Rural utility services provides 10-day delay to start of PACE letter of interest “window”

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Rural utility services provides 10-day delay to start of PACE letter of interest “window”

June 30, 2023

The Rural Utility Service (RUS) of the U.S. Department of Agriculture has announced that it is postponing from June 30, 2023, until July 10, 2023, the beginning of the window for when applicants can file a Letter of Interest (LOI) for its Powering Affordable Clean Energy (PACE) forgivable loan program. LOIs will be considered on a rolling basis. The delay is in response to applicants seeking more time to prepare. Previously RUS announced that all LOIs must be submitted by 11:59 a.m. on September 29, 2023. RUS has not announced a delay in this end to this “window” for submitting an LOI.

More information about PACE can be found here.

PACE is an expansion of the current RUS Electric Loans for Renewable Energy, which:

  • Must be for the benefit of rural customers;
  • Are made at a rate equal to the average tax-exempt municipal bond rate of similar maturities; and
  • Can be used to finance wind, solar, hydropower, biomass, or geothermal projects.

PACE expands on the Electric Loan for Renewable Energy program by adding storage as an eligible project category and providing loan forgiveness. There will be three tiers of loan forgiveness:

  • 20 percent for any qualifying loan;
  • 40 percent for qualifying loans for projects where 50 percent or more of the population served is located within an energy community or a “Distressed or Disadvantaged Community:” and
  • 60 percent for qualifying loans for projects:
    • In a U.S. territory,
    • Where the proposed service area consists of 60 percent or more of a Tribal area;
    • Is owned by an Indian Tribe or Alaska Native Corporation.

Generally, a rural area is defined as an area with a population of 20,000 or less. Roughly 1,600 public power utilities qualify as a rural utility. Additionally, projects for the wholesale sale of power to utilities serving rural customers can also qualify for an Electric Loan for Renewable Energy.

If invited to submit an application, an applicant is expected to submit their PACE loan application within 60 days of being invited. The minimum award is $1 million and the maximum is $100 million. RUS estimates that roughly $2.7 billion in project financing can be accommodated by the $1 billion authorized for the program by the Inflation Reduction Act.

PACE is also “stackable” with energy tax credits. In other words, a project could be financed with PACE and also receive refundable direct payment of the energy investment tax credit or production tax credits for a project that would otherwise qualify for such credits.

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