Renewable Energy and Energy Efficiency Grant Program

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

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

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Renewable Energy and Energy Efficiency Program

• A program to help agricultural producers and
  rural small businesses purchase renewable energy
  systems and make energy efficiency improvements.

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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 entities are
  excluded

Actual Definitions available in 7 CFR Part 4280
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Formula for 50 of Ag Income

• Gross Farm Income
• __________________________________________
• Total Income Total Farm Business Expenses

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SBA Size Standards

• http//www.sba.gov/services/contractingopportuniti
  es/sizestandardstopics/index.html

Excerpts from SBA Table of Small Business Size
Standards
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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/we
  lcomeAction.do

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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

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Energy Efficiency Examples

• Building Envelope
• Lighting
• HVAC Systems
• Water Heating
• Power Systems
• Refrigeration

• Grain Drying and Curing
• Irrigation
• Fans and Blowers
• Compressors
• Pumps

EE Projects must have the previous 12 months
history of energy use in order to measure savings
from the project improvements.
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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 OM, Maintenance Debt
  Service
• Applicant must own the project and control the
  revenues and expenses, including OM

Pre-Commercial at least one commercial unit in
operation for at least 1 full year in U.S.
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Eligible uses

• 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)

Only costs identified in the Energy Audit for
energy efficiency improvements are allowed (EE)
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Eligible uses

• Business plans
• Retrofitting
• Construction of a new facility (EE) - same
  purpose same size, based upon energy audit which
  provides more energy savings than improving the
  existing facility
• Working capital (Guaranteed Loan only)
• Land acquisition (Guaranteed Loan only)

Ineligible project costs include any costs not
identified above as eligible costs
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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
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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
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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

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2003-2006 Energy Projects

• 06-Hayes Sight and Sound, Inc.
• HVAC and lighting
• 26,000 grant
• 26,000 EE GL
• 52,000 BI GL
• 06-Whites KingCo, Inc.
• Refrigeration and lighting
• 48,838 grant
• 48,830 EE GL
• 05-Epic Homes of Kansas, Inc.
• HVAC
• 5,000 grant

• 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

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2006 Energy Projects

• Lipp Properties
• (2) 4 kW wind turbines
• 20,537 grant
• MM Market
• Refrigeration and energy efficient entry door
• 10,283 grant
• Cates Carquest
• HVAC
• 4,744 grant

• 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

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2007 Energy Projects

• 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

• Agency One
• Lighting, windows
• insulation (walls/ceiling)
• 2,270 grant
• Capers Café Bakery, LLC
• HVAC
• 3,678 grant
• Stafford Development, Inc.
• Air conditioning
• 3,239 grant
• Village Road, LLC
• Waste oil burner
• 7,872 grant

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2007 Energy Projects

• Eagle Farms Energy, Inc.
• Biodiesel
• 41,835 grant
• 41,835 EE GL
• 83,670 BI GL
• CKG, Inc.
• Irrigation (flood to center pivot)
• 11,875 grant
• Becklin, Inc.
• Solar Thermal
• 5,500 grant

• HC 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 BI GL

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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

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Section 9006 Projections for 2008

• Gary L. Smith
• Director, Business Community Programs
• Topeka, Kansas
• September 26, 2007

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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
Americas farm bill. - Mike Johanns,
Secretary of Agriculture

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• Title VI
• Rural Development Programs
• All funding reflects 10-year totals unless
  otherwise noted

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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

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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

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• Title IX
• Energy Programs
• All funding reflects 10-year totals unless
  otherwise noted

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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

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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

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

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Award Dollars by Technology
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Award Numbers by Technology
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Geographic Award Distribution
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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

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Volume of Applications
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Shift in Project Size
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Median Total Project Cost and Award Amount
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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

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Guaranteed Loan Technology Breakout, 2005 and 2006
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Guaranteed Loan Activity, 2005 06
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FY 2007 Projects Awarded
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FY 2007 Projects Awarded Nationwide
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Section 9006 FY2008 Program

