# Presentation: 675224

## USDA Funding Assistance for Rural Renewable Energy and Energy Efficiency

- Rural Business – Cooperative Service
- USDA Rural Development
- May 5, 2004

**Notes:**
The Farm Security and Rural Investment Act of 2002 (the Farm Bill) created a number of programs for rural America including a direct and guaranteed loan and grant program to help fund renewable energy systems and energy efficiency improvement projects in rural America.  

This program, created in Section 9006 of the Farm Bill, is a 5-year program to help farmers, ranchers and rural small businesses purchase renewable energy systems and make energy efficiency improvements. 

##                               Outline

- What is the Section 9006 Program?
- Who is Eligible?
- What Projects are Eligible?
- Application Process
-      -  Filing out the application
-       -  Application requirements
-       -  Technical requirements
-       -  Environmental requirements
-       -  Other requirements
-       -  Evaluation criteria
- Lessons Learned from 2003
- More Information

**Notes:**
The purpose of this presentation is to help you better understand the opportunities Farm Bill Section 9006 represents.  Full details about this program are still being developed, so some of the information in this presentation is not final.

Everything in this presentation is available from the USDA web site.  I will give you that address at the end of the presentation.  

## What is the Section 9006 Program?

- Created as a U.S. Department of Agriculture program
- Program designed to assist farmers, ranchers and rural small businesses reduce energy costs and use
- Created as a 5 year program
- In 2004, this program provides grants for renewable energy and energy efficiency projects
- Congress has funded the program at $23 million per year for the first two years.
- In 2003, a total of $21.7 million in grants were awarded to 114 projects in 24 states.

**Notes:**
The Farm Bill established the Renewable Energy Systems and Energy Efficiency Improvements Program under Title IX, Section 9006. This section directs the Secretary of Agriculture to make loans, loan guarantees, and grants to farmers, ranchers and rural small businesses to purchase renewable energy systems and make energy efficiency improvements.  Congress provided $23 million to fund the program in each of fiscal years 2003 and 2004.

The Secretary of Agriculture delegated the responsibility for this program to the Rural Business-Cooperative Service within the Rural Development Mission area of U.S. Department of Agriculture.

The USDA anticipates that this program will help farmers, ranchers and rural small businesses reduce energy costs and consumption and help the nation meet its energy needs.  The program will also help support and stimulate rural economic development by helping agricultural producers and rural small businesses create new sources of income, to create new jobs, and to create new uses for agricultural products and wastes.  

The USDA is in the process of developing policies and procedures to outline how this program will operate. The first year of the program was 2003, and since policies and procedures had not yet been developed, the program was implemented through a Notice of Funds Availability.  A total of $21.7 million in grants was awarded to 114 agricultural producers and rural small businesses in 24 states.  

##               FY 2003 AwardsTechnology                          # of Awards            $ of Awards 

-               **FY 2003 Awards**Technology                          # of Awards            $ of Awards** **

**Renewable Energy Systems**
**Biomass                                                                                         $11,475,535**
**      – ****Anaerobic Digester****	****	****                    30****	****	****	****	****          **
**      – ****Bioenergy                                                   17****	****	****                 **
**Wind                                                                                                 $7,412,118**
**      – ****Large****	****	****	****                    24**
**      – ****Small****	****	****	****                    11**
**Solar****	****                                                   6****	****                            $725,566**
**Geothermal (see hybrid systems)**
**      ****-- Hybrid Systems (Geo/solar, Wind/solar)   2****	****                            $589,762**
**Hydrogen                                                          0**
**Energy Efficiency Improvements****                 24****	****                         $1,504,252**
**   **
**TOTAL PROJECTS****            ****	****                   ****114****	****                  $21.7 Million**

**Notes:**

This slide gives a break out of the number of awards and the dollar amounts by technology, as you see the big winners were Biomass including anaerobic digesters, 47 projects for $11.5 million and wind power with 35 projects for $7.4 million.  We  have a few PV systems and energy efficiency projects.  We also had 2 hybrid systems, one a combination geothermal and pv and the other was a wind and pv system. 
No hydrogen proposals were submitted for funding consideration.  

