A $6 Billion Opportunity for the Rural Energy Economy

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.

Have any Question or Comment?

One comment on “A $6 Billion Opportunity for the Rural Energy Economy

Wernard Shoy

I absolutely agree with Mr. John Farrell. The problems outlined in the article of the distinguished author to deliver power to rural cooperatives and rural municipality the same everywhere in the world and not only in the United States.
Take, for example, that France, Canada or Russia, I call only to those countries where the territory – in these countries allows
to agricultural producers to feed more than half of the planet.But only problem is same as the lack of reliable and inexpensive power system. Rather, it already is and the problem is solved, but the problem is, there is no investment money to run this grid. These $ 6 billion it was possible to long ago create and run this grid is for agricultural cooperatives. Where for this grid does not need traditional fuels, without the energy of the sun, wind and water, as well as without any biomass. All the more hydrogen and small nuclear installations and in addition without batteries.To complete the picture I would have asked the author of this article would contact me the author of this comment. A simple truth can not understand the movers and shakers of big business,
  work in agriculture, heavy, and from till dawn, so we should make it easier this labor any effective manner.

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