Capacity Markets

Capacity markets are mechanisms used to ensure there is enough electricity generating capacity to meet future demand. Power plants or other providers are paid not only for the electricity they generate but also for being available to provide power when needed, even if they don't always produce energy. This incentivizes investment in reliable energy sources to prevent shortages during peak times or emergencies. Essentially, capacity markets help keep the electricity system stable and ensure reliable power supply, especially as renewable sources like wind and solar, which can be intermittent, become more prevalent.