IRA Funding Updates: USDA Grants for Rural Renewable Energy
- Yoann Hispa
- Aug 12
- 6 min read
Renewable energy developers pursuing innovative solutions received 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 was 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 IRA funding updates for the USDA Rural Renewable Energy Grants.
On March 25, 2025, Agriculture Secretary Brooke Rollins informed recipients of the Rural Energy for America Program (REAP), Empowering Rural America (New ERA), and Powering Affordable Clean Energy (PACE) that previously committed funding would be released to awardees. The announcement also gave recipients 30 days to optionally resubmit proposals, allowing them to refocus projects on increasing American energy production while removing the Diversity, Equity, Inclusion, Accessibility (DEIA) and climate-related requirements included in earlier submissions.
IRA Funding Updates: USDA Grants for Rural Renewable Energy
The U.S. Department of Agriculture will stop funding solar and wind projects, announced Secretary Brooke Rollins in August 2025. Through the REAP Program, the USDA has invested more than $4 billion in energy projects for rural and farming communities. The Inflation Reduction Act (IRA) of 2022 added over $2 billion in funding through Fiscal Year 2031. Following the IRA, more than $1 billion supported 6,822 projects between 2023 and 2025, generating an estimated $2.75 billion in rural economic development.
Over the past year, the Inflation Reduction Act (IRA) has continued to evolve. On the first anniversary of its signing, the White House highlighted the law’s cost-saving benefits, noting that tax credits are lowering the cost of developing and deploying solar projects, making clean energy more accessible for businesses and individuals.
Although the IRA’s future remains uncertain, its impact on the solar industry has been clearly positive. Momentum in clean energy and solar development is expected to continue, fueled by broader economic and societal trends toward sustainability. Should the IRA be repealed, renewable energy developers can leverage alternative incentives and tools, such as the LandGate platform, to adapt their project planning and continue driving growth.
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
The PACE program provides financial support for renewable energy projects, offering partially forgivable loans through USDA Rural Development’s Rural Utilities Service (RUS). With $1 billion in funding, eligible applicants can secure loans up to $100 million- up to 60% of which may be forgiven- helping reduce financial risk and enable innovation. Focused on expanding clean energy access in rural, disadvantaged, and Tribal communities, PACE also gives renewable companies the resources needed to develop and scale projects in new markets.
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.
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.
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
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- if you're eligible. 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.
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.
Project Type: Renewable energy projects that use solar, wind, hydropower, geothermal, biomass, or energy storage are eligible.
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.
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.
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.
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.
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