Policies that provide financial incentives to encourage low emission options are included in this category. a. Feed-in tariff: In cases where an independent consumer of electricity is also equipped to export electricity generated on site, the electricity imported/exported from/to the grid are separated through the installation of two separate meters and are accounted for differently. While energy consumed/imported from the grid is priced at the retail electricity tariff, the excess energy injected into the grid is compensated at a predetermined tariff notified by the regulator, also called the “feed-in tariff” (FiTs). FiTs can be higher than retail electricity tariffs so that they incentivize consumers to install distributed renewable generation capacity. While FiTs have helped jump-start the development of distributed generation by providing an economic incentive, they must evolve into more mature compensation mechanisms that capture the true value of renewable electricity at the time of injection into the grid. As such, a compensation at wholesale electricity market price (e.g. when trading day-ahead platforms are established and liquid) might reflect more accurately the value of electricity injected into the grid. b. Capacity remuneration mechanisms: This provide payments to those power plants which are available for generating electricity when needed. The payments are made in addition to the earnings power plants gain by selling electricity on the energy market. This allows the recovery of fixed costs for power plants that are unable to recover in the wholesale market due to infrequent use and low market clearing prices. The aim is to fill the expected capacity gap in the presence of volatile and unpredictable renewable power generation. With increasing installation of renewable generation capacity, in particular wind and solar photovoltaic (PV), power systems require large amounts of flexible resources to provide quick responses to mitigate the additional variability and uncertainty created by the generation of variable renewable energy. At times, electricity markets prove to be insufficient to compensate flexible resources for their services. Ancillary service markets may cover some of these costs, but in some cases, they cannot attract enough additional investment in flexible resources in the longer term. Under capacity mechanisms, capacity prices are either set in advance administratively or are the result of market-based principles (for example, auctions) and are independent of the cost of the energy produced. Such capacity prices are based on the cost of providing the required capacity whenever needed. These capacity payments are often designed for long periods of time.