Rural Development Rural Business and Cooperative Development Service (RBS) SWCS SNEC 2010 Winter Meeting 2/18/2010 Charles Dubuc, Business & Cooperative Programs Specialist

Farm Bill Section 9007 – 7CFR 4280-B Rural Energy for America Program Grants and Guaranteed Loans for Grants and Guaranteed Loans for Farmers, Ranchers, and Farmers, Ranchers, and Rural Small Businesses Rural Small Businesses

REAP-9007  Application assistance and energy audits. 4% of total funds.  Feasibility studies. 10% of total funds. 10% of total funds.  Renewable Energy and Energy Efficiency Projects. 86% of total funds. 86% of total funds.

2009 Summary REAP for MA/CT/RI  Energy Audits and Renewable Energy Development Assistance-2 applications in was awarded $100,000.  Feasibility Studies-4 applications in were awarded for a total of $89,600  Renewable Energy Systems and Energy Efficiency Improvements-38 applications-16 were awarded for a total of $4,577,124.

Energy Audits and Renewable Energy Development Assistance Grants to complete energy audits and renewable energy development assistance Grants to complete energy audits and renewable energy development assistance Eligible applicants Eligible applicants governmentalgovernmental educationaleducational electrical cooperative & public power entitieselectrical cooperative & public power entities other similar organizationsother similar organizations Maximum grant $100,000 Maximum grant $100,000

Renewable Energy System Feasibility Studies  Grants to complete feasibility studies for renewable energy projects.  Same applicant criteria as regular 9007 REAP. Ag Producers and Rural Small Businesses.  Maximum grant is $50,000 or 25% of study cost.

REAP for Renewable Energy and Energy Efficiency Projects  Grants and Guaranteed Loans to fund Renewable Energy and Energy Efficiency Projects.  Ag Producers and Rural Small Businesses  Maximum grant $500,000; $250,000 for energy efficiency.  Maximum loan $25,000,000.

Funding Priorities for RE/EE Projects  Grant Only $20,000 or Less: 11 applications submitted-8 were awarded.  Guaranteed Loan Only: 1 application submitted-1 was awarded.  Grant and loan combos: 7 applications submitted-5 were awarded.  Grant Only > than $20,000: 17 applications submitted-2 were awarded.

Funding Priorities for 2010  Grants of $20,000 or less have best chance of being funded.  Guaranteed Loan only is second priority.  Combos are third priority.  Grant only more than $20,000 are lowest priority.  State allocation awarded based on score.

Purpose  Purchase renewable energy systems (A process that (A process that produces energy) produces energy)  Make improvements that reduce energy consumption

Basic Technical Eligibility Proposal must be for an eligible technology Renewable Energy  Wind  Solar  Geothermal  Biomass  Hydrogen  Hydroelectric

Energy Efficiency Projects Improvements to a facility, building, or process that reduces energy consumption, or reduces energy consumed per square foot. - Compressed Air Systems - Compressed Air Systems - Building Envelope - Building Envelope - Greenhouse Thermal Blankets - Greenhouse Thermal Blankets - Lighting - Lighting - Motors - Motors - Pumps - Pumps - HVAC - HVAC

Projects that are NOT Eligible - Residential improvements - Energy efficiency improvements related to new construction. - Agricultural tillage equipment - Vehicles

What Farmers and Ranchers Are Eligible?  Demonstrated financial need (for grants).  Must directly engage in production of agricultural products.  At least 50% of gross income must be from their agriculture business.  Must be either citizens or legally admitted.  Must not be debarred or have federal delinquency.

What Small Businesses Eligible?  Meets the definition of a small business according to SBA ( Use the “NAICS search” optionUse the “NAICS search” option  A private entity including a sole proprietorship, partnership, corporation, a cooperative, and a governmental electric utility.  Nonprofit organizations and public entities are not eligible.

Applicant Eligibility Cont. - Project must be located in rural area. To make sure your project is in an eligible area visit our website at: make sure your project is in an eligible area visit our website at: and andhttp:// click on ERS – Rural Area Determinations click on ERS – Rural Area Determinations - Some exceptions may be granted if project is located in a “string area”. Contact area office if you need additional information.

What are Eligible Costs?  Post application purchase & installation of equipment, except agricultural tillage equipment, used equipment and vehicles.  Post application construction or project improvements, except residential.  Energy audits or assessments.  Permit and license fees

Eligible Costs  Professional service fees, except for application preparation.  Feasibility studies and technical reports  Business plans  Retrofitting  Construction of a new facility – same purpose, same size, provides more energy savings than improving an existing facility  Working Capital and Land Acquisition - Eligible costs for guaranteed loans only.  Capital Improvements to an existing Renewable Energy System – Eligible costs for guaranteed loans only.

Projects Funded in 2009  A small orchard received a grant for an energy efficiency project for lighting, refrigeration and motors. ($18,035)  A greenhouse received a grant to install photovoltaic panels to meet farm energy needs. ($20,000)  A small business received a combo loan/grant to install photovoltaic panels. ($243,500/$308,000)  A small business received a grant for a feasibility study for a hydroelectric project. ($50,000)  A small rural utility received a grant to install photovoltaic panels. ($31,995)  A town received a grant to provide energy audit and renewable energy development assistance. ($100,000)

What Projects are Eligible  Project must be for the purchase of a renewable energy system or energy efficiency project.  Pre-commercial or commercially available and replicable technology.  Technically feasible.  Located in a rural area.  Applicant must be owner of the system and control site for the term of the loan.  Adequate revenues for O&M.

