A national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

National Renewable Energy Laboratory 

Innovation for Our Energy Future 

USDA Section 9006 Program: 

Status and Energy Benefits of 

Grant Awards in FY 2003–2005 

T. Walters, S. Savage, and J. Brown 

Technical Report 

NREL/TP-710-40465 

August 2006 

NREL is operated by Midwest Research Institute ● Battelle Contract No. DE-AC36-99-GO10337 
USDA Section 9006 Program: 

Status and Energy Benefits of 

Grant Awards in FY 2003–2005 

T. Walters, S. Savage, and J. Brown 

Prepared under Task No. WF141005 

Technical Report 

NREL/TP-710-40465 

August 2006 

National Renewable Energy Laboratory

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Contract No. DE-AC36-99-GO10337
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Executive Summary 

At the request of the U. S. Department of Agriculture (USDA) Rural Development, the National 

Renewable Energy Laboratory conducted a review of projects awarded in the Section 9006 

Program: Renewable Energy Systems and Energy Efficiency Improvements Program. This 

report quantifies federal and private investment, outlines project status based on recent field 

updates, and calculates the effects on energy and emissions of energy efficiency and renewable 

energy projects awarded grants in FY 2003, FY 2004, and FY 2005. In addition, this report 

provides an overview of the program challenges and modifications in the first three years of 

operation. 

The Section 9006 program was designed to provide farmers, ranchers, and rural small businesses 

with financial assistance in purchasing renewable energy systems and energy efficiency 

improvements. This program has had an inherently ambitious goal─to create and expand a 

market for energy efficiency and renewable energy technologies in rural America. Overall, 

status data reviewed in this report show the program has achieved a wide range of success. 

Awards 

In the first three years of the program, nearly 800 applications were received, resulting in 435 

grant awards to rural energy projects in 37 states. Of these awards, 412 projects in 36 states are 

still active, with a total investment by USDA of $63,922,488.1

 The total projects awarded range 

from $10,000 to multi-million dollar facilities. Forty-two percent of projects qualify as small 

projects (less than $200,000 total project costs), and in total the program has leveraged more than 

$762,000,000 in total project value. 

During the first three years of operation, the 9006 program increased dramatically in popularity. 

During the first year of operation, the quantity and quality of applications submitted were 

generally much lower than expected. To address these issues, USDA embarked on a program 

outreach effort in FY 2004 and FY 2005 to leverage partnerships and expand applicant 

resources. The results of these efforts are evident in the dramatic increase in both the number 

and quality of applications received in subsequent years. The number of small renewable 

projects is still quite low, but USDA improvements to the program final rule, published in July 

2005, are expected to increase the awards to small renewable energy projects. 

Based on current active projects to date, there is a 12:1 leverage on total project investment 

versus USDA grant funds obligated. Total obligated funds over the first three years of the 

program grants equate to nearly $64 million, leveraging $762 million of total project investment. 

This ratio is considerably higher than originally anticipated at the beginning of the program. 

 

1

Active projects include projects that have been completed or are still in pre-construction or construction phase. 

Active projects do not include projects that have been are in the process of being cancelled. 

 iii
Current Status 

The applicant commitment to projects is reflected in the fact that 95% of awarded projects are 

still considered “active,” implying that the project has reached completion or is still in the 

development phase. First year (FY 2003) projects are on a slower pace for completion than 

projects receiving awards during the second year (FY 2004). This is not unexpected and reflects 

the challenge that USDA faced in FY 2003 with low quality and quantity of applications. The 

slower completion rate is a result of the balance that USDA struck with the first year of awards 

between care with taxpayer funds and willingness to support early adopters. 

Table E1. Status of All Awarded Projects, FY 2003-2005 

Award 

Year 

Grants 

Awarded 

% of 

Projects 

Completed 

% of Projects 

Remaining 

Active

Funds 

Obligated 

to Active 

Projects 

Total Active 

Project 

Costs 

FY 2003 114 40% 89% $19,108,273 $395,393,354 

FY 2004 167 47% 95% $22,592,347 $165,021,594 

FY 2005 154 32% 99% $22,221,868 $202,148,695 

Total 435 40% 95% $63,922,488 $762,563,643 

Energy efficiency projects have the highest completion rates overall. Because these projects tend 

to be of smaller size and have lower requirements for external agreements and permits, this 

completion rate is as expected. Most of the active projects that have not yet entered the 

construction phase are either large wind turbines or anaerobic digesters. Many of these projects 

face typical development issues, including financing, interconnection, power purchase 

agreements, and equipment procurement. 

Program Benefits 

The 9006 Program has had an immediate and direct impact on renewable energy production and 

energy savings in rural America. The combined energy production and savings from the active 

projects accounts for more than 17 trillion Btu of energy per year. This production and savings 

is the equivalent to roughly 3 million barrels of oil or enough energy to power 124,000 homes or 

fuel 181,000 cars for an entire year. This also equates to significant emission benefits resulting in 

the avoidance of more than 1 million metric ton of carbon equivalent per year, providing a 

significant benefit for the environment. 

Lastly, although this report does not attempt to quantify the impact, there has been significant 

rural economic impact from the projects awarded thus far. In several instances, the 9006 

program has had a noticeable effect on certain technology market segments in rural areas. 

Specifically, awards have coincided with a major increase in the development of anaerobic 

digesters for on-farm use and in the development of “community-scale” wind facilities. 

 iv
Table of Contents 

Definitions..................................................................................................................................... vii 

Overall Program Status and Benefits of Awarded Projects............................................................ 1 

FY 2003 Award Cycle .................................................................................................................. 11 

FY 2004 Award Cycle .................................................................................................................. 18 

FY 2005 Award Cycle .................................................................................................................. 26 

Conclusion .................................................................................................................................... 32 

Appendix A─Selected Success Stories......................................................................................... 35 

Appendix B─Methodology........................................................................................................... 38

Tables 

Table E1. Status of All Awarded Projects, FY 2003-2005 ........................................................... iv 

Table 1. Status of All Awarded Projects, FY 2003-05 ................................................................... 1 

Table 2. Median Total Project Costs and Grant Awards ................................................................ 2 

Table 3. Development Status of Awarded Projects FY 2003-2005................................................ 5

Table 4. Summary of Annual Energy Impact During the First Three Years of the 9006 Program 6

Table 5. FY 2003-2005 Active Project Summary .......................................................................... 7 

Table 6. Annual Emissions Savings in Metric Tons Carbon Equivalent........................................ 9 

Table 7. Median Total Project Costs and Grant Awards by Technology, FY 2003..................... 12 

Table 8. Status of FY 2003 Awarded Projects by Technology..................................................... 13 

Table 9. FY 2003 Active Project Summary.................................................................................. 14 

Table 10. Median Total Project Costs and Grant Awards by Technology, FY 2004................... 20 

Table 11. Status of FY 2004 Awarded Projects by Technology................................................... 20 

Table 12. FY 2004 Active Project Summary................................................................................ 21 

Table 13. Median Total Project Costs and Grant Awards by Technology, FY 2005................... 27 

Table 14. Status of FY 2005 Awarded Projects by Techology..................................................... 28 

Table 15. FY 2005 Active Project Summary................................................................................ 28 

Table B1. Assumed Capacity Factor by Technology ................................................................... 38 

Table B2. Emissions Factors for Fuels ......................................................................................... 40 

Table B3. Emissions Factors for Heat .......................................................................................... 40 

Table B4. Emissions Factors for Electric ..................................................................................... 40

Table B5. Emissions Factors for Digesters................................................................................... 41 

Figures 

Figure 1. Summary of applications received, FY 2003-2005......................................................... 3 

Figure 2. Summary of applications received by size, FY 2003-2005............................................. 3 

Figure 3. Distribution of awards by state, FY 2003-2005 .............................................................. 4 

Figure 4. Number of active projects by technology, FY 2003-2005 .............................................. 8 

Figure 5. Distribution of awards by state, FY 2003...................................................................... 11 

 v
Figure 6. Number of active projects by technology, FY 2003...................................................... 14 

Figure 7. Distribution of awards by state, FY 2004...................................................................... 18 

Figure 8. Number of active projects by technology, FY 2004...................................................... 22 

Figure 9. Distribution of awards by state, FY 2005...................................................................... 26 

Figure 10. Number of active projects by technology, FY 2005.................................................... 29 

 vi
Definitions 

Anaerobic Digester A renewable energy system that uses animal waste and other 

organic substrates to produce thermal or electrical energy via 

anaerobic digestion. 

Bioenergy A renewable energy system that produces fuel, thermal 

energy, or electric power from a biomass source, other than 

an anaerobic digester project. 

Btu A unit used to measure quantity of heat, defined as the 

quantity of energy necessary to raise the temperature of 1 lb. 

of water 1° Fahrenheit. British thermal unit. 

EERE Energy efficiency and renewable energy technologies. 

Energy Efficiency 

Improvement 

Improvements to a facility, building, or process that reduces 

energy consumption, or reduces energy consumed per square 

foot, including passive improvements that reduce energy 

loads, such as improving the thermal efficiency of a storage 

facility, and active improvements that directly reduce energy 

consumption, such as replacing existing energy-consuming 

equipment with high efficiency equipment. 

Geothermal-Direct Use A system that uses thermal energy directly from a geothermal 

source. 

Geothermal-Electric A system that uses geothermal energy to produce high 

pressure steam for electric power production. 

Hybrid Renewable 

Energy Project 

A project that includes more than one type of renewable 

energy technology. 

Hydrogen Project A renewable energy system that produces hydrogen; or a 

renewable energy system that uses mechanical or electric 

power or thermal energy from a renewable resource using 

hydrogen as an energy transport medium. 

Interconnection 

Agreement 

The terms and conditions governing the interconnection and 

parallel operation of the grantee's or borrower's electric 

generation equipment and the utility's electric power system. 

kW A unit of electrical power equal to 1000 watts or 1 kilowatt. 

kWh The work performed by 1 kilowatt of electric power in 1 

hour. The unit on which the price of electrical energy is 

based. A 1000 watt light bulb operating for 1 hour would use 

1 kWh. 

MMBtu Million British thermal units. 

MGPY Million gallons per year. 

MW Unit of electrical power equal to 1 million watts. 

MWh A measure of energy production or consumption equal to 1 

million watts produced or consumed for 1 hour 

 vii
Renewable Energy Energy derived from a wind, solar, biomass, or geothermal 

source; or hydrogen derived from biomass or water using 

wind, solar, biomass, or geothermal energy sources. 

Renewable Energy 

System 

A system that produces or produces and delivers usable 

energy from a renewable energy source. 

Solar, Large Large solar systems are those for which the rated power of the 

system is larger than 10 kilowatts (kW). Large solar systems 

are either stand-alone (off grid) or interconnected to the grid 

(on grid). 

Large solar thermal systems are those for which the rated 

storage volume of the system is greater than 240 gallons or 

that have a collector area of more than 1,000 square feet. 

Solar, Small Small solar electric projects are those for which the rated 

power of the system is 10 kW or smaller. Small solar electric 

projects are either stand-alone (off grid) or interconnected to 

the grid at less than 600 volts (on grid). 

Small solar thermal projects are those for which the rated 

storage volume of the system is 240 gallons or smaller, or that 

have a collector area of 1,000 square feet or less. 

