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Inflation Reduction Act

Electric cooperatives are leading the charge to reliably meet tomorrow’s energy needs at a cost consumers can afford. Several provisions in the IRA provide co-ops with new tools as they navigate the changing energy landscape and prepare for a future that depends on more electricity to power the American economy.

Where we stand

Electric co-ops secured important policy wins through the budget reconciliation bill in 2022. The legislation gave co-ops direct access to energy tax incentives, created a new voluntary grant and loan program at USDA specifically for electric co-ops to support rural energy innovation, and funded the Powering Affordable Clean Energy (PACE) program. NRECA engaged with both USDA and Treasury as they finalized their rules for each of these programs. Keeping the programs flexible and approachable will help co-ops leverage new tools as they plan to meet the future energy needs of their communities.

Digging deeper

Direct-pay tax credits

Under the IRA, Congress gave electric co-ops direct access to energy innovation tax incentives. In March 2024, the Treasury Department published the final rule for the direct-pay legislation that will give electric cooperatives direct access to energy innovation tax credits, which it calls "elective pay" credits. The rule and the underlying law that was passed by Congress directly reflect input from NRECA and electric cooperatives.

Voluntary clean energy incentives

The 2022 budget bill created USDA’s $9.7 billion Empowering Rural America (New ERA) grant and loan program designed specifically for electric co-ops that purchase or build new clean energy systems. These are essential new tools as we prepare for a future that depends on more electricity to power the American economy. The wide range of eligible projects for this program—including carbon capture, renewable energy, storage, nuclear, and generation and transmission efficiency improvements—allows each electric cooperative to determine its path based on its unique circumstances.

Powering Affordable Clean Energy (PACE) program

The Powering Affordable Clean Energy (PACE) program makes $1 billion available in 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 solar, wind, geothermal, biomass and hydropower projects and energy storage in support of renewable energy systems.

Fact Sheet: Co-ops Are Leveraging Federal Funding to Benefit Communities

Electric co-ops are finding innovative ways to leverage historic funding from the 2021 bipartisan infrastructure law and the 2022 Inflation Reduction Act. See examples of how co-ops are using this funding to benefit their members and communities.

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