rural energy for america program everett january 19, 2011

United States Department ofAgriculture

Renewable Energy ProgramsRural Development Business Programs

Rural Energy for America ProgramEverett

January 19, 2011

United States Department ofAgriculture Renewable Energy Programs

INTRODUCTIONSSharon Exley-Business Programs Specialist/NW Area

Mary Traxler- Energy Coordinator/ State OfficeJan Cyr-Area Specialist/ NW Area Office


Housekeeping


Participants: Potential applicant-interestTechnology provider-type

Other- Assistance OrganizationConsultant etc.

What you hope to gain from this session:


Renewable Energy Programs

RURAL DEVELOPMENTCommitted to the future of rural communities

USDA is an equal opportunity provider, employer, and lender



USDA is an equal opportunity provider, employer, and lender.



2008 Farm Bill Title IX Section 9003: Biorefinery Assistance Program –

Provides loan guarantees of up to $250 million for the development, construction and retrofitting of commercial-scale bio-refineries

Section 9004: Repowering Assistance – Provides payments to existing bio-refineries to

replace fossil fuels used to produce heat or power to operate the bio-refineries with renewable biomass.



2008 Farm Bill Title IX

9005: Bioenergy Program for Advanced Biofuels Provides payments to eligible agricultural

producers to support and ensure an expanding production of advanced bio-fuels

9008: Biomass Research and Development Supports research, development, and

demonstration of biobased products, biofuels, and biopower



Section 9007: Rural Energy for America Program• Establishes a grant and loan guarantee program to

assist ag producers and rural small businesses in purchasing renewable energy systems and making energy efficiency improvements

• Establishes a grant program for energy audits, technical assistance

2008 Farm Bill Title IX



Renewable Energy Feasibility Study Grant Renewable Energy Development Assistance Grant Energy Audit Grant Renewable Energy Systems & Energy Efficiency

Improvements Grant, Grant & Loan Guarantee, Loan Guarantee

REAP Funding Opportunities



Online Resources

Application templates & forms http://www.rurdev.usda.gov/wa/BUSREAP.htm

Part 4280-B Regulation http://www.rurdev.usda.gov/regs/regs_toc.htm



Online Resources:

Catalog of Federal Assistance: https://www.cfda.gov/

National Website:http://www.rurdev.usda.gov/rbs/farmbill/

index.html



Purpose for REAP RE & EE

Provide financial assistance to agricultural producers and rural small businesses for the purpose of purchasing and installing renewable energy systems and energy efficiency improvements in rural areas.



Eligible Technologies

Biomass and Bioenergy Projects Anaerobic DigestersHydrogen production from renewablesGeothermal, direct use



Eligible Technologies

Geothermal, electric generationSolar, small and large, electric and thermalWind, small and largeEnergy Efficiency Improvements



Grant Funding

Maximum grant assistance to one individual or entity -$750,000

Renewable Energy Systems Applications -minimum grant $2,500, max $500,000

Energy Efficiency Improvements Applications- minimum grant $1,500, max $250,000



General Provisions for REAP RE & EE

Grant amount may not exceed 25% of the eligible costs of the project

A combined loan guarantee and grant may not exceed 75% of the eligible project costs



Program Considerations – Grants and Loan Guarantees

Type of system to be purchasedEstimated quantity of energy to be generatedEnvironmental benefits of the systemExtent of system replicationExpected energy savings - energy auditEstimated payback period



Applicant Eligibility

1. The applicant must be an agricultural producer or a rural small business.

2. Individuals must be citizens of the U.S. or reside in the U.S. after being legally admitted for permanent residence



Applicant Eligibility3. Entities must be 51% owned or directly or

indirectly by either citizens or the U.S. or legally admitted for permanent residence

May not have outstanding Federal judgments, delinquent Federal income taxes, delinquent Federal debt

Must have a demonstrated financial need



Project Eligibility

1. The project must be for the purchase of a renewable energy system or to make energy efficiency improvements.

2. The project must be for pre-commercial or commercially available and replicable technology.

Not for research and development projects.


Renewable Energy ProgramsProject Eligibility

3. The project must be technically feasible. Technical feasibility will be based on information provided by the applicant and recognized industry experts. The National Renewable Energy Laboratory (NREL) may review some projects for technical feasibility.

Project Eligibility


Renewable Energy ProgramsProject Eligibility

4. The project must be located in a rural area

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Project Eligibility



Project Eligibility

5. The applicant must be the owner of the system and control the operation and maintenance of the proposed project. A qualified third party operator may be used to manage the operation and/or maintenance of the proposed project.



Project Eligibility

6. The project site must be controlled by the applicant for the term of the Federal assistance.

7. All projects financed must be based on satisfactory sources of revenue in an amount sufficient to provide for the operation and maintenance of the system or project. (Financial Feasibility)



Eligible Project Costs – Grants and Loan Guarantees

Must be integral &necessary part of the system:1. Post-application purchase and installation of

equipment (new, refurbished, or remanufactured), except agricultural tillage equipment, used equipment, and vehicles

2. Post-application construction or improvements, except residential




3. Energy audits or assessments4. Permit and License Fees5. Professional service fees, except for

application preparation fees6. Feasibility Studies and Technical Reports7. Business Plans8. Retrofitting



Eligible Project Costs – Grants and Loan GuaranteesConstruction of a new energy efficient facility

only when: new facility is used for same purpose is approximately same size will provide more energy savings than improving the existing facility (based on the energy audit) Only costs identified in the audit for energy efficiency improvements are allowed.




