USDA, RURAL DEVELOPMENT February 9, Rural Development Business Programs U.S. Department of Agriculture

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1 USDA, RURAL DEVELOPMENT February 9, 2010 Rural Development Business Programs U.S. Department of Agriculture 1

2 Section 9007 Rural Energy for America Program 2002 Farm Bill: Section 9006, Renewable Energy and Energy Efficiency Program 2008 Farm Bill: Section 9007, Rural Energy for America Program 2

3 REAP Three Parts to REAP Energy Audit and Renewable Energy Development Assistance EA/REDA Facility (Renewable Energy System and Energy Efficiency Improvement) Renewable Energy Feasibility Study 3

4 Definitions to Remember Rural Any area other than a city or town with population over 50,000. Cannot be in urbanized area adjacent to such a city or town. (Lower left corner of page) ERS Rural Area Determination Agricultural Producer -- An individual or entity directly engaged in the production of agricultural products (including farming or ranching) that receives 50% + of their gross income from the operations. Small Business A private entity including a sole proprietorship, partnership, corporation, cooperative (including most Rural Electric Cooperatives), and certain other electric utilities. Must meet SBA size standards for small business Non-profits, schools, public bodies and individual homeowners are excluded Electric Cooperatives - Eligible if total electric output is < 4 million MW hours annually 4

5 SBA Size Eligibility General Rule of Thumb Wholesale generally not more than 100 employees Retail generally not more than $6.5 million average annual sales. (3 year annual average) Service generally not more than $6.5 million average annual sales (some as high as $32.5 million) Manufacturing generally not more than 500 employees (some as high as 1,500 employees) Mining not more than 500 employees Construction generally not more than $31 million average annual sales. (some as low as 6.5 million) Consult SBA web site. (Know your NAICS code) 5

6 Farm Bill Definitions ENERGY EFFICIENCY improvement Improvement to a facility, building, or process that reduces energy consumption, or reduces energy consumed per square foot. Examples: Heating, cooling, lighting, dryers, motors and drives, building improvements, etc 6

7 RENEWABLE ENERGY Energy derived from: Biomass Wind Solar Geothermal Oceanic (new) Hydroelectric (new) Biomass does not include recycled or unsegregated solid waste. 7

8 FUNDING AVAILABILITY 3 Scenarios Guaranteed Loan 75% Grant 25% Combination Guaranteed Loan & Grant Loan 50% & Grant 25% 8

9 FUNDING AVAILABILITY Grants: Grants can fund up to 25% of eligible project costs. Minimum and maximum grant awards $1,500 - $250,000 efficiency projects and $2,500 - $500,000 for renewable energy projects 9

10 FUNDING AVAILABILITY Guaranteed Loans: Guaranteed loans cannot exceed 75% of eligible project costs Loan amounts range from $5,000 to $25,000, % guarantee of loss 1% guarantee fee, a 1/4% annual servicing fee 10

11 Commercial vs. Pre-Commercial Commercial Offered or manufactured as a product line Spare parts routinely available from the manufacturer Pre-Commercial At least one commercial unit in operation for at least one full year in the US. 11

12 What are Eligible Costs? Post application purchase & installation of equipment, except agricultural tillage equipment and vehicles. Post application construction or project improvements, except residential. Energy audits or assessments Permit fees Professional service fees, except for application preparation. Feasibility studies Business plans Retrofitting Construction of a new facility same purpose, same size, provides more energy savings than improving an existing facility 12

13 What Costs are NOT Eligible? Residential improvements Energy efficiency improvements related to new construction Agricultural tillage equipment Vehicles Applicant in-kind contributions 13

14 Plan your project Research, Compare, Consult experts, Start making decisions. Important - The Technical Report Where is the money coming from The Process Begins For an Energy Efficiency project - have an energy audit/assessment done For ex: Focus on Energy Utility Company Gen-Sys Energy Environmental information to Rural Development ASAP 14

15 Application Documentation Application Templates available at USDA Rural Development Website Another Website (Environmental Law & Policy Center) 15

16 Application - Government Forms - Narrative Report includes self-scoring - Technical Report - Environmental Report - Other Forms and Reports, Assessment, Audit, Warranty, Equipment Specifications, etc. 16

17 Evaluation Criteria Used to rank eligible projects for funding Points awarded for: Quantity of energy produced or saved (15-20 points) Environmental benefits (10 points) Commercial availability (10 points) Technical merit (35 points) Financial readiness (15 points) (grants only) Applicant size (10 points) Simplified application (5 points) New applicant (5 points) Return on Investment (10 points) Grant Only Requests of $20,000 or less (10 points) Interest Rate (10 points) (guaranteed loans only) 17

18 Environmental Biomass, Bioenergy Anaerobic Digester Geothermal Direct Geothermal Electric Hydrogen Production Hydrogen Transportation Solar Large & Small Photovoltaic Solar Small, Thermal Solar Large, Thermal Wind Small (less than 120 ft hub) Wind Large Energy Efficiency CatEx, Class I EA or Class II EA Class I EA maybe Class II EA CatEx Class I EA or Class II EA Class I EA CatEx CatEx Class I EA Class II EA Class I EA Class II EA CatEx 18

19 Overview of the Process in 2009 NOSA May 26, 2009 Application July 31, 2009 Award August & September 2009 Fund Disbursement/Reporting October & November

20 Energy Related Websites

21 PROGRAM FUNDING Funding mandatory: FY 09 - $55 million FY 10 - $60 million FY 11 - $70 million FY 12 - $70 million Discretionary Funding: additional $25 million each fiscal year for FY

22 FUNDING BREAKOUT IN 2009 REAP Allocation % Amount Energy Audit & REDA 4% $2,400,000 Feasibility Study 10% $6,000,000 Grants of $20,000 or less 20% $12,000,000 State Allocation 46.20% $27,717,600 National Office REAP Reserve 19.80% $11,882,400 Total 100% $60,000,000 22

23 FISCAL YEAR 2009 Funding Priority Type of Funding Last Day Applications Can be Sent Into the State Office Timeframe of When Applications Can be Sent Into the National Office 1st Grant request of $20,000 or less on-going up to July 31st 15th and last day of each month 2nd Loan only on-going up to July 31st by noon of each Friday Eastern Time 3rd Grant and Loan Combination on-going up to July 31st 15th and last day of each month 4th Grant request of $21,000 or more on-going up to July 31st State Office allocation to be used by August 31st then submit to the National Office Reserve Funds. WISCONSIN STATE ALLOCATION OF FUNDS IN 2009 Grant Only Loan Only Combo Grant Portion Combo Loan Portion $311,445 $1,071,362 $221,472 $571,393 23

24 WI FUNDING HISTORY Fiscal Year Grants/Loans # Awards $1,715, $6,262, $1,466, $666, $1,832, $5,587, $1,392,039 TOTAL 122 $18,923,157 24

25 FISCAL YEAR 2010 Submit Application Early On-Going Basis Federal Register Not Published Yet Increased Funding - $100 Million Approximately State Allocation vs. National Office Allocation Unfunded Applications in 2009 may be Rolled Over for 2010 Consideration 25

26 FISCAL YEAR 2010 Funding priority same as last year - Grant requests of $20,000 or less - Guaranteed Loan - Guaranteed Loan & Grant - Grant requests greater than $20,000 26

27 Brenda Heinen, Rural Energy Coordinator Business & Community Programs USDA Rural Development 4949 Kirschling Court Stevens Point, WI Phone: , ext. 139 Fax:

28 Any Questions? 28