‘Historic’ announcement makes $10.7bn available to US rural utilities Dollar Bills on American Flag

The Biden-Harris Administration announced the availability of nearly $11 billion in grants and loan opportunities to help rural energy and utility providers bring clean energy to their communities.

Announced by the US Department of Agriculture (USDA), the funds are being touted as the single largest investment in rural electrification since President Franklin D. Roosevelt signed the Rural Electrification Act into law in 1936.

The funding is available through two programmes under President Biden’s Inflation Reduction Act (IRA):

• Empowering Rural America, otherwise known as the ‘New ERA’ programme, which makes $9.7 billion available to eligible rural electric cooperatives.
• Powering Affordable Clean Energy (PACE) programme, which makes available the remaining $1 billion in partially forgivable loans.

For both programmes, the USDA will be opening a Letter of Interest process

New ERA vs PACE

The aim of the New ERA is to enable co-ops to deploy renewable energy systems, zero-emission and carbon capture systems.

According to the programme, its main motivation is to help rural Americans transition to clean, affordable and reliable energy. By reducing air and water pollution, New ERA funding will aim to improve health outcomes and lower energy costs for people in rural communities.

New ERA programme funding is available to member-owned rural electric cooperatives; the funds can be used to make energy efficiency improvements to eligible systems, both transmission and generation, to purchase, build or deploy renewable energy, zero-emission systems, carbon capture storage systems, or to purchase renewable energy.

The PACE programme is open to renewable energy developers and electric service providers, including municipals, cooperatives, and investor-owned and Tribal utilities in the US to help finance large-scale solar, wind, geothermal, biomass, hydropower projects and energy storage in support of renewable energy systems.

Loans through the programme, states the USDA, may be forgiven by 40% of the loan amount, and the maximum loan amount is $100 million.

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An historic investment for US rural utilities

“The Biden-Harris Administration’s commitment to cleaner energy provides rural communities with an affordable and reliable power grid, while supporting thousands of new jobs and helping lower energy costs in the future,” US agriculture secretary Tom Vilsack said in a media release.

“These investments will also combat climate change and significantly reduce air and water pollution that put children’s health at risk. The US department of agriculture stands ready to partner with municipalities, tribal entities, entrepreneurs, rural electric cooperatives and other utilities to see this transformative investment come to life and create new economic growth and healthier communities.”

According to the USDA, the two programmes together mark the single largest investment in rural electrification since President Franklin Delano Roosevelt signed the Rural Electrification Act into law in 1936.

Earlier this year in February, in a bid for grid security across the country, the Biden-Harris Administration announced an investment of $2.7 billion to help rural electric cooperatives and utilities expand and modernise the electric grid.

A month later, an application came out of the National Rural Electric Cooperative Association’s (NRECA’s) R&D arm for smart grid funding, covering a range of technologies, including advanced analytics, distribution automation, unmanned aerial systems and second-generation AMI.

The announcement also marks the latest from US President Biden’s Investing in America agenda and the IRA, which has placed the USA as a key player on the global energy transition map.

Their announcements have led to several moves coming out of the EU to enhance their market position competitively, most notable being the Green Deal Industrial Plan, which the Commission hopes will spur supply chains and clean tech development across the continent.