Wind, Large A wind energy project for which the rated power of the 

individual wind turbine(s) is larger than 100 kW. 

Wind, Small Wind energy system for which the rated power of the wind 

turbine is 100 kW or smaller and with a generator hub height 

of 120 feet or less. A small wind system is either stand-alone 

or connected to the local electrical system at less than 600 

volts. 

 viii
Overall Program Status and Benefits of Awarded Projects 

The purpose of this document is to quantify investment, project status, and energy impact of 

energy efficiency and renewable energy technologies (EERE) resulting from grants in the first 

three years of the Renewable Energy Systems and Energy Efficiency Improvements Program 

under Title IX, Section 9006 (FY 2003 through FY 2005).2

 The program was established by the 

Farm Security and Rural Investment Act of 2002 and currently provides grants and loan 

guarantees to assist agricultural producers and rural small business with purchasing renewable 

energy systems and making energy efficiency improvements.3 

Program Applications and Awards 

In the first three years of the program, nearly 800 applications were received, resulting in 435 

grant awards to rural energy projects. Of these awards, 412 projects are still active in 36 states, 

with a total investment by USDA of $63,922,488.4

 Table 1 shows the status as of June 2006 of 

projects awarded in each fiscal year. The total projects awarded range from $10,000 to multimillion dollar facilities. 

Table 1. Status of All Awarded Projects, FY 2003-2005 

Award 

Year 

Grants 

Awarded 

% of 

Projects 

Completed 

% of Projects 

Remaining 

Active 

Funds 

Obligated 

to Active 

Projects 

Total Active 

Project 

Costs 

FY 2003 114 40% 89% $19,108,273 $395,393,354 

FY 2004 167 47% 95% $22,592,347 $165,021,594 

FY 2005 154 32% 99% $22,221,868 $202,148,695 

Total 435 40% 95% $63,922,488 $762,563,643 

The 9006 program was implemented during FY 2003 through FY 2005 by a release each year of 

a Notice of Funds Availability (NOFA). The NOFA, and thus the program rules, changed in 

each year. The final program rules, 7 CFR Part 4280, were published on July 18, 2005, and will 

be used in future fiscal years to administer the program. Many of the recommendations or issues 

identified in this report have been addressed in the final program rules. 

Statutory requirements for the program dictate that grant recipients must demonstrate financial 

need for the award. As such, the grant award (capped at 25% of project costs and $500,000 for 

renewable energy projects and $250,000 for energy efficiency projects), is typically a sizable 

portion of the overall project costs. On average, the projects leverage grant funds at a 12:1 ratio. 

The bulk of projects to date (93%) are less than $3 million in total project costs; 42% are small 

projects with total project costs under $200,000. Table 2 shows the median total project costs 

 

2

Although guaranteed loans are also part of the 9006 program, only two loans have been awarded during the first 

three years; they were issued in 2005. This report does not address those two projects. 

3

www.rurdev.usda.gov/rbs/farmbill/index.html 

4

Active projects include projects that have been completed or are still in pre-construction or construction phase. 

Active projects do not include projects that have been are in the process of being canceled. 

 1
and grant awards. Overall, the median total project cost was $386,000, and the median grant 

award was $87,425. 

Table 2. Median Total Project Costs and Grant Awards 

Award 

Year Awards 

Median Total 

Project Cost Median Grant 

FY 2003 114 $870,482 $141,872 

FY 2004 167 $236,200 $51,900 

FY 2005 154 $228,710 $29,975 

Total 435 $386,000 $87,425 

During the first three years of operation, the 9006 program increased dramatically in popularity. 

The funding cycle during FY 2003 saw a small but diverse number of projects. The quantity and 

quality of applications received were not as hoped, and USDA could not award all of the 

available FY 2003 program funds. Several program design issues were identified following the 

FY 2003 award cycle. Those are addressed later in this report (see FY 2003 Award Cycle). 

A substantial effort by USDA in program outreach was undertaken in both FY 2004 and FY 

2005. In addition to USDA, the U.S. Department of Energy’s (DOE) Wind Powering America 

initiative and the U.S. Environmental Protection Agency’s (EPA) AgStar program for anaerobic 

digesters actively promoted the 9006 program. The USDA State Office also partnered on 

outreach efforts with DOE Regional Offices, many state energy offices, and non-profit 

organizations. The results of these efforts are evident in the dramatic increase in both the 

number and quality of applications received in subsequent years. Figure 1 indicates the number 

of total applications received in FY 2005 increased by a factor of 2.6 compared to FY 2003. 

 2
147

249

114

172

276

114

167

154

388

0

50

100

150

200

250

300

350

400

450

FY 2003 FY 2004 FY 2005

Total Applications

Eligible Applications

Projects Awarded

Figure 1. Summary of applications received, FY 2003-2005. 

As shown in Figure 2, the number of applications received for small projects has also steadily 

increased. This trend is expected to continue in FY 2006 and FY 2007, as new simplified 

application processes outlined in the final rule make the program more accessible to projects 

with total costs of less than $200,000. 

388

190

103

249

149

115

46

134

198

0

50

100

150

200

250

300

350

400

450

FY 2003 FY 2004 FY 2005

Number of Applications/Projects

Total Applications

Small Projects

Large Projects

Figure 2. Summary of applications received by size, FY 2003-2005. 

Equally important was the parallel increase in the number of applications determined to be 

eligible for program funding. In FY 2003, many applications lacked technical integrity or did 

 3
not meet the eligibility criteria. USDA decided to loosen qualifications for eligibility in order to 

utilize the available funds. However, original standards were met by an increased number of 

projects in both FY 2004 and FY 2005. Interviews with technical reviewers for applications in 

each of the years have indicated that the quality of applications has increased significantly from 

year to year. Although this is likely attributable to many factors, two factors often mentioned by 

stakeholders are increased outreach from USDA and an increased familiarity with the program 

and technologies at the USDA State Offices. 

As outreach improved through the years, so has the geographic diversity of project awards. 

Figure 3 shows the distribution of awards by state. Projects have been awarded in 37 states, with 

a large number of those awarded in Midwestern agricultural states, such as Nebraska, Iowa, 

Wisconsin, and Minnesota. Awards have not been awarded exclusively to those states; states 

such as New York, Washington, California, and Idaho have also received a significant number of 

awards. A number of factors have affected this distribution, including access to technical 

assistance, involvement of state USDA offices, and availability of state incentive programs for 

renewable energy and energy efficiency. 

Number of Projects Awarded by State

1-4 15-24 

5-14 25+ 

 

Figure 3. Distribution of awards by state, FY 2003-2005. Although a large number of projects were 

awarded in the Midwest, states in other regions such as California, Idaho, New York, and 

Washington also received a substantial number of awards. 

 4
Status of Grant Awards 

As part of the grant agreement with USDA, awardees must provide quarterly updates on the 

status of their project development until it is operational. This report provides project status 

based on the input from quarterly reports that USDA State Offices input into a central database 

by June 15, 2006. Energy benefits are derived from original project estimates included with the 

application. For more information, see Appendix B. 

For purposes of this report, the term “complete” means that the project is operational and “under 

development” means that the project is in one of the phases of development. This term 

encompasses projects that are still in the design or permitting phase as well as projects that are 

under construction or in the start-up or shakedown process. Active projects include projects that 

are complete or under development. In some cases, project funding has been “canceled,” either 

for failing to meet certain eligibility criteria or in response to the awardees decision to forego the 

project. 

As can be seen in Table 1, 95% of the projects awarded under the 9006 program are still active, 

meaning they are either complete or still under development. Considering that a range of 

economic issues, bankruptcies, changes in ownership, technical or market barriers, or changes of 

business plans can account for a project not moving forward, this is an encouraging number. 

Table 3 shows the specific phases of the awarded projects by year. 

Table 3. Development Status of Awarded Projects FY 2003-2005 

Active 

FY Canceled Complete 

Under 

Development 

Total 

Awarded 

2003 16 46 52 114 

2004 6 79 82 167 

2003-2005 23 175 237 435 

2005 1 50 103 154 

A clear trend is that small projects are completed sooner. This is as expected, because the 

project lead time, including financing, permitting, equipment procurement, and other 

development issues, is considerably longer for a multi-million dollar facility than a small-scale 

project. For FY 2003, 40% of projects are completed and operational, while for FY 2004, 47% 

of projects are completed. This seems unusual at first, given the fact that FY 2003 projects have 

had an additional year for completion. However, several circumstances existed in the FY 2003 

award cycle that led to increased project development work for many awardees during that year. 

In addition, very small projects (less than $40,000) were ineligible in the first year of the 

program. As a result, this lower completion rate is not unexpected. 

Most of the projects that are still in the pre-construction phase are either utility-scale wind 

turbines or anaerobic digesters. Anaerobic digesters seem to have particular difficulty moving 

from pre-construction to construction phase. EPA’s AgStar program is currently conducting 

research to determine key barriers remaining for these types of activities. Energy efficiency 

projects have the highest completion rates. These projects tend to be smaller and have lower 

 5
requirements for external agreements and permits; therefore, they face fewer barriers to 

completion. 

Few projects from FY 2005 are completed because funding for those projects was not obligated 

until September 2005. Nearly one-third of awarded projects are completed, consisting mostly of 

energy efficiency projects. Further information on year-specific and technology-specific issues 

is available in the following sections of this report. 

Benefits of Grant Awards 

To determine the estimated energy benefits of the awarded projects, the National Renewable 

Energy Laboratory (NREL) calculated annual energy either produced or saved for each project. 

Energy numbers were converted to million British thermal units (MMBtu) for all projects for 

reporting purposes. Table 4 summarizes the expected annual energy impact for active projects 

once they are operational. To determine what annual energy benefits are already accruing from 

this program, the energy estimates for completed projects are also listed. 

The combined energy production and savings from these active projects account for more than 

17 million MMBtu of energy per year. This is the equivalent to about 3 million barrels of oil or 

enough energy to power 124,000 homes or fuel 181,000 cars for a year. Although the completed 

projects to date only account for a fraction of that amount, slightly more than 2 million MMBtu 

per year, this is expected because smaller projects are completed first. As larger projects come 

online over the next couple years, the larger energy numbers will be attained. 

Table 4. Summary of Annual Energy Impact During the First Three Years of the 9006 

Program MMBtu/year (MWh/year) 

FY 2003-

2005 Total Produced Saved Fuel Electric Heat 

Active 17,114,606 

(5,016,004) 

16,860,241 

(4,941,454) 

254,364 

(74,550) 

12,627,696 

(3,700,966) 

3,998,599 

(1,171,922) 

488,310 

(143,115) 

Completed 2,063,194 

(604,688) 

1,990,416 

(583,358) 

72,777 

(21,330) 

1,330,224 

(389,866) 

493,990 

(144,780) 

238,980 

(70,041) 

Of note, these are annual energy numbers. Although project life varies by technology and 

project, 20 years of project life is a reasonable assumption. Accounting for this assumption, the 

overall energy benefits of this program will likely be at least 20 times the values in the table. 