• Programs
• Grants
• Combination Grant / Guaranteed Loans
• Loans - Guaranteed

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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

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Section 9006 FY2008 Program

• NOFA for 2008
• In Process
• Application Period
• To Be Determined
• Start Early Now
• Multiple Rounds Anticipated for Grants

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Section 9006 FY2008 Program

• Trends / Tips
• Program getting very competitive
• Application preparedness increasingly important
• Utilize Scoring Criteria for application
  preperation

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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
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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
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Section 9006 FY2008 Program Technical Merit
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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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Section 9006 FY2008 Program

• Growing in Interest
• Government
• Businesses (big and small)
• Wall Street
• International
• Government increasing dollars in RE/EE Programs
• Private Investments increasing dollars
  committed

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• Section 9006
• Success Stories
• FY 2003-2007

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Energy Efficiency Success
Epic Homes of Hoisington, Kansas
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Energy Savings
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9006 Success StoryHoisington, KS

• Energy efficiency improvements
• Replaced old boiler with 3 new high efficiency
  heating units
• Estimated total eligible project costs 20,000
• Grant amount 5,000 (25)
• Projected energy savings gt 40
• Realized energy savings first 12 months gt 66
• Anticipated Return On Investment (ROI) 8-11
  years
• ROI being realized first 12 months 5-6 years

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Energy Efficiency Success
MM Market of Belle Plaine, Kansas
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2006 EE Testimonial

• MM Market The assistance we received through
  the Energy Efficiency Program has had a
  tremendous impact on our business and on our
  community. The improvements that were made
  have allowed us to offer the people of our
  community a much wider selection of products.
  These changes have impacted both our bottom
  line and the health of the people in our
  community. The significantly higher level of
  efficiency of our new units has allowed us to be
  bigger but also to be greener. The Energy
  Efficiency Program has been a difference maker in
  our business.
• Mark Fillmore M M Market

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9006 Success StoryBelle Plaine, KS

• Energy efficiency improvements
• Replaced refrigeration cases/freezer with three
  (3) new higher efficiency units
• Estimated total eligible project costs 41,132
• Grant amount 10,283 (25)
• Projected energy savings 4,052,160 kWh/year
• Energy savings during the first few months appear
  to be meeting their expectations
• Anticipated Return On Investment (ROI) 4.32
  years

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2007 RE Award

• Becklin, Inc. of Spring Hill, Kansas will be
  utilizing a 5,500 a RE grant along with matching
  funds of 16,888 for the purchase of a small
  solar thermal system which will provide heat and
  hot water for the buildings that house Becklin,
  Inc. This system will produce solar thermal
  energy in the form of BTU output for use in
  heating the businesses buildings and provide hot
  water. The BTU's produced by the system will
  replace the BTU's purchased as conventional
  fossil fuels and electricity. The energy
  replacement is projected to be 816,000 BTU's. The
  project's matching funds will be provided by
  owner and Becklin, Inc.

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2007 EE Award

• CKG, Inc. of Grinnell, Kansas will be utilizing
  a 11,875 EE grant along with matching funds of
  35,625 to make energy efficiency improvements to
  their farm's irrigation system located in Gove
  County, Kansas. The EE improvements will consist
  of the conversion of a flood irrigation system to
  a center pivot system which will provide a
  projected 53 percent annual energy savings.
• The added benefits of the conversion may include
  water savings and higher crop yields. The
  project's matching funds will be provided through
  a loan from the State
• Bank of Grinnell.

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2007 RE Award

• Eagle Farms Energy, Inc. of Cherryvale, Kansas
  will be utilizing a 14,835 RE grant along with
  matching funds of 125,505 for a batch biodiesel
  processing system located in Labette County,
  Kansas. The system will utilize canola seed,
  Virgin Vegetable Oil, or Waste Vegetable Oil to
  produce off road, ASTM 6751 standard biodiesel.
  The project estimates to produce 360,000 gallons
  per year at full production.