March 26, 2014 © 2014 Solar Energy Industries Association® 1

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Solar and the Rural Energy for America

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March 26, 2014 © 2014 Solar Energy Industries Association® 2

Solar and the Rural Energy

for America Program

Anthony Crooks, Ph.D, Renewable Energy Policy Specialist, U.S. Department of

Agriculture, Rural Development

Katherine Stainken, Manager, Government Affairs, SEIA

Solar and the Rural Energy for America Program

Tony Crooks

USDA, Rural Development

U.S. Renewable Resources

Source: AEO2014 Early Release Overview

States with Renewable Portfolio Standards and

Renewable Mandates in 2009

$1.1 billion to leverage renewable energy industry

investments in new technologies and feedstocks

• Biomass Crop Assistance Program (BCAP) – $70 M

• Biomass Research and Development Initiative -- $118 M

• Biorefinery Assistance -- $75 M (’09), $245 M (’10)

• Bioenergy Program for Advanced Biofuels -- $300 M

• Rural Energy for America Program (REAP) -- $255 M

• Biobased Markets Program -- $9 M

• Biodiesel Fuel Education Program -- $5 M

• Biofuels Infrastructure Study -- $1 M

• Repowering Assistance -- $35 M

Food, Conservation, and Energy Act ’08Energy Title Programs with Mandatory Funding

• Rural Energy for America Program: $50 million each year FY 2014-18

• Biorefinery Assistance Program: $200 million available until expended

• Repowering Assistance: $12 million available until expended

• Bioenergy Program for Advance Biofuels: $15 million each year FY 2014-18

• BioPreferred Program: $3 million each year FY 2014-18

• Biomass Research and Development Initiative: $3 million each year FY2014-18

• Biomass Crop Assistance Program: $20 million each year FY 2014-18

Agriculture Act of 2014Energy and Bioeconomy Programs with Mandatory Funding

• Increasing economic opportunity in rural America

• Improving the quality of life of all rural Americans

2008 Farm Bill – Title IX Renewable energy programs administered by

USDA Rural Development

• Biorefinery Assistance Program

• Repowering Assistance Program

• Advanced Biofuels Payment Program

• Rural Energy for America Program (REAP)

FLAGSHIP

Rural Energy for America

Section 9007 -- Rural Energy for America Program (REAP)

Formerly Section 9006 – Renewable Energy Systems and Energy

Efficiency Improvements Program.

Establishes a grant and loan guarantee program to assist agricultural

producers and rural small businesses in purchasing renewable energy

systems and making energy efficiency improvements.

Establishes a grant program for energy audits, renewable energy

development assistance, and feasibility studies.

Rural Energy for America Program (REAP)Continued

• Grant Limits:

– $500,000 for Renewable Energy Systems (or 25% of Total Project Costs);

– $250,000 for Energy Efficiency Improvements.

• Loan Guarantee Limits:

– $25 Million Cap;

– Cap Federal share at 75% of project costs.

• Mandatory Funding:

– FY 09 - $55 Million + $5 million discretionary;

– FY 10 - $60 Million + $39 million discretionary;

– FY 11 - $70 Million + $5 million discretionary;

– FY 12 - $70 Million (Actual $22 M mandatory + $2.5 M discretionary);

– FY 13 - $44.3 Million + $3.1 million discretionary.

Rural Energy for America Program (REAP) Notice of Interim Rule Making published April 14, 2011

• The inclusion of flexible fuel pumps that dispense blended liquid

transportation

• Clarifying language to accommodate Section 17 corporations (DOI).

• The removal of citizenship requirements provided the proposed project

is located in a State and the applicant has a place of business located in a

State.

• The modification of the rural area requirement for projects proposed

by agricultural producers to allow such projects to be located in non-

rural areas.

• The addition of a new paragraph to clarify how the Agency addresses

changes in equipment for energy efficiency improvements for

determining eligible project costs.

What projects are eligible?

Requirements for eligible renewable energy or energy efficiency projects:

– Must be located in a rural area, unless for agricultural producer;

– Must be for commercially available and replicable technology;

– Must be technically feasible;

– Must have sufficient revenues to provide for operation and maintenance.

The applicant must be the owner and control the operation and maintenance of the proposed project.

What are Eligible Costs?

• Post application purchase and installation of equipment, except agricultural

tillage equipment and vehicles;

• Post application construction or project improvements, except

residential;

• Energy audits or assessments;

• Permit fees;

• Professional service fees, except for application preparation;

• Feasibility studies;

• Business plans;

• Retrofitting;

• Construction of a new facility – same purpose, same size,

provides more energy savings than improving an existing facility.

