1. Renewable Energy for America Program
REAP
Renewable Energy for America Program

2. REAP (Rural Energy for America Program) USDA RURAL DEVELOPMENT
Do you know existing businesses or farmers in your area
that could benefit from making
Energy Efficiency Improvements?
Are you aware of the benefits and opportunities
Renewable Energy Systems
such as wind, solar, biomass, and geothermal
can provide to local businesses and farmers?
I am here to discuss with you, how USDA Rural Development can offer assistance with “Energy Efficiency Improvements and Renewable Energy Systems” through our Guaranteed Loan & Grant Programs.

3. Energy Programs USDA RURAL DEVELOPMENT
The Food, Conservation, and Energy Act of 2008
Renewable Energy for America Program (Section 9007)
Biorefinery Assistance (Section 9003)
Repowering Assistance (Section 9004)
Bioenergy Program for Advanced Fuels (Section 9005)
Biomass Research and Development (Section 9008)
Rural Energy Self-Sufficiency Initiative (Section 9009)
Title 9 of the new farm bill provides opportunities for Energy financing through USDA Rural Development. The focus of the discussion today will be on the Section 9007 program, the Renewable Energy for America Program. However, I wanted to call your attention to other energy opportunities offered in the farm bill, which are also outlined here. The Biorefinery assistance program provides loan guarantees for commercial scale and grants for demonstration scale Biorefineries that produce advanced biofuels. “Advanced Biofuels” is any fuel derived from renewable biomass other than corn kernel starch—(which would then excludes all our current corn based ethanol plants) Advanced biofuels could be cellulose, himcellulose or lignin, biofuel derived from waste material including crop residue, animal waste and food and yard waste, Diesel equivalent fuel derived from renewable biomass, including vegetable oil and animal fat; as well as biogas from organic materials of landfill and sewage waste treatment gas.
Repowering assistance provides “Payments” to assisting existing biorefineries (including ethanol and biodiesel plants) which use fossil fuels for heat or power to replace fossil fuels with renewable biomass. Payments are based upon quantity of fossil fuels replaced, percentage reduction of fossil fuel used and cost effectiveness of the renewable biomass system. Combined heat and power processes when using digesters may hold great potential for our NE ethanol plants to capture some of these funds.
Bioenergy Program for Advanced Fuels provides “payments” to advanced biofuels producers to support and ensure an expanding production of advanced biofuels. Same definition of advanced biofuels applies. Payment amounts based upon quantity and duration of advanced biofuel production and net nonrenewable energy content of the advanced biofuels.
Biomass Research and Development promotes research, development and demonstration regarding the production of biofuels and bioproducts. Grants are made to institutions of higher learner or national laboratories for R&D projects. If you have customers with unique R&D concepts, we can help connect them to the appropriate parties to further research their idea and its potential.
Rural Energy Self-Sufficiency Initiative is designed to provide financial assistance for the purpose of enabling eligible rural communities to substantially increase energy self-sufficiency. Grants can be used to conduct energy assessments of all energy users, formulate and analyze ideas for reducing conventional energy sources, or to develop and install an integrated renewable energy program. Unfortunately this program does not have mandated funding and therefore Congress would have to allocate funding for this program to be implemented. USDA RD does however have funding via our Community Facility program if communities are interested in installing renewable energy systems to offset the power that their community owned facilities produce.
The 9007 and 9008 program are well established programs that were administered in the last farm bill. These programs are likely to be released October first. The Biorefinery assistance program is a priority program as well that has an October 1st target date. The other programs are in the regulation phase and may not be released until into the new calendar year.

4. What is the Section 9007 Program?
Designed to assist farmers, ranchers and rural small businesses with energy projects
As noted, we will be focusing on the Renewable Energy for America Program, Section 9007 for our discussion today. The New Farm Bill established the Renewable Energy for America Program under Title IX, Section Comstock Seed Solar project funded in FY08 in Douglas County, NV.
This section directs the Secretary of Agriculture to make loans, loan guarantees, and grants to farmers, ranchers and rural small businesses to purchase renewable energy systems and make energy efficiency improvements. Congress provides mandated funding of $55 million to fund the program in FY09, $60MM for 2010, $70MM for FY2011 & The last farm bill also funded this program, under Section 9006, which you may be familiar with, but the maximum funding level only reached $23MM in its highest funded year. To provide a bit of clarification, $23MM provided $15MM in grant funds and $200MM in loan guarantees. $55MM will potentially double the level of funding available.
This program helps farmers, ranchers and rural small businesses reduce energy costs and consumption, and helps the nation meet its energy needs. The program also supports and stimulates rural economic development by helping agricultural producers and rural small businesses create new sources of income, create new jobs, and to create new uses for agricultural products and wastes.

