Basics of Renewable Energy
Systems and Energy Efficiency
Improvements Program
Chuck Banks, State Director
Gary L. Smith, Program Director
F. Martin Fee, B&CP Specialist
Topeka, Kansas
September 26, 2007
Basics of Renewable Energy
Systems and Energy Efficiency
Improvements Program
F. Martin Fee
Business and Community Programs Specialist
Topeka, Kansas
September 26, 2007
Renewable Energy and Energy
Efficiency Program
A program to help
agricultural producers and
rural small businesses
purchase renewable energy
systems and make energy
efficiency improvements.
Who is eligible to apply for funding?
• Agricultural producers directly engaged in
ag production (≥ 50% of their gross income)
• Rural small businesses that meet the
SBA Size Standards
• Demonstrated financial need
• Project must be located in a rural area
• Non-profit organizations and public entities
are excluded
Actual Definitions available in 7 CFR Part 4280
Formula for 50% of Ag Income
Gross Farm Income
__________________________________________
Total Income + Total Farm & Business Expenses
SBA Size Standards
http://www.sba.gov/services/contractingopportunities/sizestandardstopics/index.html
NAICS
Codes
NAICS U.S. Industry Title
Size standards in
millions of dollars
Size standards in
number of employees
Subsector 111 – Crop Production
111110
Soybean Farming
$0.75
Subsector 221 – Utilities
221119
Other Electric Power Generation
Total electrical output for the proceeding fiscal year
did not to exceed 4 million megawatt hours
Subsector 325 – Chemical Manufacturing
325193
Ethyl Alcohol Manufacturing
1,000
Subsector 445 – Food and Beverage Stores
445110
Supermarkets and Other (except
Convenience Stores) Stores
$23.0
Excerpts from SBA Table of
Small Business Size Standards
Rural Area
Any area other than a city or town with population over 50,000.
Cannot be in urbanized area adjacent to such a city or town.
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do
What types of projects are eligible?
•
•
•
•
•
•
•
•
Biomass, Bioenergy
Anaerobic digester
Geothermal, electric generation
Geothermal, direct use
Hydrogen
Solar, small and large
Wind, small and large
Energy efficiency
Energy Efficiency Examples
•
•
•
•
•
•
Building Envelope
Lighting
HVAC Systems
Water Heating
Power Systems
Refrigeration
•
•
•
•
•
Grain Drying and Curing
Irrigation
Fans and Blowers
Compressors
Pumps
EE Projects must have the previous 12 months history of
energy use in order to measure savings from the project
improvements.
What projects are eligible?
• Purchase RE or make EE improvements
• Pre-commercial or commercially available, and
replicable technology (No Research and Development)
• Technical Merit and located in a rural area
• Sufficient revenues for O&M, Maintenance &
Debt Service
• Applicant must own the project and control the
revenues and expenses, including O&M
Pre-Commercial: at least one commercial unit
in operation for at least 1 full year in U.S.
Eligible uses
• Post-application purchase and installation of
equipment; (except agricultural tillage equipment & vehicles)
• Post-application construction or project
improvements; (except residential)
• Energy audits or assessments;
• Permit fees and Feasibility Studies;
• Professional service fees; (except application
preparation)
Only costs identified in the Energy Audit for energy
efficiency improvements are allowed (EE)
Eligible uses
• Business plans;
• Retrofitting;
• Construction of a new facility (EE) - same
purpose same size, based upon energy audit
which provides more energy savings than
improving the existing facility;
• Working capital (Guaranteed Loan only)
• Land acquisition (Guaranteed Loan only)
Ineligible project costs include any costs
not identified above as eligible costs
What size of grant is available?
• Not exceed 25% of total eligible project costs
• Minimum grant request
– Renewable energy system - $2,500
– Energy efficiency improvements - $1,500
• Maximum grant request
– Renewable energy system - $500,000
– Energy efficiency improvements - $250,000
Maximum grants per applicant per fiscal year is
$750,000
What size of Guaranteed Loan (GL)
is available?
• Not exceed 50% of total eligible project costs
• Maximum combination GL and grant cannot
exceed 50% of total eligible project costs
• Minimum GL request is $5,000 (less grant amount)
• Maximum GL request is $10 million
Can combine with up to $25M of Business
and Industry GL for larger projects
What Guaranteed Loan (GL) rates
and terms are available?
