A secondary aim is to encourage a change in dispatch decisions for existing generation, favouring the use of less carbon-intensive generation over more traditional forms when both are available. The carbon price floor is intended to provide greater certainty on future carbon prices, protecting investors in UK low-carbon initiatives from the volatility of the EU carbon price. This has the effect of reducing the amount of risk that investors are exposed to and decreasing the cost of capital for low-carbon investment. In setting the Carbon Floor Price, the Government must achieve a balance between encouraging investments in low-carbon generation without unfairly impacting existing generators, undermining the competitiveness of UK industry or increasing electricity prices unduly. For these reasons, the introduction of a Carbon Floor Price is insufficient on its own to deliver sufficient investment and is supplemented by a proposed change in the support mechanism for low-carbon generation to a form of Feed-in tariff, discussed below. A Feed-in tariff (FIT) provides a fixed level of income for a low-carbon generator over a specified period of time. There are three main types: a Premium FIT offers a static payment in addition to the revenue gained by selling electricity on the market; a Fixed FIT provides a static payment designed to replace any revenue from selling in the electricity market; and a FIT with a contract for difference (CfD), where a variable payment is made to ensure that the generator receives the agreed tariff assuming they sell their electricity at market price. A FIT with CfD is the Government’s preferred choice as it is deemed to be the most cost-effective whilst retaining an appropriate amount of exposure to market forces. The requirement to sell electricity on the market encourages operators to make efficient decisions about dispatch and maintenance given that revenues above the agreed tariff can be achieved if electricity is sold at above the average market price. Contact with the market would be completely removed under a Fixed FIT, potentially leading to sub-optimal operational decisions, and too great under a Premium FIT, over-exposing operators to future electricity price uncertainty. It is proposed that Feed-in tariffs with Contracts for Difference (FIT CfD) will replace the current support mechanism, the Renewables Obligation (RO), in 2017 after running in parallel from 2013. The Renewables Obligation encourages the generation of electricity from renewable energy sources by awarding Renewable Obligation Certificates (ROCs) to generators. Renewables Obligation Certificates provide an additional source of income in that they can be sold to suppliers who are obligated to source an increasing amount of the electricity they provide from renewable energy sources.