Capacity Market
CommercialAlso known as: Capacity Mechanism, Capacity Payment
A capacity market pays generators and storage operators to have capacity available to deliver power during times of system stress, regardless of whether they are actually dispatched. It is essentially a payment for readiness.
Capacity markets exist in several regions including the UK, PJM (US), and ISO-NE (US). They provide a stable, predictable revenue stream that reduces dependence on volatile wholesale and ancillary service prices. For BESS projects, capacity payments can significantly improve bankability by providing a contracted income floor.
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