AOBCs: What They Are and How they Benefit you

Published March 24, 2021

AOBCs: What They Are and How they Benefit you

DATE PUBLISHED: March 24, 2021

By now, you are likely aware of the Solar Massachusetts Renewable Target (SMART) program, initially launched in 2018 as a long-term, sustainable incentive initiative to promote cost-effective solar development in the state. But both public organizations and private property owners may not realize the increased benefits available to them after the program’s July 2020 refresh. Regardless of whether you’ve already invested in solar or not, additional Alternative On-Bill Credits (AOBCs) could help you save even more on your electric bill or generate revenue while also reaping environmental benefits. The best part is that taking advantage of AOBCs is a lot simpler than you might think.

Depending on your utility service, you may be familiar with high-value bill credits from net metering. The net metering value for public entities includes the supply rate plus delivery rate charges. Private projects with excess solar generation can qualify for market net metering, which earns 60% of the net meter credit value. Maybe you’re already receiving net metering credits for one of more of your utility bills, and that’s great (you’ll still want to keep on reading!). But net metering is limited by utility area and capacity. Some parts of Massachusetts don’t have any opportunities left for participation. In recognition of the net metering constraint, the Massachusetts Department of Energy Resources included AOBCs as an alternative. That means businesses, municipalities and school districts are eligible to earn more savings thanks to SMART.

The first phase of the SMART program offered AOBCs for standalone community solar projects. The 2020 updated SMART regulations included a few key changes including an additional 1,600 MW of incentives and the creation of AOBCs for behind-the-meter projects. Now, anyone participating in a solar project in National Grid, Eversource, or Unitil areas can earn compensation for excess kilowatt-hour (kWh) generation. The SMART AOBC is valued at the utility’s basic supply rate of the tariff at the solar project meter, which offers significantly greater value than wholesale market rates.

AOBC graphic

AOBCs vs Net Metering: Battle of the Bill Credits!

The Massachusetts Department of Energy Resources defines an AOBC as the value of the net excess electricity generated and fed back to the utility. AOBCs provide compensation for energy generation at a standard rate equal to the value of the utility’s basic service rate times the amount of kWh generated. AOBCs are available throughout the SMART program and are limited only by the program’s 3,200 MW of capacity.

Net metering opportunities remain in select utility areas, and are most abundant in Eversource East and West. Where net metering is available, public entities can reap greater savings than with AOBCs, and private project owners can expect similar compensation. A knowledgeable industry expert can help both public and private entities evaluate options and determine the best available solution for their project.

Benefits for Everyone

It doesn’t matter if you install solar on your roof, over your parking lot or on vacant land. Your utility will apply your AOBC directly to your electric bill, even if you are already receiving net metering credits. You can continue to stack incentives for “adders” like solar storage (which can help further decrease demand charges and increase the total SMART incentive) or a solar carport/canopy (which provides shade, increased property value and EV-charging potential). This opportunity — for as much as a 300% increase in compensation equaling thousands of dollars in savings — makes the economics of going solar much more favorable for a project owner, site owner and a bill credit offtaker.

Your utility bill may even reach zero, but that’s OK because — just like with net metering — solar owners also have the opportunity to apply the credit to a future bill or even allocate credits to any other meter within the same utility territory. Solect aligns these project participants to create additional incentives, which benefit the project owner, the site owner and the offtaker such as a local public school or non-profit organization, even if they don’t have solar. AOBCs give you more flexibility and control over your energy costs with the choice to Power Your Tomorrow or someone else’s.

Why act now?

SMART is a declining block incentive program so the sooner you act the more savings you will receive and the greater progress you’ll make toward reaching carbon-emissions-reduction goals.

With incentives and early reservation periods available specifically for public entities like municipalities, you owe it to your organization to consider how you can take advantage of AOBCs and solar as you plan for 2022 and even beyond. It’s just good business practice and it’s not too early or as labor-intensive as you might think.

Solect Energy takes the confusion and work out of discovering how you can best take advantage of AOBCs, net metering and other solar programs. As an experienced consultant and trusted solar and storage program provider for PowerOptions, we will work with your team to analyze your annual electric costs and evaluate your capacity, making sense of incentives and determining the best way to maximize your benefits. From consulting to installation to maintenance and beyond, you can count on Solect to be your one-stop-shop for electric bill savings.

Contact us today for a free evaluation and to learn more about how you can take advantage of AOBCs through the SMART Program!