Typical Capacity Remuneration Mechanisms and Enlightenment for an Imperfect Competition Electricity Market

The capacity remuneration mechanism is an important part of the electricity market and a necessary complement to the spot market. An efficient design of a capacity remuneration mechanism is the key to ensuring a reliable power supply and stable revenue for power generators. Therefore, the current mainstream capacity remuneration mechanisms are first compared in this paper. Then, the benefits of the mechanism and its adaptability in China are analyzed. Finally, combined with the demand for developing the capacity market in China, suggestions are proposed for designing a capacity remuneration mechanism by stages, clarifying capacity cost allocation, improving assessment and penalty rules, and connecting capacity compensation with other markets, etc., to build capacity remuneration mechanism in China's electricity market.