What is an example of a regulatory incentive that supports solar distributed generation?

The correct answer highlights the role of Renewable Portfolio Standards (RPS) as a regulatory incentive that supports solar distributed generation. An RPS mandates that a certain percentage of energy sold by utilities comes from renewable sources, including solar power. This regulatory framework creates a market for renewable energy, encouraging utilities to invest in and promote solar generation among their customers.

By setting clear targets, RPS drives the development of renewable energy technologies, including solar, as utilities seek to meet compliance requirements. This, in turn, supports the growth of distributed solar generation by providing a structured demand for clean energy and incentivizing investments in solar projects.

In contrast, the other options do not directly support solar distributed generation. Tax credits for solar installations do indeed provide financial incentives but are considered financial rather than regulatory incentives. Subsidies for fossil fuels and grants for traditional energy sources do not align with promoting renewable energy objectives and could, in fact, undermine the advancement of solar technologies.