Contact Tobias Sellier, Senior Director of Media Relations and Communications, at TSellier@PublicPower.org or 202-467-2927.
Washington, D.C., May 16, 2023 — The American Public Power Association applauds today’s Notice of Funding Opportunity for the US Department of Agriculture Rural Utility Service Powering Affordable Clean Energy loan forgiveness program.
Rural America is where most renewables are being developed, but far too few rural communities themselves have had the opportunity to participate in, let alone own and operate, such facilities. Today’s announcement gives rural utilities the chance to change that through direct ownership of renewable energy generation projects used to serve their customers. The program is also available to entities, including joint action agencies, selling power for resale by rural utilities.
This is a significant opportunity for public power. Nearly two-thirds of rural utilities are public power utilities owned and operated by cities, villages, boroughs, and townships, operating in every state except Hawaii. More than half of all public power utilities receive at least some of their power through wholesale purchases from joint action agencies.
And direct ownership of generation is a sea change: local ownership means local jobs and local control. Coupled with refundable direct payment tax credits, which for the first time will allow public power utilities to access energy tax credits, PACE could be transformative for rural communities that seek and receive these loans.
APPA also wants to thank RUS for its work to engage stakeholders in advance of today’s notice and its ongoing commitment to work with applicants through a two-step application process. Again, rural public power utilities are serving some of the nation’s smallest and most remote communities and RUS has worked diligently to see that all eligible entities are aware of the opportunity. RUS has also worked to reduce upfront costs by creating the two-step process of first submitting a letter of intent, before being invited to submit a formal loan application. This process could still be challenging to smaller utilities, but is designed to reduce upfront costs, while increasing the likelihood of subsequent success for those who do submit a formal application.
Background
PACE, authorized by the Inflation Reduction Act, is a $1 billion expansion of the existing RUS Electric Loans for Renewable Energy program. Under the existing program, loans:
- 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.
PACE expands on this program by allowing loan forgiveness and adding storage as an eligible project category. PACE is also “stackable” with energy tax credits. In other words, 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.