5. What is the Section 9007 Program?
Provides Grants & Loan Guarantees for:
Renewable Energy Projects
and
Energy Efficiency Projects
The Secretary of Agriculture is directed to make loans, loan guarantees, and grants to farmers, ranchers and rural small businesses to purchase renewable energy systems and make energy efficiency improvements.
The Secretary of Agriculture delegated the responsibility for this program to the Rural Business-Cooperative Service within the Rural Development Mission area of U.S. Department of Agriculture.

6. What is the Section 9007 Program?
USDA has funded approximately 2,012 loan & grant projects totaling $143,658,988 since the Program began in FY 2003.
For FY 2008, 1,157 applications were filed, requesting $1,205,714,554 and 764 were funded totaling $49,805,805.
As noted earlier the 2002 Farm Bill funded the program under Section The results of the farm bill were that approximately 1, 248 loan and grant projects worth $93.8MM were funded through 2007.

7. Who is Eligible?
Agricultural producers and rural small businesses can apply
Pursuant to the Farm Bill, eligible applicants include farmers, ranchers and rural small businesses. To be eligible for grants, applicants must demonstrate financial need as determined by USDA. For grants under 200,000, a self-certification signed by the applicant is sufficient.
AG PRODUCERS are defined as those who receive 50% or more of their gross income is derived from the ag operation.
-SMALL BUSINESS is defined via the SBA small business definition which uses NAICS CODES, and is measured by either gross sales or by the number of employees of the business.
-RURAL is defined as areas with under 50,000 population. The location of the applicant, not the headquarters is used.
- Demonstrated financial need -- the applicant must demonstrate that it is unable to finance the project from its own resources or other funding sources without grant assistance. This applies only to grant only financing and Combo packages, not the guaranteed loan program.
In addition, recipients have to be the owner of the system and control the operation of the proposed project. If grant recipients sell the project to a buyer that is not eligible under the above definitions, the Government may recapture a prorated portion of the grant funds for up to 20 years.

8. What Projects are Eligible?
Any renewable energy and energy efficiency project as defined in the law.
Two types of projects are eligible, Renewable energy and Energy Efficiency Improvement projects.
-Eligible renewable energy projects include systems that generate energy from wind, solar, biomass, or geothermal source or that produce hydrogen derived from biomass or water using a renewable energy source. Renewable energy projects can include the generation of electricity, heat, fuels, or hydrogen.
-Energy efficiency projects typically involve installing or upgrading equipment that results in a significant reduction in energy use from current operations.
 -Funds could be used for the following as a part of an eligible project: purchase and installation of equipment; construction or improvements; energy audits; permit fees; professional service fees; feasibility studies; business plans, and retrofitting.

9. What Projects are Eligible?
Renewable Energy – Energy derived from:
wind
solar
renewable biomass
ocean (including tidal, wave, current & thermal)
geothermal
hydroelectric source
hydrogen derived from renewable biomass or water using one of the above energy sources
The Energy Title of the Farm Bill includes a few important definitions – what is renewable energy and what is meant by the term “biomass.” According to the law,
Renewable Energy – energy derived from:
wind, solar, renewable biomass, ocean (including tidal, wave, current & thermal, geothermal, hydroelectric source, or
hydrogen derived from renewable biomass or water using one of the above energy sources.
Hydropower – includes ocean energy and hydroelectric, diverted run of river, in stream and in-conduit. Small hydro is anything less than 30 MW.

