Renewable Energy Development by Electric Cooperatives: Indirect Uses of Federal Energy Tax Credits

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Renewable Energy Development by Electric Cooperatives: Indirect Uses of Federal Energy Tax Credits

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2022-12-22

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In this thesis, I look to understand how electric cooperatives develop renewable energy in a cost-effective manner, despite the inability to use popular financing methods such as the production tax credit and the investment tax credit. I also analyze how their current practices may be impacted by the addition of direct pay as a policy tool in the Inflation Reduction Act. Electric cooperatives provide energy to 56% of the nation’s landmass, specifically to rural communities that investor-owned utilities do not reach. The national push for decarbonization of the energy industry has put requirements such as renewable portfolio standards on utilities, demanding certain percentages of their portfolio to come from renewable energy. Electric cooperatives struggle with this development of renewable energy because their status as not-for-profit entities prevents them from utilizing federal investment and production tax credits. I conducted four interviews with the electric cooperatives Dairyland Power, Great River Energy, Hoosier Energy, and Old Dominion Electric Cooperative to understand their decision-making process in the development of renewable energy. I identified five key factors impacting this decision making: providing low-cost energy to members, size of staff and resources, membership in the National Renewables Cooperative Organization, project size, and interconnection concerns. I also found that cooperatives had mixed opinions on whether they were hoping to quickly begin using direct pay options once it was available. These findings show that it will be very important that any future policy tool, including direct pay, will need to ensure it still allows cooperatives to achieve their goal of providing the lowest cost of energy.

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Gutenkauf, Gabriella. (2022). Renewable Energy Development by Electric Cooperatives: Indirect Uses of Federal Energy Tax Credits. Retrieved from the University Digital Conservancy, https://hdl.handle.net/11299/252424.

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