Table 4 delineates energy benefits in two ways: (1) energy produced and saved and (2) forms of 

energy produced and saved. The numbers for energy produced and energy saved are based on 

the technology, not the end use of the energy. A small wind system, for example, is considered 

to be producing energy even if that energy might offset on-farm use and result in savings in the 

form of reduced energy purchases by the farmer from the local utility. The table shows that the 

vast amount of program energy benefits will be for energy production rather than energy savings. 

This finding reflects the program history of funding primarily renewable energy projects. 

The next columns (Fuel, Electric, Heat) in Table 4 delineate the overall energy benefits by 

showing the form of the energy produced or saved. All projects have been characterized as 

 6
producing or saving fuel, electricity or thermal (heat) energy. A majority of the energy benefits 

accrue from fuel-related projects, most of which are biodiesel or ethanol production facilities. 

Electric production and savings account for about a quarter of energy benefits. 

The 9006 program is cross-cutting in nature and impacts many types of energy efficiency and 

renewable energy (EERE) technologies. Projects submitted during the applications cycle are 

divided into 10 EERE classifications: bioenergy, anaerobic digesters, geothermal-electric 

generation, geothermal-direct use, hydrogen, solar-small, solar-large, wind-small, wind-large, 

and energy efficiency improvements. 

This division of technologies was first used in the FY 2004 NOFA, which detailed different 

technical requirements for each technology type. These classifications generally have been used 

for technical reviews and tracking of applications and awards. 

Table 5. FY 2003-2005 Active Project Summary 

Technology 

Active 

Projects 

Active 

Grants 

Estimated Energy 

Generated/Saved, 

MMBtu (MWh) 

Anaerobic Digesters 74 $20,411,922 964,662 (282,726) 

Bioenergy 35 $7,716,970 8,891,584 (2,605,974) 

EE Buildings 118 $3,585,809 221,814 (65,009) 

EE Industrial 40 $977,982 31,970 (9,370) 

Geothermal 4 $380,283 24,934 (7,308) 

Hybrid 9 $2,439,832 4,152,128 (1,216,919) 

Solar, Large 8 $1,247,827 12,801 (3,752) 

Solar, Small 8 $69,416 35,018 (10,263) 

Wind, Large (>100 kW) 92 $26,335,936 2,772,690 (812,629) 

Wind, Small (≤100 kW) 24 $691,429 6,880 (2,016) 

Total 412 $63,857,406 17,114,481 (5,015,967) 

Table 5 shows active projects in each of these program areas as well as the estimated energy 

saved or generated. This table includes a “hybrid” category, which designates applications that 

combined multiple renewable energy projects or technologies. Program rules allow hybrid 

projects but prohibit one application from including renewable technologies with energy 

efficiency improvements. Figure 4 shows the distribution of active projects by number of 

applications. 

Energy efficiency projects in the building sector received the highest total number of grant 

awards. Building efficiency technologies include improved insulation, high efficiency heating 

and cooling units, and high efficiency circulation units. Industrial efficiency technologies 

include improvements to industrial processes or systems including refrigeration units, grain 

dryers and irrigation pumps. These awarded projects were typically small, with total project costs 

averaging just under $125,000. Although energy efficiency projects account for 38% of active 

projects, they only account for 7% of the grant funds awarded to active projects. This relatively 

small investment, though, leads to more than 250,000 MMBtu in energy savings each year. 

 7
Awards for small projects in other technologies have been limited. Small solar, small wind, and 

geothermal-direct use projects combined account for less than 5% of the total number of active 

projects and total committed dollars. 

Anaerobic digesters, large wind, and bioenergy projects represent the three largest categories 

receiving grant funding. These projects are capital intensive and attract a complex group of 

engineering, banking, and economic development entities. They also create a substantial amount 

of energy generation potential. Wind and bioenergy projects alone represent more than 11 

million MMBtu of annual energy generation; anaerobic digester projects contribute another 1 

million MMBtu. In addition to energy generation, digester projects can provide additional 

economic benefits by helping farmers meet environmental compliance standards. 

Digesters

74

Bioenergy

35

EE Buildings

118

EE Industrial

40

Geothermal

4

Hybrid

9

Solar-large

8

Solar-small

8

Wind, large

92

Wind, small

24

Figure 4. Number of active projects by technology, FY 2003-2005. Energy efficiency buildings 

and large wind technologies have the most active projects, followed by anaerobic digesters and 

energy efficiency industrial. 

In addition to energy benefits, projects receiving funding from FY 2003 to FY 2005 will also 

have a substantial impact on emissions. Using national averages for emissions factors, based on 

voluntary greenhouse gas reports provided by DOE, data in Table 6 depict the overall emissions 

benefits in metric tons of carbon equivalent (MTCE) per year. The table shows that 9006 

projects funded to date will prevent, on an aggregated basis, more than 1 million MTCE 

(MMTCE) from entering the atmosphere. 

 8
Table 6. Annual Emissions Savings in Million Metric Tons Carbon 

Equivalent (MMTCE) 

Fiscal Year Fuel Electric Heat Total 

2003 700 281,900 13,200 295,800 

2004 136,300 220,700 18,800 375,800 

2005 145,300 288,400 3,400 437,100 

2003-2005 282,300 791,000 35,400 1,108,700 

Lastly, although this report does not attempt to quantify the impact, there has been significant 

impact on the rural economy from the projects awarded thus far. In several instances, the 9006 

program has had a noticeable effect on certain technology market segments in rural areas. 

Specifically, program awards have coincided with a major increase in the development of 

anaerobic digesters for on-farm use and in the development of “community-scale” wind 

facilities. Before 2003, about 40 anaerobic digesters operated in the United States. Under the 

9006 program to date, 15 new anaerobic digester projects are operational, and an additional 59 

projects are under development. 

As these markets have expanded, applicants have devised innovative business models and 

approaches to achieve economies of scale and financial efficiency when applying for program 

dollars. In some cases, these have led to increased income and rural development opportunities. 

A significant amount of effort and attention has been directed to refining and developing 

community wind business models, which enable local ownership of one to two utility-scale wind 

turbines. These business models often use innovative ownership structures such as a “flip” 

model, which combines local ownership with outside investors. These models allow equity 

investors to leverage tax credits and depreciation during the early years of operation and local 

owners to receive cash benefits once these short-term incentives expire. This approach has been 

successful in creating opportunities for local ownership of renewable energy projects while 

retaining project income for the rural community. 

For example, prior to 2003, there were fewer than 30 community wind projects in operation, the 

majority of which were installed in states with strong incentives, such as Iowa and Minnesota.5

 

The 9006 program has directly contributed to increasing this number. At the end of 2005, more 

than 80 community wind projects in eight states have been awarded grants through the 9006 

program. 

Another interesting aggregation model has developed in Mississippi, where more than 75 

applications have been submitted during FY 2004 and FY 2005 for energy improvements in 

poultry operations. These operations were run by small individual farmers for whom rising 

energy costs can significantly reduce profit margins and, therefore, family income. In support of 

these poultry operations, university, private, and public partners worked together to identify a 

template model to apply various energy efficiency improvements. These improvements include 

 

5

 This number was calculated from data obtained from the American Wind Energy Association 

(http://www.awea.org/projects/). Community projects are those less than 4 MW and more than 1 MW that are not 

part of a large utility-scale wind farm. 

 9
high efficiency heaters, fans, and structurally integrated panels for improved insulation. By 

aggregating projects and streamlining the engineering approach, recipients could take advantage 

of economies of scale and shared expertise. This collaborative model highlights how good 

technical support can increase the number of applications for the program. 

The 9006 program has had an immediate and direct impact on renewable energy production and 

energy savings in rural America. At a time when energy prices are a major concern of 

agricultural producers and rural small businesses, this program offers an opportunity to pursue 

innovative energy solutions that result in energy independence and an improved bottom line. 

The following sections describe accomplishments achieved and lessons learned, by fiscal year, 

during the first three years of the program (FY 2003, FY 2004, and FY 2005). 

 10
FY 2003 Award Cycle 

Background 

USDA announced the availability of funds in FY 2003 in early April–less than one year after the 

2002 Farm Bill was signed into law. This first-of-its-kind program for the federal government 

brought a host of new technologies and new technical issues to USDA. USDA was successful in 

making the program available in FY 2003, but the review and award processes raised numerous 

issues, which USDA has addressed in subsequent years. 

Overall in FY 2003, USDA awarded grants to 114 projects in 24 states for $21.7 million. Figure 

5 shows the distribution of awards by state. These grants leveraged total project costs of $694 

million. Despite having $22.8 million in funding available, USDA was not able to use all of the 

funding in the first year because of inadequate technical information in many applications. 

Number of Projects Awarded by State

1-4 15-24 

5-14 25+ 

 

Figure 5. Distribution of awards by state, FY 2003. The largest number of grants was awarded in 

Minnesota and New York. 

In general, the quality and quantity of applications submitted to the 9006 program in its first year 

were much lower than expected. A variety of reasons were identified for this result, which are 

discussed in the Key Issues section. However, this situation is not unusual for new programs that 

have had limited opportunity for outreach and education. 

 11
Because of the lack of quality applications, USDA was faced with the difficulty of using all 

available funds. USDA management made a key decision in the award process. Rather than 

have a substantial amount of the program funding revert to the Treasury, USDA worked with 

State Offices and technical reviewers to determine which projects had potential for success 

despite the fact that they did not initially meet eligibility criteria. If projects were deemed to 

have potential, but needed further documentation, technical design, resource assessment, or other 

resolvable issues, then the projects were reclassified as eligible with conditions. In this manner, 

USDA relaxed the initial application requirements to allow projects with incomplete applications 

or in earlier stages of development to qualify. 

This strategy allowed USDA to obligate almost all of its FY 2003 funding. For each project 

granted a conditional award, the awardee agreed to meet the conditions before receiving grant 

funds. As a result, no taxpayer funds were distributed to projects that could not meet the 

required conditions. However, these awarded projects were in earlier stages of design or 

development and had greater obstacles to overcome than projects awarded in subsequent years. 

Three years later, some of these projects are still having difficulty overcoming these obstacles. 

Current Status 

Table 7 shows the number of awards by technology as well as the median grant award and total 

project costs. The number of projects receiving funding is distributed equitably among large 

wind, energy efficiency, and digesters. Nearly the same number of small wind and bioenergy 

projects received funding. The technology receiving the fewest number of projects in FY 2003 

was solar. In 2003, low prices for electricity and gas made the economics of these projects very 

difficult. 

 

Table 7. Median Total Project Costs and Grant Awards by Technology, FY 2003 

Technology Awards 

Median Grant 

Award 

Median Total Project 

Cost 

Digesters 31 $200,000 $1,179,357 

Bioenergy 13 $500,000 $500,000 

EE Buildings 24 $43,345 $175,690 

EE Industrial n/a n/a n/a 

Geothermal-Direct 0 - - 

Hybrid 6 $500,000 $31,352,266 

Solar, Large 4 $85,931 $343,723 

Solar, Small 2 $14,553 $58,212 

Wind, Large 25 $192,900 $1,838,144 

Wind, Small 9 $16,850 $67,400 

All Technologies 114 $141,872 $870,482 

Bioenergy and hybrid projects had the highest median grant award. Three of the hybrid projects 

awarded in FY 2003 had a large biofuel facility component, which increased total project costs. 

Small solar and wind had the smallest median grant award and total project costs. This result is 

expected because these are generally smaller projects. 