• Interest rate negotiated between lender and
applicant
• Real estate must not exceed 30 years
• Machinery and equipment must not exceed
20 years or useful life
• Combined loans of real estate and equipment
must not exceed 30 years
• Working capital must not exceed 7 years
2003-2006 Energy Projects
• 06-Hayes Sight and Sound, Inc. • 05-Luray Grocery
–
–
–
–
HVAC and lighting
$26,000 grant
$26,000 EE GL
$52,000 B&I GL
• 06-White’s KingCo, Inc.
– Refrigeration and lighting
– $48,838 grant
– $48,830 EE GL
• 05-Epic Homes of Kansas, Inc.
– HVAC
– $5,000 grant
– Refrigeration
– $9,673 grant
• 04-Community General Store
– Refrigeration
– $6,935 grant
• 05-T and T Foods, Inc.
– Refrigeration
– $11,000 grant
• 03-Mackinson Foods, Inc.
– Refrigeration, HVAC, insulation
– Lighting, efficient doors
– $29,075 grant
2006 Energy Projects
• Lipp Properties
– (2) 4 kW wind turbines
– $20,537 grant
• M&M Market
– Refrigeration and energy
efficient entry door
– $10,283 grant
• Cates Carquest
– HVAC
– $4,744 grant
• Satanta Grocery
– Refrigeration, lighting and insulation
– $23,488 grant
• 27th and Hall Laundry
– (2) hot water heaters
– $3,257 grant
• Cougar Custom Boats
– Water source heat pumps
– $49,683 grant
2007 Energy Projects
• CrossRoads Lumber Co., Inc. • Agency One
– Heating and lighting
– $14,950 grant
• Thomas E. Wells, Jr.
– Insulation (roof)
– $3,819 grant
• Healy Biodiesel, Inc.
– Biodiesel
– $32,375 grant
• Ivan L. Bohl
– Irrigation (flood to center pivot)
– $33,343 grant
– Lighting, windows &
insulation (walls/ceiling)
– $2,270 grant
• Caper’s Café & Bakery, LLC
– HVAC
– $3,678 grant
• Stafford Development, Inc.
– Air conditioning
– $3,239 grant
• Village Road, LLC
– Waste oil burner
– $7,872 grant
2007 Energy Projects
• Eagle Farms Energy, Inc. • H&C Farms, Inc.
–
–
–
–
Biodiesel
$41,835 grant
$41,835 EE GL
$83,670 B&I GL
• CKG, Inc.
– Irrigation (engines/motors)
– $15,080 grant
– $15,080 EE GL
• Carlsons’ Grocery, Inc.
– Irrigation (flood to center pivot)
– $11,875 grant
• Becklin, Inc.
– Solar Thermal
– $5,500 grant
–
–
–
–
Refrigeration and lighting
$20,759 grant
$20,769 EE GL
$41,518 B&I GL
Websites
• Current solicitation, forms, and program
information
– htttp://www.rurdev.usda.gov/rbs/farmbill
– http://www.rurdev.usda.gov/ks
• Other supportive programs
– http://www.rurdev.usda.gov/rbs/busp/bprogs.htm
Section 9006
Projections for 2008
Gary L. Smith
Director, Business &Community
Programs
Topeka, Kansas
September 26, 2007
2007 Farm Bill Proposals
U.S. Department of Agriculture
“We need farm policy that recognizes the
tremendous potential of American
agriculture. These proposals do just that.
We listened to the people and now deliver
our proposals for America’s farm bill.”
