Section 9006 Renewable Energy and Energy Efficiency Program Ground-Source Heat Pumps and Geothermal Direct Use Works

1. Section 9006 Renewable Energy and Energy Efficiency Program Ground-Source Heat Pumps and Geothermal Direct Use Workshop March 23, 2006 Presented by Richard Carrig

2. Overview • Grant, Guaranteed loan, and Direct program to- • Purchase qualifying renewable energy systems, or • Make energy efficiency improvements • Qualifying Renewable Energy Systems • Systems deriving energy from a wind, solar, biomass, or geothermal source; or hydrogen derived from biomass or water using wind, solar, biomass, or geothermal energy sources” • Qualifying Energy Efficiency Improvements • Improvements to an existing facility, or process that reduces energy consumption

3. Nationwide Funding Levels for FY 2006 • Grant component: $11,385,000 • Guaranteed Loan component: $176,500,000 • any unused guaranteed funding authority will be converted to fund grant requests • Application Deadline dates • May 12, 2006: Grant application deadline • June 1, 2006: Guaranteed loan deadline

4. Who is eligible • Agricultural producers • An individual or entity directly engaged in the production of agricultural products, including crops; livestock; forestry products; hydroponics; nursery stock; or aquaculture, whereby 50 percent or greater of their gross income is derived from the operations. • Rural small business • Must meet Small Business Administration (SBA) small business size standards • www.sba.gov/size/indextableofsize.html • Includes all parent, subsidiaries, holding, and affiliated interests

5. Who is eligible • Other applicant eligibility criteria • Applicant must be the owner/operator of the project • Applicants must demonstrate financial need (grants only) • Applicants must meet U.S. citizenship requirements • Applicants must have sufficient revenues and ability to provide for operation and maintenance of the system • Applicants cannot be delinquent on any Federal debt • Small business applicants must be headquartered in a rural area

6. Eligible Rural Areas • Projects must be located in a rural area • Rural area: • Any area, other than a city or town that has a population of greater than 50,000 inhabitants and the urbanized area contiguous and adjacent to such a city or town according to the latest decennial census of the United States (2000 census) • Almost all of Utah will qualify as rural!!

7. Eligible Rural Areas • Ineligible areas in Utah: • Over 50,000 population (considered urban): Ogden, Layton, Salt Lake City, Sandy, West Valley, West Jordan, Taylorsville, Orem and Provo • Contiguous to urban areas (considered urbanizing) North Ogden, South Ogden, Harrisville, Washington Terrace, Riverdale, East Layton, Clearfield, Syracuse, Kaysville, Centerville, Woods Cross, Bountiful, North Salt Lake City, South Salt Lake City, Magna, Kearns, Taylorsville, Holladay, Sugar House, Murray, Midvale, Jordan, West Jordan, South Jordan, Draper, Pleasant Grove, Lindon, Lakeview, Irontown, and Springville

8. What projects are eligible • Purchase of a qualifying renewable energy system, or make energy efficiency improvements to an existing operation • Qualifying renewable energy systems include wind, solar, biomass, geothermal or hydrogen systems • Must be commercially or pre-commercially available • Must be replicable • Must be technically and financially feasible • Must be located in a rural area • Must be owned and controlled by applicant

9. What projects are eligible • Commercially available systems must: • have a proven operating history • utilize established design, and installation procedures • Service providers and labor are familiar with installation • System equipment and spare parts are readily available • Service is readily available to properly maintain and operate the system. • Warranty for parts, labor, and performance

10. What projects are eligible • Pre-Commercial technology is: • Technology that has emerged through the research and development process • Has technical and economic potential for commercial application, but is not yet commercially available • Have at least one commercial unit in operation for at least 1 full year in the U.S.

11. Some projects that are NOT eligible • Residential purposes • Hydro projects • Projects utilizing paper that is commonly recycled • Projects utilizing un-segregated solid waste (landfills) • Most new construction projects • Municipal projects, school districts, etc. • Projects not owned and controlled by the applicant • Projects not utilizing commercial or pre-commercial tech. • Used equipment, vehicles, farming equipment • Projects that are not technically or financially feasible • Projects that are not located in a rural area

12. Thresholds • Grant component • Grant requests cannot exceed 25% of eligible project costs • Maximum RE grant award is $500,000 • Minimum RE system grant award is $2,500 • Minimum $10,000 project size (eligible costs) to qualify for grant assistance • Maximum EE grant award is $250,000 • Minimum EE grant award is $1,500 • Minimum $6,000 project size (eligible costs) to qualify for grant assistance