 12
Tables 8 and 9 summarize the current status of projects awarded in FY 2003, the first year of the 

program. Although 46 projects have been reported as complete, there is still a number of 

projects in the pre-construction or construction phase, and 16 of the FY 2003 awards have been 

canceled. The low completion rate, less that 50% of total awarded projects, is due to the fact that 

many first-year projects, especially those that lacked technical integrity, were passed with 

conditions. Of the awards cancelled, eight were digester projects. State Office reports list lack 

of third party financing as the primary reason these projects failed. State Office EPA’s AgStar 

program is currently conducting additional research on this problem. 

Table 8. Status of FY 2003 Awarded Projects by Technology 

Active Projects 

Technology Cancelled Complete 

Under 

Development Total Awarded 

Digesters 8 7 16 31 

Bioenergy 2 4 7 13 

EE Buildings 2 13 9 24 

EE Industrial - - - - 

Geothermal - - - - 

Hybrid 0 1 5 6 

Solar, Large 1 1 2 4 

Solar, Small 0 1 1 2 

Wind, Large 2 14 9 25 

Wind, Small 1 5 3 9 

Total 16 46 52 114 

Most completed projects are large wind and energy efficiency projects. In the case of the first, 

the large wind industry is well organized, well financed, and experienced. These three elements 

combined ensure a high probability for success. Energy efficiency projects also benefit from an 

industry that is experienced. These projects are straightforward, especially when compared to 

other, more complex projects, such as large-scale bioenergy proposals. For instance, it is much 

simpler to replace windows and add insulation than to construct a 30 million gallon per year 

ethanol facility. 

According to field reports from rural energy coordinators, some projects have yet to obtain firm 

financing. Some technologies, for example anaerobic digesters, are unfamiliar to the banking 

and investment community, which may affect progress. Other projects, such as community 

wind, are small and have difficulty attracting the same investment interest as large utility-scale 

projects. 

 13
Table 9. FY 2003 Active Project Summary 

Technology 

Active 

Projects 

Active 

Grants 

Estimated Energy 

Generated/Saved 

MMBtu (MWh) 

Digesters 23 $5,884,959 383,274 (112,331) 

Bioenergy 11 $2,462,447 5,267,122 (1,543,705) 

EE Buildings 22 $1,275,530 175,258 (51,365) 

EE Industrial6 0 $0 0 (0) 

Geothermal 0 $0 0 (0) 

Hybrid 6 $2,112,977 4,125,275 (1,209,048) 

Solar, Large 3 $571,461 2,187 (641) 

Solar, Small 2 $29,105 109 (32) 

Wind, Large 23 $6,601,770 716,414 (209,969) 

Wind, Small 8 $170,024 1,923 (564) 

Total 98 $19,108,273 10,671,562 (3,127,656) 

Figure 6 shows the distribution by technology of active projects receiving grant awards in FY 

2003. 

Digesters

23

Bioenergy

11

EE Buildings

22

Hybrid

6

Solar, large

3

Solar, small

2

Wind, large

23

Wind, small

8

EE Industrial

0 Geothermal

0

Figure 6. The number of active projects by technology, FY 2003. Wind and digesters led during 

the first year of funding. 

 

6

 In FY 2003, data were unavailable to distinguish between building and industrial energy efficiency projects. 

 14
Key Issues 

Several valuable lessons were learned from the FY 2003 award process. At the conclusion of the 

review cycle, NREL surveyed technical reviewers and external stakeholders to determine 

primary options for improving the program. USDA began immediately to take steps to address 

many of these issues. The main suggested actions were: 

1. Provide separate technical criteria for different technologies. 

2. Decrease the minimum project size from $40,000 to $10,000 to attract more small projects. 

3. Increase upfront outreach and engage EERE networks to solicit more applications. 

4. Provide more tools and guidance to applicants to improve application quality and 

consistency. 

5. Simplify and streamline the application process, especially for smaller projects. 

In FY 2004, USDA took steps to improve or address the first four primary issues. The last of 

these, simplifying the application process for small projects, was included as part of the final rule 

governing this program. As noted earlier, the dramatic increase in both the quality and quantity 

of applications in subsequent years has shown that USDA made significant program 

improvements after the first year. Because FY 2006 will be the first year for the simplified 

application process, a review of projects following that cycle will provide information on the 

success of the rule modification for small projects. 

In addition to program design issues in FY 2003, a host of logistical issues arose with application 

tracking and review. To address this issue, USDA tasked NREL to design a Web-based tracking 

system to consolidate input from all USDA State Offices, the various technical reviewers, and 

the USDA National Office. This tool was put in place for the FY 2004 cycle. 

Technology Summary 

Bioenergy 

In 2003, 13 bioenergy projects received funding. These projects were located in Iowa, Illinois, 

Missouri, Montana, Nebraska, New York, Ohio, and Washington. As of June 2006, only four of 

these projects are considered complete. Bioenergy systems that convert biomass to electricity or 

fuels are expensive and complex, sometimes requiring several years to complete. In reviewing 

reports filed by USDA State Office staff, it is encouraging to note that seven of the 13 projects 

awarded are in pre-construction or construction phases, and completion can be expected within 

the next one to two years. It is interesting to note that three of the four bioenergy projects 

considered complete meet the definition of small projects (less than $200,000 total project costs). 

This completion time is in line with the common knowledge that large, complex projects often 

take several years to complete. 

Digesters 

In 2003, 31 anaerobic digester projects received funding. The projects were located in 

California, Idaho, Illinois, Michigan, Minnesota, North Carolina, Nebraska, New York, 

Washington, and Wisconsin. Before 2003, fewer than 10 digesters operated in the United 

 15
States.7

 Of the 31 projects awarded funding in FY 2003, seven are completed as of June 2006, 

and eight have been canceled. 

Although biogas production through anaerobic digester technology is well understood, barriers 

still exist that prevent projects from reaching the completion stage. Difficulty in obtaining 

permits, financing, engineering, and lengthy construction schedules are all reasons cited in the 

State Office reports for projects not yet completed. For projects planning to sell electricity to 

third party off-site entities, grant recipients report difficulty in securing power purchase and 

interconnection agreements with the local utility. Without these agreements, many of these 

projects are not economically feasible. 

Completed projects generally perform as expected, although one project has been shut down 

because of operational issues. Successful projects are well-engineered and implement thorough 

operations and maintenance plans. This result shows that a thorough technical review is helpful. 

It is anticipated that State Office survey data forthcoming from EPA’s Agstar program will help 

shed light on why many of these digester projects are not progressing beyond the initial planning 

stage. 

Geothermal- Electric 

No geothermal-electric projects were awarded in FY 2003. 

Geothermal-Direct 

No geothermal-direct projects were awarded in FY 2003. 

Solar, Large 

Four large solar projects were awarded in FY 2003 in California, Hawaii, Illinois, and Texas. 

Large projects are those that exceed 10 kW in rated output. These projects tend to exceed $1 

million in total project costs and are usually more complex to finance and install. Of the four 

projects awarded in FY 2003, one has been completed, one canceled, and two are still in preconstruction and construction phases. The completed project is a large-scale solar dryer system 

located in California that does not produce electricity. This project was completed in time to be 

used for the 2005 crop. The project in pre-construction phase is awaiting additional financing. 

Solar, Small 

Two small solar projects were awarded in FY 2003 in Hawaii and South Carolina. The Hawaii 

project is completed, and the South Carolina project has not yet started. According to the South 

Carolina Rural Energy Coordinator, the project is stalled in discussions between the lender and 

farmer and may be canceled soon. 

Wind, Large 

In FY 2003, Section 9006 awarded 25 large wind projects across Iowa, Idaho, Illinois, 

Massachusetts, Minnesota, New York, Texas, and Virginia. Fourteen have now been completed. 

In this category of wind projects, the most common large wind projects are community-scale 

 

7

 http://www.epa.gov/agstar 

 16
projects of one to two turbines of about 1.5 to 2 MW per turbine. These offer a new source of 

local revenue to rural communities. This type of project holds the advantage of having local 

ownership and higher rural economic impact. However, smaller projects often have some 

disadvantages as compared to very large wind farms. Disadvantages include securing power 

purchase agreements and interconnection agreements, along with procuring turbines. This 

situation is a common concern across the country, and unfortunately, community-scale projects 

are often the hardest hit by the recent wind turbine supply shortage. In some cases, wait times 

for turbines can reach 36 months. 

Wind, Small 

Nine small wind projects were funded in FY 2003. One project was canceled. Of the remaining 

eight, five have been completed; one is in the pre-construction phase, and two are in the 

construction phase. In contrast to large-scale wind projects, small wind projects awarded in FY 

2003 are owned by small rural businesses and were not able to leverage tax incentives for 

producing renewable energy. 

Hybrid 

Hybrid is a category not expressly in the regulation but evaluated during application submittal. 

Hybrid projects include more than one renewable energy technology in a single application. In 

FY 2003, six hybrid projects received funding. They are located in Iowa, Massachusetts, and 

Ohio. The Ohio projects combined ethanol production and anaerobic digester technologies. 

Ground has broken on one of the Ohio projects, and the other two are in pre-construction phase 

while additional financing is secured. The other three hybrid projects involved solar combined 

with wind or geothermal technologies; one is completed. Projects under development have 

completed the solar portions of the project, but have changed wind generators or experienced 

delays with the geothermal technologies. Although hybrid projects are acceptable, they can be 

challenging for applicants because any technology proposed must meet technical requirements. 

If one of the technologies does not pass technical review, the entire application will fail. 

Energy Efficiency, Buildings 

Of the applications received in FY 2003, 24 applicants received funding for building energy 

efficiency projects in Iowa, Illinois, Kansas, Mississippi, North Dakota, Nebraska, New York, 

South Dakota, and Vermont. Of these projects, 13 have been completed, three are in preconstruction phase, and six are under construction. Two were canceled. Building efficiency 

technologies included improved insulation, high efficiency heating and cooling units, and high 

efficiency circulation units. 

Energy Efficiency, Industrial 

No industrial efficiency applications were received in FY 2003. 

 17
FY 2004 Award Cycle 

Background 

FY 2004 was the second award cycle for the 9006 program. One hundred sixty-seven awards 

were issued in 26 states for $22.8 million, leveraging $165.9 million in project funds. Figure 7 

shows the distribution of awards by state. 

Several key improvements were made based on lessons learned during the FY 2003 award cycle. 

These improvements included more extensive outreach and education, a new application tracking 

system, and a standardized technical review process. In addition, though the final regulation was 

not issued until July 2005, USDA headquarters and NREL staff developed guidance documents 

for each of the technical sections (Section A and Section B). These improvements and additional 

information combined to achieve a significant improvement in the overall quality and quantify of 

applications. 

Number of Projects Awarded by State

1-4 15-24 

5-14 25+ 

 

Figure 7. Distribution of awards by state, FY 2004. Similar to FY 2003, Minnesota received a large 

number of awards, along with Wisconsin, Maine, and Mississippi. Projects in states that did not 

receive awards in FY 2003, such as Delaware, Georgia, and Pennsylvania, received awards in FY 

2004. 

