The nominal power rating is defined for a certain ambient temperature in free air. Note that the amount of energy that a resistor in practise can dissipate without causing damage, is strongly dependent on the operating conditions and therefore not equal to the nominal power rating. For example, a higher ambient temperature can significantly reduce the power rating. This effect is referred to as derating. It should be taking into account by the designer. Often the power rating is chosen largely above the electric power. Typically resistors are rated for a temperature of 70°C, above this resistor starts to derate. This means that above this temperature the resistor can only utilize a reduced power level. This is illustrated by a derating curve.

 
The rate of heat loss is limited by installing the resistor in an enclosure. The enclosure limits air flow and therefore the removal of heat by convection. Radiated heat will removed at a lower rate, because the walls of the enclosure act as a thermal barrier. The effect of the enclosure on the heat loss rate is strongly dependent on the size, shape, orientation, material and wall thickness. It is difficult to indicate how these parameters affect the temperature rise.
 
Increasing the heat transfer by forced convection allows for a higher watt dissipation than for normal natural convection. This can be achieved by creating an air flow, or even liquid cooling. Some resistors are designed with conducting air fins, to create a bigger surface for heat dissipation. On a circuit board resistors are often positioned close to each other. The heat radiation of one resistor will be received by the next resistor and therefore have an extra increase in temperature for a given power consumption.

 
For most electronic circuits the power rating is not a key parameter, since those resistors dissipate low amounts of energy of one watt or less. In power electronics however, the power rating is an important characteristic. Generally speaking hereto is referred when power ratings are one watt or higher. Typical applications include power supplies, dynamic brakes, power conversion circuits, power amplifiers and heaters.