How Small Communities Are Harnessing Federal Funding Opportunities

In the past few years, the Infrastructure Investment and Jobs Act and the Inflation Reduction Act have brought a wave of new and expanded opportunities for public power utilities to leverage federal funding to move projects forward. Even more critical, several programs had funds set aside specifically for smaller entities, nonprofits, and organizations in rural or disadvantaged communities.

Identifying, applying for, and carrying out projects with federal funding can come in many forms. Here’s a look at how three municipalities sought and are using grants and other funding to support their electrical systems.

Stacking Benefits

For Falls City Utilities in Nebraska, funding is for a long-term economic development project that would require additional electrical capacity.

Falls City received a $15 million grant from the Nebraska Legislature to shore up the city’s electric infrastructure, and Falls City Economic Development and Growth Enterprise, or EDGE, a nonprofit public-private consortium, landed a $50,000 Communities Local Energy Action Program, or LEAP, grant from DOE. This will help Falls City EDGE study the feasibility of attracting new businesses with a solar microgrid or secondary transmission line that would serve a proposed industrial park.

A solar microgrid could attract new industries to the park, said Lucas Froeschl, executive director at Falls City EDGE.

The project is in Richardson County, Nebraska, which has been identified as a disadvantaged community by the federal government. The government also designated the area as “energy burdened” because only one transmission line feeds the city and it doesn’t have extra capacity.

The city now has a load of about 14 MW but doesn’t have access to additional power to help its community grow, Froeschl said. The city owns contracts for generation from a coal-fired plant, has a hydroelectric allocation, and meets its other supply needs by purchasing on the open market with assistance from the Municipal Energy Agency of Nebraska.

EDGE identified a business willing to locate in Falls City and buy power so the city could afford to install additional infrastructure. But the business didn’t want to locate in the area until the needed infrastructure was installed.

“So we’ve got the chicken or egg paradox going on,” Froeschl said.

In spring 2022, the city secured the $15 million grant from the Nebraska Legislature to help expand the electrical infrastructure.

Meanwhile, Falls City EDGE looked at acquiring property where it could possibly take advantage of local corn and soybean feedstocks to create a biofuels industry at the proposed Mid-America Rail Campus. The city received a $50,000 LEAP grant, which will pay for an engineer’s cost of opinion of that secondary transmission line. It also provides 18 months of technical assistance from experts at the National Renewable Energy Laboratory to draft a cost-benefit analysis on developing a solar-plus-storage microgrid to generate its own power. With that study, Froeschl hopes to pursue another round of federal funding focused on battery pilot programs or microgrids.

“We think that the timing is right to try to go after some of these projects,” he said.

In addition, Falls City EDGE has been awarded a $70,000 grant through the U.S. Department of Agriculture to pursue a Bioeconomy Development Opportunity Zone study. It was matched with $75,000 of in-kind work from Falls City EDGE and Ecostrat, which focuses on increasing the development of biofuels.

Right now, the single transmission line is curtailed multiple times a year, and the city fires up a power plant fueled by diesel and natural gas.

“So, effectively, we do kind of have a microgrid system going on through our power plant,” Froeschl said. The dual-fuel engine is started by diesel and then run by natural gas. It can power the whole town when needed, but it’s not cost-effective. “That power plant functions as our insurance policy,” he said.

A solar microgrid could offset demand during peak hours, provide resilience during power outages, and provide clean energy to the Mid-America Rail Campus.

Adding solar also could help the city attract businesses interested in using clean energy and potentially take advantage of tax credits for clean energy production.

Initially, the microgrid would provide peak shaving and resilience.

The hope is that the microgrid could provide some of the 50 MW of generation needed for the biofuels project and help attract emerging biofuels companies. The Mid-America Rail Campus could create prosperity for people within a 25- to 50-mile region, he said.

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