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Powering Affordable Clean Energy PACE Program

Closed
Application Portal Opened on July 10, 2023
Application Portal Closed on September 29, 2023


What does this program do?

The Powering Affordable Clean Energy (PACE) program is part of the Inflation Reduction Act, which represents the largest investment in rural electrification since President Franklin Delano Roosevelt signed the Rural Electrification Act into law in 1936. With $1 billion in funding, PACE helps make clean, affordable, and reliable energy accessible to the people of rural America.

Under PACE, USDA Rural Development’s Rural Utilities Service (RUS) will forgive up to 60 percent of loans for renewable energy projects that use wind, solar, hydropower, geothermal, or biomass, as well as for renewable energy storage projects.

PACE funding makes it more affordable for rural Americans to use clean, reliable energy to heat and cool their homes, run their businesses, and power their cars, schools, and hospitals.

Who is eligible for this program?

The PACE program is available to eligible applicants that generate electricity for resale to residents in both rural and nonrural areas. However, at least 50 percent of the population served by your proposed renewable energy project must live in communities with populations of 20,000 or fewer.

Eligible entities include:

  • Corporations, states, and territories, along with their subdivisions and agencies
  • Municipalities
  • Utility districts
  • Cooperatives
  • Nonprofits
  • Indian Tribes
  • Alaska Native, regional, or village corporations
  • Limited Liability Companies or other for-profit entities organized under the laws of any U.S. state or territory

We will only accept one application from each eligible entity. However, eligible groups can collaborate to package their proposed projects into one joint letter of interest.

You must demonstrate that your proposed project is:

  • Eligible
  • Financially and technically feasible
  • Securable
  • Reliable and resilient (can recover quickly following an unexpected disruption)
  • Affordable
  • Able to be completed within the allotted timeframe

Note: Individuals are not eligible to apply for the PACE program.

The program supports designated energy communities, disadvantaged communities, distressed communities, and Tribal communities. You can determine whether your proposed project is located in a disadvantaged or distressed community by entering the project address into the “Find address or place” search field on the map.

How much funding is available?

Congress has authorized $1 billion in PACE program funding. The maximum available loan is $100 million including the forgivable portion. The minimum loan is $1 million.

The PACE program allocates funding across three applicant categories:

  1. Category 1: Provides up to 20 percent total loan forgiveness for applicants if they meet the minimum set of standards set forth in the PACE program Notice of Funding Opportunity (NOFO), published in the Federal Register.
  2. Category 2: Provides up to 40 percent total loan forgiveness if the project is in or serves 50 percent or more of the population of a designated energy community, disadvantaged community, or distressed community.
  3. Category 3: Provides up to 60 percent total loan forgiveness if the project:
    1. Is located in U.S. territories or in Compact of Free Association areas.
    2. Serves areas with Tribal populations of 60 percent or greater, are owned by a Tribal government, or are in a Substantially Underserved Trust Area.

You can apply for a loan of up to $100 million. The percentage of loan forgiveness depends on the type of community the proposed project will serve (as described above and in the NOFO). Progress payments during construction of the renewable energy project are available only for system-financed loans. We will release funds for project-financed loans and debt forgiveness only after eligible projects are completed and verified.

Your interest rate is determined by the RUS municipal rate in effect at the time of the advance. These rates are set quarterly.

How can we use PACE program funds? 

You can use PACE funds to finance wind, solar, hydropower, geothermal, or biomass renewable energy projects. Energy storage projects related to a renewable energy project are also eligible. Projects must be based on bankable power purchase agreements (PPAs) or through a financial guarantee that ensures the financial feasibility of the project. Energy must be sold for resale to eligible off-takers which can include both utility and non-utility customers. The technologies used must be commercially available. PACE funding cannot support merchant power projects.

What are the loan terms?

Provided the project is otherwise financially feasible, loan terms are the shorter of:

  1. 35 years
  2. the useful life of the equipment financed
  3. the term of the PPA, or
  4. the term of any leased real property

Community Benefit Plans 

USDA encourages community engagement through flexible Community Benefit Plans (CBPs). These partnerships allow stakeholders to actively participate in designing plans that align with local priorities and capacities. While specific outcomes are not mandated, CBPs aim to benefit communities and residents in the Eligible Service Area.
Each project supported by the USDA must include community benefits. These benefits are referred to as project-based milestones. By focusing on engaging communities near project sites, USDA ensures that the impact of initiatives extends to the local level.

Who can answer questions?

What law governs this program?

Section 22001 of the Inflation Reduction Act (7 USC 8103 (h)) governs the PACE program.

The Agency will open an on-line application portal by notice in the Federal Register and the RUS website on or before July 10, 2023.

To be considered for funding, you must first submit a letter of interest (LOI). The application window is open July 10 – September 29, 2023, with applications processed on a rolling basis.

Additional information about PACE is available in the NOFO published in the Federal Register, and on the USDA Rural Development Inflation Reduction Act. Click the plus sign to the right of “Funding Opportunities,” and see the first bullet point: “Section 22001.” 

RUS IRA PACE Program Guide LOI

USDA Rural Development PACE and New ERA Joint Application Model

Instructions and Specifications for Submitting Shapefile(s)

Applicants should use the RUS geospatial mapping tool to draw the service areas associated with each PACE Project and then upload Shapefile(s) to Grants.gov as part of an LOI submission. Applicants should go to and draw a separate Shapefile of the service area for each proposed Project to be included in a single PACE Application. The saved file(s) should be renamed to the Applicant’s name and Project name (e.g., bobselectric_project 1.zip). The Shapefile(s) should then be uploaded to Grants.gov as an attachment in Section 15 of the SF 424 during the filing process.

