A capacity market is a mechanism designed to ensure long-term reliability of electricity supply by providing payments to generators or demand-side resources for committing available capacity during future periods, especially peak demand. Participants are rewarded not for energy produced, but for being available to generate when needed. This structure provides financial incentives for investment in new or existing resources and enhances grid stability. Capacity markets are used in regions like the UK (CMU) and parts of the U.S. (PJM, ISO-NE).