| Resource Type | Report |
| Author / Source | Farr, Brush, Talamo, Jenkins, Schmitt, Newcomb, MacDonald, Preziuso, Baring-Gould, Baranowski (NREL) |
| Publication Date | January 2025 |
| Location | United States (draws on workshops in Colorado and Oregon) |
| Initiative Type | Technology, Policy, Partnership |
| Project Complexity | Intermediate |
| Recommended For | Board, Staff |
Estimated reading time: 15 minutes
Why This Matters for Rural Electric Co-ops
Rural electric cooperatives are under growing pressure to integrate DERs into their operations, but most lack the internal capacity, contractual frameworks, and business model templates to do so effectively. This report surfaces the specific structural barriers (including G&T contract constraints, limited bridge financing, cybersecurity gaps, and small co-op resource limitations) that prevent DER adoption from moving from concept to implementation.
For co-ops navigating G&T relationships or trying to make the case for local generation, the workshop findings offer peer-validated evidence of both the challenges and the strategies that are working. Co-op leaders can use this report to identify which barriers apply to their situation and what cross-sector collaboration approaches others have used to overcome them.
Key Takeaways
| › | G&T contract structures are a primary barrier to DER business model development. Many G&Ts lack mechanisms to aggregate DER services or monetize value streams such as ISO market sales, and addressing this may require proactive policy or contract flexibility negotiations by distribution co-ops. |
| › | Alternative ownership models, including subscription-based approaches that allow member systems to own local projects and pass savings to end-use members, offer a pathway to DER expansion without requiring large up-front capital from distribution co-ops. |
| › | Smaller distribution co-ops consistently lack the staff time, expertise, and budget to access federal funding and technical assistance; shared services grant coordinators and project aggregation across co-ops have emerged as effective workarounds. |
| › | Distributed wind is underrepresented in co-op DER conversations relative to solar, despite offering advantages in agricultural areas where land-use conflict is a concern. Co-ops should evaluate the full technology menu rather than defaulting to solar. |
Implementation Considerations
- Cost or Funding Requirements: This report references IRA direct pay provisions and federal funding programs including New ERA and Powering Affordable Clean Energy as DER financing opportunities. These programs are no longer available for new applicants. Co-ops with existing approved funding may still find the financing framework discussion relevant, but new applicants should not rely on these pathways.
- Regulatory or Governance Considerations: Contractual agreements between G&Ts and distribution cooperatives were the most commonly cited structural barrier to DER business model development. Co-ops should review their wholesale power contracts for provisions that limit local generation, DER aggregation, or flexible power arrangements. They should engage their G&T early if contract modifications are needed.
- Staffing or Technology Requirements: Most smaller distribution co-ops do not have in-house capacity to manage grant applications, develop community benefit plans, or evaluate DER business models independently. Regional collaboration, shared grant coordinators, and G&T-level aggregation of smaller projects are the most viable paths forward.
Notable Examples
- Tri-State Generation and Transmission Association: Hosted the first workshop; Co-Optima DER cooperative model presented as an innovative G&T-led subscription ownership approach.
- PNGC Power (Pacific Northwest Generating Cooperative): Hosted the second workshop; presented support mechanisms for distribution members.
- Oklahoma Electric Cooperative: Presented a business model for home energy microgrids.
- Bergey Windpower: Presented networked residential and small commercial microgrid use cases.
- CURE Minnesota: Presented on energy democracy and community engagement strategies.
- CoBank: Participated as a representative of the financial community with a role in co-op lending.
Estimated reading time: 15 minutes
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