13. Thresholds • Guaranteed loan component • Commercial lender underwrites the loan proposal, and applies to USDA for a guarantee on the lender’s loan • Maximum 85% guarantee for loans of $600,000 or less • Maximum 80% guarantee for loans greater than $600,000 through $5,000,000 • Maximum 70% guarantee for loans greater than $5,000,000 through $10,000,000

14. Thresholds • Guaranteed loan component • Guaranteed loans cannot exceed 50% of eligible project costs • Federal grants cannot be used as matching funds • Other guaranteed loan programs (such as SBA) can count as matching funds • Eligible costs can include working capital and land acquisition (not allowed as eligible costs for grant program)

15. Thresholds • Guaranteed loan component • Maximum guaranteed loan is $10,000,000 • Minimum guaranteed loan is $5,000 • Minimum $10,000 project size (eligible costs) to qualify for guaranteed loan assistance • Guaranteed loan equity requirements: • Minimum 15% of eligible project costs for requests of $600,000 or less • Minimum 25% of eligible project costs for requests greater than $600,000

16. Thresholds • Guaranteed loan component • Guaranteed loan fee schedule • 1% of the guaranteed loan amount • annual renewal fee of 1/8% (FY2006) of the outstanding principal balance of the loan (as of December 31st of each year) • Interest rates • negotiated between borrower and lender- subject to USDA concurrence • can be fixed or variable

17. Thresholds • Guaranteed loan component • Maximum Guaranteed loan terms • 30 years for real estate, or combination real estate and equipment purposes • 20 years for machinery and equipment purposes • 7 years for working capital purposes

18. Thresholds • Direct loan component • Not implemented at the present time • Combination grant/guaranteed loan component • Combined requests cannot exceed 50% of eligible project costs • eligible project costs can include working capital and land acquisition (otherwise not allowed for grant only requests) • Minimum combined request is $5,000 • Minimum $10,000 project size (eligible costs) to qualify for combined assistance • Minimum combined grant component of funding request is $1,500

19. Eligible projects costs • Grant program • Post application purchase and installation of RE equipment • Post application EE improvements • Energy audits or assessments • Feasibility studies, Business plans, and Technical reports • Permit and license fees • Professional service fees (except for application preparation) • Post application construction ONLY when the facility is: • used for the same size and purpose as the ‘old’ facility • provide more energy savings than ‘old’ facility • More cost effective than improving the ‘old’ facility

20. Eligible projects costs • Guaranteed program or combination requests • Same as grant program, but can also include: • real estate acquisition • working capital purposes

21. How to apply • Application requirements • Applications must be submitted to an office of USDA-Rural Development in Utah • Application instructions and forms available at: www.rurdev.usda.gov/rbs/farmbill/index.html

22. How to apply • Application requirements • Other application resources: • NREL small project technical review templates (wind, solar electric, solar thermal, bioenergy, energy efficiency) • NREL developed small project small wind RE application • INEL developed small project geothermal RE template • Processing guides • Resource handbook

23. How to apply • Application requirements- grant requests • Projects with eligible project costs greater than $200,000 • use FULL Application Review Checklist (Guide 2) • Complete Grant Certifications and Applicant Eligibility for (Guide 5) • Projects with eligible project costs of $200,000 or less • use SIMPLIFIED Application Review Checklist (Guide 3) • Also complete Grant Certifications and Applicant Eligibility for (Guide 5) • Complete Certification Regarding Qualification For Simplified Grant Applications (Guide 6)

24. How to apply • Grant Application Requirements • Data Universal Numbering System (DUNS) number • Effective 10/1/03, most applicants soliciting Federal grant assistance must have a registered DUNS number to apply • To obtain a DUNS number, call the government dedicated DUNS number self-request line at: 1-866-705-5711 • DUNS number not required for guaranteed loans!!

