Gabriella Gutenkauf

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

In this thesis, I look to understand how electric cooperatives develop renewable energy in a cost-effective manner, without the use of 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 in the Inflation Reduction. Electric cooperatives provide energy to a large portion of electricity customers in the United States, 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 tax credits. I conducted four interviews with electric cooperatives Dairyland Power, Great River Energy, Hoosier Energy, and Old Dominion Electric Cooperative to understand their decision-making process in 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 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, with need to ensure it still allows cooperatives to achieve their goal of providing the lowest cost of energy.