Please note: 

  1. The five-day resubmission deadline no longer applies; and
  2. For those who complied with the five-day rule and have supplemental data to submit, the Agency has a place to receive that data.

Any Applicant who experiences difficulties using the RUS geospatial mapping tool or has other questions related to Shapefile(s), please send an email to RD.Innovation.Data@usda.gov. The Agency will work with Applicants to submit through the RUS mapping tool; however, if the Applicant is still unable to utilize the tool, the Applicant may proceed with its LOI submission using its own comparably accurate Shapefile(s). However, Shapefiles that are not reasonably comparable may be rejected.  

Comparably accurate Shapefiles must meet the following criteria: 
a. All map areas must be closed, non-overlapping polygons with a single, unique identifier for each Project.
b. The Shapefile must have an assigned projection with an accompanying .prj file.
c. The Shapefile must use an unprojected (geographic) WGS84 geographic coordinate system.  
d. The Shapefile must be submitted as a *zip file. This can be done with WinZip or in Windows by selecting the files associated with a Shapefile, right clicking the files, then clicking Send to Compressed (zipped) folder.
e.  If submitting multiple Projects, each project service area should be zip filed separately. This *zip file can contain multiple non overlapping polygons if associated with the same Project.

The Service Area Shapefile(s) must show the location of each Project and the eligible service area(s) associated with that Project. 
 

You can email PACE program questions to: SM.RD.RUS.IRA.Questions@usda.gov

Upcoming Webinars

USDA staff will host webinars via Zoom at the following dates and times: 

Rural Clean Energy Federal Funding Fairs - Additional Funding Opportunities for Clean Energy Projects

U.S. Department of Agriculture (USDA) Rural Development is hosting our next federal funding fair on April 9, 2024!

Rural Development recognizes that clean energy support for rural communities is in high demand and is hosting a series of federal funding fairs for entities interested in building clean energy that supports rural communities. Each interagency rural clean energy federal funding fair webinar will feature a presenter who will speak about a current federal funding opportunity for clean energy projects in rural America and provide more information about program benefits and eligibility.

For our next webinar, presenters will come from U.S. Department of Treasury to talk about Elective Pay/Direct Pay benefits and U.S. Department of Energy’s Grid Deployment Office as well as representatives from the USDA who will talk more about USDA Rural Development’s Rural Energy for America (REAP) program and Rural Utilities Services (RUS) Electric program. Each session will focus on different programs, with the second rural clean energy federal funding fair webinar covering the following topics. Please register by selecting the linked sessions below:

Tuesday, April 9, 2024, 2:00pm – 3:00pm EST:

  • U.S. Dept. of Treasury will present on the Direct Pay/Elective Pay credit delivery mechanism: designed to help rural electric cooperatives and other entities gain access to clean energy tax credits for clean energy deployment

Tuesday, April 9, 2024, 4:00pm – 5:00pm EST:

  • U.S. Dept. of Energy’s Grid Deployment Office will present on its federal funding opportunities to strengthen and modernize the electric grid, highlighting where and how rural communities can apply for grid resilience funding. This includes the Grid Resilience State and Tribal Formula Grant Program and the Grid Resilience Innovation and Partnerships Program (GRIP), as well as the Transmission Facilitation Program (TFP), Transmission Siting and Economic Development (TSED) program, and the Hydroelectric Incentives Program.
  • USDA will present on Rural Utilities Services (RUS) Electric programs for medium and large utility-scale clean energy projects that serve rural communities and Rural Business-Cooperative Service (RBCS) Rural Energy for America (REAP) program for small-scale clean energy projects for rural small businesses and agricultural producers.
     

USDA has also developed Inflation Reduction Act (IRA) pocket guides to help applicants navigate the suite of programs that were recently developed for clean energy projects in rural America across multiple agencies. You will notice that the funding fairs will discuss some of the programs featured on our IRA guides. One of the guides is sorted by common eligible uses and the other across common eligible applicant groups: IRA Pocket Guides | Rural Development (usda.gov).

NOTE: Webinars will be recorded for interested parties who are not able to attend. Once they are available, the recordings will be posted here.

Past Webinars
 

Rural Clean Energy Federal Funding Fair (REAP, RUS, ERA, Direct Pay) 

New ERA Office Hours

Investing in America: REAP IRA Technical Assistance Update

  • Description: This announcement will be most valuable for those who engage in, or seek to engage in, technical assistance for applicants to the REAP program funded by the Inflation Reduction Act.
  • When: July 13 | Webinar Recording

USDA PACE Program and Eligibility Mapping Overview 

  • When: June 6

Office Hours for USDA PACE and New ERA Programs

RUS update on IRA funding

  • Description: The Rural Utilities Service (RUS) will provide general background information on the Notice of Funding Opportunity (NOFO) for both its Powering Affordable Clean Energy (PACE) program under Section 22001 and New Empowering Rural America (New ERA) program under Section 22004 of the IRA. 
  • When: May 17 Webinar

Overview of funding available through IRA

  • Description: RUS will provide background on the NOFOs for PACE and New ERA that were published in the Federal Register on May 16, 2023. RUS will also provide a brief overview of how these programs compare to other federal clean energy programs in rural America.
  • When: May 22 Webinar | May 24 Webinar | May 31 Webinar | June 1 Webinar