What does this equation mean?

The second confusion is with capacity factor . Power density is an area-normalised output rate; capacity factor is a time-normalised one. They multiply rather than substitute. Writing energy generated as E over a period t across area A , with nameplate capacity C and capacity factor f : $P_d = \frac{E}{A\,t} = \frac{C}{A} \times f = C_d\,f$. The first factor, capacity density $C_d$ , is a siting and engineering question; the second is a resource and dispatch question. Miller and Keith’s US measurements make the separation visible: they report 2016 mean capacity factors of 32.9 per cent for wind and 22.1 per cent for solar, with 90th-percentile values of 43 and 27.5 per cent, alongside power densities that are not in the same ratio at all [ 4 ] . A technology can improve its capacity factor for years without moving its power density, and the reverse. Van Zalk and Behrens found solar the only one of nine energy types with a statistically significant trend in power density over time, rising an estimated 0.42 watts per square metre per year; wind’s 0.17 per year did not reach significance [ 3 ] .