§ 5001.106 Eligible REAP—Renewable Energy System (RES) projects and requirements. For a REAP RES Project to be eligible for a loan guarantee under this part, it must meet the criteria specified in § 5001.102(a) through (c) and in paragraphs (a) through (e) of this section and be for a borrower eligible to submit an application for the project in accordance with § 5001.126. If taxable bonds are utilized as debt instruments the provisions of § 5001.105(b)(19) must be met. ( a ) The project must be for— ( 1 ) The purchase of a new or existing RES;
( 2 ) The purchase of a refurbished RES; or
( 3 ) The retrofitting of an existing RES.
( 4 ) For the purposes of this section, only those hydroelectric sources with a rated power of 30 megawatts or less are an eligible RES.
( b ) The RES project must use commercially available technology.
( c ) The RES project must be located in a rural area unless the borrower is an agricultural producer and the application supports the production, processing, vertical integration, or marketing of agricultural products. If the agricultural producer's operation is in a non-rural area, then the application can only be for RES components that are: ( 1 ) Directly related to, and their use and purpose is limited to the agricultural production operation, such as vertically integrated operations; and
( 2 ) Part of and co-located with the agricultural production operation.
( d ) Where a residence is closely associated with an agricultural operation or rural small business to be served by the RES project, 50 percent or more of the energy to be generated by the RES project must be used by the agricultural operation or rural small business. This provision must be documented with the application and can be demonstrated using either of the methods identified in paragraphs (d)(1) and (2) of this section. ( 1 ) Provide a renewable energy site assessment or other documentation and calculations that demonstrate based on historical energy use that 50 percent or more of the energy to be produced by the RES project will be used in the agricultural operation or rural small business. This includes documentation on historical residential energy use. The Agency may request additional data to determine residential versus business or agricultural operation usage. The actual percentage of energy determined to benefit the rural small business or agricultural operation will be the basis to determine eligible project costs.
( 2 ) The borrower may install or elect to conditionalize funding upon the installation of a device (such as a second meter) that results in 100 percent of the energy generated by the RES Project to be used only by the agricultural operation or rural small business.
( e ) The RES project must have technical merit. The Agency will use the information provided in the technical report submitted with the application (see § 5001.307(e) of this part) to determine if the project has technical merit. In making this determination, the Agency may engage the services of other Government agencies or other recognized industry experts in the applicable technology field, at its discretion, to evaluate the technical report. ( 1 ) *Technical report areas.* When making its technical merit determination, the Agency will evaluate the technical report using the areas specified in paragraphs (e)(1)(i) through (iii) of this section as applicable. ( i ) *RES projects with total project costs of $80,000 or less.* For these projects, the Agency will evaluate the following areas in making the technical merit determination: ( A ) Project description;
( B ) Resource assessment;
( C ) Project economic assessment; and
( D ) Qualifications of key service providers.
( ii ) *RES projects with total project costs of less than $200,000, but more than $80,000.* For these projects, the Agency will evaluate the following areas in making the technical merit determination: ( A ) Project description;
( B ) Resource assessment;
( C ) Project economic assessment;
( D ) Project construction and equipment; and
( E ) Qualifications of key service providers.
( iii ) *RES projects with total project costs of $200,000 and greater.* For these projects, the Agency will evaluate the following areas in making the technical merit determination: ( A ) Qualifications of the project team;
( B ) Agreements and permits;
( C ) Resource assessment;
( D ) Design and engineering;
( E ) Project development;
( F ) Equipment procurement and installation; and
( G ) Operations and maintenance.
( 2 ) *Pass/pass with conditions/fail assignments.* The Agency will assign each area of the technical report, as specified in paragraph (e)(1) of this section, a “pass,” “pass with conditions,” or “fail.” An area will receive a “pass” if the information provided for the area has no weaknesses and meets or exceeds any requirements specified for the area. An area will receive a “pass with conditions” if the information provided for the area has minor weaknesses which could be conditioned and reasonably resolved by the borrower. Otherwise, if the information provided for the area is conclusively deemed to be a major weakness, the area will receive a fail.
( 3 ) *Determination.* The Agency will compile the results for each area of the technical report to determine if the Project has technical merit. ( i ) A project whose technical report receives a “pass” in each of the applicable areas will be considered to have “technical merit.”
( ii ) A project whose technical report receives a “pass with conditions” in one or more the applicable areas will be considered to have “conditional technical merit.”
( iii ) A project whose technical report receives a “fail” in any one area will be considered to be “without technical merit.”
( 4 ) *Further processing of applications.* A project that is determined to have “technical merit” or “conditional technical merit” is eligible for further consideration for funding. Projects with “conditional technical merit” would be subject to funding conditions that would need to be met to ensure full technical merit prior to completion of the project. A project that is determined to be “without technical merit” is not eligible to compete for funding.