funding digester projects thru usda - lavin

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Rural Development Rural Business and Cooperative Development Service (RBS) Jim Lavin, Area Specialist

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Page 1: Funding Digester Projects thru USDA - Lavin

Rural Development

Rural Business and CooperativeDevelopment Service (RBS)

Jim Lavin, Area Specialist

Page 2: Funding Digester Projects thru USDA - Lavin

Farm Bill Section 9007 – 7CFR 4280-B Rural Energy for America

Program (REAP)

Grants and Guaranteed Loans for

Farmers, Ranchers, and

Rural Small Businesses

Page 3: Funding Digester Projects thru USDA - Lavin

What is Section 9007 ?• Created 2002 Farm Bill and amended by section 9001 of the 2008

Farm Bill.• Expands and renames the program formerly called the Renewable

Energy Systems and Energy Efficiency Improvements Program.• Hydroelectric Source Technologies will be added as eligible.• Feasibility Studies have been added as an eligible purpose. • USDA / RD has published 4280-B program Regulation.• Designed to help farmers & small businesses with energy needs &

projects.• To date, the program has provided $4,016,946 in grants and loans

to 36 applicants in CT/MA/RI jurisdiction.

Page 4: Funding Digester Projects thru USDA - Lavin

Provides for grants and/or loan guarantees for renewable energy systems and energy efficiency improvements for agricultural producers and rural small businesses.

Program demand for Section 9006 exceeded 3 times available funds

Funding increased to $255 million over four years Additional $100 million authorized in 5-year discretionary spending

Page 5: Funding Digester Projects thru USDA - Lavin

New Component

– Guaranteed loan limit increased to $25 MM.– Federal share including loan increased to

75%. Maximum grant remains at 25%– Grants to complete energy audits and

renewable energy development assistance– Eligible applicants

• governmental• educational• electrical cooperative & public power entities • other similar organizations

Page 6: Funding Digester Projects thru USDA - Lavin

Purpose

• Purchase renewable energy systems

(A process that produces energy)

• Make improvements that reduce energy consumption

Page 7: Funding Digester Projects thru USDA - Lavin

Basic Technical Eligibility

Proposal must be for an eligible technologyRenewable Energy• Wind• Solar• Geothermal• Biomass• Hydrogen • Hydroelectric

Page 8: Funding Digester Projects thru USDA - Lavin

Other Requirements

To qualify for funding, projects must pass:

• Technical Review (USDA, DOE, NREL)

• National Environmental Policy Act Review

Page 9: Funding Digester Projects thru USDA - Lavin

Biomass Projects

Utilize any organic material that is available on a renewableor recurring basis. Include: - agricultural crops - trees grown for energy production - wood waste and wood residues - plants - residues - fibers - animal wastes, and - fats, oils and greases

Page 10: Funding Digester Projects thru USDA - Lavin

Biomass Projects(continued)

Bioenergy Projects(examples):

- Waste-wood fired furnaces

- Pellet(fuel) production

- Biodiesel plants

- Biorefineries

- Ethanol plants

- Co-firing for electric/heat generation

Page 11: Funding Digester Projects thru USDA - Lavin

Past AD ProjectsGrant Loan kWh/yr

FY # Amt. Amt. Generated

2003 33 7,518,530 0 138,934,992

2004 37 9,508,946 9,830,000 133,553,644

2005 14 5,018,017 0 51,424,869

2006 11 2,915,457 1,065,850 34,970,391

2007 15 5,468,815 3,259,027 34,787,904

2008 10 10,165,952 4,981,440 55,423,731

Totals 121 40,595,717 19,136,317 449,095,531

Page 12: Funding Digester Projects thru USDA - Lavin

Energy Efficiency Projects

Improvements to a facility, building, or process thatreduces energy consumption, or reduces energyconsumed per square foot. - Compressed Air Systems - Building Envelope - Greenhouse Thermal Blankets - Lighting - Motors - Pumps - HVAC

Page 13: Funding Digester Projects thru USDA - Lavin

Projects that are NOT Eligible

- Residential improvements

- Energy efficiency improvements related to

new construction

- Agricultural tillage equipment

- Vehicles

Page 14: Funding Digester Projects thru USDA - Lavin

Who Is Eligible?

• Rural Small Business• Agricultural producers• At least 50% of gross income

must be from their agriculture business.

• Must be either citizens or legally admitted.

• Must not be debarred or have federal delinquency.

• Applicant must be site owner & responsible for project O&M

Page 15: Funding Digester Projects thru USDA - Lavin

Demonstrated Financial Need

The demonstration by an applicant 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 cash flows to sustain it financially over the long term without grant assistance.