## 114 Projects Funded in 2003

**1**

**6**

**22**

**2**

**10**

**11**

**1**** **

**3**

**2**

**3**

**1**

**1**

**18**

**5**

**1**

**2**

**1**

**5**

**8**

**5**

**1**

**1**

**4**

## Who is Eligible?

- Farmers, ranchers and rural small businesses
- For grants, applicant must demonstrate financial need

- The Farm Security
- and Rural Investment
-  Act of 2002

**Notes:**
Pursuant to the Farm Bill, eligible applicants include farmers, ranchers and rural small businesses.  To be eligible for grants, applicant must demonstrate financial need as determined by USDA. The definitions of these terms for the year 2004 and beyond will be determined later this year.   As an example, the USDA used the following definitions and conditions for grants in 2003:  
   Rural area- any area other than a city or town that has a population greater than 50,000 and the urbanized area contiguous and adjacent to such a city or town.    
   Agricultural producer - An individual or entity directly engaged in the production of agricultural products, including crops (including farming); livestock (including ranching); forestry products; hydroponics; nursery stock; or aquaculture, whereby 50 percent or greater of their gross income is derived from the operations.
   Small business – A private entity including a sole proprietorship, partnership, corporation, and a cooperative (including a cooperative qualified under section 501(c)(12) of the Internal Revenue Code) provided the entity has 500 or fewer employees and $20 million or less in total annual receipts including all parent, affiliate, or subsidiary entities at other locations.  Entities cannot have been formed solely for a charitable purpose and they must meet the Small Business Administration’s Small Business Size Standards.
   Demonstrated financial need -- the applicant must demonstrate that it is unable to finance the project from its own resources or other funding sources without grant assistance.  

In addition, grant recipients in 2003 had to be the owner of the system and control the operation of the proposed project.  If grant recipients sell the project to a buyer that is not eligible under the above definitions, the Government may recapture a prorated portion of the grant funds for up to 20 years.  

## Who is Eligible continued

- The 2004 NOFA includes definitions:*
_**Agricultural Producer**_  --  An individual or entity directly engaged in the production of agricultural products, that gets 50% + of their gross income  from the operations
_**Small Business**_ – A private entity including a sole proprietorship, partnership, corporation, and a cooperative
- Must meet SBA definition of small business
- Must have no more than 500 employees and $20 million in total         annual receipts
- Excludes entities formed solely for a charitable purpose
_**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.

- * Summarized definitions.  See 2004 NOFA for full definitions.

**Notes:**
Pursuant to the Farm Bill, eligible applicants include farmers, ranchers and rural small businesses.  To be eligible for grants, applicant must demonstrate financial need as determined by USDA. The definitions of these terms for the year 2004 and beyond will be determined later this year.   As an example, the USDA used the following definitions and conditions for grants in 2003:  
   Rural area- any area other than a city or town that has a population greater than 50,000 and the urbanized area contiguous and adjacent to such a city or town.    
   Agricultural producer - An individual or entity directly engaged in the production of agricultural products, including crops (including farming); livestock (including ranching); forestry products; hydroponics; nursery stock; or aquaculture, whereby 50 percent or greater of their gross income is derived from the operations.
   Small business – A private entity including a sole proprietorship, partnership, corporation, and a cooperative (including a cooperative qualified under section 501(c)(12) of the Internal Revenue Code) provided the entity has 500 or fewer employees and $20 million or less in total annual receipts including all parent, affiliate, or subsidiary entities at other locations.  Entities cannot have been formed solely for a charitable purpose and they must meet the Small Business Administration’s Small Business Size Standards.
   Demonstrated financial need -- the applicant must demonstrate that it is unable to finance the project from its own resources or other funding sources without grant assistance.  

In addition, grant recipients in 2003 had to be the owner of the system and control the operation of the proposed project.  If grant recipients sell the project to a buyer that is not eligible under the above definitions, the Government may recapture a prorated portion of the grant funds for up to 20 years.  

## Who is Eligible continued

- Other requirements for eligible applicants:
- If a rural small business, the business headquarters and the project to be funded must be in a rural area
- 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.

