Rural Energy Savings Program Economic Analysis Explainer

The model and methodology underpinning the economic analysis presented in “Investments in Rural Clean Energy Are Putting People to Work” were prepared by noted economist and founder of Economic and Human Dimensions Research Associates John A. “Skip” Laitner. Laitner is also an active member of the EESI Advisory Board. The analysis was conducted in close coordination with the authors of this explainer and the accompanying article.

Laitner created a model using national economic impact data based on key inputs, including annual appropriations for the Rural Energy Savings Program (RESP), annual loan amounts, typical loan drawdowns by borrowers (e.g., rural utilities), and typical repayment terms. The national economic impact data for 2022 was sourced from IMPLAN, an extensive database for conducting such analyses. EESI provided data related to RESP loans and on-bill financing programs.

The metric for estimates of jobs sustained by RESP is “job-year,” which means one full-time job held for one year. In a given year of the analysis, each job is counted individually. The cumulative figure (i.e., about 15,000) is the sum of each job in each year, from 2016 through 2040. The cumulative figure includes direct jobs (including construction) as well as indirect and induced jobs that result from the savings generated by the installation of energy efficiency, beneficial electrification, and clean energy measures.

Actual figures were used for 2016—the year of the first RESP loan—through 2023. Future years were based on estimated program activity (in 2022 dollars) based on recent loans approved by the U.S. Department of Agriculture’s (USDA’s) Rural Utilities Service (RUS) and EESI’s knowledge of the current application pipeline. The final year covered by the analysis—2040—was chosen because it would coincide with the final year of a RESP loan awarded in 2031, the end of a likely five-year authorization in the next Farm Bill, although on-bill financing program participants would continue to benefit from lower energy costs for a decade or more.

RESP activity was assumed to peak in 2031 with investments of $105 million in energy efficiency, beneficial electrification, and clean energy and then remain constant at $100 million each year through the end of the analysis. Other key assumptions include average project cost-effectiveness (a repayment period of eight years (simple payback)), average project useful life (20 years), average drawdowns from USDA by borrowers (evenly distributed over 10 years), and the price of electricity ($0.1116 in 2022 dollars adjusted for inflation).

Authors: Daniel Bresette and Miguel Yañez-Barnuevo