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July 23, 2024
Hidden within the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA), signed into law in November 2021, is a $1 billion allocation for the Energy Improvements in Rural or Remote Areas (ERA) program. Created by the Department of Energy’s (DOE’s) Office of Clean Energy Demonstrations (OCED), the ERA program prioritizes investments in solar energy, microgrids, battery energy storage systems, heat pumps, and hydroelectric power facilities in rural areas with populations of 10,000 or fewer.
Rural communities face unique challenges compared to their urban counterparts, such as higher energy costs, remoteness, and high transmission costs. The program aims to deliver measurable benefits to rural communities left behind in the energy transition by supporting new clean energy systems. Federal investments will help educate rural community members on clean energy, reduce energy poverty, and displace pollution from the fossil fuel industry.
When DOE opened the program in March 2023, it received hundreds of applications totaling more than $1.5 billion from nonprofits, rural electric cooperatives, state agencies, and tribal nations seeking federal funding to deploy clean energy into their communities.
On February 27, 2024, OCED announced $366 million in ERA awards to 17 community-driven projects across 20 states and 30 tribal nations to help rural communities accelerate their clean energy transition by deploying solar-power microgrids, hydropower, and batteries. Funded projects are expected to cut energy costs, create jobs, and accelerate clean energy deployment in rural and remote communities. Awardees will work with local communities to develop projects that provide more affordable and reliable clean energy for rural areas. Ultimately, these projects will reduce environmental impacts and decrease carbon emissions.
ERA Awardee
ERA Award
Total Project Cost
Location
Technologies
Wisconsin Office of Sustainable and Clean Energy and Office of Rural Prosperity
$9.7 million
$12.4 million
Bayfield County, Wisconsin
Solar PV + battery storage system microgrids
Iowa State University Electric Power Research Center and Montezuma Utilities
$9.4 million
$12 million
Montezuma, Iowa
Solar PV + battery storage system microgrid with substation improvements, advanced metering, and electric vehicle chargers
National Rural Electric Cooperative Association (NRECA) Research Consortium
$45.2 million
$60 million
7 communities: (Anza, CA; Arivaca, AZ; Clinton, MT; Cooke City, MT; Shakopee Mdewakanton Sioux Community, MN; Decatur, TN; Cherry Lane, NC)
Microgrids with solar PV, coupled with battery storage systems
The Wisconsin Office of Sustainability and Clean Energy and the Office of Rural Prosperity were awarded $9.7 million through the DOE ERA program to deploy solar-powered microgrids in rural areas of northern Wisconsin. The state of Wisconsin will cover 20% of the total project cost of $12.4 million. Located across 24 sites in remote areas of Bayfield County, these microgrid projects will help 28 rural communities install clean energy, lower energy bills, reduce carbon emissions, and increase resilience. The communities that will host these microgrids range in population between 101 and 2,000. Tribal nations located in Bayfield County will also benefit from these microgrid projects.
The ERA-funded project will have four phases. The first phase will involve technical analysis, environmental reviews, and hiring contractors. In 2025, during the second phase, communities will install, test, and evaluate the first solar panels and batteries. The third phase will consist in completing all the projects by the end of 2029. Finally, the project’s implementers will share lessons learned with other rural communities, as well as ways to replicate these projects.
Solar arrays and batteries will be located in municipally-owned critical facilities in these rural communities, including fire stations, health clinics, transportation facilities, and town halls, which will serve as community resilience hubs. Microgrids that can operate autonomously thanks to these solar arrays and batteries will power this critical infrastructure with locally-generated clean electricity when the electricity goes out due to extreme weather events. A community resilience hub can act as a meeting point for communities to gather in and gain access to power and shelter in an emergency. With extreme weather conditions (e.g., winter storms and heat waves) becoming more frequent in rural northern Wisconsin due to climate change, these microgrids will help save lives.
The project will install 841 kilowatts (kW) of solar arrays and 1,065 kW of battery storage capacity. These projects will generate about 1 million kWh of clean energy annually, significantly lowering energy bills and reducing annual greenhouse gas emissions. Participating communities will experience substantial utility bill savings in the first year alone. Each site will pair a 36.6 kW solar array with four batteries on average, providing about 46.3 kW of battery capacity. The solar panels in each site will generate about $4,830 in annual bill savings. Charged by solar panels, the batteries will offer up to 3 hours of resilience in case of power outages. When the solar arrays are not charging the batteries, they will release the generated electricity back to the grid, making it greener.
Beth Haskovec, the director of rural prosperity at the Wisconsin Economic Development Corporation, states that outreach is a priority. “A big component of the ERA grant award is stakeholder outreach to help identify the best rural places to site these microgrids,” said Haskovec. “Our office engaged with tribal nations to seek their expertise and bring cost-effective clean energy solutions to their communities, helping them save on utility bills and increase access to reliable clean energy.”
