USDA offers $11 billion in clean energy funding

The USDA on May 16 announced it will soon begin accepting letters of interest (LOIs) under two programs that will support the deployment of clean and renewable energy, including eligible biomass projects. The programs were allocated a combined $11 billion by the Inflation Reduction Act.

According to the agency, it will make $9.7 billion available through the Empowering Rural America (New ERA) program to help eligible rural electric cooperatives deploy renewable energy systems, zero-emission and carbon capture systems. An additional $1 billion is being made available under the Power Affordable Clean Energy program in the form of partially forgivable loans to renewable-energy developers and electric service providers, including municipals, cooperatives, and investor-owned and Tribal utilities to help finance large-scale biomass, solar, wind, geothermal, hydropower projects and energy storage in support of renewable energy systems.

The USDA will accept LOIs for the New Era program from July 31 through Aug. 31. The USDA’s Rural Utilities Service will extend an Invitation to Proceed to selected entities, which will then have 60 days to submit a completed application to the agency.

Several types of awards are available under the New ERA program, including loans, loan modifications, loan/grant combinations and grants. Award amounts may vary, but no single applicant may receive an award equal to more than 10 percent of the total $9.7 billion made available under the program. In addition, grants are limited to no more than 25 percent of the total eligible awards costs.

Eligible projects under the New ERA program include the purchase or construction of renewable energy, renewable energy systems, zero-emission systems and carbon capture and storage (CCS) systems. Eligible projects also include activities that will enable the deployment of these systems and/or improve energy efficiency and strategies to support these goals. Eligible renewable energy systems include biomass, wind, solar, ocean, geothermal, hydroelectric or energy sources that are naturally replenished and do not run out. Hydrogen derived from renewable or biomass or water using an energy source categorized as renewable energy is also eligible.

The USDA will accept LOIs for PACE funding from June 30 through Sept. 29. RUS will extend an Invitation to Proceed to selected applicants, which will have 60 days to complete and submit a loan application. Individual awards under the PACE program can be made for between $1 million and $100 million. RUS will offer both project loans and system loans under the PACE program. Project loans can be used to finance specific eligible projects where the award will be secured through a senior security interest on the project’s assets and the revenues generated from the project’s assets. System loans are only available to currently operating electric utilities. Loan forgiveness levels vary, ranging from up to 20 percent to up to 60 percent.

Additional information is available on the USDA website.