Capacity remuneration mechanisms have been imposed globally in order to ensure capacity adequacy and prevent a sharp increase in electricity prices in the long-term. The main causes of their introduction are to provide financial support for companies to generate electricity or reduce consumption in peak demand and ensure sufficient incentives for potential investors. The paper aims to review the capacity remuneration mechanisms introduced in various countries. The following mechanisms are discussed: capacity payment, strategic reserve, reliability options, capacity obligations, and capacity auctions. The paper indicates the main advantages of mechanisms and key challenges related to their introduction and operation as well. The paper contributes to the existing literature by extending and updating the knowledge on the capacity remuneration mechanisms in various energy markets. The results indicate that the most complex schemes are market mechanisms. Regardless of the nature of the traded good (call options, certificates, capacity obligation), the second market structure must be introduced and managed. Consequently, the obligations are imposed on (i) the regulatory body (regulator or transmission system operator), generation companies (or demand-side response), trading companies, and consumers. The other challenge of the implementation of various CRMs is related to the transparent treatment of all technologies. All CRMs should be technologically neutral, but ultimately, some units are more favorable due to their greater impact on the reliability of the power system.

Recent dynamic changes in global fossil fuels markets and the European carbon dioxide emission allowances system have significantly impacted the energy sectors. These fluctuations also influence district heating (DH) markets where coal and natural gas remain dominant energy vectors in numerous European countries. District heating markets are distinct from other commodity markets due to their local nature and distribution requirements. Consequently, they can operate under various market models and have different price design policies depending on the country and region. With these considerations, this study aims to review and analyse the current market models and regulations of price formulation in the context of final prices in selected district heating markets. The primary objective is to conduct an in-depth analysis of the key district heating markets in Poland and compare the outcomes with the markets of neighbouring countries, including the Czech Republic, Slovakia, Lithuania, Latvia, Estonia, and Germany. Poland is taken as an example due to its high dependence on fossil fuels and its vulnerability to current global price fluctuations. The results indicate that Poland has one of the most regulated district heating markets, and these regulations can impact the profitability of district heating companies with high prices of fuel and carbon certificates observed in global markets. To create incentives for potential investors and incumbent companies to develop more sustainable and low-emission district heating markets in Poland – where energy transition processes are still underway – it is recommended to increase the frequency of formulation and approval of tariffs.