USDA Funding for Renewable Energy and Energy Efficiency Improvements

1. USDA Funding for Renewable Energy and Energy Efficiency Improvements February 23, 2007 Rowan University Glassboro, New Jersey Presenter: Victoria Fekete, Loan Specialist USDA Rural Development

2. Outline • What is the Section 9006 Program? • Who is Eligible? • What Projects are Eligible? • How to Apply? • Filling out the Application • Application Requirements • Technical Requirements • Environmental Requirements • Evaluation Criteria • Lessons Learned • More Information • Schedule of Award Process • Applications

3. What is the Section 9006 Program? • Created as a U.S.D.A. program • Program designed to assist farmers, ranchers and rural small businesses with energy projects • In FY 2006, this program provided $11 million nationwide in grant funds for renewable energy systems and energy efficiency improvements as well as $176 million in loan guarantees.

4. Who is Eligible? • Agricultural producers and rural small businesses can apply • Definitions:* • Rural – Any area other than a city of town with population over 50,000. Cannot be in urbanized area adjacent to such a city or town. • Agricultural Producer -- An individual or entity directly engaged in the production of agricultural products (including farming or ranching) that gets 50% + of their gross income from the operations • Small Business – A private entity including a sole proprietorship, partnership, corporation or cooperative • Must have 500 or fewer employees and $20 million or less in total annual receipts. • Excludes entities formed solely for a charitable purpose. • Must meet SBA definition of small business * Summarized definitions. See Full RD Instruction 4280-B for full definitions.

5. Who is Eligible? (cont’d) • Must use systems that are commercially available (have a proven operating history & an established design, installation, equipment & service industry) • Applicant must demonstrate that it is unable to finance the project from its own sources or other sources without grant assistance.

6. Who is Eligible? (cont’d) • Applicant must have financial feasibility (The ability to achieve the projected income and cash flow. The cost accounting system, the availability of short term credit for seasonal businesses and the adequacy of raw materials and supplies will also be assessed.) • Must have technical feasibility.

7. Who is Eligible? (cont’d) • Other requirements for eligible applicants: • If individuals, must be U.S. citizens or legal permanent residents of the U.S. • If an entity, must be at least 51 percent owned by individuals who are either U.S. citizens or legal permanent residents of the U.S. • If a rural small business, the business headquarters must be in a rural area & the project funded also must be in a rural area.

8. What Projects are Eligible? • Any renewable energy and energy efficiency project as defined in the law. • Requirements for eligible projects: • Must be located in a rural area. • Must be for a pre-commercial or commercially available and replicable technology. • Must be technically feasible. • Must have sufficient revenues to provide for operation and maintenance

9. What Projects are Eligible? (cont’d) • Grants request must not exceed 25% of project costs • Renewable Energy: • Minimum grant request: $2,500 • Maximum grant request: $500,000 • If request is over $200,000, NOFA requires a project-specific feasibility study prepared by a qualifies independent consultant • Energy Efficiency • Minimum grant request: $1,500 • Maximum grant request: $250,000 • If total project costs are over $50,000, an energy audit is required (if under $50,000, energy assessment acceptable) • The applicant must be the owner of the project and control the operation and maintenance of the proposed project.

10. ELIGIBLE PROJECT COSTS • Purchase/Installation of Equipment • Construction & Improvements • Energy Audits • Permit Fees • Professional Service Fees • Feasibility Studies • Business Plans • Retrofitting

11. ENERGY AUDIT • Required for ALL energy efficiency improvement projects over $50,000, • written by an independent qualified entity, • documents current energy usage, • recommends improvements & their costs, • projects savings, and • shows the average payback period in years.

12. INELIGIBLE PROJECT COSTS • Land acquisition • Capital leases • Working capital • Residential improvements • Agricultural tillage equipment • Vehicles • Grant application preparation • Waste collection

13. INELIGIBLE PROJECT COSTS • Funding political or lobbying activities • O&M, repairs, or fuel costs • Production, collection, transportation of energy inputs • Construction of a new facility, unless it is a similar replacement with net energy savings • Costs incurred prior to application being submitted to RD except for predevelopment costs.

14. Farm Bill Definitions • Renewable Energy – energy derived from: • wind, solar, biomass, or geothermal source, or • hydrogen derived from biomass or water using one of the above energy sources • Biomass – any organic material that is available on a renewable or recurring basis. Includes: • agricultural crops • trees grown for energy production • wood waste and wood residues • plants (including aquatic plants and grasses) • residues, fibers • animal wastes and other waste materials, and • fats, oils and greases (including those that are recycled). • The term “biomass” does not include paper that is commonly recycled or unsegregated solid waste.

15. How Do I Apply? • Deadline for 2007 Applications – To Be Announced • Full details concerning the application process will only be available once Congress has issued a Notice of Funds Availability (NOFA) which is published in the Federal Register. • USDA also will provide the NOFA at: http://www.rurdev.usda.gov/rd/nofas/index.html • More information and assistance available from your our office at: USDA Rural Development 5th Floor North, Suite 500, 8000 Midlantic Drive Mt. Laurel, NJ 08054 (856-787-7750)

16. Filling out the Application • The NOFA requires a number of Standard Forms • All necessary forms available for download at www.rurdev.usda.gov/rbs/farmbill/ • SF-424: Application for Federal Assistance • Organizational DUNS • To obtain your DUNS Number, call the government dedicated DUNS Number self-request line at: 1-866-705-5711 • Catalog of Federal Assistance Number • Not applicable this year to this program • Is application subject to review by State Executive Order 12372 Process? • New Jersey does not require a review

