Communities that want to set up their own wind, solar, biomass or hydro power generators can tap into $200 million of carbon tax revenue over the next 20 years.

One-quarter of the funding will be earmarked for communities affected by the phase-out of coal-fired electricity plants.

Funds will be made available to municipalities, universities, colleges, co-operatives, agricultural societies, Indigenous communities and community groups, allowing them to partner with a private sector company.

Environment and Parks Minister Shannon Phillips announced the initiative to rural politicians at the fall conference of the Rural Municipal Association on Thursday.

Phillips said the technology has changed to make these smaller and medium-sized generation projects possible. The government said the project can generate revenue, create jobs and pay for new infrastructure and programs within communities.

Phillips said she expects interest will be high. She said there are currently projects with a combined capacity of 7,000 megawatts that have been approved or are awaiting approval right now.

"The return to communities then for solar projects in particular between five and 25 MW depending on where they're sited can be very, very good," she said. "Calgary's solar resource is the same is Rio de Janeiro's."

Starting in January, the government will hold information sessions on power generation in communities across the province.

The government will also set up a website and a hotline for people to get answers to questions about the initiative.