 18
USDA began outreach efforts in FY 2004 primarily by developing outreach tools for use by the 

State Offices, creating a 9006 Program Web site with program information and application tools, 

and working collaboratively with a range of partners in the traditional EERE network. These 

included state energy offices, certain technology programs, and a number of non-profit 

organizations. Of note, the Wind Powering America initiative at DOE made the 9006 program a 

centerpiece of their outreach efforts. These efforts included educational and outreach materials 

that provided details on what types of information were expected by technical reviewers to meet 

the technical requirements. 

In addition to the outreach and education efforts, USDA worked with technical experts at NREL 

and other DOE laboratories to develop technical guidance for applicants. These documents were 

developed for each technology area to help applicants better understand the requirements of the 

technical review process. Technical guidance also served to make the technical portions of each 

application more uniform and easier to compare during the application review process. 

USDA and NREL also developed an application tracking system that significantly streamlined 

the application review process. The tracking system allowed rural energy coordinators to 

directly enter application information via the Web. This information was then passed on to the 

application and technical review teams located at USDA headquarters and NREL. 

A standardized review process for each technology also was developed by USDA headquarters 

and NREL. This review process was integrated directly with the application tracking system and 

enabled rural energy coordinators, USDA headquarters, and reviewers to quickly ascertain the 

status of a project, as well as quickly and uniformly conduct a technical review. 

Current Status 

Table 10 shows the number of awards by technology as well as the median grant award and total 

project costs. Energy efficiency projects in the building and industrial sectors increased 

significantly between FY 2003 and FY 2004. Many digester projects continued to receive 

awards as well as large wind and bioenergy projects. Twelve small wind projects received 

grants, while solar and geothermal projects continued to be few. Unlike FY 2003, digesters and 

large wind projects had the largest median grant award and total project costs. Small solar 

projects continued to have the smallest median grant award and total project costs, although 

many energy efficiency projects also had low median project costs. 

 19
Table 10. Median Total Project Costs and Grant Awards by Technology, FY 2004 

Technology Awards 

Awards Median 

Grant Award 

Median Total 

Project Cost 

Digesters 37 $225,268 $1,013,072 

Bioenergy 13 $190,750 $763,000 

EE Buildings 64 $19,546 $86,532 

EE Industrial 9 $11,000 $44,815 

Geothermal-Direct 2 $142,677 $570,708 

Hybrid 2 $63,496 $253,985 

Solar, Large 1 $49,886 $530,701 

Solar, Small 1 $4,936 $19,745 

Wind, Large 26 $248,000 $2,099,904 

Wind, Small 12 $17,544 $70,175 

All Technologies 167 $51,900 $236,220 

Table 11 summarizes the current status of FY 2004 projects and shows that completion rates for 

FY 2004 are higher than for FY 2003. As expected, many energy efficiency projects have been 

completed. This industry is mature, and these projects are generally simple to implement. 

Efficiency projects still under development are nearly all in the construction phase and should be 

completed sometime in the next year. 

Table 11. Status of FY 2004 Awarded Projects by Technology 

Active Projects 

Technology Cancelled Complete 

Under 

Development Total Awarded

Digesters - 8 29 37 

Bioenergy - 9 4 13 

EE Buildings 3 47 14 64 

EE Industrial 1 5 3 9 

Geothermal-Direct - 2 - 2 

Hybrid - - 2 2 

Solar, Large - - 1 1 

Solar, Small - 1 - 1 

Wind, Large - 1 25 26 

Wind, Small 2 6 4 12 

Total 6 79 82 167 

Even though no digester project funding has been canceled from FY 2004, a significant number 

of projects are still under development. Most of these are still in the pre-construction phase. 

State Offices continue to cite financing as the key barrier to these projects, but also identify 

difficulty in obtaining interconnection and power purchase agreements. In contrast to FY 2003, 

the majority of large wind projects receiving funding in FY 2004 are still under development. 

Assuming these projects have a timeline of two to three years to reach completion, these projects 

should be completed within the next year. However, there is a supply shortage of large-scale 

wind turbine components, and this may be affecting the ability to secure equipment. Several 

 20
small wind projects are still trying to secure financing. The same is true for the single large-scale 

solar project. 

Table 12 summarizes the active projects, grant amounts, and estimates of energy generation and 

savings. In FY 2004, bioenergy projects still accounted for the largest magnitude of energy 

savings and generation. It is important to note that energy savings and generation numbers are 

estimates only and that field verification needs to occur once projects reach the completion stage. 

Even for projects that are completed, the numbers listed for energy savings and generation are 

based on applicant estimates only. 

Table 12. FY 2004 Active Project Summary 

Technology 

 Active 

Projects Active Grants 

Estimated Energy 

Generated/Saved 

MMBtu (MWh) 

Digesters 37 $9,508,946 419,759 (123,024) 

Bioenergy 13 $3,136,132 1,455,766 (426,661) 

EE Buildings 61 $1,527,260 28,993 (8,497) 

EE Industrial 8 $165,972 18,874 (5,532) 

Geothermal-Direct 2 $285,353 23,851 (6,990) 

Hybrid 2 $126,992 26,404 (7,739) 

Solar, Large 1 $49,886 5,586 (1,637) 

Solar, Small 1 $4,936 24 (7) 

Wind, Large 26 $7,301,540 641,077 (187,889) 

Wind, Small 10 $485,330 3,767 (1,104) 

Total 161 $22,592,347 2,624,101 (769,080) 

 21
 Figure 8 shows the distribution of active projects awarded in the FY 2004 cycle. 

 

Digesters, 37

Bioenergy, 13

EE Buildings, 61

EE Industrial, 8

Geothermal, 2

Hybrid, 2

Solar, large, 1

Solar, small, 1

Wind, large, 26

Wind, small, 10

Figure 8. Summary of active projects by technology, FY 2004. Building energy efficiency projects 

received the largest number of awards during the second year of funding. 

Key Issues 

Fewer problems were encountered in the FY 2004 than in the previous cycle. However, a few 

key issues arose during the review process. The biggest issue was related to scoring of the grant 

applications. Because not all funding was awarded in the first year, no ranking of applications 

was necessary. However, FY 2004 funding was more competitive, and concerns with the 

scoring surfaced. First, the scoring system was not “technology-neutral.” Some types of 

projects, particularly large projects, had inherent advantages over others. To remedy this 

situation, USDA normalized the scores across various technology groups to level the playing 

field. This resulted in greater diversity of awarded projects and ensured that small projects were 

treated equally. 

It also became evident that while business elements were included in the scoring, there were not 

provisions for scoring projects based on technical merit. As such, some the best projects 

technically, or those deemed to have the highest probability of success, were not funded; others 

that were not as strong technically received awards. USDA modified its scoring criteria in FY 

2005 to accommodate a technical merit score. 

Another issue repeatedly raised by stakeholders was the limitation on eligibility for rural small 

businesses. The NOFA in both years had placed additional restrictions on the definition of a 

small business, and many rural electric coops interested in participating were ruled ineligible. 

USDA resolved this limitation in the FY 2005 NOFA. 

 22
Lastly, although outreach tools had been developed, the applications were not reflecting a broad 

of geographic diversity, as hoped. As a result, USDA expanded its outreach model beyond 

simply developing tools for State Offices. 

Small projects for energy efficiency were far more prevalent in FY 2004 awards, but small 

renewable energy projects were still not well represented. It was evident from applications 

received that the application process for small renewable energy systems was still complicated 

and unclear to many applicants. The fail rate on small renewable energy system applications, 

particularly solar applications, was extremely high. 

For both outreach and the technical efforts, USDA provided funding in FY 2005. It funded a 

survey of stakeholders to determine how best to improve outreach and application quality, and it 

funded the development of outreach and technical improvements. 

Technology Summary 

Bioenergy 

In FY 2004, similar to FY 2003, 13 bioenergy projects received funding. These projects were 

located in Colorado, Delaware, Iowa, Massachusetts, Mississippi, Nebraska, Ohio, Pennsylvania, 

and Wisconsin. In contrast to FY 2003, as of June 2006, nine of these projects are already 

complete, a significant improvement over FY 2003. This improvement is in part due to the 

increased outreach effort conducted by USDA and NREL regarding technical requirements for 

applicants. None of the projects have been canceled, and three of the projects are in the 

construction phase. Only one project is still at the pre-construction phase due to a combination 

of financing and restructuring of the applicant’s business. 

The scope and scale of bioenergy projects for FY 2004 was extremely broad. They ranged from 

high efficiency pellet stoves installed in Wisconsin, to 1 million gallon per year (MGPY) B2/B5 

biodiesel (a blend of 2% and 5% biodiesel with 98% and 95% petroleum diesel, respectively) 

facilities in Pennsylvania. 

Digesters 

In 2004, 37 anaerobic digesters projects received funding. They were located in California, 

Georgia, Michigan, Minnesota, New York, Ohio, Pennsylvania, Vermont, and Wisconsin. 

Nearly all projects involved the production of both electricity and heat, ranging in size from 46 

kW to 1.6 MW. 

Digesters continue to have a low completion rate and difficulty moving into the construction 

phase. Of the 37 projects awarded funding, only 11 have reached the completion or construction 

phase (eight and three, respectively). Twenty-six projects are still in the pre-construction phase. 

Barriers include last-minute design changes, permitting issues, interconnection and power 

agreements, financial uncertainties, and emissions regulations from EPA. It is expected that the 

EPA AgStar-supported study of digester systems receiving awards from 9006 will shed light on 

the details of these barriers as well as point out keys to success. 

 23
Geothermal-Electric 

No geothermal-electric projects were awarded in FY 2004. 

Geothermal-Direct 

Two geothermal-direct projects using ground source heat pump (GSHP) technology were 

awarded in FY 2004. Both projects, one in Iowa and the other in Pennsylvania, are complete. 

Both met the “small project” definition (total project costs less than $200,000), which 

contributed to their quick completion. As well, GSHPs use relatively simple technology and do 

not require interconnection agreements, complex permitting, and often yield rapid simple 

payback. 

Solar, Large 

Only one large solar project (solar thermal) was awarded in FY 2004. This project, located in 

Mississippi, is 90% complete and was delayed because of Hurricane Katrina. The awardee 

expects to complete the project this year. Solar thermal projects are similar to geothermal-direct 

ones in that no interconnection agreements and minimal permitting are required. 

Solar, Small 

A single small solar project was awarded in FY 2004 for a 2.5-kW solar electric system located 

in Wisconsin. Total project cost was less than $20,000 and completed in FY 2005. Small solar 

electric systems are a mature technology and can be considered nearly “off-the-shelf” with 

respect to installation. The expense of the system is a key barrier to more widespread 

deployment of this technology. The 9006 program has had a significant impact on the economic 

viability of these types of projects. 

Wind, Large 

Twenty-six large wind projects were awarded grants in FY 2004. All but one is in the preconstruction, with expected completion in 2006. One project has been completed, and one is still 

in the pre-construction phase. Nearly all of the large wind projects submitted in FY 2004 use the 

community wind business model, which seeks to maximize the tax and grant efficiency of the 

project. The 9006 program has contributed indirectly to the success of this model; the grant 

amounts make many of these projects financially attractive to local investors, including farmers 

and residents of the local community. 

