Rural cooperatives are hard at work, discovering how their members can benefit from the Empowering Rural America Program (New Era). Funded by the Inflation Reduction Act (IRA), the U.S. Department of Agriculture is offering rural electric cooperative utilities and stakeholders a total of $9.7 billion renewables-focused grants and loans exclusively for rural electric cooperatives to purchase renewable energy, renewable energy systems, zero-emission systems and carbon capture and storage systems, with grants covering no more than 25% of the project cost, under IRA section 22004. The application window and runs through Sept. 29.
Co-ops serve 56% of the country’s landmass, including more than 90 percent of counties experiencing persistent poverty according to a The National Rural Electric Cooperative Association (NRECA) report. And in June 2023 the University of Wisconsin Center for Cooperatives, reported, rural electric cooperative system has grown to more than 800 distribution cooperatives, delivering electricity to 12 percent of electricity consumers in the United States via 42 percent of the country’s distribution lines. These 800 distribution cooperatives are served by 63 generation and transmission cooperatives (G&Ts), which generate around 5 percent of the nation’s electricity and own 6 percent of its transmission lines.
There are several provisions that can help electric cooperatives bring affordable clean energy to rural communities across the country. Our research team at University of California, Berkeley has been studying the cost-saving impact the IRA can have for 11 of medium and large US generation and transmission (G&T) cooperatives, if they take advantage of IRA clean energy tax credits, along with new funding to guarantee loans for refinancing fossil assets. Our comprehensive report was released in June 2023.
The 11 Cooperative Utilities
The 11 G&Ts we analyzed make up a representative cross-section of the 63 G&Ts in the U.S. The selected B&Ts are Basin Electric Cooperative, Big Rivers Electric Corporation, Buckeye Power, Inc., Dairyland Power Cooperative, Great River Energy, Oglethorpe Power Corporation, Old Dominion Electric Cooperative, San Miguel Electric Cooperative, Inc., Seminole Electric Cooperative, Inc., Tri-State G&T Association, Inc., and Wabash Valley Power Association. Their service territories are shown in Figure 1.
Rural cooperatives have been working to transition to clean energy across the country, with the share of renewable energy increasing from 17% of generation in 2016 to 22% of generation in 2021. Simultaneously, cooperatives’ coal-fired generation decreased to 32 percent of generation in 2021 from 41% in 2016. However, the cooperative transition from coal lags the rest of the country — nationwide, only 22% of electricity came from coal in 2021. Within G&Ts, coal resources are highly concentrated in just 16 cooperatives owning 85% of the 17 gigawatts of coal capacity still unannounced for retirement. Furthermore, while carbon dioxide emissions from cooperatives decreased from nearly 200 to 165 million tons in 2021, natural gas generation increased in share to 29% in 2021 from 26% in 2016.
Our research team employed Regional Energy Deployment System (ReEDS) model developed by the National Renewable Energy Laboratory (NREL), an industry-standard optimal capacity expansion model, and using several simplifying assumptions, forecast a least cost electricity resource mix for the eleven G&Ts described above for 10 years, from 2022 through 2032. We then use PLEXOS, another industry standard production cost simulation model toevaluate hourly dispatch at the individual power plant level for the year 2032 to ensure that the electricity resource mix is technically and operationally feasible and is able to meet demand with generation throughout the year, including periods of high demand and low RE generation. The analysis was conducted without considering the New Era grants and financing available. Additional details could be found in our June 2023 Report.
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