Despite serving only 13 percent of U.S. electricity load, electric cooperatives loom large in conversations about the U.S. energy system’s past, present and future.

The initial vision for nonprofit electric co-ops dates back to the New Deal, when the Rural Electrification Act of 1936 authorized the creation of co-ops to serve rural areas bypassed by the larger electricity providers of the time. Today, 832 distribution co-ops and 63 generation and transmission (G&T) co-ops still serve most of rural America, including more than 90 percent of persistent poverty counties (counties with at least 20 percent of their population living in poverty).

As the energy transition ramps up, bringing the benefits of low-cost renewable energy to more places, electric co-ops have the opportunity to replace their aging coal fleets with wind and solar projects. This can lower electric bills and drive rural economic development in areas that need it.

Through several years of engagements with co-op leadership and stakeholders, we have learned that electric co-ops face unique and varied constraints as well as incentives when it comes to decarbonizing their generation mix. Co-ops have lagged other utilities in retiring their coal plants, although a spate of coal retirement announcements and emissions reduction goals set by several prominent G&Ts in the past year indicates they may be closing that gap. A combination of rapidly falling costs for renewable energy and battery storage technologies, state climate policy, and member demand for carbon-free electricity is driving that shift.

Nonetheless, a number of G&T co-ops are continuing to operate aging and increasingly uneconomic coal plants without plans for their retirement. This can be due to the nature of some co-op financing structures as well as regulatory and governance models that muddy the economic signal for retirement. For example, coal plants may have undepreciated value that the G&Ts seek to recover, and in some cases, they act as the collateral on G&T debt obligations, making their retirement a risk to lenders.

What’s more, co-ops’ nonprofit status limits their ability to take advantage of existing tax credits for wind and solar development. And G&Ts with a history of asset ownership may be reluctant to shift toward greater shares of third-party-owned generation (such as wind and solar projects contracted for through power purchase agreements).

In short, co-ops’ situations and needs are as varied as the geographies they serve — as the saying goes, "If you know one co-op, then you know one co-op." As such, there hasn’t yet been a silver bullet approach that can overcome the barriers to full co-op participation in the clean energy transition.

Read the full article about co-ops and rural economic development by  Katie Siegner & Mark Dyson & Gabriella Tosado at GreenBiz.