The context is the following:
日時計{ひどけい}は太陽{たいよう}の位置{いち}が変{か}わるのを利用{りよう}して、影{かげ}がどこにできるかで時間{じかん}が分{わ}かる時計{とけい}です。
My best guess is that できる takes the meaning of growing, as the place where the shadow extends/grows to, but I'm not completely sure of it. My attempt at a translation would be "The sundial utilizes the change in position of the sun and tells the time by the place where (its) shadow extends to."
Is my assumption and translation correct?