## What Projects are Eligible?

- Any renewable energy and energy efficiency project as defined in the law
- Grants request must not exceed 25% of eligible project costs
- Applicant must provide at least 75% of eligible costs as match
-    - applicant in kind and other federal grants are not eligible
-       for match
-    - third party in kind is limited to 10% of total match for
-      eligible project costs (example : 10% of 75%)

**Notes:**
Eligible renewable energy projects include systems that generate energy from wind, solar, biomass, or geothermal source or that produce hydrogen derived from biomass or water using a renewable energy source. Renewable energy projects can include the generation of electricity, heat, fuels, or hydrogen.  Energy efficiency improvement projects are also eligible.  Energy efficiency projects typically involve installing or upgrading equipment that results in a significant reduction in energy use from current operations.   

Grant requests must not exceed 25% of the eligible project costs, and the combined total of grant and loan (made or guaranteed) cannot exceed 50% of a project’s costs.  

Eligibility requirements for the future will be determined in a regulation to be published later this year. As an example, the USDA used the following definitions and conditions for grants in 2003:  
      -  Projects had to be located in a rural area. 
	-  Residential uses were not eligible.
-  There was no upper limit on project size, but the maximum grant size for energy efficiency projects was $250,000 and the maximum grant for renewable energy projects was $500,000.  Grant requests had to be for at least $10,000 per application.
     -  Grant funds could only be used for commercial or pre-commercial technology.  They could not be used for research, development, land acquisition, or crop production. 
     -  Funds could be used for the following as a part of an eligible project: purchase and installation of equipment; construction or improvements; energy audits; permit fees; professional service fees; feasibility studies; business plans, and retrofitting.

## Farm Bill Definitions

- Renewable Energy – energy derived from:
- Wind
- Biomass
- Solar
- Geothermal source
-  Hydrogen derived from biomass or water
-     using one of the above energy sources

- The Farm Security
- and Rural Investment Act of 2002

**Notes:**
The Energy Title of the Farm Bill includes a few important definitions – what is renewable energy and what is meant by the term “biomass.”  According to the law, 

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.

## Farm Bill Definitions

- Biomass – any organic material that is available on a renewable or recurring basis.  Includes:
- agricultural crops or residues
- trees grown for energy production
- wood waste and wood residues
- plants (including aquatic plants and grasses)
- fibers
- animal wastes and other waste materials
- fats, oils, and greases (including those that are recycled)
- Does _not_ include paper that is commonly recycled or unsegregated solid waste

- The Farm Security
- and Rural Investment Act of 2002

## Energy Efficiency (EE) Improvements Definition
 Improvements to a facility or process that reduces
     energy consumption
Energy Efficiency Improvement Examples
 Heating / Ventilation / AC 
 Lighting
 HWH 
 Refrigeration systems 
 Motors, pumps, and other systems 
 Insulation / windows /doors 
EE Projects must have the previous 12 months history 
of energy use in order to measure savings from the
project improvements  

-  Improvements to a facility or process that reduces
-      energy consumption
- Energy Efficiency Improvement Examples
-  Heating / Ventilation / AC
-  Lighting
-  HWH
-  Refrigeration systems
-  Motors, pumps, and other systems
-  Insulation / windows /doors
- EE Projects must have the previous 12 months history
- of energy use in order to measure savings from the
- project improvements

**Notes:**
Some examples here are improved insulation, improved pump motors or HVAC apparatus. It could involve changing the time of day of peak usage. 

## What Projects are Eligible continued

- 2004 NOFA 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 sufficiency revenues to provide for operation and maintenance
- The applicant must be the owner of the project and
-     control the operation and maintenance of the
-     proposed project.

## What Projects are Eligible continued

- Minimum grant request: $2,500
- Renewable Energy:
- - Maximum grant request: $500,000
- Energy Efficiency:
- - Maximum grant request: $250,000

##  2004 Eligible Project Costs

- Post application, purchase and installation of equipment
- Post application, construction or improvements
- Energy audits or assessments (EE projects)
- Permit fees
- Professional service fees
- Feasibility studies (RE projects)
- Business plans
- Retrofitting

## 2004 Eligible Project Costs continued

- Construction of a new facility (EE projects)
-      -  when used for same purpose,
-      - approximately the same size, and
-      - based on energy audit will provide more energy
-        savings than improving the existing facility
-      - only items identified in the energy audit are allowed

##  2004 Ineligible Project Costs Include:

- Any costs not previously identified as eligible costs
- Purchase or installation of equipment, prior to application
- Construction or improvements, prior to application
- Agricultural tillage equipment
- Vehicles
- Residential improvements
- Fees for preparation of the grant application

