USDA’s Rural Utilities Service is offering $10.7 billion in loans and grants to help rural energy providers reduce greenhouse gas emissions.
The agency issued a Notice of Funding Availability Monday in the Federal Register of $9.7 billion for the Empowering Rural America (New ERA) program funded in the Inflation Reduction Act, to finance rural electric cooperative projects. Last week, USDA’s Rural Development office announced a series of webinars on both New ERA and another NOFA posted online Monday for the $1 billion Powering Affordable Clean Energy (PACE) program.
Speaking to reporters, Ag Secretary Tom Vilsack said the funding would help rural electric cooperatives “reach parity” with larger utility companies that may have already begun investing in renewable energy sources, helping the coops “accelerate plans that they may have to transition away from fossil fuel” power generation.
“This is not expected to be the be-all and end-all from the standpoint of solving every REC's challenges across the country, but it is a significant investment that is going to allow a number of RECs to accelerate their plans, and in doing so, can show the way forward,” he said. Vilsack also pointed to the March funding announcement through USDA's Rural Energy for America Program, which also leveraged IRA funding and was much larger than the typical rollout for the program.
PACE offers up to 50% in loan forgiveness on renewable energy infrastructure projects using solar, wind, hydropower, biomass, or a geothermal source of energy. Both notices are expected to be published officially in the Federal Register Tuesday.
The New ERA notice said an eligible project “includes a portfolio of actions that will result in the reduction in GHG emissions and be consistent with long-term resiliency, reliability, and affordability of rural electric systems.”
“Such actions include, but are not limited to, the purchase or construction of renewable energy, renewable energy systems, zero-emission systems, (or) carbon capture and storage systems,” RUS said in the New ERA NOFA.
The National Rural Electric Cooperative Association called the notice “workable guidance.”
“USDA has smartly structured this program in a way that will help electric co-ops leverage new tools to reduce costs and keep energy affordable while meeting the future energy needs of their rural communities,” NRECA CEO Jim Matheson said. “I’m grateful to USDA for listening to us throughout this process and for settling on rules that ensure the program is flexible and accessible to all electric cooperatives.”
NRECA said it helped shape the program, which “is designed specifically for electric cooperatives interested in purchasing or building new clean energy systems.”
NRECA noted that there is “a wide range of eligible projects,” which in addition to those mentioned by USDA include nuclear energy.
The program “allows each cooperative to determine its path based on its unique circumstances,” the association said. “Co-ops will be eligible to receive a grant for as much as 25% of their project cost, with a maximum amount of loans and grants limited to $970 million for any one entity.”
Under the IRA, no one applicant may receive more than 10% of the $9.7 billion, which is required to be spent by Sept. 30, 2031.
In the notice, RUS said applicants “are invited to propose assistance from any single financial assistance product or a combination of such products,” including a grant or a loan on its own, a grant/loan combination, or a loan refinancing or loan modification.
“The agency reserves the right to offer an applicant a financial package different than requested,” RUS said. “The most competitive applications, i.e. those that propose achieving the greatest reductions in GHG emissions, will receive the best financial offerings in terms of grant amounts and interest rates.”
RUS will take letters of interest in August, then send eligible entities an invitation to proceed with the program and offer 60 days to complete and submit a New ERA application.
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Under the PACE program, RUS is making loan amounts between $1 million and $100 million available.
The amount appropriated is $1 billion, but RUS said that “based on projected subsidy rates, (it) expects to have approximately $2.7 billion available to lend.”
Interested applicants have from June 20-Sept. 29 to submit letters of interest. RUS will then invite certain submittals to proceed with an application, which will need to be submitted within 60 days “or a time agreeable to the agency.”
House Ag Committee ranking member David Scott, D-Ga., said he was grateful to see the funding was going “to the people and businesses that need it.”
White House National Climate Advisor Ali Zaidi said the administration believes “there's a favorable wind blowing” on renewable energy investments, and the new funding will allow rural communities “an opportunity to put up a sail.
“We know that capital formation, especially in rural communities, is harder,” he said. “This allows more of those communities to tap into the opportunity. The technology is there, the trend lines are there; this makes sure more folks can tap into it.”
Story updated Tuesday morning to include quotes from Capitol Hill and Biden administration officials.
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