What costs are NOT eligible?

• Residential improvements;

• Energy efficiency improvements related to new construction;

• Agricultural tillage equipment;

• Vehicles;

• Applicant in-kind contributions;

• Any expense incurred prior to application submittal.

Guaranteed Loan limitations

Guaranteed Loan request must not exceed 75% of project

costs (including grant funds, if applicable)

– Renewable Energy:

• Minimum request: $5,000;

• Maximum request: $25,000,000 .

– Energy Efficiency

• Minimum request: $5,000;

• Maximum request: $25,000,000.

Grant limitations

Grants request must not exceed 25% of project costs

– Renewable Energy

• Minimum grant request: $2,500

• Maximum grant request: $500,000

– Energy Efficiency

• Minimum grant request: $1,500

• Maximum grant request: $250,000

Fees

• Guarantee Fee up to 1 percent of loan;

• Renewal Fee up to 0.5 percent of loan.

Consolidated Energy Holdings, LLCPollock, Louisiana

Loan guarantees and grants totaling over $10 million.

To refinance of short-term debt, purchase of a feedstock holding tank, and install a feedstock pretreatment system and methanol recovery column, to complete the biodiesel facility.

Results:

• Equipped plant with several newly developed components.

• Allowed production of biodiesel from yellow grease and other waste organic products

• Lowered production costs on 12 million gallons of biodiesel per year.

• Modified port facility to sell, blend, ship, and receive fuel and feedstock.

• Enhanced operating cash flow

• Provided 29 jobs and saved 4 jobs in the Lower Mississippi Delta Commission area.

Berkshire East Ski Area Charlemont, Mass.

Ski Area Powered by Renewable Energy

• USDA Rural Development provided a $1,588,613 Renewable Energy for America Program Loan Guarantee to assist the ski resort in the purchase and construction of a 900KW wind turbine.

Benefits to the ski resort business and the environment.

• Provides power for the entire business’s needs --snow making equipment, lodge, lifts, and canopy tour business.

• Reduces the use of fossil fuels to the ski area.

• Excess energy capacity -- resort completely sustainable and provides renewable energy credits to local non-profits.

• Reduced energy costs make the resort competitive. Berkshire East Ski Area’s 900KW Wind Turbine

Greenhouse curtain saves 2.2 million Btu and $30,000 a yearDS Cole Growers of Loudon, New Hampshire

• 150,000 square foot commercial

greenhouse wholesaler to the regional

nursery trade.

• Awarded $40,318 REAP grant to assist

in a $161,271, Energy Efficiency

Improvement project to install energy

curtains in the grow houses.

• Reduces dependence on fossil fuel, 2.2

million Btu, and cuts heating costs by

$30,000 a year.

• Demonstrated Simple Payback of 5.3

years!

Greenhouse curtain

Biomass Co-generation (1.5 MW)$500,000 grant $2,350,000 loan guarantee

Rough and Ready Lumber CompanyCave Junction, Oregon

3 full-time jobs at the lumber company.

• 7-10 jobs forest stewardship and harvest

contractors.

• 1.5 megawatts generated from biomass.

In 2007, Rough and Ready Lumber Company wanted to

increase their output of dried, ready-for-market

lumber. Their kilns, however, were powered by a

35-year-old boiler that was not up to the job.

The total cost of the project amounted to $6 million. In

addition to the assistance provided through REAP,

the cost was further offset by a State of Oregon

$1.675 million Business Energy Tax Credit.

Another $1.7 million will be paid by the Energy Trust

of Oregon at a rate of $42 per megawatt-hour as the

company produces power over the 5 years of

production.

Payback reduced from 15 yrs to 5 yrs!

AgPower Jerome, LLCLincoln, Idaho

Anaerobic Digester$500,000 Grant$21.2 million Total Project Costs

AgPower Jerome, LLC, of Lincoln County

is one of four similar projects in Idaho

that are partnering with ID dairymen.

AgPower partners with large dairy herds

to provide high quality bedding

material and nutrient management

services in return for the opportunity

to generate significant renewable

energy revenues from the manure

collected on the premises.Will generate 29.9 megawatts per year

• Maxwell Farms an 850 cow, 1,000 acre dairy farm in rural Newport, Vermont, recognized that controlling operating costs—particularly energy, bedding, and soil nutrients—was critical to future sustainability.

• Renewable Energy System Grant, $357,988, and L/G $326,767 to complete the construction of a $1.6 million dollar 212 kW methane digester project.

• Joined the Central Vermont Public Service (CVPS) Cow Power program, becoming the fifth farm to install an anaerobic digester; receives $0.16/kWh feed in tariff from CVPS.

