How More Farms Can Add Electric Co-Ops With Help of New USDA Loans
June 23, 2023 In 2023, USDA will begin administering two loan and grant programs worth almost $11 billion to support clean energy in rural areas. Here’s why farms should use the loans to usher in more electric co-ops. Electric cooperatives are community-based organizations that provide members with electricity. Because the people who use their services own and govern the co-ops, they have a say in how the co-ops function. This local control allows members to make decisions that align with specific needs in the community.
Unlike energy companies, co-ops don’t focus on making a profit — any extra funds the cooperative generates get redistributed back to the community. Co-ops contribute to community development by supporting local economic growth.
Benefits of Rural Electric Cooperatives
Electric co-ops can be an excellent option for farms with limited access to traditional utility companies. Utility companies often struggle to reach distant homes and farms scattered across rural areas, leaving some people lacking options when it comes to electricity.
Additionally, they allow farmers to pool their resources to purchase their own utility equipment, such as solar panels and wind turbines. Making a one-time purchase can save money in the long run compared to paying for electricity regularly.
The 2023 USDA Loans
In May 2023, the USDA announced its two new loan and grant programs.
- New ERA: The New Empowering Rural America (New ERA) program — part of the Inflation Reduction Act — will allocate $9.7 billion for rural Americans to transition to clean, reliable energy. It provides funding for member-owned rural electric co-ops, and aims to reduce air and water pollution, lower energy costs and improve health outcomes. The New ERA program is the largest investment in rural electricity since the 1936 Rural Electrification Act.
- PACE: Congress also approved $1 billion for the Powering Affordable Clean Energy (PACE) program. Under PACE, the Rural Development’s Rural Utilities Service will forgive up to 60% of wind, solar, geothermal, biomass and hydropower renewable energy projects loans.
Who Is Eligible for New ERA and PACE?
Electric co-ops in Virginia, Missouri, Arizona, Kentucky, Oklahoma, Maine, Minnesota, New Mexico, North Dakota, South Carolina, and Utah will be eligible for the loans. The application period for PACE loans begins later this month, while the application window for New ERA loans opens in July.
Taking Advantage of the USDA Loans
The USDA’s new loans aim to put rural electric co-ops on equal standing with large, privately owned utility companies. Co-ops can use the funding to build carbon capture facilities, zero-emission systems and renewable energy. They will also be able to deliver affordable power to millions of consumers.
Solar panels — which convert up to 45% of the energy they absorb into electricity — will be easier for farmers to obtain than ever before. Wind turbines — another staple of rural green energy — will also become more affordable.
The loan programs can expand smart grid services to bring broadband internet to rural regions. They will specifically target disadvantaged, vulnerable and Tribal communities, delivering funds where people need them most.
Sparking a Movement
Rural areas are often left out of the energy conversation, but the USDA’s new loan programs will give farmers a voice. They fund electric cooperatives’ expansion in remote regions and emphasize renewable energy. New ERA and PACE will provide underserved communities access to much-needed electric services, and they put the power in co-op members’ hands. The future of farming just got brighter.
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