USDA announces $11B in green energy grants for rural utilities

The ongoing shift to green energy doesn’t just reduce pollution and cost, it also provides job opportunities—an especially welcome boon for rural and post-industrial communities that have been left behind by digitization. But the upfront cost of installing solar arrays and wind turbines is prohibitive for cities and counties that don’t have a large taxbase.

An initiative from the Biden-Harris Administration announced last month aims to help rural energy and utility providers overcome that hurdle through nearly $11 billion in grants and loan opportunities. It represents the largest single investment in rural electrification since President Franklin D. Roosevelt signed the Rural Electrification Act into law in 1936.

“All across America, rural cooperatives lift up our rural communities,” said Ali Zaidi, assistant to the president and national climate advisor in a statement. “For so many of our rural communities, this is simply a gamechanger. It’s a big deal.”

The funding has been made available under two programs through the Inflation Reduction Act. Simaltaneous to the announcement, the U.S. Department of Agriculture opened a letter of interest process for the $9.7 billion New Empowering Rural America program (New ERA). Rural electric cooperatives are eligible to apply for funding to deploy renewable energy systems, zero-emission and carbon capture systems. The second funding opportunity is through the Powering Affordable Clean Energy (PACE) program, which makes $1 billion available in partially forgivable loans to renewable-energy developers and electric service providers, including municipals, cooperatives, and investor-owned and Tribal utilities to help finance large-scale solar, wind, geothermal, biomass, hydropower projects and energy storage in support of renewable energy systems, according to a statement from the USDA.

The funding opportunities have been lauded by advocacy organizations.

“Rural America is where most renewables are being developed, but far too few rural communities themselves have had the opportunity to participate in, let alone own and operate, such facilities,” reads a statement from the American Public Power Association. The funding streams give “rural utilities the chance to change that through direct ownership of renewable energy generation projects used to serve their customers. The program is also available to entities, including joint action agencies, selling power for resale by rural utilities.”

About two-thirds of rural utilities are publically owned, the statement continuess. And more than half of them “receive at least some of their power through wholesale purchases from joint action agencies,” the statement continues. “Coupled with refundable direct payment tax credits, which for the first time will allow public power utilities to access energy tax credits, PACE could be transformative for rural communities that seek and receive these loans.”

More information on the New ERA program can be found on the USDA’s website. Rural electric cooperatives, including current and previous USDA borrowers, are eligible for funding. To apply, eligible entities must submit a letter of interest between July 31 and Aug. 31.

More information on the PACE program can also be found on the USDA’s website. Loans through PACE program can be forgiven by 40% of the loan amount, and the maximum loan amount is $100 million. Applicants in Puerto Rico, the Federated States of Micronesia, the Republic of the Marshall Islands, the Republic of Palau, and Tribal communities are eligible for up to 60% loan forgiveness. The USDA will begin accepting letters of interest starting June 30, and on a rolling basis until Sept. 29.