Earlier this month, President Biden signed into law the Inflation Reduction Act (IRA), legislation designed to reduce the deficit while investing in domestic energy production aimed at reducing carbon emissions by 40 percent by 2030.
Part of this act provides $9.7 billion in Agriculture Department assistance for rural cooperatives to improve their electrical systems. This is a huge step towards national energy sustainability, unlocking clean energy for utilities and accelerating adoption of renewable energy. This funding will provide financial assistance to eligible rural electric systems that utilize renewable energy systems, zero-emission systems, and carbon capture and storage systems, or that make energy efficiency improvements to electric generation and transmission systems.
Additionally, not-for-profit power providers, including public power and co-ops, can now qualify for direct pay, meaning those entities can directly receive money from the Department of Treasury that is equal in value to what those parties would have gotten through tax credits. Without direct federal payments, these providers have historically had to partner with for-profit businesses that are eligible for tax credits.
Direct-pay incentives will have a major impact on Northeastern REMC’s plans to develop utility-scale solar in Indiana, said Eric Jung, president and CEO of the Columbia City-based distribution co-op.
Jung said Northeastern REMC may decide to develop utility-scale solar on its own since it will be able to receive the direct-pay tax credits. He estimates that the incentives will pay for 22% to 28% of the capital expenditure. That’s a big help to a co-op that has already invested more than $30 million in five battery storage projects.
“This will allow us to do more faster as we continue to deploy renewables and invest in our rural communities,” Jung said. “It’s enormously good news.”
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For more information on Federal Funding available to utilities please go to https://www.tantalus.com/resources/funding/.