Last year's climate law could bring big changes to the small nonprofits that provide electricity to many rural Americans, helping accelerate the nation's switch to clean energy. The country’s 900 or so rural electric cooperatives serve remote rural customers and are member-driven, -owned and -controlled. Their nonprofit status has made it hard to make investments in low-carbon energy; unlike investor-owned utilities, they can’t go into debt or sell shares to pay for a solar farm. But getting them off of fossil fuels is essential to meeting President Joe Biden’s climate goals. Most rely on larger organizations, called generation and transmission cooperatives, or G&Ts, to generate their electricity — and plan for the clean energy transition. But some co-op CEOs are looking to exit G&Ts and go it alone as new clean energy and funds become accessible under last year’s Inflation Reduction Act. The deal with rural co-ops: Some co-ops have expanded their clean power offerings, but the going is slow. In 2020, 28 percent of co-ops’ electricity came from coal, compared with 19 percent nationally, according to the U.S. Energy Information Administration. Many have legacy fossil fuel plants, and members may be unwilling to raise monthly bills to pay for renewables. The Inflation Reduction Act is poised to supercharge the progress that’s been made. It both creates a $9.7 billion grant program for co-ops to slash greenhouse gas emissions, and enables co-ops to take advantage of clean energy tax credits. It’s a “remarkable, generational opportunity for co-ops,” said Jim Matheson, CEO of the National Rural Electric Cooperative Association. Family feud: But exactly how to seize that opportunity is prompting a handful of co-ops to rethink traditional business models. At the heart of the dispute is how co-ops interact with G&T associations, the larger organizations that provide much of their power and transmission. Already five co-ops have either left or announced they will leave a major G&T called Tri-State Generation and Transmission Association, which covers parts of four Western states. Mark Gabriel, the CEO of departing co-op United Power, told me his efforts to boost clean energy and take advantage of rooftop solar were being “throttled” by his group’s contract with Tri-State. Alone, he says, his co-op could use more rooftop solar and battery storage to create cheaper energy on-site. Not everyone thinks abandoning the traditional business model is the way to go. G&Ts have a size advantage and existing generation that offers reliable power to members as they transition. Tri-State is moving away from coal in two states by the end of the decade, as well as offering members flexibility to generate more of their own electricity. “The fastest way to get to renewables reliably is to be a part of Tri-State’s portfolio,” said Tri-State CEO Duane Highley. “There’s no quicker way to do it than by staying in the family.”
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