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USDA's largest-ever rural loan funds gas plant near Google data center

USDA's largest-ever rural loan funds gas plant near Google data center

Built World

The Smarr combined-cycle plant is the biggest single award in USDA rural-lending history, and it sits near a Google data-center site.

Today: Analysis questions rural vs. AI purpose

Overview

Updated 1 hour ago

The U.S. Department of Agriculture lent a Georgia electric cooperative $3.3 billion to help finish a 1.4-gigawatt natural-gas plant. It is the largest loan in the history of the agency's Rural Utilities Service. The plant sits about half a mile from land Google bought for a data center.

Oglethorpe Power says the Smarr plant serves its 38 member cooperatives, which supply nearly 5 million Georgians. Federal officials have acknowledged data centers could benefit, and the project lands in the middle of an AI-driven surge in U.S. power demand.

The loan carries about 6.3 percent interest, cheaper than market rates, and will save cooperatives roughly $25 million a year over 30 years. Those savings flow to member electric bills. The question is whether cheap federal money meant for rural communities is now underwriting power for the AI economy.

Why it matters

If federal rural-loan money underwrites power for data centers, cooperative members may pay for capacity AI customers consume.

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Key Indicators

$3.3B
USDA Rural Utilities Service loan
Largest single loan in the program's history, at roughly 6.3% interest over 30 years.
1,425 MW
Plant capacity
Two-unit Smarr combined-cycle gas plant, enough to power about 800,000 homes.
$25M/yr
Annual interest savings
Oglethorpe says the federal financing saves member cooperatives this much compared to market rates.
38
Member distribution cooperatives
Oglethorpe sells wholesale power to 38 co-ops serving nearly 5 million Georgians.
$8.6B
Pending RUS loan requests
USDA's rural development chief said this much was requested in the first month of the fiscal year.

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People Involved

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Timeline

2025 2029

6 events Latest: Today
Tap a bar to jump to that date
  1. Smarr plant expected to open

    Upcoming Construction

    Oglethorpe expects the two-unit plant to begin commercial operation.

  2. Analysis questions rural vs. AI purpose

    Today Media

    Construction Review published reporting asking whether the plant serves rural customers or AI-driven data-center demand.

  3. USDA official says plant could benefit data centers

    Statement

    USDA rural development chief Chris Smith told Reuters the plant could potentially serve data centers; Oglethorpe denied it is dedicated to one.

  4. USDA announces record $3.3B rural loan

    Policy

    Agriculture Secretary Brooke Rollins announced the largest loan in Rural Utilities Service history to help finance the Smarr plant.

  5. Oglethorpe breaks ground on Smarr plant

    Construction

    The cooperative began building the 1,425-megawatt combined-cycle gas plant in unincorporated Smarr, Monroe County.

  6. Google buys Monroe County land

    Corporate

    Google purchased nearly 1,000 acres in Monroe County, about half a mile from the future Smarr plant site, for a data center.

Scenarios

1

Smarr plant comes online in 2029 serving cooperative members

Likely Resolves by End of 2029

Discussed by: USDA, Oglethorpe Power

The plant finishes construction and begins selling wholesale power to the 38 member cooperatives. The federal loan's low interest rate trims roughly $25 million a year from financing costs, which flows back into member electric bills. Data-center demand stays on Georgia Power's side of the grid.

2

Data center locks up a named share of Oglethorpe generation

Possible Resolves by End of 2027

Discussed by: Reuters, Construction Review

Proximity plus AI load pulls a data-center developer toward the plant's power. A member cooperative or Oglethorpe signs a large supply contract tied to a specific data-center customer, shifting a meaningful share of output from household load to industrial load. The co-op's low-cost federal financing effectively backs that contract.

3

RUS loan pipeline expands for AI-era generation

Possible Resolves by Q3 2027

Discussed by: USDA Rural Development chief Chris Smith

With $8.6 billion in RUS loan requests already on file one month into the fiscal year, Congress appropriates more money and the agency approves further large fossil-generation loans in states facing data-center load. The Smarr loan becomes the template, not the exception.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

1935-1936

Rural Electrification Act (1936)

The New Deal created the Rural Electrification Administration, lending at low interest to cooperatives to wire farms that private utilities refused to serve. In 1935, roughly 10% of U.S. farms had electricity; by 1950, about 90% did.

Then

Cooperatives built distribution lines across the countryside, and rural power became standard.

Now

The program evolved into today's Rural Utilities Service, still lending cheap federal money to electric cooperatives.

Why this matters now

The Smarr loan is the same subsidy mechanism deployed for a purpose the New Dealers never faced: a gas plant half a mile from an AI data center.

2010-2025

Virginia's data-center power crunch (2010s-2020s)

Northern Virginia's Loudoun County became the world's largest data-center cluster. Dominion Energy's load forecasts exploded, utilities built gas and transmission to keep up, and residents pushed back on rate increases and new lines.

Then

The region hosts most of the world's internet traffic, and power demand there keeps rising.

Now

The pattern — demand forecasts racing ahead of grids, residents paying for capacity others consume — is now repeating across the Southeast.

Why this matters now

Georgia is following the Virginia path, with Georgia Power planning a 50% capacity expansion and data centers clustering around new generation. The Smarr loan is the rural cooperative version of that buildout.

Sources

(4)