Sixteen electric co-ops across the USA are to receive over US$7.3bn in grants and loans from a federal programme in support of clean energy in rural communities.
The US Department of Agriculture (USDA) Empowering Rural America (Era) programme is a $9.7bn fund, created exclusively for co-ops to develop clean energy projects in rural areas, and is part of the 2022 Inflation Reduction Act.
“Under the Biden-Harris Administration, we are supporting a more prosperous future for rural communities by speeding up the transition to clean energy while at the same time keeping monthly bills low and investing in the American workforce with new jobs and apprenticeships,” said USDA secretary Tom Vilsack. “One in five rural Americans will benefit from these clean energy investments, thanks to partnerships with rural electric co-operatives like Dairyland. Put simply, this is rural power, for rural America.”
“The Inflation Reduction Act makes the largest investment in rural electrification since FDR and the New Deal in the 1930s,” said John Podesta, senior international climate advisor to the president. “Today’s awards will bring clean, affordable, reliable power to rural Americans all across our nation.”
“Our country’s investments in rural electric system infrastructure, renewable energy, and modern technologies are critical investments in future generations of rural North Dakotans,” said Erin Oban, state director of USDA Rural Development in North Dakota. “Of the 16 selections announced today, three of them – Basin Electric Cooperative, Great River Energy, and Minnkota Power Cooperative – are either based or have a significant presence in serving rural North Dakota. These co-ops continue to show their commitment to ensuring that our most rural hometowns and neighbours have access to reliable, affordable electricity.”
The first confirmed award goes to Dairyland Power Cooperative based in La Crosse, Wisconsin. The generation and transmission co-op will receive $573m in grants and loans for four solar installations and four wind projects, which will secure 1,080 MW of renewable energy capacity.
President Joe Biden visited Vernon Electric Cooperative, one of Dairyland’s member co-ops, on 5 September to announce the funding.
“Wisconsin has a strong history of neighbour helping neighbour, and forming co-operatives, which are literally owned and powered by the people of Wisconsin,” he said.
The president praised co-ops in the agricultural sector for their role in the agricultural sector in his birth state, Delaware.
“It’s a $4bn enterprise in the Delmarva Peninsula, and it’s co-ops that made it happen,” he said of the agricultural sector. “But millions of Americans rely on co-ops like yours for electricity every single day, and it matters,” he added.
Biden added that the grants will help rural communities transition to clean, affordable, reliable energy and reduce greenhouse gas pollution by 43 million tons a year.
He argued the investment was “the most significant transformative investment in electricity and electrification and clean energy for rural America” since Franklin Roosevelt’s New Deal.
“Co-ops are still nonprofits,” he said. “They don’t have the same resources the private utility companies have to modernise their energy infrastructure, and for decades, they couldn’t access tax credits to make clean energy more affordable. That’s why Kamala [Harris] and I ensured that for the first time in American history these nonprofit co-ops can benefit from clean energy tax credits, just like for profit utilities have for decades.”
Biden reminded the audience of his administration’s initiative to create new tools for co-ops to refinance their debts.
“Today’s historic announcement of $7.3bn for rural electric co-ops builds on those steps. It means clean, affordable electricity for over 5 million rural households and businesses across 23 states,” he added.
Dairyland president and CEO Brent Ridge also spoke at the event, explaining that the Era funds will enable the co-op to reduce its carbon emissions by over 70% by 2031, as well as help to keep rates down and create local jobs.
“It’s a win-win-win,” he said. “It’s good for Dairyland members, the environment and the economy of rural communities.”
The ERA programme also marks what has been described as a “sea change in the relationship between power co-operatives and environmentalists”, as the two groups worked together to lobby for the federal funding.
The programme received 157 letters of interest from electric co-ops proposing a range of projects, such as carbon capture, renewables and energy storage.
Clean energy think tank RMI estimates that renewable capacity supply for rural co-ops will increase by 35% – from 26 to almost 35 gigawatts – as a result of the programme.
“The New Era programme showcases what is possible when the government prioritises voluntary, flexible decision-making and allows electric co-ops to take a tailored approach to respond to local needs,” said National Rural Electric Cooperative Association CEO, Jim Matheson. “It is a transformative opportunity for electric co-operatives.”
A further 15 co-ops are currently at the underwriting stage of the ERA programme: Allegheny Electric Cooperative; Arizona Electric Power Cooperative; Basin Electric Power Cooperative; Buckeye Power; CORE Electric Cooperative; East Kentucky Power Cooperative; Golden Valley Electric Association; Great River Energy; Hoosier Energy; Minnkota Power Cooperative; San Miguel Electric Cooperative; Seminole Electric Cooperative; Tri-State Generation and Transmission Association; United Power; and Wolverine Power Supply Cooperative.
President and CEO of Minnkota Power Cooperative, Mac McLennan, said that electric co-ops are entering “one of the most transformational periods in our industry’s history”, adding:
“We are grateful to continue forward as we pursue development of Project Tundra – a bold carbon capture initiative in North Dakota – as well as the advancement of 370 megawatts of new wind energy resources in the state. New ERA helps not-for-profit co-operatives like Minnkota more cost-effectively decarbonise power supply portfolios, while retaining a reliable and resilient electric grid for the members we serve.”
Environmental campaigners – often at loggerheads with electric co-ops in previous years – have also welcomed the news. Although a number of co-ops have been working to move to cleaner energy, the wider sector has been criticised by green groups for being slow to transition from fossils: in 2022, coal accounted 30% of co-ops’ power generation compared to 20% nationally.
There has been tension within the sector too. Electric co-ops looking to switch to renewables had faced legal battles to exit a contract with Colorado-based Tri-State Generation and Transmission (G&T) Association, which had been dependent on coal, making it a target for green critics.
Tri-State, which had itself signalled a wish to move to cleaner energy, is one of the recipients of funds, and played a key role alongside environmentalists and other co-ops in pushing for the government package.
“It’s kind of like those light beer commercials: great taste, less filling,” said CEO Duane Highley. “But it’s lower rates and cleaner energy. There are a lot of sceptics who say you can’t make an energy transition and keep it reliable and affordable. Our mission is to show that it is possible.”
Jeremy Fisher, senior strategy and technical adviser at green campaign group Sierra Club, told E&E News the move was an “extraordinary pivot” for Tri-State, adding that electric co-ops had urgently needed financial support to make the expensive capital costs of transition. “Anything that hits their bottom line immediately has a repercussion on rates,” he said. “What they needed was to find a way to get it off their balance sheet.”
Two more rounds of ERA funding are set to be announced in the coming months.