- Mike Johanns, Secretary of Agriculture
Title VI:
Rural Development
Programs
All funding reflects 10-year totals unless otherwise noted
Title VI: Rural Development
• Consolidate rural development programs to
increase flexibility and efficiency
• Provide $1.6 billion in loans to complete the
rehabilitation of all 1,283 certified Rural Critical
Access Hospitals
Title VI: Rural Development
• Provide an additional $500 million to reduce the
backlog of rural infrastructure projects
–
–
–
–
Water and waste disposal loans and grants
Emergency water assistance grants
Community Facilities loan and grant programs
Distance learning and telemedicine grants
Title IX:
Energy Programs
All funding reflects 10-year totals unless otherwise noted
Title IX: Energy
• Provide $500 million to create a Bioenergy and
Bioproducts Research Program
– Increase cost-effectiveness through cooperation between
university and Federal scientists
• Provide $500 million for rural alternative energy
and energy efficiency grants
– Directly assists farmers, ranchers, and rural small
businesses
Title IX: Energy
• Provide $2.1 billion in loan guarantees to support
cellulosic ethanol projects in rural areas
• Provide $150 million for biomass research
competitive grants, focusing on cellulosic ethanol
Section 9006 Trends – FY 2003 to 2006
Rural Development – Business Programs
U.S. Department of Agriculture
Award Dollars by Technology
Digester,
$24,354,450
Biomass,
$12,560,109
Geothermal,
$921,282
Efficiency,
$8,841,791
Hybrid,
$2,521,236
Solar,
$2,224,639
Wind,
$32,917,930
Award Numbers by Technology
Digester, 90
Efficiency, 419
Biomass, 71
Geothermal, 15
Hybrid, 12
Solar, 40 Wind, 166
Geographic Award Distribution
No. of States
5
3
4
11
20
4
No. Awarded
>50
21-50
11-20
6-10
1-5
0
Replicable Business and Technology
Models
• Efficiency Improvements
– Poultry Houses
– Grain Dryers
– Irrigation Upgrades
• Community Wind
– Enable local ownership of 1 – 2 utility-scale
wind turbines
– Often employ innovative ownership structures
such as “flip” model
Volume of Applications
600
500
400
Submitted
300
Eligible
Awarded
200
100
0
2003
2004
2005
2006
Shift in Project Size
600
500
400
Small Projects
Large Projects
Total Projects
300
200
100
0
2003
2004
2005
2006
Median: Total Project Cost and Award
Amount
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0
2003
2004
Total Project Cost
2005
Grant Award
2006
Guaranteed Loan and Combination
Applications
• In FY 05, 2 guaranteed loans, for a total amount of
$10.1 million (both bioenergy)
– short window for application
• In FY 2006, 17 Guaranteed loans, for a total
amount of $24.3 million (varied technologies)
– considered first full year
– 15 of these are combination applications
Guaranteed Loan Technology Breakout,
2005 and 2006
Digester
Bioenergy
Efficiency
Wind
Solar
Geothermal
Guaranteed Loan
Amount
$
1,065,850
$
32,312,821
$
601,080
$
279,111
$
$
$
34,258,862
$
$
$
$
$
$
$
Grant Amount Number of Awards
500,000
1
2,214,349
9
601,088
7
309,111
2
0
0
3,624,548
19
Guaranteed Loan Activity, 2005 – 06
2005 Award
2006 Award
FY 2007 Projects Awarded
$47,500,000
$50,000,000
$45,000,000
$40,000,000
$35,000,000
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
Grant
Loan
Combo
$9,714,881
$8,401,603
$9,882,420
Grant
Only
Loan
Only
Combos
FY 2007 Projects Awarded
Nationwide
400
300
297
200
130
100
5
0
Grant
Loan
Only
Combo
# Projects
Section 9006 – FY2008 Program
• Programs
– Grants
– Combination – Grant / Guaranteed Loans
– Loans - Guaranteed
Section 9006 – FY2008 Program
• Trends –
– Small projects do get funded
FY07 Average Grant Size
– Grant Only
– Combo Grant
$32,700
$64,600
FY07 Average Loan Size
– Combo Loan
– Loan Only
$76,000
$9,500,000
Section 9006 – FY2008 Program
• NOFA for 2008
– In Process
• Application Period
– To Be Determined
– Start Early – Now
– Multiple Rounds Anticipated for Grants
Section 9006 – FY2008 Program
• Trends / Tips
– Program getting very competitive
– Application preparedness – increasingly important
– Utilize Scoring Criteria for application preperation
Section 9006 – FY2008 Program
Scoring Criteria
• Quantity of energy produced, replaced or saved **
– 10-20 points
• Environmental benefits
– Maximum of 10 points
• Commercial availability **
– Maximum of 10 points
• Technical merit *
– Maximum of 35 points
• Readiness (grants only)
– Maximum of 15 points
** NREL Opinion
* NREL Determines
Section 9006 – FY2008 Program
Scoring Criteria
• Small agricultural producer/Very small business
– Maximum of 10 points
• Simplified application
– Maximum of 5 points
• Previous grantees or borrowers
– Maximum of 5 points
• Return on investment **
– Maximum of 10 points
• Loan rate (guaranteed loan only)
– Maximum of 10 points
** NREL Opinion
* NREL Determines
Section 9006 – FY2008 Program
Technical Merit
Qualifications of the project team
10
%
Score
Agreements and Permits
5
%
Score
Energy or Resource Assessment
10
%
Score
Design and Engineering
30
%
Score
Project Development Schedule
5
%
Score
Project Economic Assessment
20
%
Score
Equipment Procurement
5
%
Score
Equipment Installation
5
%
Score
Operations and Maintenance
5
%
Score
Decommissioning
5
%
Score
Each of 10 scores are added to
get total score awarded.