For Renewable Energy Projects Onlycan also include10. Working capital11. Land acquisition



Ineligible Project Costs

Those NOT an integral and necessary part of the renewable energy system or energy efficiency improvement.

Agricultural tillage equipment, used equipment and vehicles

Residential projects (single family, multi-family and Bed & Breakfast)

Fees for application preparation




All costs not specifically listed as “Eligible Project Costs”

ie: capital leases, residential improvements, waste collection: production, collection, and transportation of energy inputs, funding of political or lobbying activities, etc.




Construction of a new energy efficient facility that is not to be used for the same purpose, is not approximately the same size and would provide less energy savings than improving an existing facility;

Costs not identified in an energy audit.



Feasibility Study

A business level feasibility study will be required on all renewable energy system projects with total eligible project costs exceeding $200,000.

Study must be completed by an independent qualified consultant.



Feasibility Study Components

Must include an evaluation of: economic feasibility market feasibility technical feasibility financial feasibility management feasibility



Energy Audit

An energy audit or energy assessment must be included on all energy efficiency projects with total eligible costs exceeding $50,000

Conducted by a Certified Energy Manager or Professional Engineer

EA that meets criteria for Farm Service Agency programs



OKSO…. HOW DO I APPLY?



DO NOT APPLY AT GRANTS.GOV



Application Process

Separate applications must be submitted for the Renewable Energy Systems, Energy Efficiency Improvement projects and Feasibility Study projects.



Application Process

Submit Applications to the USDA Rural Development State Energy Coordinator in Olympia, Washington

Submit an original and one complete copy Applications are accepted at any time and

will be considered for available funds.



Application Process

Parallel paths :Grant application underwayTechnology provider producing tech reportUSDA environmental review process Lender working on loan application



Application Process

Critical step: Discuss project and environmental review process with the Area Business Specialist

Environmental must be completed when application is submitted.



Application Process

Sharon Exley, NW Washington 360-428-4322, Ext. [email protected]

Carlotta Donisi, SW Washington [email protected]

Ted Anderson, NE Washington 509-924-7350, Ext. [email protected]

Roni Baer, SE Washington 509-454-5740, Ext. [email protected]

mailto:[email protected]






Application Process

Key resource:Wa. State Energy Website- for NOFA/ NOSA

templates, forms, regulations, checklists

http://www.rurdev.usda.gov/wa/BUSREAP.htm



Application Process

Applications must be in the format as provided in template

http://www.rurdev.usda.gov/wa/BUSREAP.htm



Application Process

No 3-ring binders or bound papersBinder Clip, rubber band or 8 position folderSections need to be tabulated, indexed or

dividedTable of Contents, reference section and page

numbers



Application Process

All grant applicants must obtain a DUNS number

Website – http://fedgov.dnb.com/webform/displayhomepage.do



Application and Documentation Table of Contents

Include page numbers for each component of the application in the Table of Contents.

Begin pagination immediately following the Table of Contents



Application Process – Required Forms

Complete forms for Template Tab A SF 424 – Application for Federal Assistance SF 424C - Budget Info/Construction Or SF 424D- Assurances - Construction 1940-20 Environmental Questionnaire



Application Process – Required FormsComplete forms for Template Tab BAD 1049 – Certification Regarding a Drug-Free

workplace RequirementsAD 1048 - Certification Regarding Debarment,

Suspension and Other Responsibility Matters – Lower tier

Exhibit A-1 of 1940-Q Cert. for Contracts, Grant and Loans (If grant app is $100,000 or more)



Application Process – Required FormsTAB B Continued

SF-LLL - Disclosure of Lobbying Activities AD 1047 – Certification Regarding Debarment,

Suspension and Other Responsibility Matters – Primary Covered Transactions

RD 400-1 – Equal Opportunity Agreement RD 400-4 – Assurance Agreement Intergovernmental comments (if applicable)



Application Process – Required FormsTAB B Continued

Certification of Relationship with AgencyCertification of Demonstrated Financial Need Intergovernmental Review if applicable



Application and Documentation Forms, Certifications, and Organizational Documents

Tab C Organizational Documents- Legal organizational documents are

required to be submitted as part of the application, except for sole proprietorships



Application and Documentation Project SummaryTab DTitle – Provide a descriptive title of the

project (should be the same as on SF 424)Applicant Eligibility – describe how each

criteria outlined in §4280.107 is metProject Eligibility – describe how each criteria

outlined in §4280.108 is met



Application and Documentation Project Summary

Description of Operation• Describe the applicant’s farm, ranch or

business operation - §4280.111(b)(3)(iv)Financial Information for Size Determination

• Must be substantiated by authoritative records - §4280.111(b)(3)(v)



Application Process Tab E - Matching Funds Documentation Applicant must provide at least 75 percent of

the eligible project costs to complete the project – “Matching Funds”

Matching Funds may not include applicant in-kind contributions or other Federal grant awards



Tab F - Self Evaluation ScoreEvaluation Criteria

1. Quantity of Energy Replaced, produced or Saved.

2. Environmental Benefits. 3. Commercially Available.4. Technical Merit Score. (NREL will make

Determination



Technical Report (filed in Tab H)

A critical component used by USDA RD-NREL

In scoring



Technical Report

Use Appendix A to RD Instruction 4280-B for projects with total eligible costs less than $200,000.