25. How to apply • Grant Application Requirements • Form SF 424.2“Application for Federal Assistance-Construction” • DUNS number goes in item 5 • Catalog of Federal Domestic Assistance Number (item 10) is 10.755 • All applications are subject to review by the State Executive Order 12373 process (item 16)

26. How to apply • Grant Application Requirements • Form SF424C “Budget Information-Construction Programs” • include total project costs • itemize by purpose, and by eligible (allowable) and ineligible (costs not allowable for participation) • a more detailed budget breakdown is required in the Technical report • Form SF 424D”Assurances-Construction Programs” • Basically a read/sign form • Assuring compliance to 19 requirements

27. How to apply • Grant Application Requirements • Form RD 1940-20 “Request For Environmental Information” • Basically a checklist of 32 environmental resources that may be affected by the project • AD-1049 “Certification Regarding Drug-Free WorkplaceRequirements (Grants) Alternative 1 – For Grantees Other Than Individuals” • Basically a read/sign form • Policies and procedures to ensure a drug-free workplace

28. How to apply • Grant Application Requirements • AD-1048 “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion-Lower Tiered Covered Transactions” • Basically a read/sign form • A ‘lower tier participant’ is basically any project contractor or vendor doing business with the applicant

29. How to apply • Grant Application Requirements • Exhibit A-1 of 1940-Q (Certification for Contracts, Grants and Loans) • Only required if grant request exceeds $100,000 • Basically a read/sign form • Certifying that no Federal funds will be used for lobbying or other activities • Form SF-LLL “Disclosure of Lobbying Activities” • Only required if applicant will use Non-Federal funds for lobbying activities

30. How to apply • Grant Application Requirements • AD-1047 “Certification Regarding Debarment , Suspension, and Other Responsibility Matters-Primary Covered Transactions” • Basically a read/sign form • This one is signed by the applicant only. A ‘primary participant’ is the applicant

31. How to apply • Grant Application Requirements • Form RD 400-1 “Equal Opportunity Agreement” • Only required if Federal Assistance exceeds $10,000 • Basically a read/sign form • Applicant agrees to include ‘Equal Opportunity’ language into contract documents • Form RD 400-4 “Assurance Agreement” • Only required if Federal Assistance exceeds $10,000 • Basically a read/sign form • Applicant agrees to comply with the civil rights act of 1964 (non discrimination requirements)

32. How to apply • Grant Application Requirements • Intergovernmental consultation comments in accordance with Executive Order 12372 • Basically, this references an agreement between the Federal and State Governments stating that the Federal government won’t fund projects that the State government is opposed to. • In Utah, the Association of Government (AOG) serving the project area must be notified of the project, and given an opportunity to provide comments on the project (60 days) • BRAG, Five County AOG, Mountainland AOG, Six County AOG, Southeastern Utah AOG, UBAG, Wasatch Front Regional Council

33. How to apply • Grant Application Requirements • Certification, indicating whether or not there is a known relationship or association with a USDA employee (included in Guide 5) • Spouse, other relative, close friend, business partner, etc.

34. How to apply • Grant Application Requirements • Certification, indicating that the applicant meets the definition of demonstrated financial need (included in Guide 5 and 6) • documentation that the applicant is unable to finance the project from its own and commercially available resources without grant assistance, or that the project proposed by the applicant cannot achieve the income and cashflows to sustain it financially over the long term without grant assistance • Organizational Documents • Except for sole proprietorships • Articles of Incorporation, By-Laws, current certificate of existence, etc.

35. How to apply • Grant Application Requirements • Table of contents • Include page numbers for each component of the application • Project Summary • Title of project • Applicant eligibility • Project eligibility • Operation description • Financial information for size determination

36. How to apply • Grant Application Requirements • Financial statements (total operations) NOT REQUIRED FOR PROJECTS OF $200,000 OR LESS • current balance sheets and income statements (within 90 days) • 3 years historical balance sheets and income statements • pro forma startup balance sheet • 3 years projected balance sheets, cashflow statements, and income statements (including list of assumptions) • small business financial statements must meet GAAP

37. How to apply • Grant Application Requirements • Financial information for size determination • small businesses must provide sufficient information for USDA to determine total annual income and cost of goods (total operations) • Ag. producers must provide sufficient information for USDA to determine the gross market value of their ag, products sold for the prior calendar year

38. How to apply • Grant Application Requirements • Matching funds • Sources of matching funds, amounts, and status of matching funds with contact information • Self-Evaluation Score • Appendix ‘C’ to RD Instruction 4280-B or Guide 4 • Also include supporting documentation to support score

39. How to apply • Grant Application Requirements • Technical Report • Purpose: document that the project design, procurement, installation, startup, operation, and maintenance of the project will operate or perform as specified over its design life in a reliable, safe, cost-effective, and legally compliant manner • Appendix ‘A’ to RD Instruction 4280-B for small sized projects (projects with total eligible project costs of $200,000 or less) • NREL technical review templates should be helpful!!

