USDA awards $6B to rural clean power initiatives

America’s rural electric cooperatives are playing an increasing role in the transition to clean energy thanks to a major boost from federal programs.

The U.S. Department of Agriculture announced on Friday that more than $6 billion will be awarded to help rural communities build renewable energy projects that will lower greenhouse gas emissions and have the potential to reduce electricity costs while creating jobs. The grants and loans will primarily be used to build new wind, solar, and battery facilities, though some winning proposals also include hydropower and nuclear.

The vast majority of the funding — about $5.5 billion — will go exclusively to nonprofit member-owned electric cooperatives in rural communities through the USDA’s Empowering Rural America (New ERA) program. Another $565 million in partially forgivable loans will go to any type of company that promises to bring affordable clean power to rural communities through the Powering Affordable Clean Energy (PACE) program.

“These programs put the money exactly where it is most needed and most effectively used,” said Ted Compton, board president of La Plata Electric Association, a cooperative in southern Colorado that previously received a $13 million loan through the PACE program.

Rural America already plays an outsized role in the energy transition, but it typically does so by hosting large, utility-owned wind and solar facilities that generate electricity to serve areas with larger populations. The New ERA and PACE programs, created by the 2022 Inflation Reduction Act, aim to help rural Americans benefit more directly from clean, cheap renewable energy. To date, the New ERA program has awarded money to projects across 30 states.

Nonprofit, member-owned electric cooperatives power the homes of 42 million Americans and their combined service area covers more than half of the country’s land. Under this structure, profits are reinvested in the company or returned to the members rather than to investors.

But cooperatives typically operate with fewer resources than large, investor-owned utilities while serving smaller populations spread across substantial distances. The USDA funding is the largest investment in bolstering electricity infrastructure for rural Americans since the New Deal era.

“If we’re going to meet our climate goals and meet the rising demand for energy, we’ve got to build a lot of clean energy. And rural communities have to be partners in that,” said Josh Ewing, director of the Rural Climate Partnership, a nonprofit that works to ensure rural communities are represented in climate policy and has helped cooperatives navigate the grant application process.

In one of the largest of the newly selected projects, Seven States Power Corporation secured $439 million to build a 250-megawatt solar facility serving the Southeast. The cooperative, owned and operated by 153 local power companies across Tennessee, Kentucky, Mississippi, Alabama, Virginia, North Carolina, and Georgia, will use the funding to provide power across the regional grid that keeps the lights on for about 10 million people.

In a press release, Jeff Dykes, board chair of Seven States, said the award is a ​“big step in the right direction” that would enable the company to ​“leverage innovative technology to design, develop and deploy energy solutions for the Tennessee Valley.”

On the smaller side, Fox Islands Electric Cooperative secured $8.7 million to support renewable energy development for remote island communities located miles off the coast of Maine in Penobscot Bay. The cooperative plans to repower and upgrade its 4.5-megawatt onshore wind farm and build a solar array over a capped landfill. The installments will be able to power 1,500 homes.

A project in Alaska involves building run-of-river hydropower that can generate electricity without the need for dams. With $7.4 million from New ERA, the Inside Passage Electric Cooperative expects to generate enough hydroelectricity to power 543 homes in Hoonah, an island community in southeast Alaska.

While the funding announcements represent a major milestone, experts caution that they are no guarantee of eventual success, and hard work remains to be done.

“It’s not like you snap your finger,” said Keith Dennis, president of the Beneficial Electrification League, which promotes modern grid infrastructure and works with cooperatives to navigate federal programs. ​“You have to build these things from the ground up,” he added, including finalizing site plans, getting each project through permitting requirements, and selecting contractors to build new facilities.

“These things take a lot of time,” Dennis said.

Cooperatives also tend to be less experienced with that process than large utility companies, and Ewing said they’re going to need sustained assistance ​“to not make too many rookie mistakes and to really work alongside their communities.”

But, he is hopeful that being ​“naturally more connected to their communities than some of those for-profit companies,” cooperatives will be able to navigate the permitting process without getting bogged down by local opposition and lawsuits that can hamper larger for-profit projects.