$6 Billion Opportunity: Rural Electric Cooperatives Could Lead On Clean Energy
Originally published on ilsr.org.
Last week I asked why rural electric cooperatives haven’t been leaders on renewable energy. This week, I explain a $6 billion opportunity they can seize to take leadership.
One of the biggest barriers to making investments in energy efficiency and renewable energy is the upfront cost. So what if members of rural electric cooperative and rural municipal electric utilities could borrow money for small-scale improvements on the same terms as the utilities for their large-scale power plants?
Starting in 2014, they can.
The USDA’s Rural Utility Service’s Energy Efficiency & Conservation Loan Program (federal rule) allows rural utilities to borrow money at low rates – 30 years at 3.3% – for energy efficiency and renewable energy improvements at their facilities or properties owned by the customers it serves. The obligation to pay can be tied to the meter, allowing the energy savings and the financial obligation to pass from owner to owner of the property.
In 2014, the Rural Utility Service authorized $250 million in loans, but will ramp that up to as much as $6 billion in 2015. What could $6 billion buy?
$6 Billion for Rural Energy Efficiency could…
- Save $32 billion in electricity costs for rural electric customers over 20 years
- Create 81,000 rural jobs installing energy efficiency improvements
- Provide enough power for 32 million homes for a year
- Cut carbon dioxide emissions by 223 million metric tons
- Note: energy savings estimates based on a real program covered in this EPA study. Job estimates based on the Sonoma Energy Independence program, covered here. Power savings estimates assume 1 home uses ~10 megawatt-hours per year. GHG emission estimates from EPA.
Let’s not forget that most of the money spent on a rural electric bill leaves the community, to pay for importing power from a remote supplier. Estimates suggest that 70% of the savings ($22 billion) will be retained within the community.
But it’s not just for energy efficiency. What if all that money was invested in renewable energy like solar power?
$6 Billion for Rural Solar Energy could…
- Install 2,000 megawatts of solar power, 7 times more than is in the entire Midwest
- Save $5.3 billion in electricity costs for rural electric customers over 20 years
- Create 14,000 rural jobs installing solar power
- Provide enough power for 265,000 homes for a year
- Cut carbon dioxide emissions by 1.8 million metric tons
- Note: Installed cost of $3/Watt, output of 1322 kilowatt-hours per year per kilowatt of DC capacity, 7 jobs per megawatt. GHG emission estimates from EPA, as above.
But the rural utilities can also make money offering this program. The USDA allows utilities to re-loan the money to individuals at up to 1.5% interest above their own borrowing rate of 3.3%. On loans of $6 billion, rural electric utilities would have a margin of $59 million per year re-loaning the money to their customers. Certainly there’s some program overhead, but cooperatives could likely aggregate their efforts, much like they’ve done by creating cooperative institutions like CoBank, and generation and transmission cooperatives.
It’s rare to find an energy program that can make a significant dent in energy consumption, save energy customers big money, make utilities winners, and juice the rural economy. Rural utilities shouldn’t miss this chance.
This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Democratic Energy weekly update.
Photo Credit: Alexander Boden
Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.
CleanTechnica Holiday Wish Book
Our Latest EVObsession Video
CleanTechnica uses affiliate links. See our policy here.
Going from $250 million to $6 billion is a 24-fold increase. This is Obama’s executive action agenda at work. But the increase is likely to be targeted by the Grand Oil Party in Congress.
But it is sneak attack! Farm get massive support from the GOP. Notice that most of the support for RE went to “corn-to-ethanol”, a farm support program; since the delta energy was likely negative.
The GOP only cares about corporate farms. Family farms are a 3rd class entity as far as the GOP is concerned
I think we’re at a point at which PBO is going to get just about zero of what he wants out of Congress. That leaves him free to veto any bill that takes away power.
If the GOP wants to change its ways and start acting on the behalf of Americans then some trades can be made. I doubt there will be much of that before early 2016 when the GOP will attempt to clean up its image as it did prior to the 2014 election. For the next year or so they are more likely to let their freak flag fly.
Yes which is why I believe and hope our next President will be a Democrat. The Republicans have done enough damage to this country since Reagan got in office in 1980, both environmentally and economically.
point number 1 should have said something like paid for in ten years. And free electricity there after.