In addition to delays from the wind turbine shortage, 22 awardees cite difficulties in obtaining 

from local utilities power purchase agreements, interconnection agreements, or both. Power 

purchase and interconnection agreements are critical to the financial success of these projects 

and represent a significant barrier to widespread adoption of these technologies. 

 

Wind, Small 

Twelve small wind projects located in Minnesota, Missouri, New York, Texas, Virginia, 

Washington, and Wisconsin received funding in FY 2004. Six are now complete, and one is 

currently under construction. Two projects have been canceled, and three are still in the preconstruction phase while additional financing is secured. 

 24
Hybrid 

Two projects received funding under this category in FY 2004─a combined solar thermal and 

solar electric project in Nebraska and a combined solar electric, solar thermal, and biomass boiler 

in Iowa. The Nebraska project is in the construction phase, and the Iowa system is in preconstruction because of new design considerations. Both of these projects are interesting 

because they represent a whole system approach by the applicant, which includes multiple 

sources of renewable energy. 

Energy Efficiency, Buildings 

Energy efficient building projects continued to receive a high number of awards in FY 2004. 

They included technologies such as lighting upgrades, high R-value insulation, new windows, 

and high efficiency heating, ventilation, and air conditioning systems (HVAC). The sixty-four 

projects receiving funding were located in Illinois, Kansas, Maine, Mississippi, North Dakota, 

Nebraska, Oklahoma, and Wisconsin. Forty-seven have been completed, and 12 are under 

construction. Only three projects have been canceled because of financial consideration, and 

only two are still in pre-construction. Energy efficiency measures at building facilities are 

extremely cost-effective, offering rapid simple payback and reliable performance. 

Energy Efficiency, Industrial 

Industrial efficiency applications were awarded for the first time in FY 2004. They included 

projects in Iowa, Kansas, Nebraska, Washington, and Wisconsin. Industrial efficiency projects 

included high efficiency refrigeration, irrigation pumps, and grain dryer systems. Of the nine 

projects awarded, five are complete, three are under construction, and one is canceled.

 25
FY 2005 Award Cycle 

Background 

FY 2005 was the latest completed award cycle as of the writing of this report. During FY 2005, 

154 awards were issued in 32 states for $22.2 million, leveraging $202 million. Figure 9 shows 

the distribution of awards by state. FY 2005 saw the greatest number of states with projects 

awarded, with Iowa, Nebraska, and Minnesota having the largest number overall. 

Number of Projects Awarded by State

1-4 15-24 

5-14 25+ 

 

Figure 9. Distribution of awards by state, FY 2005. Although some states, such as Iowa, 

Minnesota, and Nebraska, continued to receive many awards, FY 2005 saw the greatest number of 

states with projects awarded. 

The only significant changes to the program in FY 2005 were a broader definition of rural small 

business that could include more rural electric coops and a change to scoring that included a 

technical merit score. 

Key improvements made during the FY 2005 award cycle included continued emphasis on 

outreach, education and training activities. A pilot outreach model was developed, bringing 

USDA State Offices together with state energy offices and other in-state energy experts to create 

 26
energy teams. After model development in Ohio, Iowa, and Wisconsin, in particular, USDA 

joined with national partners to increase awareness of the program and expand outreach. 

USDA worked closely with State Offices and partnered with DOE Regional Offices to solicit 

energy stakeholders about outreach needs for tools and resources. This led to the development of 

a range of outreach products, including brochures, presentations, and sample applications. 

On July 18, 2005, the final rule for the 9006 program was published. This occurred after the 

deadline for FY 2005 grant applications, so the rule did not alter the grant program for the year. 

It did, however, make guaranteed loans available. Two projects received guaranteed loans in FY 

2005. 

Current Status 

Table 13 shows the number of awards by technology as well as the median grant award and total 

project costs. The number of funded digester applications dropped substantially in part due to 

the high number of applications received in FY 2003 and FY 2004. Additionally, many of the 

earlier projects are still unable to advance past the pre-construction phase. Energy efficiency 

awards now account for almost half the grants issued, followed by large wind. Digester and 

bioenergy projects follow. As in previous years, the number of small solar, wind, and 

geothermal projects are small compared to the other technologies. 

 

Table 13. Median Total Project Costs and Grant Awards by Technology, FY 2005 

Technology Awards 

Median Grant 

Award 

Median Total Project 

Cost 

Digesters 14 $456,619 $1,826,476 

Bioenergy 11 $118,150 $472,600 

EE Buildings 35 $8,515 $34,060 

EE Industrial 33 $12,415 $51,750 

Geothermal-Direct 2 $47,465 $189,870 

Hybrid 1 $199,863 $799,455 

Solar, Large 4 $44,178 $214,346 

Solar, Small 5 $4,396 $17,586 

Wind, Large 43 $257,000 $2,469,000 

Wind, Small 6 $17,247 $68,988 

All Technologies 154 $49,975 $228,710 

Energy efficiency projects, along with small wind and solar projects, continued to have the 

lowest median grant awards and total project costs. Digesters and large wind projects continued 

to have the highest median grant awards and total project costs. 

Table 14 summarizes the status of awards across technologies for FY 2005 as of June 15, 2006. 

Because these awards were announced only in late summer of 2005, most of the projects are still 

under development. Only one project has been canceled. Cancellation was due to change of 

ownership and financing according to USDA State Office reports. 

 27
It is anticipated that large wind projects receiving funding during the FY 2005 grant cycle may 

have difficulty reaching completion in less than two years. As mentioned in the previous 

section, there is a world-wide shortage of turbine components. Those familiar with the industry 

indicate waiting time for components may be as long as two to three years. 

Table 14. Status of FY 2005 Awarded Projects by Technology 

Active Projects 

Technology Canceled Complete 

Under 

Development 

Total 

Awarded 

Digesters - - 14 14 

Bioenergy - 6 5 11 

EE Buildings - 15 20 35 

EE Industrial 1 23 9 33 

Geothermal-Direct - - 2 2 

Hybrid - - 1 1 

Solar, Large - - 4 4 

Solar, Small - 2 3 5 

Wind, Large - - 43 43 

Wind, Small - 4 2 6 

Total 1 31 122 154 

Table 15 lists dollar amounts and estimated energy savings and generation broken out by 

technology. Even though only 11 bioenergy projects received awards in FY 2005, bioenergy 

projects still represent the largest number in terms of energy savings and generation. These 

projects typically produce motor and distillate fuel as a primary product, and economics dictates 

that their scale be substantial. Small wind and solar projects continued to be few during FY 

2005. To address this issue, USDA created a simplified application process in FY 2006. Figure 

10 shows the distribution of active grants awarded by technology in FY 2005. 

Table 15. FY 2005 Active Project Summary 

Technology 

Active 

Projects 

Active 

Grants 

Estimated Energy 

Generated/Saved 

MMBtu (MWh) 

Digesters 14 $5,018,017 161,628 (47,370) 

Bioenergy 11 $2,118,391 2,168,696 (635,608) 

EE Buildings 35 $783,019 17,563 (5,147) 

EE Industrial 32 $812,010 13,096 (3,838) 

Geothermal-Direct 2 $94,930 1,083 (317) 

Hybrid 1 $199,863 448 (131) 

Solar, Large 4 $626,480 5,027 (1,473) 

Solar, Small 5 $35,375 34,885 (10,224) 

Wind, Large 43 $12,432,626 1,415,199 (414,771) 

Wind, Small 6 $101,157 1,190 (349) 

Total 153 $22,221,868 3,818,815 (1,119,230) 

 28
Digesters

14

Bioenergy

11

EE Buildings

35

EE Industrial

32 Geothermal

2

Hybrid

1

Solar, large

4

Solar, small

5

Wind, large

43

Wind, small

6

Figure 10. Number of active projects by technology, FY 2005. The number of digesters awarded in 

FY 2005 dropped from FY 2004 and FY 2003, with industrial and building energy efficiency 

projects accounting for nearly half the projects awarded. 

Key Issues

The FY 2005 grant cycle went smoothly. There were far more applications than previous years, 

and as such, roughly only 50% of eligible applications received funding. Appeals of decisions 

were far more prevalent after the FY 2005 cycle than previously, attributed to the greater number 

of projects that did not receive awards. 

A key ongoing concern was that very few small-scale renewable energy projects received 

awards. Although the number of applications for small projects in some technologies had 

increased, the increased competition had reduced the number of awards to previous levels. 

Because the policy focus of the 9006 program was to benefit small rural business and 

agricultural producers, scoring preferences and a simplified application process that favored 

these applicants was developed for FY 2006. 

Technology Summary 

Bioenergy 

Eleven bioenergy projects, in Georgia, Iowa, Maine, Michigan, Missouri, North Dakota, South 

Dakota, Tennessee, Washington, and Wisconsin, received funding in FY 2005. Projects 

included small pellet stoves, small- and large-scale biodiesel manufacturing facilities, large-scale 

ethanol plants (16 MGPY), and biomass heating. Five of the 11 projects involved fuel 

production. Six projects have been completed, while five are still under development. 

 29
Digesters 

Fourteen digester projects were awarded in FY 2005 in Michigan, New Hampshire, New York, 

Ohio, Pennsylvania, South Dakota, Washington, and Wisconsin. This number was down from 

the 21 and 37 projects awarded in FY 2003 and FY 2004. Part of this decrease may be attributed 

to low completion rates for FY 2003 and FY 2004 projects and limited contractor capacity. 

Additionally, early adopters of this technology are engaged and followers may be taking a waitand-see approach before moving forward. 

Projects ranged in size from 50-kW projects situated on small farms in New York to a 1-MW 

project in Washington. According to informal surveys conducted with applicants and digester 

design firms, digester technology continues to face challenges. These include design, 

interconnection and power purchase agreements, financial uncertainty, and permitting. All 14 

projects are currently under development. 

Geothermal-Electric 

There were no geothermal electric projects awarded in FY 2005. 

Geothermal- Direct 

Two geothermal direct projects, in Montana and Nebraska, were funded during the FY 2005 

cycle. Both leveraged ground-source heat pump technologies to meet heating and cooling 

demands at farm operations. Combined they will produce more than 1 MMBtu per year of 

energy. Both are currently in the pre-construction phase. 

Solar, Large

Four large solar projects received funding in FY 2005, including both thermal and electric 

applications. Projects receiving awards were located in Arizona, California, and Oregon. It is 

interesting to note that in climates as different as Arizona and Oregon, large-scale solar 

technologies can still be used to supply energy for rural business applications. Large solar 

projects totaled 5,000 MMBtu in energy production and savings. Two of these projects are 

under construction, while two are in the pre-construction phase. 

Solar, Small 

Five small-scale solar projects were awarded funding in FY 2005, including both solar electric 

and solar thermal applications. States receiving funding included Hawaii, Massachusetts, and 

North Carolina. Two are completed, and the remaining three are under development. These 

projects totaled 34,000 MMBtu in energy production. 

Wind, Large 

Large-scale wind projects continued to dominate the applications in FY 2005. The popularity of 

the community-scale wind project model gained traction, and 43 projects received funding. 

Funds were distributed to Colorado, Iowa, Illinois, Minnesota, and Utah. Nearly all of these 

projects used a version of the flip business model to maximize financial efficiency of revenues 

from electricity sales, tax credits, and renewable energy credits. The 43 wind projects, once 

completed, will provide more than 415,000 MWh of emission-free electricity per year. Most of 

 30
these projects are still in the pre-construction phase, waiting for equipment, power purchase 

agreements with the local utility, or both. 

