Electricity capacity market mechanisms in foreign countries and their implications for China

With the increasing share of renewable energy integration into the grid, the utilization hours of traditional fossil fuel power units have declined. The inadequate fixed cost recovery mechanism has hindered their transformation into regulating or backup units, leading existing thermal power units to be more inclined to exit the market and further exacerbating capacity shortages in the power system during peak load periods. Against this backdrop, this paper selects three representative capacity markets—Ireland, Great Britain, and the PJM Interconnection in the United States—as case studies. It systematically examines the operation of their capacity markets and the mechanisms for allocating capacity costs, with a focus on analyzing the practical outcomes and challenges faced by each market. Furthermore, from the perspectives of institutional objectives, market structure, and the logic of balancing resource allocation, this study extracts common patterns and differentiated approaches across the three capacity markets, summarizing their adaptability under high renewable energy penetration. Finally, in light of the actual conditions of China's electricity market, this paper puts forward implications and recommendations from foreign capacity market practices for the relevant development of China in terms of market design, cost allocation, and market coordination, so as to provide a reference for advancing China's energy transition.