Rural Development’s Rural Energy for America Program (REAP) Grants and Loans Guarantees & Renewable Energy Feasibility Studies June 5, 2009

Two Purposes 1.Program is designed to promote energy efficiency and renewable energy development for agricultural producers and rural small businesses through grants and loan guarantees for the purchase of these systems. 2.Program is designed to help fund feasibility studies for agricultural producers and rural small businesses interested in the installation of renewable energy systems.

Rural Development’s Role Grant Assistance 25% of the project’s eligible costs $250,000 Maximum for Energy Efficiency Projects. $500,000 Maximum for Renewable Energy Projects. –Grant assistance is taxable. A 1099 will be sent to the grant recipient. –REAP Grant cannot be used with grants from other Federal Sources. Loan guarantees 85% loan guarantee for loans under $600,000 $25,000,000 maximum loan amount

Expected Available Funding Fiscal Year Farm Bill provided for increased funding over previous years. –Fiscal year 2008 funding levels were $16 Million for grants and $208 Million for Loan Guarantees. –Fiscal year 2009 funding levels are expected to be $31 Million for grants and $303 Million for Loan Guarantees.

Types of projects eligible for USDA Assistance Renewable Energy Energy Efficiency

Biomass and Bioenergy Projects –Biodiesel, Ethanol –Wood pellet manufacturing –Boilers fueled by biomass Anaerobic Digester Projects Wind –Small - less than 100kw and under 110’hub height –Large – Over 100kw Geothermal

Solar – Electric Projects –Small (less than 10kW) and Large Solar – Thermal Projects –Small (240 gallons storage or less) and Large Energy Efficiency Improvements –Grain Dryer Replacements –Freezers & Coolers –Lighting Improvements –Efficiency improvements per energy audit Small Hydropower

Applicant Eligibility Grants and Loan Guarantees Applicant: must be an agricultural producer (Greater than 50% of income from farming operation). rural small business as defined by the SBA. must be citizens of the U.S. must not have federal judgments or delinquent federal taxes Must demonstrate financial need (Grants and Grant and Loan Guarantee Combinations only)

Project Eligibility Grants and Loan Guarantees Project: Must be for the purchase of a renewable energy system Must be to purchase energy efficiency improvements. Must be for commercially available and replicable technology Must have technical merit Must be located in a rural area Cannot be used for residential improvements.

Eligible Project Costs (Grants) –Post-application purchase and installation of equipment, –Post-application construction or project improvements, –Permit Fees –Retrofitting (Post- Application) –Professional Service Fees, except application preparation –Feasibility Studies (required prior to application submission) –Business Plans (required prior to application submission) –Energy Audits (required prior to application submission) –Program cannot be used for projects already installed.

Guaranteed Loans Provides a federal loan guarantee to banks on loans made to customers intending to finance energy related projects. Guaranteed loan cannot exceed 75% of total eligible project costs. This Federal Assistance is intended to provide “gap” financing for energy related projects. –Minimum cash equity injection into the project will range from 15% up to 25% of eligible project costs.

Lender Benefits Risk mitigation Increased Profits Increased Confidence of Banking Regulators Increased Liquidity Customer Benefits Longer Term Loan Better Interest Rate Improved Cash Flow Helps to ensure a successful project.

Application Contents Project description Application forms Grant or guaranteed loan forms (Or both) Grant recipient Certifications Financial Information Quantity of financial information is dependent on the size of the grant and/or guaranteed loan request. Project’s Technical Requirements

Application Contents Project Technical Requirements- All projects will be required to address the following ten items within the projects technical report. 1. Qualifications of key project service providers 2. Agreements, permits, and certifications 3. Resource assessment 4. Design and engineering 5. Project development schedule 6. Project economic assessment 7. Equipment procurement 8. Equipment installation 9. Operations and maintenance 10.Dismantling and disposal of project components Start to complete this information NOW!!

Examples Replacement lighting for Manufacturer County. Savings kWh ; Annual Savings $9,758; Payback of 2.5 Years Grain Dryer Replacement - Energy Savings Electric savings of 47% Propane savings of 37% Cost savings of $8,124 per year Small Greenhouse Application improvements included Thermal curtain, root zone heating and Solar window film 34% Energy Savings and Annual Savings of $11,143

Examples Wind Turbine Installation for Existing Greenhouse –Proposed electricity production is 81,600 kWh/ year –Energy Production as a percentage 26% –Expected cost savings $7,344 /yr. Anaerobic Digestion System - to resolve odor and runoff problems and create a renewable energy to offset farm electrical use and generate renewable energy sales –Expected electrical production 6,970,000 kWh –Return on Investment Expected costs of $2,270,000 / Expected income of $528,000 = 4.3 yrs

Renewable Energy Feasibility Studies Same applicant eligibility requirements as the Renewable energy systems requirements. Grant funding is capped at $50,000 or 25% of the project whichever is less. Description of the Feasibility study to be conducted.

Application Time Line All Applications must be received by: July 31, 2009 Contact Randy Monhemius at 614/ or at to discuss the application process.