With increased climate change impacts, tribal leaders and municipalities in Bayfield County wanted to invest in clean energy to move away from fossil fuels, the predominant fuel source for these communities. The ERA award helps make those clean energy projects a reality. Microgrid sites were selected in coordination with local partners and community leaders interested in spurring clean energy projects and increasing resilience against climate change in this remote Wisconsin rural area.
To make these clean energy projects economical, the Wisconsin State offices will stack the ERA grant with federal clean energy tax credits (i.e., the 30% investment tax credit). Because these clean energy projects are located in tribal territory, they are eligible for the Energy Communities Bonus credit, which adds ten percentage points to the base credit. Leveraging 40% in tax incentives will help offset part of the installation cost, making it possible to invest in larger projects, which will lead to more significant energy savings and greenhouse gas emission reductions. These credits can also benefit tax-exempt organizations, thanks to direct pay provisions.
Further investment from the ERA award will help install electric vehicle (EV) charging stations across these 28 rural communities and buy low-carbon-fuel heavy snowplow machines to replace diesel-powered ones.
“The ERA award entails a big investment in local clean energy generation that will greatly impact these communities,” said Haskovec. “Clean energy investments in these rural areas reduce carbon emissions and help preserve their natural beauty. They also improve the quality of life for those living there and the tourists attracted by the same natural beauty we are trying to protect. These projects will generate wealth in local communities, increase job creation, and provide opportunities for certification skills in clean energy installations.”
Montezuma Municipal Light & Power partnered with Iowa State University (ISU) to apply for a DOE ERA grant for clean energy deployment in rural and remote areas. ISU is the grant project manager, while the municipal utility is the implementing organization.
Established in 1939, Montezuma Municipal Light & Power is a municipal utility in central Iowa that provides power to 9,040 customers in the town of Montezuma. The utility uses eight MW of diesel generators and power bought from the Midwest ISO market to offer electricity to its customers.
Using the $9.4 million ERA award, the utility will build a solar-powered microgrid to increase resilience in a rural community that has experienced severe weather events leading to power loss, like the 2020 derecho. The utility will provide a 20% match, up to a maximum of $2 million, as required by DOE.
A 2.4 MW solar array and a 1.5 megawatt-hour (MWh) battery storage system will allow Montezuma Light & Power to separate itself from the power grid in an emergency. The utility will leverage direct pay tax incentives (covering about 30% of the project’s total cost) to save money and maximize grant funds.
The rural microgrid will also help the utility reduce reliance on fossil fuels and lower greenhouse gas emissions. With the award, the utility plans to build new transmission feeder lines and new switch equipment, as well as equip households and businesses with advanced metering equipment. Ultimately, the microgrid will provide solar power to 706 residential homes, 201 commercial buildings, and two industrial facilities.
As part of the ERA application, the utility engaged with its commercial customers to seek their letters of support, which were submitted to the DOE to demonstrate their project’s community benefits.
Montezuma Municipal Light & Power’s superintendent, Kevin Kudart, says the microgrid would benefit customers immensely. “With the microgrid, we’ll be able to respond faster and more efficiently to power outages caused by extreme weather events,” Kudart said. “The microgrid will allow us to keep affordable electricity rates for our customers while reducing fossil fuel reliance on our power grid and increasing our sustainable practices.”
Led by the National Rural Electric Cooperative Association (NRECA), the trade association for all 900 rural electric cooperatives in the United States, seven rural electric cooperatives spread out across the country plan to install solar-powered microgrids to improve energy access and resilience with funds from an ERA grant.
A $45 million award from the DOE ERA program, combined with a $15 million cost share for a total of $60 million, will enable the consortium to revolutionize microgrid deployment across electric cooperatives serving remote areas. This significant federal grant funding injection can transform these communities' energy landscape for generations to come and help them prepare for the clean energy future.
NRECA used a consortium approach to select the co-ops to participate in the award application. Twenty-five co-ops stepped up with microgrid projects to showcase their commitment to clean energy and resilience. The projects were carefully vetted based on their potential for replication, location in Justice40 communities, innovative elements, and engagement with tribes, ensuring a diverse and inclusive approach.
In the end, seven communities were identified in the application and will each receive a portion of the grant award to install solar-powered microgrids. These communities include Anza, California; Arivaca, Arizona; Clinton and Cooke City, Montana; Shakopee Mdewakanton Sioux Community, Minnesota; Decatur, Tennessee; and Cherry Lane, North Carolina. Rural electric cooperatives serving these communities will deploy clean energy projects that increase satisfaction among electric cooperative members, deliver measurable energy savings, offer reduced energy capital expenditures, and lower carbon emissions. Ultimately, these clean energy-powered microgrids will contribute local economic benefits such as increased resilience and job creation.
“When the DOE ERA grant program came out for building renewable energy-based microgrids, we immediately became interested in applying to help our member co-ops increase their renewable energy,” said Tolu Omotoso, NRECA’s director of energy solutions and grid consortium manager. “Our project goals are to improve grid resilience and resilience, reduce carbon emissions, provide backup power resources when the electricity goes out, and train co-op employees on microgrid installation and operation.”
Author: Miguel Yañez-Barnuevo
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