What does this program do?
The Powering Affordable Clean Energy (PACE) program is part of the Inflation Reduction Act, which represents the largest investment in rural electrification since President Franklin Delano Roosevelt signed the Rural Electrification Act into law in 1936. With $1 billion in funding, PACE helps make clean, affordable, and reliable energy accessible to the people of rural America.
Under PACE, USDA Rural Development’s Rural Utilities Service (RUS) will
forgive up to 60 % of loans
for renewable energy projects that use wind, solar, hydropower, geothermal, or biomass, as well as for renewable energy storage projects.
PACE funding makes it more affordable for rural Americans to use clean, reliable energy to heat and cool their homes, run their businesses, and power their cars, schools, and hospitals.
Who is eligible for this program?
The PACE program is available to eligible applicants that generate electricity for resale to residents in both rural and non-rural areas.
However, at least 50 % of the population served by your proposed renewable energy project must live in communities with populations of 20,000 or fewer.
Eligible entities include:
Corporations, states, and territories, along with their subdivisions and agencies
Alaska Native, regional, or village corporations
Limited Liability Companies or other for-profit entities organized under the laws of any U.S. state or territory
PACE will only accept one application from each eligible entity. However, eligible groups can collaborate to package their proposed projects into one joint letter of interest.
You must demonstrate that your proposed project is:
Financially and technically feasible
Reliable and resilient (can recover quickly following an unexpected disruption)
Able to be completed within the allotted timeframe
Note: Individuals are not eligible to apply for the PACE program.
The program supports designated energy communities, disadvantaged communities, distressed communities, and Tribal communities.
How much funding is available?
Congress has authorized $1 billion in PACE program funding.
The maximum available loan is $100 million including the forgivable portion.
The minimum loan is $1 million.
The PACE program allocates funding across three applicant categories:
Category 1: Provides up to 20 % total loan forgiveness for applicants if they meet the minimum set of standards set forth in the PACE program Notice of Funding Opportunity (NOFO), published in the Federal Register.
Category 2: Provides up to 40 % total loan forgiveness if the project is in or serves 50 % or more of the population of a designated energy community, disadvantaged community, or distressed community.
Category 3: Provides up to 60 % total loan forgiveness if the project:
Is located in U.S. territories or in Compact of Free Association areas.
Serves areas with Tribal populations of 60 % or greater, are owned by a Tribal government, or are in a Substantially Underserved Trust Area.
You can apply for a loan of up to $100 million. The % of loan forgiveness depends on the type of community the proposed project will serve (as described above and in the NOFO).
When will the funds be released?
- Progress payments during the construction of the renewable energy project are available only for system-financed loans.
- Funds for project-financed loans and debt forgiveness only after eligible projects are completed and verified.
Your interest rate is determined by the RUS municipal rate in effect at the time of the advance. These rates are set quarterly.
How can we use PACE program funds?
You can use PACE funds to finance wind, solar, hydropower, geothermal, or biomass renewable energy projects.
Energy storage projects related to a renewable energy project are also eligible.
Projects must be based on bankable power purchase agreements (PPAs) or through a financial guarantee that ensures the financial feasibility of the project.
Energy must be sold for resale to eligible off-takers which can include both utility and non-utility customers. The technologies used must be commercially available. PACE funding cannot support merchant power projects.
Provided the project is otherwise financially feasible, loan terms are the shorter of:
the useful life of the equipment financed
the term of the PPA, or
the term of any leased real property
Looking for help with LOI preparation for PACE funding?
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To be considered for funding, you must first submit a letter of interest (LOI).
The application window is open June 30 – September 29, 2023, with applications processed on a rolling basis.
Your LOI must arrive before September 29, 2023
PACE will evaluate LOIs as they are received
If PACE invites you to submit an application and it meets all program requirements, your project will be considered for funding.