Tri-State won $2.5 billion to close coal plants, get new renewable energy for rural customers

Tri-State Generation has won praise from environmental groups for an aggressive plan to build clean, renewable energy, and Friday the co-op won the financing to do it: $2.5 billion in federal loans and grants to retire existing coal plants and acquire new renewable energy resources across four Western states where its member cooperatives provide electricity to a million consumers.

Officials say the financing will reduce electricity rates 10% by 2034 and create $430 million in benefits for rural consumers in Colorado, Wyoming, New Mexico and Arizona. It will also fund Tri-State’s purchase of 1,280 megawatts of energy from solar, wind and wind/storage hybrid projects and more than 100 megawatts of standalone energy projects, about half of which will lie in Colorado. Tri-State anticipates the funding will cut 5.8 million tons of climate pollution annually while creating more than 2,000 new jobs. 

The financing comes from the Department of Agriculture’s $9.7 billion Empowering Rural America program for electric cooperatives only, helping co-ops in 23 states transition to green energy and which Tri-State says it had a key role in developing. 

The Sierra Club is calling the investments “game changers for rural electric utilities” including the 16 that joined the not-for-profit wholesale power supplier in filing an Electric Resource Plan, or ERP, with the Colorado Public Utilities Commission for the procurement of new energy resources to replace carbon-belching coal plants in 2023. 

The Tri-State ERP calls for 1,280 megawatts of solar, wind and solar hybrid plus 100 megawatts of storage. It also envisions Tri-State possibly building a 290-megawatt gas-fired plant, with carbon capture, in Moffat County, where Tri-State is closing its Craig Station coal-fired plant.

At the same time, with the arrival of inexpensive utility-scale solar and battery storage, other co-ops have left Tri-State, including two of its largest members, Brighton-based United Power, which departed in May, and Sedalia-based CORE Electric Cooperative, which will leave in 2026.

Tri-State and the hatching of New ERA 

Tri-State’s CEO Duane Highley told around 250 employees, member co-op leaders and Colorado U.S. Sen. Michael Bennet and U.S. Reps. Yadira Caraveo and Brittany Pettersen, that it was appropriate the announcement was taking place Friday in the company’s boardroom in Westminster, because in 2019 “this is where the idea for New Era funding literally hatched.”

Rocky Mountain Institute convened that meeting, which included the Sierra Club and Rural Power Coalition. 

“The concept was how can we help grow America with investments in the event of closing coal plants, and how can we help the rural members of cooperatives accelerate energy transition,” Highley said. 

That transition has had its ups and downs, with “unprecedented turmoil in the renewable development industry over the last few years” causing delays that slowed getting 595 megawatts of new solar to co-op member service territories, according to Susan Hunter, Tri-State’s head of energy resources. Those delays also sent United Power and others on their quests for renewable energy. 

But Tri-State was influential in getting rules changed that now allow not-for-profit co-ops to take advantage of direct-pay tax credits, which led to the eventual installment of those 595 megawatts of solar installed and the purchasing power to buy two other western Colorado solar projects that will come online next year. 

Other projects online or in development: 

• Spanish Peaks Solar/Spanish Peaks II Solar power purchase agreements in Las Animas County 
• Craig Station Unit 2 and Unit 3 retirement in Moffat County
• A solar power purchase agreement in western Colorado
• Purchase of a four-hour lithium battery in eastern Colorado
• Two wind power purchase agreements in eastern Colorado 

Tri-State says it will invest in rural communities where New ERA-funded projects are located. A request for proposals to be constructed between 2026 and 2031 has been issued. 

A Farmer Benefit Plan, also announced Friday, will encourage awardees to work with local agriculture producers to identify ways the new projects can benefit them. Lee Boughey, Tri-State vice president of communications, said this could arrive through things like Tri-State offering ranchers and other agriculture producers no-cost assessments and custom incentives to “reduce utility spend,” or through a rebate for projects that electrify processes or equipment on farms, for instance.

On Friday, USDA deputy secretary Xochitl Torres Small said “investment in rural electrification matters because there’s an irony in that people don’t always know rural America produces some of the most relied-upon resources like energy and food and fiber. Yet those producers often pay a little bit more for their energy every single day, which makes it harder to make ends meet.”

Last month, Bennet welcomed an initial announcement of $1.1 billion for rural cooperatives in Colorado through the New ERA program, which represents the largest investment in rural electrification since the New Deal.

Tri-State received the largest chunk at $679 million. Brighton-based United Power, the second-largest co-op in the state, received up to $261 million. CORE Electric Cooperative, the state’s largest co-op, is set to get $225 million. 

Tri-State was able to leverage its $679 million in budgeting authority for a total of $2.5 billion in financing, largely in low-interest loans from the federal government.

“It was a big deal when USDA first announced that Tri-State had $679 million in budget authority under the New ERA program,” Eric Frankowski, executive director of the Western Clean Energy Program, said in an email. “That Tri-State is able to leverage that into $2.5 billion for its clean energy transformation is truly monumental. That’s 80% of the company’s entire long-term debt load.”