## Application Process

- Applications are now being accepted for 2004
- Application deadline is July 19, 2004
- Full details are available in the 2004 NOFA (Can access at _[www.rurdev.usda.gov/rbs/farmbill](http://www.rurdev.usda.gov/rbs/farmbill/)__[/](http://www.rurdev.usda.gov/rbs/farmbill/)_)
- For more information and assistance available contact your Rural Development State Rural Energy Coordinator
- See the last slide for contact information

**Notes:**
Applications will not be accepted for 2004 funding under Section 9006 of the Farm Bill until a policies and procedures are completed and published.  In 2003, the USDA implemented the program using a Notice of Funds Availability, which was only valid for that year.  The NOFA was published in the Federal Register on April 8, 2003.  But, until new policies and procedures are published, the 2003 Notice of Funds Availability provides the best insight into what may be needed to prepare an application. 

Any specific questions should be directed to the rural energy coordinators at your respective USDA State Rural Development Offices, keeping in mind that they will not have access to the proposed regulation before you.

However, because of the likely short time frame available to apply this year, it will be helpful to discuss your renewable energy and energy efficiency plans with your rural energy coordinator prior to actual publication of the policies.  The rural energy coordinator will also be able to discuss the USDA environmental requirements that must be met for your proposed project.  

You should contact the office where your project is located, or, in the case of a rural small business, where you are headquartered. 

## Filling out the Application

- The NOFA requires a number of Standard Forms
- - Can download at: _[www.rurdev.usda.gov/rbs/farmbill](http://www.rurdev.usda.gov/rbs/farmbill/)__[/](http://www.rurdev.usda.gov/rbs/farmbill/)_
- SF-424: Application for Federal Assistance
-     - Organizations must have a  DUNS number
- Dun and Bradstreet Universal Numbering System
** **To obtain call: 1-866-705-5711
- -  Catalog of Federal Assistance Number (N/A for this year)
- The application is subject to review by State Executive Order
-    12372 Process
- Contact your state USDA rural energy coordinator for details
- Can submit at same time you send in application

## Application Requirements

- Must meet eligibility requirements for:
- Applicant
- Project
- Financial Need
- Replicability
- Complete application
- To qualify for funding, the application will also have to pass:
- Technical Review
- National Environmental Policy Act (NEPA) Review

## Technical Requirements

- Any project with total costs over $50,000 requires the services of a Professional Engineer.
- 2004 NOFA has different technical requirements based on type of technology and size of project
- All renewable energy requirements follow the same standard project development process, energy efficiency projects are similar

## 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 and generator hub height 120 ft. or less)*
- Wind, large *(larger than 100 kW)*
- 10. Energy Efficiency
- USDA has worked with technology experts to develop Guides to help applicants better understand how to respond to the technical requirements of the 2004 NOFA.  Available at: _[www.rurdev.usda.gov/rbs/farmbill](http://www.rurdev.usda.gov/rbs/farmbill/)__[/](http://www.rurdev.usda.gov/rbs/farmbill/)_

## Technical Requirements

- Renewable energy  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** **

## Feasibility Study for Renewable Energy (RE) Systems 

- If grant request is over $50,000, the NOFA requires a project-specific feasibility study prepared by a qualified independent consultant
- Must include an analysis of feasibility for:
-         - Market
-         - Financial
-         - Economic
-         - Technical
-         - Management
- Must include an opinion and recommendation by consultant

##  Energy Audit for Energy Efficiency (EE) Projects

- If total project costs are over $50,000, a full energy audit is required
- Prepared by an independent, qualified entity and documents:
-            -  current energy usage
-      -  recommended improvements and their costs
-      -  energy savings from the improvements
-       -  dollars saved per year
-      -  average payback period in years for the improvements
- Where to locate energy auditors
-           - depends on type of business to be audited
-      - contact your local utility company
-      - for ag projects try KSU Extension Engineering
-      - For a list of commercial building auditors, go to:  _[www.ksrenew.com](http://www.ksrenew.com/)_
-        (click on USDA Farm Bill, then click on auditors)