40. How to apply • Grant Application Requirements • Technical Report • Appendix ‘B’ to RD Instruction 4280-B for large sized projects (projects with total eligible project costs greater than $200,000) • renewable energy projects with total eligible project costs greater than $400,000 and energy efficiency improvement projects with total eligible project costs greater than $200,000 require the services of a licensed professional engineer (PE) or team of PEs. • For projects with total eligible project costs greater than $1,200,000, the technical report must be reviewed by and include an opinion and recommendation by an independent qualified consultant.

41. How to apply • Grant Application Requirements • Energy Efficiency requests • Must have a energy assessment or an energy audit • Energy assessment is sufficient if the project has eligible project costs of $50,000 or less. • Energy audit is required if the project has total eligible project costs greater than $50,000. • Energy audit must be completed by a certified energy auditor.

42. How to apply • Grant Application Requirements • Renewable Energy Systems • Must have a business level feasibility study if total eligible project costs exceed $200,000 • Feasibility study must include an evaluation of the economic, market, technical, financial, and management aspects of the project. • Feasibility studies must be completed by a independent, qualified consultant

43. How to apply • Guaranteed Loan Application requirements • Guaranteed loans greater than $600,000 • Reference Guaranteed Loan Review Checklist (Guide 9) • Guaranteed loans LESS than $600,000 • Reference Guaranteed Loan Review Checklist (Guide 10) • Do not need a DUNS number • Do not have to document financial need • Do not need to complete many of the Federal forms required for grant proposals

44. How to apply • Guaranteed Loan Application Requirements • Guaranteed loans do have to have the following: • Business plan (loans greater than $600,000) • Lender’s written analysis • A personal credit report for each owner, partner, officer, director, key employee, and stockholder owning 20% or more interest in the business (except passive investors) • Kept in lender’s file for loans of $600,000 or less • Appraisals on proposed collateral • Kept in lender’s file for loans of $600,000 or less

45. How to apply • Guaranteed Loan Application Requirements • Guaranteed loans do have to have the following: • Commercial credit reports on the borrower and any parent, affiliate, and subsidiary firms • Kept in lender’s file for loans of $600,000 or less • Current personal and corporate financial statements of any guarantors • Kept in lender’s file for loans of $600,000 or less

46. How to apply • Guaranteed Loan Application Requirements • Guaranteed loans do have to have the following: • Certification by the lender that it has completed a comprehensive analysis of the proposal, the borrower is eligible, the loan is for authorized purposes with technical merit, and there is a reasonable assurance of repayment ability based on the borrower’s history, projections, equity, and the collateral to be obtained • Kept in lender’s file for loans of $600,000 or less • Proposed lender/borrower loan agreement

47. Evaluation of Grant Applications • USDA-Rural Development will review all applications for eligibility and completeness • NREL will complete all technical reviews • Complete applications that are eligible, and pass technical reviews requirements will be considered for nationwide funding competition • Projects funded based on project evaluation scores • Appendix C • Guide 4 (Appendix C Scoring Guideline) • All projects will be funded by September 30, 2006

48. Evaluation of Grant Applications (Appendix C) • Evaluation criteria (total maximum score is 110 points): 1. Quantity of energy replaced (one of three categories) a. Energy replacement (max. 15 points) • 10 points if greater than 25% through 50% • 15 points if greater than 50% b. Energy savings (max. 20 points) • 5 points if 20% to 30% • 10 points if 30% to 35% • 15 points if 35% or more • 5 points if eligible project costs of $50,000 or less and has a professional energy audit c. Energy generation (10 points) • energy produced primarily for sale

49. Evaluation of Grant Applications 2. Environmental benefits (10 points) a. Contributes to environmental goals/objectives of other Federal, State, or local programs 3. Commercial availability (max. 15 points) a. Commercially available/replicable (5 points) b. Minimum 5 year comprehensive warranty (10 points) 4. Technical merit score (max. 35 points) a. 10 components- scored by NREL

50. Evaluation of Grant Applications 5. Readiness (grants only- max. 15 points) a. 5 points if amount of matching funds are place to start project is between 50% to 75% b. 10 points if amount of matching funds are 75% to 10% c. 15 points if amount of matching funds are 100% 6. Small ag. producer / very small business (max 15 points) a. 5 points if less than $600,000 in previous year b. 10 points less than $200,000 in previous year or is a very small business (less than 1 million in annual receipts and less than 15 employees)