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Basics of Renewable Energy Systems and Energy Efficiency Improvements Program Chuck Banks, State Director Gary L. Smith,

Basics of Renewable Energy Systems and Energy Efficiency Improvements Program Chuck Banks, State Director Gary L. Smith, Program Director F. Martin Fee, B&CP Specialist Topeka, Kansas September 26, 2007. Basics of Renewable Energy Systems and Energy Efficiency Improvements Program

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Basics of Renewable Energy Systems and Energy Efficiency Improvements Program Chuck Banks, State Director Gary L. Smith,

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  1. Basics of Renewable Energy Systems and Energy Efficiency Improvements Program Chuck Banks, State Director Gary L. Smith, Program Director F. Martin Fee, B&CP Specialist Topeka, Kansas September 26, 2007

  2. Basics of Renewable Energy Systems and Energy Efficiency Improvements Program F. Martin Fee Business and Community Programs Specialist Topeka, Kansas September 26, 2007

  3. Renewable Energy and Energy Efficiency Program A program to help agricultural producersand rural small businesses purchase renewable energy systems and make energy efficiency improvements.

  4. Who is eligible to apply for funding? • Agricultural producers directly engaged in ag production (≥ 50% of their gross income) • Rural small businesses that meet the SBA Size Standards • Demonstrated financial need • Project must be located in a rural area • Non-profit organizations and public entitiesare excluded Actual Definitions available in 7 CFR Part 4280

  5. Formula for 50% of Ag Income Gross Farm Income __________________________________________ Total Income + Total Farm & Business Expenses

  6. SBA Size Standards http://www.sba.gov/services/contractingopportunities/sizestandardstopics/index.html Excerpts from SBA Table of Small Business Size Standards

  7. Rural Area 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. http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

  8. What types of projects are eligible? • Biomass, Bioenergy • Anaerobic digester • Geothermal, electric generation • Geothermal, direct use • Hydrogen • Solar, small and large • Wind, small and large • Energy efficiency

  9. Energy Efficiency Examples • Grain Drying and Curing • Irrigation • Fans and Blowers • Compressors • Pumps • Building Envelope • Lighting • HVAC Systems • Water Heating • Power Systems • Refrigeration EE Projects must have the previous 12 months history of energy use in order to measure savings from the project improvements.

  10. What projects are eligible? • Purchase RE or make EE improvements • Pre-commercial or commercially available, and replicable technology (No Research and Development) • Technical Merit and located in a rural area • Sufficient revenues for O&M, Maintenance & Debt Service • Applicant must own the project and control the revenues and expenses, including O&M Pre-Commercial: at least one commercial unit in operation for at least 1 full year in U.S.

  11. Post-application purchase and installation of equipment; (except agricultural tillage equipment & vehicles) Post-application construction or project improvements; (except residential) Energy audits or assessments; Permit fees and Feasibility Studies; Professional service fees; (except application preparation) Eligible uses Only costs identified in the Energy Audit for energy efficiency improvements are allowed (EE)

  12. Business plans; Retrofitting; Construction of a new facility (EE) -same purpose samesize, based upon energy audit which provides more energy savings than improving the existing facility; Working capital(Guaranteed Loan only) Land acquisition(Guaranteed Loan only) Eligible uses Ineligible project costs include any costs not identified above as eligible costs

  13. What size of grant is available? • Not exceed 25% of total eligible project costs • Minimum grant request • Renewable energy system - $2,500 • Energy efficiency improvements - $1,500 • Maximum grant request • Renewable energy system - $500,000 • Energy efficiency improvements - $250,000 Maximum grants per applicant per fiscal year is $750,000

  14. What size of Guaranteed Loan (GL) is available? • Not exceed 50% of total eligible project costs • Maximum combination GL and grant cannot exceed 50% of total eligible project costs • Minimum GL request is $5,000 (less grant amount) • Maximum GL request is $10 million Can combine with up to $25M of Business and Industry GL for larger projects

  15. What Guaranteed Loan (GL) rates and terms are available? • Interest rate negotiated between lender and applicant • Real estate must not exceed 30 years • Machinery and equipment must not exceed 20 years or useful life • Combined loans of real estate and equipment must not exceed 30 years • Working capital must not exceed 7 years

  16. 2003-2006 Energy Projects • 05-Luray Grocery • Refrigeration • $9,673 grant • 04-Community General Store • Refrigeration • $6,935 grant • 05-T and T Foods, Inc. • Refrigeration • $11,000 grant • 03-Mackinson Foods, Inc. • Refrigeration, HVAC, insulation • Lighting, efficient doors • $29,075 grant • 06-Hayes Sight and Sound, Inc. • HVAC and lighting • $26,000 grant • $26,000 EE GL • $52,000 B&I GL • 06-White’s KingCo, Inc. • Refrigeration and lighting • $48,838 grant • $48,830 EE GL • 05-Epic Homes of Kansas, Inc. • HVAC • $5,000 grant

  17. 2006 Energy Projects • Satanta Grocery • Refrigeration, lighting and insulation • $23,488 grant • 27th and Hall Laundry • (2) hot water heaters • $3,257 grant • Cougar Custom Boats • Water source heat pumps • $49,683 grant • Lipp Properties • (2) 4 kW wind turbines • $20,537 grant • M&M Market • Refrigeration and energy efficient entry door • $10,283 grant • Cates Carquest • HVAC • $4,744 grant

