Rural Electric Co-ops on a Path to More Renewable Energy

A principal mission undertaken by the 25x’25 Alliance in recent years is finding ways to help rural electric cooperatives add renewable energy and diversify their portfolios.

The advantages to co-ops in moving to low- and no-carbon energy alternatives include meeting a growing demand for energy, the declining cost of wind and solar power production in the face of variable costs of fossil fuels, changing customer needs and interests, changing political dynamics and an aging infrastructure.

As part of that mission, 25x’25 this week released a 13-page guide that can assist rural electric cooperatives in attracting local funding to build distributed scale renewable energy generation projects. “Establishing a Community Tax Equity Investment Company to Invest in Renewable Energy Projects” is the culmination of more than six months of work by a tax equity finance model (TEFM) team formed under the 25x’25 Energy for Economic Growth (EEG) initiative, a 25x’25 collaboration with the National Rural Electric Cooperative Association in assisting rural electric utilities in promoting renewable energy development.

NRECA has demonstrated serious leadership in its pursuit of renewable energy capacity. In July, CEO Jo Ann Emerson joined co-op leaders and officials from the White House Rural Council and the USDA’s Rural Utilities Service (RUS) to discuss recent progress and potential collaboration on efficiency and renewable energy development.

The association is looking to maximize the value of current federal programs and find creative opportunities to extend the benefits of new efficiency and renewable energy technologies to co-op consumers.

Rural utilities have been aggressively adding renewable energy capacity to the rural electric grid, reporting last month that the nation’s more than 900 co-ops own or purchase about 16.5 GW of renewable capacity and plan to add 2 GW of capacity in the near future.

NRECA also cites a surge in co-op development of community solar, noting that co-ops have developed 43 community solar arrays and are planning another 35 projects in a total of 24 states.

The vast majority of renewable energy attributed to co-ops comes through long-term power purchase agreements (PPAs). With those PPAs, some 95 percent of NRECA’s distribution members (795 out of 838) offer renewable energy options to 40 million Americans. The IRS has approved $900 million in CREB allocations for cooperative renewable energy development.

A growing number of rural electric cooperatives are ready to move beyond the PPAs and develop their own renewable energy generation projects in partnership with their members. It’s a transformation to a more reliable, distributed and home-grown energy future that rural electric cooperatives stand ready to lead.

But a major barrier has been the lack of business models and financing mechanisms that would work for those co-ops and local investors. The guide released this week offers both a business model and an investment guide, and is designed to overcome that barrier.

With the guide now in hand, the next step is to spread the word and familiarize rural utility leaders with the document, then begin pilot testing with the co-op partners EEG has recruited.

To learn more about the guide, the Alliance urges rural co-op leaders to contact 25x’25 Project Coordinator Ernie Shea at EShea@25×25.org, or 25x’25 Project Associate Ethan Gilbert at EGilbert@25×25.org. Both can also be reached at 410-252-7079.

Rural cooperatives have a core mission that is in alignment with efforts to provide energy alternatives and are well suited to accept this new undertaking, and help lead and shape America’s energy future. Keep up the good work.

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