A Little History on Rural Electric Cooperatives and Why They’re Moving to Solar Power

I’m going to share a little history with you. Did you know in the mid-1930s, nine out of 10 rural homes didn’t have electricity? No lights. No refrigeration. No air conditioning. No words.

President Franklin Roosevelt took the bull by the horns on May 11, 1935, when he signed an executive order establishing the Rural Electrification Administration (REA). A year later, the Rural Electrification Act was passed that started a loan program to fund rural power projects. There was just one problem: investor-owned utilities had no interest in using federal loans to expand service to sparsely populated rural areas. There was no money in it.

One group was interested in the government loans: farmer-based cooperatives. This convinced the REA that locally owned electric cooperatives were the way to bring electricity to rural communities. So in 1937, the REA drafted the Electric Cooperative Corporation Act, a model law that states could adopt to enable the formation and operation of not-for-profit, local electric cooperatives. It was a brilliant move, power for and by the people.

Today, there are 900 rural electric cooperatives in 48 states across America, all committed to providing reliable, competitively priced electric energy. Since 1980, co-ops have largely relied on electricity generated by coal-fired power plants supplied by electric wholesalers. The system was very effective in bringing electricity to even the most remote communities.

Here’s more history. Photovoltaic technology was “born” in 1954 when three scientists at Bell Labs created the first solar cell capable of converting the sun’s energy into power. It would take more than 50 years (2008 to be exact) for solar energy to finally take off in America, bringing a cleaner, sustainable, low cost alternative to fossil fuels.

Okay, one more bit of history. In 2014, only 20% of America’s rural electric cooperatives were interested in solar energy. Their reasons for taking a pass on solar were valid. First was cost. As nonprofit entities, co-ops can’t take advantage of federal and state tax breaks and accelerated depreciation incentives for solar projects. Fortunately, the National Rural Electric Cooperatives Association (NRECA) stepped in and has helped remove the cost barrier by identifying financing, often through private equity firms, to develop ways that allow co-ops to easily fund solar projects. At the same time, the cost of solar panels has dropped exponentially, making solar more affordable.

Contracts with electric wholesalers have been more of a challenge. Contracts with wholesalers either limit self-generation to less than 10% or don’t allow it at all. One co-op in Taos, New Mexico, waged a yearlong battle with its wholesale co-op supplier to break their contract, paying a multi-million dollar settlement to do so. Other co-ops have negotiated buy-outs from their contracts. Many were fortunate that their wholesale partners began solar power generation.

 Let’s get back to the mission of rural electric cooperatives. Local communities established co-ops to deliver affordable, reliable electricity to members. However, communities also have an interest in the environment and public health. Members added another requirement to their co-ops: reduce emissions through efforts that include adopting renewables. This requirement jump-started the solar transformation of America’s rural electric cooperative. See for yourself.

In 2010, Co-ops solar capacity was just 35 megawatts. By 2018, the NRECA reported solar capacity of 916 megawatts. Included in this growth are 30 megawatts of utility-scale solar in 10 states supported by a U.S. Department of Energy partnership with 17 electric co-ops.

Co-op solar adoption is literally nationwide.

America’s rural electric cooperatives are shooting for a 100% renewable energy future. A total of 502 co-ops in 44 states currently use solar as a source of power. Among the states leading the way are:

Georgia is #1 with 40 co-ops
Indiana is #2 with 39 co-ops
Iowa is #5 with 25 co-ops
Ohio is #9 with 23 co-ops
Illinois is #15 with 15 co-ops
Michigan is #23 with 7 co-ops

Because of better solar technology, improved battery storage and customer demand, co-ops are bringing solar to regions of the country once considered unsuitable for solar development. Would you be surprised to learn co-ops in Montana, North Dakota and Alaska all use solar?

And, there’s more to come. In late 2019, the U.S. Department of Energy awarded a $1 million grant to NRECA to make solar energy more affordable for communities with fewer financial resources and extend the benefits of solar development to low- and moderate-income consumers.

The motivation for moving to solar is simple: it’s all about the mission.

Americans care about our energy future. They care about clean air. They care about their kids. They care about the health of their communities. Americans also want affordable energy they can count on. And America’s rural electric cooperatives are here to make that happen with the help of solar solutions companies like Solential. You know I had to work that in didn’t you?

That’s enough history for now. In my next post, I’ll share news on three solar arrays Solential designed, built and maintains for a rural electric cooperative in Iowa. In the meantime, if you have questions about a solar solution for your co-op, school, business or farm, you can reach me, Cory Miller, at cmiller@solential.com or via text or phone at 317-627-4530.

To learn more about America’s Rural Electric Co-ops, please visit their national trade association’s website here.