Together, America Prospers

Powering Affordable Clean Energy Program (PACE)

What does this 

program do?

The Powering Affordable Clean 

Energy (PACE) program is part 

of the Inflation Reduction Act, 

(IRA – information is available 

at this link: https://tinyurl.

com/548c8tb7), 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 percent 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 nonrural areas. 

However, at least 50 percent 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

• Municipalities 

• Utility districts

• Cooperatives 

• Nonprofits 

• Indian Tribes 

• 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 

We 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:

• Eligible

• Financially and technically feasible

• Securable

• Reliable and resilient (can recover 

quickly following an unexpected 

disruption)

• Affordable

• 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 (You can learn 

more about energy communities at 

this link: https://tinyurl.com/2bjkak5w), 

disadvantaged communities, 

distressed communities, and Tribal 

communities. You can determine 

whether your proposed project 

is located in a disadvantaged or 

distressed community by entering the 

project address into the “Find address 

or place” search field on the map at 

this link: https://tinyurl.com/5n7a46zd.

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:

1. Category 1: Provides up to 20 

percent 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 and available 

on the PACE program webpage at: 

https://tinyurl.com/bdh3599h. 

2. Category 2: Provides up to 40 

percent total loan forgiveness 

if the project is in or serves 50 

percent or more of the population 

of a designated energy community, 
Powering Affordable Clean Energy

(PACE)

disadvantaged community, or 

distressed community. 

3. Category 3: Provides up to 60 

percent total loan forgiveness if the 

project: 

a. Is located in U.S. territories or 

in Compact of Free Association 

areas (COFA – information is 

available at this link: https://

tinyurl.com/4cm4k4tf) 

a. Serves areas with Tribal 

populations of 60 percent 

or greater, are owned by a 

Tribal government, or are in 

a Substantially Underserved 

Trust Area (SUTA – information 

is available at this link: https://

tinyurl.com/4rvtpsc9)

You can apply for a loan of up to 

$100 million. The percentage of loan 

forgiveness depends on the type of 

community the proposed project will 

serve (as described above and in the 

NOFO). Progress payments during 

construction of the renewable energy 

project are available only for systemfinanced loans. We will release 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 and can be found at this link: 

https://tinyurl.com/u5uu742h.

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 – information is available at this 

link: https://tinyurl.com/3dzhw7at) 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. 

What are the loan terms?

Provided the project is otherwise 

financially feasible, loan terms are the 

shorter of:

1. 35 years 

2. the useful life of the equipment 

financed 

3. the term of the PPA, or

4. the term of any leased real 

property

How do we get started?

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 

• We will evaluate LOIs as they are 

received 

• If we invite you to submit an 

application and it meets all program 

requirements, your project will be 

considered for funding.

Additional information about PACE is 

available in the NOFO published in 

the Federal Register and can be found 

on the PACE program webpage at 

this link: https://tinyurl.com/bdh3599h, 

and on the USDA Rural Development 

Information Reduction Act webpage 

at https://tinyurl.com/548c8tb7. Click 

the plus sign to the right of “Funding 

Opportunities,” and see the first bullet 

point: “Section 22001.” 

Who can answer questions?

A list of Frequently Asked Questions 

(FAQs) can be found on the PACE 

webpage at this link: https://tinyurl.

com/bdh3599h. 

You can email PACE program 

questions to SM.RD.RUS.IRA.

Questions@usda.gov. 

What law governs this program?

Section 22001 of the Inflation 

Reduction Act (7 USC 8103 (h)) – 

available at this link: https://tinyurl.

com/2p8m9k7v - PDF) governs the 

PACE program.

USDA’s PACE program website

NOTE: Because information changes, always consult official program instructions 

or contact your local Rural Development office for help. A list is available at this link: 

https://go.usa.gov/xJHPE. You will find additional resources, forms, and program 

information at https://rd.usda.gov. 

USDA is an equal opportunity provider, employer, and lender.

Last Updated May 2023