Self-Certification for Small Projects.

Additional Documentation for Large Projects.

Page 16: Funding Digester Projects thru USDA - Lavin

Applicant Eligibility Cont.

Project must be located in rural area. To

make sure your project is in an eligible area

visit our website at:

http://www.rurdev.usda.gov/rbs/ and click

on ERS – Rural Area Determinations

Page 17: Funding Digester Projects thru USDA - Lavin

What are Eligible Costs?

• Post application purchase & installation of equipment, except agricultural tillage equipment, used equipment and vehicles.

• Post application construction or project improvements, except residential.

• Energy audits or assessments.• Permit and license fees

Page 18: Funding Digester Projects thru USDA - Lavin

Eligible Costs

• Professional service fees, except for application preparation.

• Feasibility studies and technical reports• Business plans• Retrofitting• Construction of a new facility – same purpose, same

size, provides more energy savings than improving an existing facility

• Working Capital and Land Acquisition - Eligible costs for guaranteed loans only.

• Capital Improvements to an existing Renewable Energy System – Eligible costs for guaranteed loans only.

Page 19: Funding Digester Projects thru USDA - Lavin

Some Projects Funded in MA/CT/RI Jurisdiction

• Dove and Boar Farm; $29,397 renewable energy grant. Purchase and installation of a 15.6 KW Grid Connected Photovoltaic system at applicant’s farm in Hampton, CT

• S & D Farm; $49,751 renewable energy grant. Purchase and installation of a 50 KW Wind Turbine at applicant’s farm in Lisbon, CT.

• Smith Country Cheese: $48,000 renewable energy systems grant. Purchase and installation of a 20 KW Grid Connected Photovoltaic system at applicant’s farm in Winchendon, MA.

Page 20: Funding Digester Projects thru USDA - Lavin

What Small Businesses Eligible?

• Proposed project in a rural area.• Demonstrated financial need (grants only).• Meets the definition of a small business

according to SBA (http://sba.gov/size/index.html)» Use the “NAICS search” option

• A private entity including a sole proprietorship, partnership, corporation, a cooperative, and a governmental electric utility.

• Nonprofit organizations and public entities are not eligible.

Page 21: Funding Digester Projects thru USDA - Lavin

What Projects are Eligible

• Project must be for the purchase of a renewable energy system or energy efficiency project.

• Pre-commercial or commercially available and replicable technology.

• Technically feasible.• Located in a rural area.• Applicant must be owner of the system and

control site for the term of the loan.• Adequate revenues for O&M.

Page 22: Funding Digester Projects thru USDA - Lavin

What Is Not Eligible?

•Residential•Agricultural Tillage Equipment•Vehicles•Applicant In-Kind Contributions

Page 23: Funding Digester Projects thru USDA - Lavin

Maximum Grant Amount

Total Project Costs ________Minus Ineligible Costs ______= Total Eligible Costs ______ x 25%Equal Maximum Grant of ______

Total Eligible Costs minus Grant =Matching Funds Required to be Covered by the Applicant

Grants cannot exceed $500,000 for renewable energy projects and $250,000 for energy efficiency projects.

Page 24: Funding Digester Projects thru USDA - Lavin

Percentage of Guarantee

• 85% Loans of $600,000 or less.

• 80% Loans greater than $600,000 but less than or equal to $5,000,000.

• 70% Loans greater than $5,000,000.

Page 25: Funding Digester Projects thru USDA - Lavin

Rates and Terms

Interest rate negotiated between lender and borrower.

Term: Real estate 30 years Equipment 20 years or

useful life.

Working Capital 7 years

Page 26: Funding Digester Projects thru USDA - Lavin

Fees

• Guarantee Fee* 1% maximum• Renewable Fee* .5% maximum

(.25% for FY 2008) on balance @ 12/31 X guaranteed portion

* Fees will be published annually

Page 27: Funding Digester Projects thru USDA - Lavin

Tools and Resources

• Regulation:

http://www.rurdev.usda.gov/regs/regs_toc.html

• Outreach Materials, Technical and Environmental Guidance:

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

tools.html

Page 28: Funding Digester Projects thru USDA - Lavin

Funding Cycle

• Annual NOSA/NOFA.• Anticipate early 10

issuance.• Nationwide

competition for funds.• Early and final

deadlines. Last year 4/15 and 6/16.

Page 29: Funding Digester Projects thru USDA - Lavin

Questions?

Page 30: Funding Digester Projects thru USDA - Lavin

Contact:Jim Lavin

Area SpecialistUSDA Rural Development

52 Boyden RdHolden, MA 01520508-829-4477 x126

[email protected]