Wind, Small 

Small wind projects continued to represent only a few of the award recipients in FY 2005. Six 

projects received funding and aggregate to 348 MWh of annual energy production. Projects 

receiving funding were located in Iowa, Idaho and Minnesota. Four projects are completed, 

while the remaining two projects are still under development. 

Hybrid 

One hybrid project was awarded in FY 2005 for a combined solar electric and small wind system 

located in Idaho. This project is under construction. 

Energy Efficiency, Buildings 

Building efficiency applications continue to receive many awards; 35 grants were issued during 

the FY 2005 cycle. States receiving funding include Iowa, Kansas, Louisiana, Michigan, 

Mississippi, North Dakota, Nebraska, Oklahoma, South Carolina, and Wisconsin. Total energy 

savings for these projects is estimated to be 17,000 MMBtu and include technologies ranging 

from HVAC upgrades; high performance windows, doors and walls; and advanced energy 

systems controls. Fifteen projects have been completed, nine are under construction, and three 

are in the pre-construction phase. 

Energy Efficiency, Industrial 

Thirty-three industrial efficiency projects were awarded in FY 2005, combining for an estimated 

13,000 MMBtu of annual energy savings. High efficiency grain dryers and irrigation systems 

dominated the award pool and were located in Iowa, Missouri, Montana, Nebraska, Ohio, and 

Idaho. Twenty-three are complete, and the remaining projects are still under development. 

 31
Conclusion 

Based on this analysis, there are a number of conclusions about the status and success of the 

USDA 9006 Program. The Section 9006 program has an ambitious goal─to create and expand a 

market for energy efficiency and renewable energy technologies in rural America. Overall, this 

program has had a wide range of success. Any expansion of a market area for these technologies 

historically has come with a wide range of market barriers and other obstacles. These have 

certainly existed in this program and are reflected in some of the project completion rates. But 

the popularity of this program, along with the strong continued commitment of applicants to 

projects, makes this a successful program. 

The energy, emissions, and economic benefits of this program are significant. The active 

projects from the first three years alone are expected to produce enough energy to power 124,000 

homes or fuel 181,000 cars each year for the next two decades. In addition, these projects are 

expected to reduce emissions by the equivalent of 1 million metric tons of carbon per year. 

Although this report does not quantify the economic benefits of these projects, the program has 

had a measurable impact on the markets for several of these EERE technologies. 

The applicant commitment to projects is reflected in the fact that 95% of awarded projects are 

still on track. The program’s popularity is seen by the ever increasing number of applications: in 

FY 2005, USDA received requests for three times as much funding as was available. 

Although a significant number of projects have reached completion, there are still a range of 

standard issues reported that have caused delays or prevented project completion, including 

change of ownership, farm financial issues and bankruptcies, and changing business plans. As 

expected, smaller projects are completed sooner than larger, more complex ones. However, in 

general, the project development timeframes are not unexpected and, especially for FY 2004 and 

2005, are consistent with project development timelines currently seen in industry. 

The 2003 projects are on a slower pace for completion than 2004. Thirty-one percent of the 

active 2003 projects are expected to proceed, but still have not broken ground after more than 

two years. This is not unexpected and probably reflects the balance that USDA struck with the 

first year of awards between care with taxpayer funds and willingness to support early adopters. 

As technical requirements were strengthened in subsequent years, it is expected that a higher 

level of completion is reached in a shorter time period. 

In the first three years of the program, there has been about a 12:1 leverage on project costs 

compared to grant funds committed. This ratio is considerably higher than technical 

expectations at the beginning of this program and is substantial considering that each awardee 

has demonstrated financial need and indicated that the project would not go forward without the 

grant funds. In the long-term, this ratio may decrease as a larger number of small projects 

 32
receive funding. Even at the minimum leverage ratio of 4:1,8

 the program will be successful in 

leveraging taxpayer funds to increase market opportunities for new technologies. 

In the first three years, 43% of the grants have gone to small projects (total costs under 

$200,000). New rules implemented in July 2005, with simplified applications and scoring 

advantages, encourage these projects. As a result, the number of small project applications is 

expected to increase. Further data will be available after the FY 2006 program award cycle. 

Data in this report were based on limited information provided by USDA State Office staff 

involved with the projects. Many FY 2003 and FY 2004 projects are still in development. 

Available technical information from USDA State Office staff members lacked detail to fully 

evaluate all barriers to project development. If USDA is interested in further details, a technical 

review of barriers affecting incomplete projects may be warranted. Of note, USDA has provided 

funds to EPA’s AgStar program to analyze digester projects. 

USDA has provided some funding for a post-award tracking system. A Web-accessible data 

base will help State Office staff update and enter data regarding project progress and 

development. In addition, it will enable easier data retrieval and help USDA identify barriers to 

project development. Equally important, an on-line data base will enable benefits analysis to be 

completed in a rapid, cost-effective manner. 

A number of methodologies used in this report also will be beneficial in evaluating the 

guaranteed loan portion of the 9006 program. It is recommended that an evaluation of the 

guaranteed loan program be conducted once a sufficient sample size is available. 

 

8

 The regulation allows grant awards for up to 25% of total project costs, with a cap at $500,000. It is unlikely that 

all awarded applications would have total eligible projects costs of less than $2 million. 

 33
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 34
Appendix A─Selected Success Stories 

State: Wisconsin 

Technology: Anaerobic Digester 

Grant Amount: $299,580 

Yearly Energy Production: 6,652 MMBtu 

Project Status Summary: Project is complete. The digester has been in operation for one year 

and has exceeded performance expectations. Recipients plan to add another generation set, 

which will increase output even further. They are using the separated solid as bedding, which has 

been very beneficial, and are working on using other solids to make potting soil. So far, they are 

happy with the results. There are no noticeable odors, so area residents are appreciative. 

Farmer’s comment, “I think the benefits of a methane digester are very good. I believe the future 

potential is even better. We need to continue to explore ways to use methane more efficiently to 

produce higher dollar valued products to keep American ag profitable. I would ask that you 

please continue to support and fund projects like this one using renewable agricultural products." 

(Source: Wisconsin USDA Rural Development Office) 

State: Mississippi 

Technology: Energy Efficiency, Buildings 

Grant Amount: $32,629 

Yearly Energy Savings: 11,346 gallons of natural gas 

Project Status Summary: Project is complete. This was one of five similar energy efficiency 

projects awarded in the state in FY 2003. Funds were used for energy efficiency improvements 

to poultry broiler production houses. The greatest savings for this project resulted from reduced 

natural gas use. Natural gas savings were higher than expected at 37%, with an overall energy 

savings of 25%. No operational problems have been reported to date, and the recipient is pleased 

with the overall results. This was one of the first in a series of awarded projects funding energy 

efficiency improvements in poultry houses (39 similar projects in Mississippi were awarded in 

FY 2004 alone). Other efficiency projects at poultry houses experienced similar savings and 

results. 

(Source: Mississippi USDA Rural Development Office) 

State: Minnesota 

Technology: Wind, Large 

Grant Amount: $178,201 

Yearly Electricity Production: 5,245,609 kWh 

Project Status Summary: Project is complete. A 1.65-MW wind turbine was constructed and has 

been operational since December 2004. This is one of seven community wind projects funded in 

Minnesota in FY 2003. These projects replicate the successful MinWind model, which 

significantly increased the number of farmer-owned community wind developments. Electricity 

is sold to Xcel Energy through an interconnection agreement. State production incentives have 

contributed to the economic success of this project and other community wind projects. 

(Source: Minnesota USDA Rural Development Office) 

 35
State: Wisconsin 

Technology: Solar, Small 

Grant Amount: $4,936 

Yearly Electricity Production: 7,665 kWh 

Project Status Summary: Project is complete. The recipients experienced some difficulties 

during installation due to adverse weather. Finding a licensed solar contractor in their area also 

took longer than expected. These minor setbacks were overcome, and installation was 

completed in May 2005. After seven months operation, the system had produced around 70% of 

expected total output. Accounting for line losses and other factors, on average, the system output 

is around 80% of capacity. In retrospect, they would have preferred to use a dual access tracker, 

rather than the single access tracker chosen for the project. Overall, they are very pleased with 

the project results. They noted that the system is often more efficient in colder weather, when 

snow reflects extra sunlight onto the solar panels, which is a real bonus considering their 

location. 

(Source: Wisconsin USDA Rural Development Office) 

State: New York 

Technology: Wind, Small 

Grant Amount: $12,467 

Yearly Electricity Production: 12,480 kWh 

Project Status Summary: Project was completed in January 2005. The recipient was described as 

“ecstatic” once the turbine was up and running. She experienced some problems with the 

inverter, and the turbine was not operational for one month in the summer of 2005. As a result, 

fewer kilowatt-hours were produced than expected. However, the amount produced was a very 

high percentage of total electrical usage on the farm. Savings from the additional electricity 

production allowed the addition of equipment to the operation, which the recipient could not 

afford previously. In the future, the 10-kW turbine is expected to replace all of the farm's current 

electricity use with power from a renewable source. The recipient, quite happy with the turbine, 

is now a strong advocate for wind power and hopes to encourage others in the community to 

build turbines of their own. 

(Source: New York USDA Rural Development Office) 

State: Iowa 

Technology: Wind, Large 

Grant Amount: $45,450 

Yearly Electricity Production: 900,000 kWh 

Project Status Summary: Project is complete. The recipient sells power to the local utility to 

offset electricity costs, which increased significantly following the addition of a hog operation. 

The physical construction and commissioning of the 450-kW turbine was completed on 

schedule. The farmer has been very pleased, explaining, "The project really has been a neat 

family project for our farm. It was just a fun, exciting project.” They also hope to expand their 

operations, noting, “The bottom line is we did it for our business to help control our future... 

Maybe, if this thing keeps working like it has been...well, maybe three or four years down the 

 36
line, we’ll be able to add another turbine. After all, we have three potential sites and plenty of 

high points—ample space to add another turbine." 

(Source: Waterloo/Cedar Falls Courier Online & Iowa USDA Rural Development Office) 

State: Iowa 

Technology: Efficiency, Industrial 

Grant Amount: $12,250 

Yearly Energy Savings: 1,035 MMBtu 

Project Status Summary: Project is completed. With the grant funding, a husband and wife team 

upgraded their 40-year-old grain-drying facility with more efficient equipment, including new 

grain bins and fans, doubling the size of their previous facility. The new equipment is in use and 

no operational problems have been reported. Overall, they are very satisfied with the 

improvements. The updated equipment saved their farm more than $16,000 in liquid petroleum 

gas costs in one year. In addition to the energy savings, they also saved time. Last fall, they 

were able to dry 70,000 bushels of corn in the new facility. In the old facility, where it took one 

week to dry 3,000 bushels, it would have taken 23 weeks to dry their recent harvest. The wife 

reported, "My husband was not very supportive of this grant-writing thing. He said it was a big 

waste of time. I will let you know that I did make sure he realized when we got the grant who 

did all the work for it.” 