Section 9006 – FY2008 Program
• Trends / Tips
– Pitfalls
•
•
•
•
•
•
Environmental Issues can hold up application development
Leverage – need commitment
Technical Issues not addressed
Readiness
Incomplete / Inconclusive information
Application started too late
Section 9006 – FY2008 Program
• Growing in Interest
–
–
–
–
Government
Businesses (big and small)
Wall Street
International
• Government increasing dollars in RE/EE Programs
• Private Investments – increasing dollars committed
Section 9006
Success Stories
FY 2003-2007
Energy Efficiency Success
Epic Homes of Hoisington, Kansas
Energy Savings
500
450
Total Gas (mcf) Used
400
350
300
250
200
150
100
50
0
Old Boiler - Prior
To Improvements
New Heating
Units (3) - After
Improvements
New Heating
Units (2)
New Heating
Unit (1)
9006 Success Story
Hoisington, KS
• Energy efficiency improvements
– Replaced old boiler with 3 new high efficiency heating
units
•
•
•
•
•
•
Estimated total eligible project costs: $20,000
Grant amount: $5,000 (25%)
Projected energy savings: > 40%
Realized energy savings first 12 months: > 66%
Anticipated Return On Investment (ROI): 8-11 years
ROI being realized first 12 months: 5-6 years
Energy Efficiency Success
M&M Market of Belle Plaine, Kansas
2006 EE Testimonial
M&M Market The assistance we received through the
Energy Efficiency Program has had a tremendous impact on
our business and on our community. The improvements that
were made have allowed us to offer the people of our
community a much wider selection of products. These
changes have impacted both our bottom line and the health
of the people in our community. The significantly higher
level of efficiency of our new units has allowed us to be
bigger but also to be greener. The Energy Efficiency
Program has been a difference maker in our business.
Mark Fillmore
M & M Market
9006 Success Story
Belle Plaine, KS
• Energy efficiency improvements
– Replaced refrigeration cases/freezer with three (3) new
higher efficiency units
•
•
•
•
Estimated total eligible project costs: $41,132
Grant amount: $10,283 (25%)
Projected energy savings: 4,052,160 kWh/year
Energy savings during the first few months appear to
be meeting their expectations
• Anticipated Return On Investment (ROI): 4.32 years
2007 RE Award
Becklin, Inc. of Spring Hill, Kansas will be utilizing a
$5,500 a RE grant along with matching funds of $16,888 for
the purchase of a small solar thermal system which will
provide heat and hot water for the buildings that house
Becklin, Inc. This system will produce solar thermal energy
in the form of BTU output for use in heating the businesses’
buildings and provide hot water. The BTU's produced by
the system will replace the BTU's purchased as
conventional fossil fuels and electricity. The energy
replacement is projected to be 816,000 BTU's. The project's
matching funds will be provided by owner and Becklin, Inc.
2007 EE Award
CKG, Inc. of Grinnell, Kansas will be utilizing a $11,875
EE grant along with matching funds of $35,625 to make
energy efficiency improvements to their farm's irrigation
system located in Gove County, Kansas. The EE
improvements will consist of the conversion of a flood
irrigation system to a center pivot system which will
provide a projected 53 percent annual energy savings.
The added benefits of the conversion may include water
savings and higher crop yields. The project's matching
funds will be provided through a loan from the State
Bank of Grinnell.
2007 RE Award
• Eagle Farms Energy, Inc. of Cherryvale, Kansas
will be utilizing a $14,835 RE grant along with
matching funds of $125,505 for a batch biodiesel
processing system located in Labette County,
Kansas. The system will utilize canola seed, Virgin
Vegetable Oil, or Waste Vegetable Oil to produce off
road, ASTM 6751 standard biodiesel. The project
estimates to produce 360,000 gallons per year at full
production.