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USDA Grants for Renewable Energy Under the IRA


Photograph of solar panels and wind turbines on land

Renewable energy developers pursuing innovative solutions now have new funding opportunities intended to incentivize and expand clean energy development in rural America. With the passing of the Inflation Reduction Act (IRA), the USDA was provided several funding opportunities to help organizations invest in renewable energy development. Included in these funding opportunities are the Powering Affordable Clean Energy (PACE) program and the Empowering Rural America (New ERA) program, which were announced on May 16, 2023.


Between these two transformative initiatives, the USDA stands ready to provide nearly $11 billion in grants and loan opportunities that will help bring clean energy to rural communities across the county. In this article, we will explore what these programs entail, why they are beneficial for renewable companies, and summarize the key eligibility requirements.


Want more information about how to access this funding for your development efforts? Listen to our recent webinar discusses these opportunities in-depth:



What is the Powering Affordable Clean Energy (PACE) Program?

The PACE program is a government-backed loan forgiveness program with $1 billion in funding. This program was designed to accelerate the development and adoption of renewable energy technologies by providing financing assistance to large-scale solar, wind, energy storage, geothermal, and hydropower project developers. This initiative represents a significant step towards a sustainable future, as it aims to provide more affordable and reliable clean energy to rural Americans.


What is the Empowering Rural America (New ERA) program?

The New ERA program is a $9.7 billion program designed to provide loans and grants to member-owned rural electric cooperatives. Its primary goal is to provide funds for improvements to eligible energy infrastructure (generation and transmission systems) or the development and deployment of renewable energy systems. While these funds are not directly available to renewable energy developers, and thus will not be our main focus in this blog, we found the New ERA program important as it will likely provide opportunities for developers in the future. With the inflow of funding to rural electric cooperatives for purchasing, building, and deploying zero-emission systems, project developers may stand to benefit if they choose to pursue projects in rural electric cooperative territories.


Benefits of the PACE Program for Renewable Companies:

  1. Reduced Financial Risk: The PACE program offers financial assistance in the form of partially forgivable loans. Under PACE, USDA Rural Development’s Rural Utilities Service (RUS) will forgive up to 60 percent of loans for renewable energy projects including solar, wind, hydropower, geothermal, and energy storage systems. With $1 billion in funding, eligible applicants can apply (once per entity) for loans up to $100 million. The minimum loan is $1 million, which includes the forgivable portion. This support helps to mitigate the financial risks associated with bringing new renewable energy technologies to market. Renewable companies can focus on innovation and growth, knowing that they have the backing of the program to help navigate potential challenges.

  2. Support Clean Energy in Rural America: As part of the largest investment in rural electrification since the Rural Electrification Act in 1936, the PACE program will help to bring more affordable clean energy to consumers throughout America. The program is structured to increase loan forgiveness for projects that will serve rural customers in distressed, disadvantaged, and Tribal communities.

  3. Market Access: With $1 billion in funding, PACE provides renewable energy entities with crucial financial resources necessary for the development and commercialization of clean energy projects in new markets. This funding can be instrumental in bridging the gap between groundbreaking ideas and practical implementation, allowing companies to scale up their operations and target markets that may not otherwise be economical.

Eligibility Requirements for PACE Program Funding:

  1. Company Type: To qualify for the PACE program, eligible entities include corporations, municipalities, utility districts, cooperatives, nonprofits, Indian Tribes, Limited Liability Companies, or other for-profit entities organized under the laws of any U.S. state or territory. Only one application per entity will be accepted, however, groups can collaborate to package proposed projects into one joint application.

  2. Project Type: Renewable energy projects that use solar, wind, hydropower, geothermal, biomass, or energy storage are eligible.

  3. Project Location: To be eligible, a project must produce renewable energy for resale and serve at least 50 percent of rural customers. This minimum requirement provides up to 20% total loan forgiveness. To qualify for increased loan forgiveness of 40%, a project must serve primarily customers in an Energy Community, Distressed or Disadvantaged Community. Further, to qualify for the maximum of 60% loan forgiveness, a project must be located in Compact of Free Association areas or serve at least 60 percent Tribal populations.

  4. Technical Feasibility: Your company's project should demonstrate a strong technical foundation and feasibility. The program aims to support projects with high potential for success, so a well-developed plan, clear objectives, and a solid technological framework are crucial.

  5. Environmental Impact: The PACE program prioritizes projects that have a positive impact on the environment. Not only should a project promote sustainability, it must also meet requirements by providing documents for an environmental and historic preservation review.

  6. Financial Viability: While the program offers financial support, it also expects companies to exhibit financial viability and a clear business model. Projects must be based on bankable PPAs or through a financial guarantee that ensures the financial viability of a project. Demonstrating a realistic path to commercialization and financial sustainability is essential for successful consideration.

With the help of IRA-induced funding, the PACE program represents a game-changing opportunity for renewable energy companies seeking to make a significant impact in the clean energy sector. By providing reduced financial risk, new market access, and the opportunity to support rural communities, this program empowers companies to bring their renewable energy projects to fruition. While the New ERA program does not provide funding directly to developers, we do anticipate a positive trickle-down effect to take place in rural cooperative territories.


With $9.7 billion in funding available to rural electric cooperatives, we expect the use of those funds will result in increased hosting capacity and RFP programs - both of which provide opportunities for renewable project developers. These incentive programs create large opportunities but they also drive a large amount of competition for land. For most developers, that means deploying a team of landmen for an expensive boots-on-the-ground leasing campaign.


However, the challenge of finding viable land is simplified by using LandGate to get ahead of the competition and get site control faster in eligible communities. LandGate is on the front lines of sourcing greenfield development sites within these areas for our clients.


To about these programs and how to access LandGate leads that qualify for millions of dollars in loan forgiveness, book with us directly here, or reach out to sales@landgate.com.



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