Tools and Resources  Regulation:4280-B html  Outreach Materials, Technical and Environmental Guidance: tools.html

Funding Cycle  Annual NOSA/NOFA.  Anticipate early 2010 issuance for audit, feasibility and project applications.  State allocations have been increased.  Funding increased to $99 Million from $60 Million  Nationwide competition for funds.  Applications accepted throughout the year.

Section 9007 Renewable Energy Systems and Energy Efficiency Improvements Program Scoring Guidelines Scoring Guidelines

Score Sheet Criteria #1 One of the following: Energy Replacement (max of 15) or Energy Savings (max of ) or Energy Produced (max of 10)

Score Sheet Criteria #1 Quantity of energy replaced  If the estimated energy produced equals more than 150% of the energy requirements of the applicant, the project will be scored as an energy generation project.  Determined by dividing the estimated energy to be generated over a 12 month period by the estimated quantity of energy consumed over the same 12 month period during the previous year by the applicable energy application. Score Greater than 0 but equal to or less than 25%, award 5 pts. Greater than 25%, but equal to or less than 50%, award 10 pts. Greater than 50%, award 15 pts.

Score Sheet Criteria #1 Quantity of energy saved  Energy savings. Energy savings will be determined by the projections in an energy assessment or audit. Projects with total eligible project costs of $50,000 or less that opt to obtain a professional energy audit will be awarded an additional 5 points. ( means point is excluded ] means point is included (in the direction of the bar) Percent of annual energy saved by the energy efficiency improvements Score 20% up to but not including 30%, 5 pts will be awarded. 30% up to but not including 35%, 10 pts will be awarded. 35% or greater, 15 points will be awarded.

Score Sheet Criteria #2 Environmental Goals (10 pt.) Does the proposed system contribute to the environmental goals and objectives of other Federal, State, or local programs? File should contain letter from the appropriate Federal, State or local official to document this.

Score Sheet Criteria #3  Commercial availability If commercially available and replicable – 5 pts. If commercially available and replicable – and – 5 year or longer warranty – 10 pts.

 Technical Merit Score  35 pts  The contents of the Technical report will substantiate the score for technical merit.  Technical experts (coordinated by NREL) will make the final point determination for this criteria. Score Sheet Criteria #4

Score Sheet Criteria #5 (Grants Only)  Readiness (only grants) Prior to the Agency receiving the complete application, written commitment of Prior to the Agency receiving the complete application, written commitment of 50% up to but not including 50% up to but not including 75% matching funds – 5 pt. 75% matching funds – 5 pt. 75% up to but not including 75% up to but not including 100% matching funds – 10 pt. 100% matching funds – 10 pt % Matching funds- 15 pt % Matching funds- 15 pt.

Score Sheet Criteria #6  Small Agricultural Producer) (Sched F, line 11) <$600,000 – 5 pt. <$600,000 – 5 pt. <$200,000 – 10 pt. <$200,000 – 10 pt.  Very Small Rural Business-  < 15 employees, and < 15 employees, and < $1 million annual < $1 million annual receipts = 10 pt. receipts = 10 pt.

Simplified Application Simplified Application If an applicant is If an applicant is - eligible for and uses the - eligible for and uses the simplified application process simplified application process or or - the project has total eligible project costs of $200,000 or less, project costs of $200,000 or less, 5 points will be awarded. 5 points will be awarded. Score Sheet Criteria #7

Previous grantees and borrowers If an applicant has not been awarded a grant under this program within the previous two years, award 5 points. If an applicant has not been awarded a grant under this program within the previous two years, award 5 points. Score Sheet Criteria #8

 Return on investment Less than 4 years, award 10 ptsLess than 4 years, award 10 pts 4-7 years, award 4 pts4-7 years, award 4 pts 8-11 years, award 2 pt8-11 years, award 2 pt  Simple payback. Incentives are not part of calculation Score Sheet Criteria #9 Return on Investment

Score sheet criteria #10 Grants of $20,000 or less  If the grant requested is $20,000 or less, award 10 points.

Score Sheet Criteria #11 – Guaranteed Loans Only (e), if the rate of the loan is below Prime Rate –  plus 1.5%, award 5 pts. Or Or  plus 1%, award 10 pts.

Highest Points Possible – Grant Grant $20,000 or less – 125 (EE) Energy replacement -110 (RE) Energy savings -115 (EE) Energy generation-105 (RE)

Other Rural Development Energy Programs  Value-Added: Grants for Farm Based Renewable Energy.  Business & Industry Guaranteed Loans: Loans to rural businesses for qualified energy projects.  Biomass Research and Development Program: Funding for universities, laboratories for R & D for production of biofuels.

Other RD Energy Programs  Biorefinery Assistance Program: Loan guarantees and grants to develop new and emerging technologies for advanced biofuels.  Repowering Assistance Program: Payments to biorefineries that replace fossil fuels with renewable biomass.  Bioenergy Program for Advanced Biofuels: Payments to producers to support and expand production of advanced biofuels.

Questions?