Neighborhood Energy, LLCNewport, Vermont

Anaerobic Digester$357,990 Grant$326,770 Loan Guarantee

Project benefits:

• High value animal bedding

• Nutrient solids

• Net Income ~ $225,000/year

Pacific Outdoor Equipment of Bozeman, Montana

manufactures sporting goods.

Company President Greg Garrigues has looked for ways

to offset the energy used in the mfg. process.

With a $4,599 REAP grant, some funds provided by the

Northwestern Energy, and assistance from Montana

Community Development Corporation, Garrigues

constructed a grid-tied solar array that sits atop the

company warehouse on the north side of town.

The solar array offsets 30 percent of POE’s energy use

and is an expression of the company’s commitment

to be a responsible member of the global

community.

Pacific Outdoor Equipment Bozeman, Montana

Solar Array $4,599 Grant

“Pulling the Switch” on 3,715 kWh/year

Wampler’s Farm SausageLenoir City, Tennessee

• Wampler’s Farm Sausage

Company is family owned for three

generations; in business since 1937.

• REAP Guaranteed Loan of

$1,230,585 to install solar panels;

• 2,240-panel, 502 kilowatt array;

• Displaces 12-15 percent of the

company's electricity consumption;

• Believed to be the state's largest

industrial installation. Photo courtesy: MICHAEL PATRICK/NEWS SENTINEL.

Running on 100 percent solar powerMaster Paints & Chemicals, Guayanila, Puerto Rico

• A rural paint manufacturer that

employs 260 people; Master Paints is a

significant economic engine for Puerto

Rico.

• Average electricity expenses exceeded

$180,000/year.

• REAP grant of $210,176, combined

with Puerto Rico Green Energy Fund

grant of $380,787 helped install a

286,000 kW “Grid-Tie” photovoltaic

system.

• Total Project Cost -- $843,562.

• Master Paints has now offset 100

percent of its annual energy costs.

286,000 kW “Grid-Tie” rooftop photovoltaic system

Addison Solar, LLCFerrisburgh, Vermont

$1.5 million loan guarantee from TD Bank through the Rural Energy for America Program.

Total project costs: $5.7 million.

Impact:

• 3,800 solar panels erected on a 16 acre tract.

• Production of 1 Megawatt of solar energy enough to power 170 average VT homes.

Results:

• Neighborhood high school structuring a science curriculum around the solar project.

• Grand opening allowed students and community leaders to discuss the “how’s and what’s” of alternative energy.

2013 REAP Loan Guarantees

• Mahoning Creek

Hydroelectric, PA,

$7.5M, 19.8 MWh;

• Duplin County Solar,

NC, $5 M, 35 MWh;

