A new era for rural electric cooperatives: New clean energy investments, supported by federal incentives, will reduce rates, emissions, and reliance on outside power

Abstract

This paper shows a least cost electricity generation portfolio for some of the largest rural electric cooperative utilities in the US. Due to the recent dramatic declines in renewable energy and battery storage costs, along with incentives under the federal Inflation Reduction Act (IRA) and excellent quality of renewable resource potential, we find that new investments in clean energy are significantly more cost-effective for most cooperative utilities than operating their existing coal and gas fired power plants. The study shows that rapid renewable energy (RE) deployment offers the rural cooperatives an opportunity to reduce their wholesale electricity costs by 10–20% compared with 2021 levels, while retiring their entire coal capacity by 2032. Most utilities could reduce their CO₂ emissions by 80–90% relative to the 2021 levels, while also meeting load requirements at all hours, ensuring power supply reliability. While significant financing would be needed for such a transition to clean energy, we find that nearly half of the investments can be offset by the IRA tax credits. With bold and timely execution, cooperatives can reinvent their generation mix to provide affordable, reliable, and clean electricity that benefits rural communities.