The U.S. Department of Agriculture’s Rural Utility Service on May 16 issued a notice of funding opportunity for the Powering Affordable Clean Energy forgivable loan program.
To be invited to submit a PACE loan application, applicants must first submit a Letter of Interest. LOIs can be submitted beginning at 11:59 a.m. on June 30, 2023, and must be submitted by 11:59 a.m. on September 29, 2023. If invited to submit an application, an applicant is expected to submit the PACE loan application within 60 days of being invited.
The minimum award is $1 million and the maximum is $100 million. USDA’s Rural Utility Service estimates that roughly $2.7 billion in project financing can be accommodated by the $1 billion authorized for the program by the Inflation Reduction Act.
PACE is an expansion of the current RUS Electric Loans for Renewable Energy.
Generally, electric loans for renewable energy:
- Must be for the benefit of rural customers;
- Are made at a rate equal to the average tax-exempt municipal bond rate of similar maturities; and
- Can be used to finance wind, solar, hydropower, biomass, or geothermal projects.
Generally, a rural area is defined as an area with a population of 20,000 or less. Approximately 1,600 public power utilities qualify as a rural utility.
Additionally, projects for the wholesale sale of power to utilities serving rural customers can also qualify for an Electric Loan for Renewable Energy.
PACE expands on the Electric Loan for Renewable Energy program by adding storage as an eligible project category and providing loan forgiveness.
The guidance provides for three tiers of loan forgiveness: (1) 20 percent for any qualifying loan; (2) 40 percent for qualifying loans for projects where 50 percent or more of the population served is located within an energy community or a “Distressed or Disadvantaged Community” and (3) 60 percent for qualifying loans for projects.
PACE is also “stackable” with energy tax credits, meaning a project could be financed with PACE and also receive refundable direct payment of the energy investment tax credit or production tax credits for a project that would otherwise qualify for such credits.
APPA is hosting a webinar on Tuesday, May 30, from 3-4 p.m. Eastern, with RUS Assistant Administrator Christopher McLean, who will provide background information about the PACE program, provide a timeline and instructions about the application process, and offer an opportunity to ask questions.