## Slide 26

|  |        All  applications | Total Project costs over $50,000 | Grant requests over $50,000 |
| --- | --- | --- | --- |
| Applicant must address all technical requirements |        X |         |           |
| Services of a Professional Engineer |  |        X |           |
| Full Energy Audit for an Energy Efficiency Project |  |        X |           |
| Feasibility Study for a Renewable Energy Project |         |         |          X |

## Environmental Requirements

- All projects receiving federal grants are subject to the provisions of the National Environmental Policy Act (NEPA).
- Environmental reviews must be site and project specific
- Will be completed by USDA and the applicant
- Type and complexity of review depends on:
-       - type of technology, size, and location of project
- Must be completed in  time for grant funds to be obligated by
-      September 30, 2004, or grant funds will not be awarded.
- If a project requires public comment as part of the review, the applicant will need to complete that effort prior to September 30, 2004
- If you anticipate any environmental or public concerns with your project, discuss these with your state USDA rural energy coordinator early in     the development process.

## Other 2004 Requirements  

- Procurement and Performing Development
- Must follow appropriate procurement and construction procedures that are applicable for the size or type of project
- Grantees were NOT authorized to:
-      -  Construct any part of the project improvements, or
-      -  Utilize their own personnel or equipment
- Grant Agreement
- Reporting
- Recapture
- Consult NOFA  for other Requirements**     **

## Evaluation Criteria for Renewable Energy Systems

- Quantity of energy produced – energy generation for sale or a high level of energy replacement gets highest score, maximum 20 points
- Environmental Benefits – if project is needed to meet environmental regulation, 10 points
- Commercial Availability – 10 points
- Cost Effectiveness – the shorter the payback, the higher the score,     maximum 25 points
- Matching Funds – the higher percentage match, the higher the score, maximum 15 points
- Management – if the project is monitored and managed by a qualified third-party operator, 10 points
- Small Agricultural Producer – if the applicant qualifies, 10 points

## Evaluation Criteria for Energy Efficiency Projects

- Energy Savings – based on energy saved in operation, higher percentage gets higher score, maximum 20 points
- Cost Effectiveness – the shorter the payback, the higher the score,
-      maximum 25 points
- Matching Funds – the higher percentage match that the applicant provides for the grant, the higher the score, maximum15 points
- Small Agricultural Producer – if the applicant qualifies, 10 points.
-      - Small Agricultural producer: produced ag products with a gross
-        market value less than $1 million in the preceding year
- Full details of evaluation criteria are available in the 2004 NOFA

## Lessons Learned from 2003

- Developing Your Project
- Know your energy resource
- Build a strong project team
- Start as early as possible (Feasibility study, energy audit, tech require., environmental review, various agreements and permits, matching funds)
- Utilize available  incentives and resources in your area
-      - USDA, non-profit org., 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.

## Lessons Learned from 2003

- Preparing Your Application
- Carefully read all the terms of the NOFA and include _everything_ that it requires
- Organize your application in line with the NOFA
- If you don’t understand something on a form or in the NOFA, contact your USDA state office right away
- 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.

## Schedule of 2004 Award Process

- May 5, 2004                 USDA issues NOFA for renewable
-                                      energy and energy efficiency grants,
-                                      Begins accepting applications
- July 19, 2004               Deadline for 2004 applications
- September 3, 2004	    Anticipated date for announcement of
-                                      projects selected for funding
- September 30, 2004    End of Fiscal Year. Deadline for
-                                      obligating all funding to awardees

## More Information

- Web site for the USDA Farm Bill Section 9006:
- www.rurdev.usda.gov/rbs/farmbill/
- Web site includes a range of useful information:
- Overview of Program
- 2004 Notice of Funds Availability
- State USDA Rural Energy Coordinators
- Standard Government Application Forms
- Technology-specific Guidance for Technical Requirements
- Links to other resources and incentives for these technologies

## Contact information: 

-  Kansas Rural Development
-      - website: _[www.rurdev.usda.gov/ks](http://www.rurdev.usda.gov/ks)_
-      - Topeka State Office, Tel: 1-785-271-2700
-      - Larry Carnahan
-        PO Box 437, 115 West 4th st.
-        Altamont, Kansas 67330
-        Tel: 1-620-784-5431
-        Fax: 1-620-784-5900
-        Email: _[larry.carnahan@ks.usda.gov](mailto:larry.carnahan@ks.usda.gov)_