Use Appendix B to RD Instruction 4280-B for projects with total eligible costs exceeding $200,000.



Technical Report

Projects greater than $1,200,000 must include an opinion and recommendation by an independent qualified consultant

RE projects costing more than $400,000 and EEI projects costing more than $200,000 require the services of a professional engineer (PE)



Technical Report

A PE may be required for smaller projects depending on the level of engineering and if necessary to ensure public safety



(4) Technical Merit Most Important Area of Scoring Criteria Each category has its own maximum possible scoreand will be scored according to the following criteria: 100% description has no significant weaknesses,

exceeds requirements 80% description has one or more significant

strengths, meets requirements



(4) Technical Merit

60% description meets basic requirements, but has weaknesses

40% description is lacking one or more critical aspects, key issues not addressed, demonstrates some merit or strengths

20% description has serious deficiencies, internal inconsistencies, missing information

0% description has no merit



Rural Development Business Programs

(4) Technical Merit 100% 80% 60% 40% 20%

4A Qualifications of Project Team 3.5 2.8 2.1 1.4 0.7

4B Agreements & Permits 1.75 1.4 1.05 0.7 0.35

4C Energy or resource assessment 3.5 2.8 2.1 1.4 0.7

4D Design & Engineering 10.5 8.4 6.3 4.2 2.1

4E Project development schedule 1.75 1.4 1.05 0.7 0.35

4F Project economic assessment 7 5.6 4.2 2.8 1.4

4G Equipment procurement 1.75 1.4 1.05 0.7 0.35

4H Equipment installation 1.75 1.4 1.05 0.7 0.35

4I Operation and Maintenance 1.75 1.4 1.05 0.7 0.35

4J Dismantling and Disposal 1.75 1.4 1.05 0.7 0.35


So…. Some helpful hints, things to considerfor the technical report


Evaluation Criteria

5. Readiness. (Grants Only)6. Small Agricultural Producer/ Very Small

Business. 7. Simplified application 8. Previous Grantees and Borrowers. 9. Return on Investment. 10.Loan Rate (Guaranteed Loan Only)



Tab G-Energy Audit

An energy audit or energy assessment must be included on all energy efficiency improvement projects with total eligible costs exceeding $50,000

Conducted by a Certified Energy Manager or Professional Engineer

EA that meets criteria for Farm Service Agency programs



Submit Application for review one month before published deadlines-call specialist to determine delivery method

Sharon Exley, NW Washington 360-428-4322, Ext. 159

Carlotta Donisi, SW Washington 360-704-7724

Ted Anderson, NE Washington 509-924-7350, Ext. 115

Roni Baer, SE Washington 509-454-5740, Ext. 134


GUARANTEED LOAN FUNDING



Guaranteed Loan Funding

The minimum amount of guaranteed loan to a borrower is $5,000 less any program grant amounts.

The maximum amount of guaranteed loan is $10 million.




Percentage of guarantee: 85% for loans $600,000 or less; 80% for loans greater than $600,000 up to

and including $5 million; 70% for loans greater than $5 million up to

and including $10 million.



Terms of Loan

Real Estate - 30 years maximum; Machinery/equipment - 20 years or the

useful life, whichever is less; Combined on Real Estate and equipment –

must not exceed 30 years; Working capital - 7 years maximum




The amount of the loan made available to an eligible project will not exceed 75% of the total eligible project costs.



Credit Quality

Lender must determine the following:(a) Cash flow – business has adequate debt coverage and can accommodate expansion.(b) Collateral – Discounted collateral value will be

at least equal to the loan amount.(c) Industry – Current status of the industry.



Credit Quality

Equity - must meet requirements of (1) or (2).

(1) For loans > $600,000 cash equity injection in the project of not less than 25% is required.

(2) For loans < $600,000 cash equity in the project of not less than 15% is required.



Equity

Cash equity injection can be in the form of: Cash; Federal Grants; The market value of equity in real property that is to

be pledged as real collateral for the loan may be substituted in whole or in part to meet the cash equity requirement.



Equity

RE and EE Guaranteed Program: Cash equity injection = cash injection + FMV of RE

pledged + grants divided by total eligible project costs

Business & Industry Guaranteed Program:Tangible balance sheet equity = tangible equity divided

by total tangible assets



Questions?



Thank You

USDA is an equal opportunity provider, employer, and lender.