10. What Projects are Eligible?
Renewable Biomass – any organic material that is available on a renewable or recurring basis. Includes:
Renewable plant material, including
Feed grains
Other agricultural commodities
Other plants and trees
Algae
Waste material, including
Crop residue
Other vegetative waste material (including wood waste & wood residues)
Animal waste and byproducts (including fats, oils, greases, & manure)
Food waste and yard waste
Materials, pre-commercial thinnings, or invasive species from National Forest System land & public lands (See Section 9001 for further definition)
The term “renewable biomass” means any organic material that is available on a renewable or recurring basis. This includes.
Renewable plant material, including: Feed grains, Other agricultural commodities, Other plants and trees, Algae
Waste material, including: Crop residue, Other vegetative waste material (including wood waste & wood residues), Animal waste and byproducts (including fats, oils, greases, & manure), Food waste and yard waste
Materials, pre-commercial thinnings, or invasive species from National Forest System land & public lands Section 9001 has further definitions regarding this type of renewable biomass that I am not going to outline in this presentation.

11. What Projects are Eligible?
Energy efficiency projects typically involve installing or upgrading equipment to significantly reduce energy (BTU) use.

12. What Projects are Eligible?
Pre-commercial or commercially available and replicable technology
Grant requests $200,000 or less, commercially available technology only
Projects must be technically feasible
Must have sufficient revenues to provide for O&M
All projects must complete a technical report based upon the type of technology and the project’s size. The project must be determined technically feasible in order to compete for funds. If TPC exceed $1.2MM, an independent third party review of the technical report is required.
Currently the National Renewable Energy Lab (NREL) in Colorado completes the technical reviews of more complex Renewable Energy Projects, while the Energy Efficiency projects and some Renewable energy projects are reviewed by RD’s state energy team.
The project must have sufficient revenues to provide for the operation and maintenance of the system.

13. What Projects are Eligible?
Energy Efficiency Projects
Energy Audit Required showing BTU Savings
Renewable Energy Projects
Business Level Feasibility Study Required
If TPC $200,000+
-An energy audit is required for all energy efficiency projects. The results of the audit must show BTU (British Thermal Units)savings. While the project in general may show labor, water, or maintenance savings, it is only eligible if it shows BTU savings.
Renewable energy projects do not require an energy audit, but must provide justification regarding the renewable output of the system. The output documentation varies depending on the type of technology and the scope of the project. As projects costs and complexity increases, so does the level of documentation required by our agency.
Projects over $200,000 require a business level feasibility study and full financial information (historical, current and pro-forma).
If TPC’s are over $200,000 for EEI projects and over $400,000 RE, the services of a professional engineer are required.

14. Business Level Feasibility Study
An acceptable feasibility study, completed by an independent third party, should include, but not be limited to, a discussion of the project’s:
Economic feasibility
Market feasibility
Technical feasibility
Financial feasibility
Management feasibility
If Renewable Projects have TPC over $200,000 a feasibility study is needed and should address the five areas of feasibility, economic, market, technical, financial and management.

15. Grant Program Grant Request cannot exceed 25% of project costs
Applicant must demonstrate financial need
Maximum grant request
$500,000 for Renewable Energy
$250,000 for Energy Efficiency
Minimum grant request:
$2,500 for Renewable Energy
$1,500 for Energy Efficiency
As noted earlier the program has a grant program, a guaranteed loan program, or a combination grant/guaranteed loan request can be made.
-For the grant only program as well as Combo packages, demonstration of financial need is required. For grants under $200,000 a signed self-certification is sufficient. Over that amount inability to support a debt service of 1.25 would be a good indication of financial need. This is not required for the guaranteed loan program.
We will discuss shortly the combination grant/guaranteed loan submission process. The program requires participation from a local lender.
We will begin discussing the Grant requests which have the greatest appeal to the eligible applicants.
Grant requests must not exceed 25% of the eligible project costs. Maximum grant requests are as noted, and minimum grant requests also apply.
For EEI projects, the minimum grant request is $1,500 which equates to a $6,000 project. RE grant requests must be for a minimum of $2,500, which equates to a $10,000 project. Several renewable projects can be combined into a hybrid application to meet the $10,000 minimum TPC if necessary.
Applicants are only allowed to file one RE and one EE per fiscal year, not to exceed the maximum funding request for each.

16. Guaranteed Loan Program
Guaranteed Loan cannot exceed 75% of total eligible project costs.
Minimum Guaranteed Loan = $5,000
Maximum Guaranteed Loan = $25MM
Simplified Application process for loans $600,000 or less
-The guaranteed loan program, which requires an application through a lender for the farmer or businesses behalf, can be requested for up to 75% of the total eligible project costs.
-The maximum funding has been increased since the last farm bill, as the maximum was previously 50%.
-Both Guaranteed loans and combination grant/loan packages can request up to 75% of total project costs, not to exceed $25MM for the guaranteed loan. The grant maximums of $250,000 EEI & $500,000 RE remain in effect.
-The minimum guaranteed loan is $5,000.
- Loan requests under $600,000 have a simplified application process.