• Barrington Power Solar,

NH, $300,331 (Combo),

1 MWh.

Rural Energy for America Program Investments, 2003-13

YearNumber

of Projects

Grant AmountLoan

Guarantee Amount

Leverage Total Project Cost

2003 114 $21,707,373 $0 $545,381,487 $567,088,860

2004 167 $22,812,049 $0 $136,984,587 $159,796,636

2005 156 $22,237,268 $10,100,000 $193,511,453 $225,848,721

2006 395 $21,209,435 $24,158,862 $190,332,768 $235,701,065

2007 436 $19,123,191 $57,270,743 $243,396,339 $319,790,273

2008 764 $34,239,666 $15,566,169 $158,032,939 $207,838,774

2009 1487 $50,994,075 $57,522,141 $160,884,046 $269,400,262

2010 2377 $83,932,404 $73,699,020 $292,173,011 $449,824,426

2011 1888 $57,443,982 $34,072,816 $320,493,367 $412,010,165

2012 844 $20,365,148 $14,278,112 $122,923,334 $157,566,593

2013 1,423 $40,082,065 $32,557,550 $250,715,746 $323,355,361

Total 10,051 $394,146,656 $319,225,413 $2,614,829,077 $3,328,221,136

REAP Investments by Technology, 2003-13

TechnologyNumber of

ProjectsGrant

Amount

Loan Guarantee

Amount

Leverage Amount

Total Project Cost

ENERGY EFFICIENCY 6,729 $151,986,389 $52,602,860 $581,586,032 $786,175,281

SOLAR 1,703 $59,069,648 $31,960,953 $293,177,283 $384,207,884

WIND 646 $69,619,301 $45,422,876 $730,071,189 $845,113,366

BIOMASS 498 $94,743,134 $159,512,842 $131,788,582 $386,044,558

GEOTHERMAL 281 $6,438,306 $1,136,443 $34,187,500 $41,762,249

FLEXIBLE FUEL PUMP 98 $5,623,485 $0 $20,535,232 $26,158,717

HYBRID 40 $1,871,556 $328,459 $8,599,994 $10,800,009

HYDROELECTRIC 33 $2,992,068 $19,704,500 $82,454,277 $105,150,845

10,026 $392,343,887 $310,668,933 $1,882,400,090 $2,585,412,909

EA/REDA 85 $7,998,559 $5,089,011 $13,087,570

FEASIBILITY STUDY 183 $4,460,484 $14,907,741 $19,368,224

268 12,459,043 19,996,752 32,455,794

REAP Solar Investments, 2003-13

YearNumber of

ProjectsGrant Amount

Loan Guarantee Amount

LeverageTotal Project

Cost

2003 7 $1,225,566 $0 $5,676,702 $6,902,268

2004 4 $181,814 $0 $876,602 $1,058,416

2005 10 $861,718 $0 $2,984,694 $3,846,412

2006 16 $769,678 $0 $2,379,458 $3,149,136

2007 19 $379,882 $15,057 $1,057,413 $1,452,352

2008 65 $2,496,136 $457,333 $7,049,408 $10,002,877

2009 169 $6,125,527 $3,473,539 $17,561,046 $27,160,112

2010 298 $13,373,602 $8,356,177 $43,884,293 $65,614,072

2011 492 $14,720,253 $6,157,406 $55,121,639 $75,999,298

2012 214 $6,543,523 $3,647,900 $52,383,031 $62,574,454

2013 447 $14,222,909 $10,182,000 $120,294,400 $144,699,309

Total 1,740 $60,900,608 $32,289,412 $309,268,686 $402,458,706

REAP Solar Investments, 2003-13

$0

$5

$10

$15

$20

$25

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

1.2 0.2 0.9 0.8 0.4 2.5

6.1

13.4 14.7

6.5

14.2

-- - - 0.0

0.5

3.5

8.4 6.2

3.6

10.2

Grant Amount Loan Guarantee Amount$ Millions

High Energy Cost grants

The Rural Utilities Service (RUS)

High Energy Cost Grant Program

awarded $3 million to Sacred

Power Corporation to install

hybrid solar photovoltaic (PV)

power stations for remote tribal

homes in the Navajo Nation in

Arizona.

Rural Electric Loan Guarantee program

Southern Maryland Electric

Cooperative; 5.5-megawatt solar

farm (8,700 MWh).

At maximum production, enough

clean energy to power 600 homes

and offset the pollution of 1,600

cars.

$20 million project -- 1,078 fixed

arrays, 33 acres of 47-acre site; a

onetime tobacco farm purchased by

SMECO at the turn of the century.

30% TPC Treasury 1603 (ARRA);

60% RUS G/L (25 years).

Tom Dennison, left, of Southern Maryland Electric

Cooperative and SunEdison project manager Jay Marx

at SMECO’s solar farm in Hughesville, MD. Photo courtesy of Tin Nguyen/Maryland Independent.

Wealth creation

Multiplier effect --

USDA leveraged investments create a multitude of

secondary and tertiary employment opportunities

and business startups in rural areas and serve as an

incubator to new green technologies.

USDA Energy Partnerships

USDA

FSA NIFA FS NRCSOCE -

OCS

ARS

National

Labs

DOE

EERE

Biomass Program

National Labs

EPA

RFS2 AgSTAR

Environmental Quality Improvement Program

• Eligible program participants receive

financial and technical assistance to

implement conservation practices, or

activities like conservation planning,

that address natural resource

concerns on their land.

• Payments are made to participants

after conservation practices and

activities identified in an EQIP plan

of operations are implemented.

Contracts can last up to ten years in

duration.

Solar powered irrigation pumps deliver

300 gallons per minute from a depth of 68

feet to irrigate pecan trees in Arizona.

FSA Loan Guarantee Program

• FSA guaranteed loans provide lenders (e.g., banks, Farm

Credit System institutions, credit unions) with a guarantee

of up to 95 percent of the loss of principal and interest on

a loan. Farmers and ranchers apply to an agricultural

lender, which then arranges for the guarantee.

• FSA guaranteed loans are for both Farm Ownership and

Operating purposes. Like the Direct Loan Program, a

percentage of Guaranteed Loan funds are targeted to

beginning farmers and ranchers and minority applicants.

Thank you!

Tony Crooks

USDA, Rural Development

202-205-9322

Anthony.Crooks@usda.gov

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March 26, 2014 © 2014 Solar Energy Industries Association® 47