Rural Development’sRural Energy for America Program(REAP)Grants and Loans Guarantees &Renewable Energy Feasibility Studies June 5, 2009
Two Purposes • Program is designed to promote energy efficiency and renewable energy development for agricultural producers and rural small businesses through grants and loan guarantees for the purchase of these systems. • Program is designed to help fund feasibility studies for agricultural producers and rural small businesses interested in the installation of renewable energy systems.
Rural Development’s Role Grant Assistance • 25% of the project’s eligible costs • $250,000 Maximum for Energy Efficiency Projects. • $500,000 Maximum for Renewable Energy Projects. • Grant assistance is taxable. A 1099 will be sent to the grant recipient. • REAP Grant cannot be used with grants from other Federal Sources. Loan guarantees • 85% loan guarantee for loans under $600,000 • $25,000,000 maximum loan amount
Expected Available Funding Fiscal Year 2009 • 2008 Farm Bill provided for increased funding over previous years. • Fiscal year 2008 funding levels were $16 Million for grants and $208 Million for Loan Guarantees. • Fiscal year 2009 funding levels are expected to be $31 Million for grants and $303 Million for Loan Guarantees.
Types of projects eligible for USDA Assistance • Renewable Energy • Energy Efficiency
Biomass and Bioenergy Projects • Biodiesel, Ethanol • Wood pellet manufacturing • Boilers fueled by biomass • Anaerobic Digester Projects • Wind • Small - less than 100kw and under 110’hub height • Large – Over 100kw • Geothermal
Solar – Electric Projects • Small (less than 10kW) and Large • Solar – Thermal Projects • Small (240 gallons storage or less) and Large • Energy Efficiency Improvements • Grain Dryer Replacements • Freezers & Coolers • Lighting Improvements • Efficiency improvements per energy audit • Small Hydropower
Applicant EligibilityGrants and Loan Guarantees Applicant: • must be an agricultural producer (Greater than 50% of income from farming operation). • rural small business as defined by the SBA. • must be citizens of the U.S. • must not have federal judgments or delinquent federal taxes • Must demonstrate financial need (Grants and Grant and Loan Guarantee Combinations only)
Project Eligibility Grants and Loan Guarantees Project: • Must be for the purchase of a renewable energy system • Must be to purchase energy efficiency improvements. • Must be for commercially available and replicable technology • Must have technical merit • Must be located in a rural area • Cannot be used for residential improvements.
Eligible Project Costs (Grants) • Post-application purchase and installation of equipment, • Post-application construction or project improvements, • Permit Fees • Retrofitting (Post- Application) • Professional Service Fees, except application preparation • Feasibility Studies (required prior to application submission) • Business Plans (required prior to application submission) • Energy Audits (required prior to application submission) • Program cannot be used for projects already installed.
Guaranteed Loans • Provides a federal loan guarantee to banks on loans made to customers intending to finance energy related projects. • Guaranteed loan cannot exceed 75% of total eligible project costs. • This Federal Assistance is intended to provide “gap” financing for energy related projects. • Minimum cash equity injection into the project will range from 15% up to 25% of eligible project costs.
Lender Benefits • Risk mitigation • Increased Profits • Increased Confidence of Banking Regulators • Increased Liquidity Customer Benefits • Longer Term Loan • Better Interest Rate • Improved Cash Flow • Helps to ensure a successful project.
Application Contents • Project description • Application forms • Grant or guaranteed loan forms (Or both) • Grant recipient Certifications • Financial Information • Quantity of financial information is dependent on the size of the grant and/or guaranteed loan request. • Project’s Technical Requirements
Application Contents • Project Technical Requirements- All projects will be required to address the following ten items within the projects technical report. Start to complete this information NOW!!
Examples • Replacement lighting for Manufacturer County. • Savings kWh 121976; Annual Savings $9,758; Payback of 2.5 Years • Grain Dryer Replacement - Energy Savings • Electric savings of 47% • Propane savings of 37% • Cost savings of $8,124 per year • Small Greenhouse Application improvements included • Thermal curtain, root zone heating and Solar window film • 34% Energy Savings and Annual Savings of $11,143
Examples • Wind Turbine Installation for Existing Greenhouse • Proposed electricity production is 81,600 kWh/ year • Energy Production as a percentage 26% • Expected cost savings $7,344 /yr. • Anaerobic Digestion System - to resolve odor and runoff problems and create a renewable energy to offset farm electrical use and generate renewable energy sales • Expected electrical production 6,970,000 kWh • Return on Investment Expected costs of $2,270,000 / Expected income of $528,000 = 4.3 yrs
Renewable Energy Feasibility Studies • Same applicant eligibility requirements as the Renewable energy systems requirements. • Grant funding is capped at $50,000 or 25% of the project whichever is less. • Description of the Feasibility study to be conducted.
Application Time Line • All Applications must be received by: July 31, 2009 • Contact Randy Monhemius at 614/255-2424 or at email@example.com to discuss the application process. • http://www.rurdev.usda.gov/ia/rbcs_RE-EE_grants.html