Abstract: The lower marginal costs of renewable energy will lead to low energy prices in the market, compressing the profitability of various types of power sources. In order to ensure sufficient capacity supply in the power system, the market needs to introduce capacity compensation mechanism. This paper summarizes and compares the typical capacity compensation mechanisms in the foreign power markets, and proposes a power capacity compensation mechanism suitable for our country. Specifically, this method examines the average values of the cost gap of the unit effective capacity of each unit in the market, determines the cost compensation prices of the unit effective capacity, and settles the unit capacity compensation prices accordingly. Finally, this paper completes a case study based on the current actual and future planned power system data of a certain province in China. The results show that as the penetration rate of renewable energy continues to increase, the number of thermal power units that need capacity compensation gradually increases, and so do the capacity compensation revenue accounts for the total revenue. With its proportion in the total revenue to be increased continuously, the importance of the capacity compensation mechanism will gradually be highlighted.