17. Guaranteed Loan Program
Maximum Percentage of Guarantee
$600,000 or less = 85%
$600,001 to $5 million = 80%
$5 million to $10 million = 70%
$10 million to $25 million = 60%
Interest Rate set by Lender
Guarantee fee = 1% of guaranteed portion,
with annual renewal fee of ¼ of 1% of the guaranteed portion.
No Prepayment Penalty
The percentage of guarantee varies based upon the project size. Projects under $600,000 can apply for an 85% guarantee. Projects from $600,001 to $5MM-an 80% guarantee, and those projects from $5MM to $10MM a 70% guarantee, and $10MM to $25MM a 60% guarantee.
The interest rate is set by the lender and can be a fixed or variable rate.
There is an upfront 1% guarantee fee on the guaranteed portion, which is passed on to the borrower.
An annual renewal fee also applies. The annual renewal fee is subject to change each year and is currently set at 1/4 of 1%. The renewal fee in effect at the time the loan closes is the fee that will be paid for the term of the loan.
-There are no prepayment penalties.

18. Combination Grant/Guaranteed Loan
Combination requests cannot exceed 75% of total eligible project cost
Combo requests due on the 15th and last day of the month and are funded bi-weekly until funds exhausted.
100% of eligible combo’s funded to date
-The Combination requests are reviewed bi-weekly for funding consideration, versus waiting for an entire fiscal year funding announcement.
-Guaranteed Loan funds are set aside until late August when any unused funds will be pooled to funds additional grants.
-It is important to note that to date 100% of the eligible combination applications that were requested have been funded.

19. Guaranteed Loan Program
Guaranteed Loan Terms
Real Estate
30 years maximum
Machinery and Equipment
20 years or the useful life
Working Capital
7 years maximum
Term W.C. Only, No Lines of Credit
The guaranteed loan terms are as follow, maximum of 30 years for real estate, 20 years for Machinery & equipment, and 7 years for working capital.
-Note that we can only provide fixed, seven year maximum, working capital terms. Lines of credit are not eligible to be guaranteed.

20. FY 2009 Total Allocation Energy Audit & REDA 4% $ 2,400,000
Feasibility Study % $ 6,000,000
Grants of $20,000 or less 20% $12,000,000
State Allocations % $27,717,600
National Office REAP % $11,882,400
Reserve
TOTAL: $60,000,000
REDA (Renewable Energy Development Assistance) These set asides are required by statute and will be set aside UNTIL pooling 9/8/09. The 20% set aside for Grants only of $20,000 or less is not eligible for combos. Feasibility Study funds a maximum grant of $50,000 OR 25% OF ELIGIBLE PROJECT COST. No minimum grant.

21. Nevada State Allocation
Grant –only $338,850
Loan-only $1,584,677
Grant only would be for those over $20,000 as all grant requests $20,000 & under will be directed to the N/O funding specifically for these amounts.
State Allocations are determined by:
-State’s percentage of national rural population
State’s percentage of national rural population with incomes below poverty level.
-State’s percentage of national nonmetropolitan unemployment.
Same formula used as for the B&I & RBEG allocations.

22. Pooling of Funds
State Allocations must be used by close of business approximately the end of May.
Priority of pooled funds
Grants of $20,000 or less
Loan only
Loan and grant combos
Grant only
Grants of $20,000 or less (if not 20 percent)

23. Dates to Remember
NOSA (Notice of Solicitation of Applications) Issued: Anticipated by end of February
Closing Date: Unknown
received at: USDA RD State Office S. Curry St Carson City, NV
Pooling Date: 5/28/2010
All applications must be received in the State Office by 4:30 PM, not postmarked by this date, but actual receipt of the application package in the State Office.

24. Contact Information
This program assists local businesses and farmers in obtaining grants & loans for renewable energy & energy efficiency projects.
USDA RURAL DEVELOPMENT
Mark Williams-Business Programs Specialist
Ph Ext 116
Herb Shedd-Business Programs Director
Ph Ext. 119