New PACE Awards Aim to Support Cooperative Energy Storage Projects

Electric cooperative energy storage projects in Alaska and Arizona have been selected to receive a combined $255 million in loans under recently announced grants from the U.S. Department of Agriculture.

The awards are a result of the Powering Affordable Clean Energy (PACE) program in the Inflation Reduction Act, a $1 billion initiative to provide partially forgivable loans for renewable energy, energy storage and other clean energy projects serving rural areas.

Under the USDA’s June 26 announcement, Alaska Electric and Energy Cooperative Inc. will receive a $100 million loan to install a 45-megawatt, four-hour battery storage system near its Soldotna substation. The cooperative is a subsidiary of the Homer Electric Association in Homer, Alaska.

Declining supply and high natural gas prices in southcentral Alaska are driving HEA to seek more renewable energy sources for its system, and battery storage plays a key role in this process.

Battery storage technology “really is the bridge that allows us to look at alternative (energy sources),” said Homer Electric Chief Financial Officer Sarah Lambe.

Under the terms of the loan, HEA qualified for a maximum of 60% loan forgiveness. And with the option to directly pay through an IRA for federal tax incentives, the co-op plans to apply for investment tax credits of up to 40% on the approximately $112 million project, Lambe said.

Without support from the PACE program, “our members would not be able to afford (this project),” said HEA CEO Brad Janorschke.

The USDA also asked Golden Valley Electric Association Inc. of Fairbanks, Alaska, for a $100 million loan for a 46-MW battery system that would be connected to GVEA’s Wilson substation. As part of the proposal, the cooperative would also improve its Nenana substation and install a half-mile circuit to support a 16-MW solar power purchase agreement with the Nenana solar farm.

In February, the GVEA Board adopted an updated Power Generation Plan that included the addition of an energy storage system to enable large-scale integration of renewable energy sources—a goal supported by the PACE award.

“This funding will allow GVEA to significantly accelerate initiatives across our Strategic Generation Plan, benefiting our members and the broader community,” GVEA CEO Travis Million said in a news release. “We are committed to creating a sustainable energy future for Interior Alaska.”

GVEA said it also received maximum loan forgiveness of 60% and that the project qualifies for federal tax credits covering 30% to 50% of the project cost.

The final cooperative award announced June 26 was $55.2 million to Sierra Southwest Cooperative Services Inc. to finance three storage projects in Arizona with a combined capacity of 35 MW and four hours of duration. Sierra is part of Arizona G&T Cooperatives, based in Benson.

The funds will support a 10 MW/40 MWh battery system for Trico Electric Cooperative in Sahuarita, Arizona; a 10 MW/40 MWh battery system in Cochise, Arizona, for Sulphur Springs Valley Electric Cooperative; and a 15 MW/60 MWh battery system in Fort Mohave for Mohave Electric Cooperative.

The Trico and Sulphur Springs Valley plants have already begun operations, and the MEC project is scheduled to be operational by the end of summer.

“This support significantly strengthens our ongoing efforts to implement smart, affordable and reliable clean energy initiatives for the benefit of our cooperative members and rural Arizona communities,” said Patrick Ledger, CEO of Sierra Southwest. “We look forward to continuing to work with USDA to advance these essential projects.”

USDA said it expects to award additional PACE awards in the coming months.

Molly Christian is a staff reporter for NRECA.

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