(Source: Waterloo/Cedar Falls Courier Online & Iowa USDA Rural Development Office) 

 37
Appendix B─Methodology 

Energy Savings and Generation 

Data to support energy savings and generation calculations are taken directly from project data 

sets for FY 2003, 2004, and 2005.9

 For FY 2003, this consists of an internal project information 

sheet that NREL developed on all project applications sent to the Lab for technical review. In 

FY 2004 and FY 2005, USDA State Office staff entered original project and energy data into an 

NREL managed tracking system. NREL verified certain technology size and type during the 

review process. 

Data were calculated at the project level and rolled up to summary numbers. NREL conducted a 

verification process on all existing numbers to ensure that they were within anticipated ranges. 

Any missing data or discrepancies were filled in by researching basic savings or production 

numbers claimed by the applicant and recorded during the application review process. 

For all projects, both energy production and savings data were requested as annual energy (kWh, 

MMBtu, gallons per year) based on applicant projected generation or savings data. In the case 

where power rating was entered (e.g., 1.65-MW wind turbine) without supporting energy data 

(e.g., 5,500,000 kWh/year), a standard capacity factor10 was developed for each technology. The 

capacity factors were based on referenced data and advice from NREL technology staff. 

Table B1

Technolo Assumed Capacity 

. Assumed Capacity Factor by Technology 

gy Description Factor 

Anaerobic Digesters 90% 

Biomass (Electric Ge 90% 

Small Solar 35% 

Large Solar 35% 

Small Wind 30% 

Large Wind 35% 

neration) 

or each fiscal year, projects were sorted by technology type, and energy production or savings 

ce. 

 

F

values were compared within each subgroup to identify outliers and unexpected values. Any 

unusual data results were subjected to further research and verification. In a few cases, energy

savings were offered in dollars per year. In those cases, fuel prices were taken from the Energy 

Information Administration (EIA) and used as $0.0816/kWh11 for rural electricity and 

$0.0095/MMBtu for natural gas, taken from the EIA 2003/4 Midwest residential gas pri

9

 A small percentage, less than 5%, of the projects did not have current data from State Offices. These projects were 

designated as under development. 

10 Capacity factor is a percentage of time a project is expected to be operating at rated power output. It is the 

number of hours of operation time per year divided by 8,760. 

11 2004 commercial average: http://www.eia.doe.gov/cneaf/electricity/epa/epat7p4.html 

 38
All energy values were converted to MBtus for inter-comparison. For these calculations, a 

conversion factor of 3,412 Btu/kWh was used. For fuels, a conversion factor of 130 

MMBtu/gallon of biodiesel and 70 MMBtu/gallon of ethanol were used. 

Household and vehicle consumption equivalents were based on EIA data for 2001, the latest 

available. Households used an average of 10,624 kWh in 2001,12 and each vehicle in the United 

States traveled about 12,000 miles and used about 592 gallons in that year.13 

Project status was taken from quarterly surveys conducted by USDA and completed by USDA 

rural energy coordinators in each USDA State Office. Both direct input and background 

comments on award status, phase of project development, and obstacles to development were 

used to complete this report. 

Projects for which grant funds have been canceled, or for which surveys indicated were 

anticipated, were removed from active project summaries and from the overall energy generation 

and savings estimation calculations. Reporting numbers for FY 2003 and FY 2004 were updated 

in June 2006 by USDA State Office staff. 

Although there are also annual reports required on operational projects, those are not due until 

after a year of operation. As such, those are only available for a few projects so far, and that 

information is not included in this report. 

Emissions Calculations 

For emissions calculations, the report relied on factors and procedures outlined in DOE’s 

Voluntary Reporting of Greenhouse Gases–Form EIA 1605 (2006). These data were crosscorrelated with an EPA internal document, “Unit Conversions, Emissions Factors, and Other 

Reference Data,” November 2004. These data are meant for rough estimation purposes only and 

are estimated to be within +/-20%. Calculating a more refined number would require a detailed 

analysis on a state-by-state basis and is beyond the scope of this report. 

The EIA 1605 form provides the means for voluntary reporting of greenhouse gas emissions, 

reductions, and sequestration under the Energy Policy Act of 1992 (Public Law 102-486). The 

form allows parties participating in the voluntary reporting to calculate emissions impacts from a 

variety of sources and provides emissions coefficients and procedures for estimating values. The 

report focuses on emissions most affected by human activity, including carbon dioxide (CO2), 

methane, nitrous oxide, and halogenated substances. This report calculated only the CO2

component of emissions savings. 

Form 1605 provides instructions and emissions coefficients to determine CO2 impact on an 

individual technology basis. Appendix B of the instructions guide to the form contains specific 

emissions coefficients for a variety of technologies, including motor gasoline, distillate fuel, 

 

12 http://www.eia.doe.gov/emeu/reps/enduse/er01_us.html 

13 http://www.eia.doe.gov/emeu/rtecs/nhts_survey/2001/index.html 

 39
methane, landfill gas, biomass, geothermal, wind, photovoltaics and solar thermal, and 

wood/wood waste. The emissions factors for calculating CO2 emissions benefits from 

technologies supported by the USDA 9006 program are summarized in the tables below. The 

first three tables are separated into fuel, heat, and electric technologies to account for 

standardized emission rate factors associated with each technology. NNZ refers to estimated 

CO2 emissions that are not reabsorbed into the biological cycle.14 For each division, an average 

emissions rate for CO2 was calculated and applied to the roll-up data for the FY 2003 through 

FY 2005 cycle. 

Table B2. Emissions Factors for Fuels 

Type Baseline 

Emissions 

(lb/MMBtu) NNZ% 

EERE Contribution 

(lb/MMBtu) 

Total 

(lb/MMBtu) 

Biodiesel Distillate 161,386. 5% 8069. 153,317 

Ethanol Motor Fuel 156,425. 5% 7821. 148,604 

Average 150,960 

Table B3. Emissions Factors for Heat 

Type Baseline 

Emissions 

(lb/MMBtu) NNZ% 

EERE Contribution 

(lb/MMBtu) 

Total 

(lb/MMBtu) 

Wood Heat Natural Gas 117,080 5% 5,854 111,226 

Geothermal Heat Natural Gas 117,080 0% 0.0 117,080 

Solar Heat Natural Gas 117,080 0% 0.0 117,080 

Average 115,129 

Table B4. Emissions Factors for Electric 

Type Baseline 

Emissions 

(lb/kWh) NNZ% 

EERE Contribution 

(lb/kWh) 

Total 

(lb/kWh) 

Wood Electric Grid Electric 1.340 5% 0.067 1.273 

Geothermal Electric Grid Electric 1.340 0% 0.000 1.340 

Solar Electric Grid Electric 1.340 0% 0.000 1.340 

Wind Grid Electric 1.340 0% 0.000 1.340 

Efficiency Grid Electric 1.340 0% 0.000 1.340 

Average 1.327 

Digesters are noted in a separate table because of the “double dip” effect in which methane is 

captured on the front end of the process and grid-based emissions are avoided in the second (near 

net zero CO2). In transactions accepted by Chicago Climate Exchange and others,15 a standard 

approach to compute emissions benefits resulting from digester projects is to account for the 

emissions benefits realized from preventing methane from entering the atmosphere (through 

capture of the manure), add in the benefit realized from producing electricity from a renewable 

 

14 Sheehan, J. (2002). Life-Cycle Analysis of Ethanol from Corn Stover. 8 pp., NREL Report No. PO-510-31792. 15 Monitoring, Reporting and Verification Protocol for the IEUA Anaerobic Digester Project (January 24, 2006), 

Prepared for Inland Empire Utilities Agency. Environmental Resources Trust, Inc., Washington, D.C. 

 40
resource (manure), and subtract a small component of CO2 emitting and not reabsorbed into the 

closed carbon cycle loop. 

Table B5. Emissions Factors for Digesters 

Type 

Capture 

Emissions 

(lb/MMBtu) 

Electric 

Emissions 

(lb/MWh) NNZ% 

EERE Contribution 

(lb/MWh) 

Total 

(lb/MWh) 

Digesters 115,258 1.340 5% 0.067 394,533 

 

 41
F1147-E(12/2004) 

REPORT DOCUMENTATION PAGE Form Approved 

OMB No. 0704-0188

The public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, 

gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this 

collection of information, including suggestions for reducing the burden, to Department of Defense, Executive Services and Communications Directorate (0704-0188). Respondents 

should be aware that notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information if it does not display a 

currently valid OMB control number. 

PLEASE DO NOT RETURN YOUR FORM TO THE ABOVE ORGANIZATION.

1. REPORT DATE (DD-MM-YYYY)

August 2006 

2. REPORT TYPE

Technical report 

3. DATES COVERED (From - To)

 

5a. CONTRACT NUMBER

DE-AC36-99-GO10337 

5b. GRANT NUMBER

4. TITLE AND SUBTITLE

USDA Section 9006 Program: Status and Energy Benefits of Grant 

Awards in FY 2003-2005 

5c. PROGRAM ELEMENT NUMBER

5d. PROJECT NUMBER

NREL/TP-710-40465 

5e. TASK NUMBER

WF1H1004 

6. AUTHOR(S)

T. Walters, S. Savage, and J. Brown 

5f. WORK UNIT NUMBER

7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES)

National Renewable Energy Laboratory 

1617 Cole Blvd. 

Golden, CO 80401-3393 

8. PERFORMING ORGANIZATION 

REPORT NUMBER

NREL/TP-710-40465 

10. SPONSOR/MONITOR'S ACRONYM(S)

USDA 

9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES)

USDA Rural Development 

1400 Independence Ave., S.W., MS 3220 

Washington, DC 20250 11. SPONSORING/MONITORING 

AGENCY REPORT NUMBER

12. DISTRIBUTION AVAILABILITY STATEMENT

National Technical Information Service 

U.S. Department of Commerce 

5285 Port Royal Road 

Springfield, VA 22161 

13. SUPPLEMENTARY NOTES

14. ABSTRACT (Maximum 200 Words)

At the request of the U. S. Department of Agriculture (USDA) Rural Development, the National Renewable Energy 

Laboratory reviewed projects awarded in the Section 9006 Program: Renewable Energy Systems and Energy 

Efficiency Improvements Program. The purpose of this program is to provide grants to farmers, ranchers, and rural 

small businesses for purchasing renewable energy systems and energy efficiency improvements. NREL's report 

quantifies federal and private investment, outlines project status based on recent field updates, and calculates the 

effects on energy and emissions of renewable energy and energy efficiency projects from USDA grants awarded in 

FY 2003-FY 2005. Also included is an overview of the program challenges and modifications in the first three years 

of operation. 

15. SUBJECT TERMS

USDA; U.S. Department of Agriculture; NREL; National Renewable Energy Laboratory; renewable energy grants; 

energy efficiency grants; rural development; farm energy efficiency; farm renewable energy 

16. SECURITY CLASSIFICATION OF: 19a. NAME OF RESPONSIBLE PERSON 

a. REPORT 

Unclassified 

b. ABSTRACT 

Unclassified

c. THIS PAGE 

Unclassified

17. LIMITATION 

OF ABSTRACT

UL 

18. NUMBER 

OF PAGES 

19b. TELEPHONE NUMBER (Include area code)

Standard Form 298 (Rev. 8/98) 

Prescribed by ANSI Std. Z39.18