  18. 2007 Energy Projects • Agency One • Lighting, windows & insulation (walls/ceiling) • $2,270 grant • Caper’s Café & Bakery, LLC • HVAC • $3,678 grant • Stafford Development, Inc. • Air conditioning • $3,239 grant • Village Road, LLC • Waste oil burner • $7,872 grant • CrossRoads Lumber Co., Inc. • Heating and lighting • $14,950 grant • Thomas E. Wells, Jr. • Insulation (roof) • $3,819 grant • Healy Biodiesel, Inc. • Biodiesel • $32,375 grant • Ivan L. Bohl • Irrigation (flood to center pivot) • $33,343 grant

  19. 2007 Energy Projects • H&C Farms, Inc. • Irrigation (engines/motors) • $15,080 grant • $15,080 EE GL • Carlsons’ Grocery, Inc. • Refrigeration and lighting • $20,759 grant • $20,769 EE GL • $41,518 B&I GL • Eagle Farms Energy, Inc. • Biodiesel • $41,835 grant • $41,835 EE GL • $83,670 B&I GL • CKG, Inc. • Irrigation (flood to center pivot) • $11,875 grant • Becklin, Inc. • Solar Thermal • $5,500 grant

  20. Websites • Current solicitation, forms, and program information • htttp://www.rurdev.usda.gov/rbs/farmbill • http://www.rurdev.usda.gov/ks • Other supportive programs • http://www.rurdev.usda.gov/rbs/busp/bprogs.htm

  21. Section 9006 Projections for 2008 Gary L. Smith Director, Business &Community Programs Topeka, Kansas September 26, 2007

  22. 2007 Farm Bill Proposals U.S. Department of Agriculture “We need farm policy that recognizes the tremendous potential of American agriculture. These proposals do just that. We listened to the people and now deliver our proposals for America’s farm bill.” - Mike Johanns, Secretary of Agriculture

  23. Title VI: Rural Development Programs All funding reflects 10-year totals unless otherwise noted

  24. Title VI: Rural Development • Consolidate rural development programs to increase flexibility and efficiency • Provide $1.6 billion in loans to complete the rehabilitation of all 1,283 certified Rural Critical Access Hospitals

  25. Title VI: Rural Development • Provide an additional $500 million to reduce the backlog of rural infrastructure projects • Water and waste disposal loans and grants • Emergency water assistance grants • Community Facilities loan and grant programs • Distance learning and telemedicine grants

  26. Title IX: Energy Programs All funding reflects 10-year totals unless otherwise noted

  27. Title IX: Energy • Provide $500 million to create a Bioenergy and Bioproducts Research Program • Increase cost-effectiveness through cooperation between university and Federal scientists • Provide $500 million for rural alternative energy and energy efficiency grants • Directly assists farmers, ranchers, and rural small businesses

  28. Title IX: Energy • Provide $2.1 billion in loan guarantees to support cellulosic ethanol projects in rural areas • Provide $150 million for biomass research competitive grants, focusing on cellulosic ethanol

  29. Section 9006 Trends – FY 2003 to 2006 Rural Development – Business Programs U.S. Department of Agriculture

  30. Award Dollars by Technology

  31. Award Numbers by Technology

  32. Geographic Award Distribution

  33. Replicable Business and Technology Models • Efficiency Improvements • Poultry Houses • Grain Dryers • Irrigation Upgrades • Community Wind • Enable local ownership of 1 – 2 utility-scale wind turbines • Often employ innovative ownership structures such as “flip” model

  34. Volume of Applications

  35. Shift in Project Size

  36. Median: Total Project Cost and Award Amount

  37. Guaranteed Loan and Combination Applications • In FY 05, 2 guaranteed loans, for a total amount of $10.1 million (both bioenergy) • short window for application • In FY 2006, 17 Guaranteed loans, for a total amount of $24.3 million (varied technologies) • considered first full year • 15 of these are combination applications

  38. Guaranteed Loan Technology Breakout, 2005 and 2006

  39. Guaranteed Loan Activity, 2005 – 06

  40. FY 2007 Projects Awarded

  41. FY 2007 Projects Awarded Nationwide

  42. Section 9006 – FY2008 Program • Programs • Grants • Combination – Grant / Guaranteed Loans • Loans - Guaranteed

  43. Section 9006 – FY2008 Program • Trends – • Small projects do get funded FY07 Average Grant Size • Grant Only $32,700 • Combo Grant $64,600 FY07 Average Loan Size • Combo Loan $76,000 • Loan Only $9,500,000

  44. Section 9006 – FY2008 Program • NOFA for 2008 • In Process • Application Period • To Be Determined • Start Early – Now • Multiple Rounds Anticipated for Grants

  45. Section 9006 – FY2008 Program • Trends / Tips • Program getting very competitive • Application preparedness – increasingly important • Utilize Scoring Criteria for application preperation

  46. Section 9006 – FY2008 Program Scoring Criteria • Quantity of energy produced, replaced or saved ** • 10-20 points • Environmental benefits • Maximum of 10 points • Commercial availability ** • Maximum of 10 points • Technical merit * • Maximum of 35 points • Readiness (grants only) • Maximum of 15 points ** NREL Opinion * NREL Determines

  47. Section 9006 – FY2008 Program Scoring Criteria • Small agricultural producer/Very small business • Maximum of 10 points • Simplified application • Maximum of 5 points • Previous grantees or borrowers • Maximum of 5 points • Return on investment ** • Maximum of 10 points • Loan rate (guaranteed loan only) • Maximum of 10 points ** NREL Opinion * NREL Determines

  48. Section 9006 – FY2008 ProgramTechnical Merit

  49. Section 9006 – FY2008 Program • Trends / Tips • Pitfalls • Environmental Issues can hold up application development • Leverage – need commitment • Technical Issues not addressed • Readiness • Incomplete / Inconclusive information • Application started too late

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