17. Application Requirements • Must meet eligibility requirements for: • Applicant • Project • Financial Need • Replicability • Complete application • Technical Report required for both RE & EE projects • To qualify for funding, the application will also have to pass: • Technical Review • National Environmental Policy Act (NEPA) Review

18. Technical Requirements • Different technical requirements are based on type of technology & size of project • All renewable energy requirements follow the same standard project development process: • Qualifications of project team • Agreements and permits • Resource assessment • Design and engineering • Project development schedule • Financial feasibility • Equipment procurement • Equipment installation • Operations and maintenance • Decommissioning

19. Technical Requirements • Different Technology Requirements for: • Biomass, Bioenergy • Anaerobic Digester • Geothermal, electric generation • Geothermal, direct use • Hydrogen • Solar, small (10 kW or smaller) • Solar, large (larger than 10 kW) • Wind, small (100 kW or smaller) • Wind, large (larger than 100 kW) • Energy Efficiency • USDA has worked with technology experts to develop Guidance on the Technical Requirements for each technology. • Designed to help applicants better understand how to respond to the technical requirements. • Available at www.rurdev.usda.gov/rbs/farmbill/

20. Environmental Requirements • All projects receiving federal grants are subject to the provisions of the National Environmental Policy Act (NEPA). • The USDA will perform the NEPA review • Per RD Instruction 4280-B, applicants must: • Complete Form RD 1940-20, “Request for Environmental Information.” • Provide all information necessary for the Agency to complete a NEPA review and analysis. USDA may contact applicant after preliminary review if more information is needed. • Be responsible for any applicable analyses and studies required as part of completing the NEPA analysis (i.e. Archaeological studies, Biological Assessments, etc.) • Strive to achieve positive community support, select good sites, and mitigate environmental impacts resulting from their proposals.

21. Environmental Requirements • If an environmental review cannot be completed in sufficient time for grant funds to be obligated by September 30, 2007, grant funds will not be awarded. • One potential exception: funds may be obligated even though the U.S. Fish and Wildlife and Historic Preservation portions of the NEPA review are not completed. • Funds will not be disbursed until the full NEPA review is satisfactorily completed. • If a project requires public comment and input as part of the NEPA review, the applicant will need to complete that effort prior to September 30 to receive an award. • If you anticipate any potential environmental or public concerns with your project, discuss these with your USDA state rural energy coordinator as early in the development process as possible.

22. Evaluation Criteria • All projects scored on: • Quantity of energy replaced, produced or saved –greater the quantity higher the score • Environmental Benefits – if project is needed to meet environmental regulation, it gets extra points • Commercial Availability – extra points if available • Technical Merit Score - this is scored by NREL • Cost Effectiveness – the shorter the payback, the higher the score • Matching Funds – the higher percentage match that the applicant provides for the grant, the higher the score • Management – if the project is monitored and managed by a third-party qualified operator, it gets extra points • Small Agricultural Producer – if the applicant qualifies as a small producer, the project gets extra points. • Simplified application/low cost project – if project costs under $200,000, it gets extra points • No Previous Grants within last 2 years – project gets extra points.

23. Technical Merit Points • Qualifications of the Project Team • Agreements and Permits • Energy or Resource Assessment • Design and Engineering • Project Development Schedule • Project Economic Assessment • Equipment Procurement • Equipment Installation • Operation and Maintenance • Dismantling and Disposal of Project Components

24. Lessons Learned • Developing Your Project • Know your energy resource • Build a strong project team • Start as early as possible • Take advantage of other available state and local incentives • Tap into the resources available in your area • USDA state office, non-profit organizations, state energy and agriculture agencies • Recognize this is a long-term project and requires a long-term commitment • Remember: Evaluation criteria are important in getting an award. Think about tailoring your project to the NOFA.

25. Lessons Learned (cont’d) • Preparing Your Application : • Carefully read all the terms of the NOFA and include everything that it requires. • Make use of available resources, especially the USDA state rural energy coordinator. • Only include more information if it will really add value and help bolster your project. Longer is not better. • Organize your application in line with the NOFA and include a table of contents, page numbers. • If you don’t understand something on a form or in the NOFA, contact the USDA State Office.

26. More Information • Web site for the USDA Farm Bill Section 9006: www.rurdev.usda.gov/rbs/farmbill/ • Overview of Program • Standard Government Application Forms • Technology-specific Guidance for Technical Requirements • Links to other resources and incentives for these technologies • Additional website for invaluable assistance, fillable forms and reference material is: www.rurdev.usda.gov/ia/rbcs_RE-EE_grants.html • NOTE: This is a site maintained by USDA Rural Development in Iowa. All inquiries, correspondence and applications must be addressed to USDA Rural Development in NEW JERSEY.

27. MORE INFORMATION (cont’d) • Submit separate applications for “Renewable” and “Efficiency” projects • Only 1 application - per applicant for each • Technical report must be an original + 1 copy • Maximum amount of grant assistance to any one entity cannot exceed $750,000 • Application content see RD Instruction 4280-B and NOFA to be forthcoming

28. Schedule of Award Process

29. APPLICATIONS • Submit a complete application no later than (to be announced in future NOFA) • Mail to: USDA Rural Development Attn: Business & Community Programs 5th Floor North, Suite 500 8000 Midlantic Drive Mount Laurel, NJ 08054

30. ? 1-856-787-7750 NJ RD State Office

31. Thank You!