Rural Energy for America Program (REAP) Energy Efficiency & Conservation Loan Program (EECLP) and the Rural Energy Savings Program (RESP)

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Marsha Whitehead
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1 Presented by: Bob Coates Rural Energy for America Program (REAP) Energy Efficiency & Conservation Loan Program (EECLP) and the Rural Energy Savings Program (RESP) Program Overview

2 Agenda REAP, EECLP and RESP Loan Purpose and Authority Eligibility REAP vs EECLP vs RESP - Overview Environmental Review EECLP Information RESP information REAP Information

3 Loan Purpose and Authority Rural Energy for America Program (REAP) (Loan and Grant Program) Provides guaranteed loan financing and grant funding to ag producers and small businesses to purchase or install renewable energy systems or make energy efficiency improvements Governed By 2014 Farm Bill 7 CFR 4280 Subpart B Rural Energy Savings Program (RESP) (Direct RUS Loan) Help rural families and small businesses achieve cost savings through loans that would enable them to implement durable cost-effective energy efficiency measures. Governed By 2014 Farm Bill

4 Loan Purpose and Authority Energy Efficiency & Conservation Loan Program (EECLP) (FFB Guarantee) Finance DSM, EEC, on-grid/off-grid renewables that will result in the better management of the utility system load growth more beneficial load profile greater optimization of the use of alternative energy resources Rural Electrification Act of 1936 as amended in CFR Subpart H

5 Eligibility REAP Agricultural producers in rural and non-rural areas Businesses in an area other than a city or town of greater than 50,000 and the urbanized areas of that city or town. RESP any public power district, public utility district, or similar entity, or any electric cooperative that borrowed and repaid, prepaid, or is paying an electric loan made or guaranteed by RUS; any entity primarily owned or controlled by 1 or more entities described before; or any other entity that is an eligible borrower of RUS, as determined by 7 CFR

6 Eligibility EECLP A utility system that has direct or indirect responsibility for providing retail electric service to persons in a rural area. Including existing borrowers & utilities who meet RUS borrower requirements

7 REAP and RESP Overview Eligibility Purpose Interest Rate Maximum Loan size REAP - Agriculture and Small business in rural areas Provides funding for renewable energy systems or to make energy efficiency improvements Negotiated with Lender, subject to USDA approval Loan- up to $25 Million Grants up to $250k Renewable/$500k Energy Efficiency RESP- $45M in FY17 Not limited to utilities but they have to serve rural areas (E.g. subsidiaries of utilities) To help rural families & rural small businesses reduce energy costs or consumption 0% Not specified Mark-up to end user N/A Capped at 3% Loan term Varies by purpose, up to 30 years for Real Estate Up to 20 years Acceptable financial structures/ investments Loan Guarantee up to 75%, grants up to 25% of total eligible project costs, combined to 75% Only for re-lending like in tariff charge, PACE programs, traditional consumer loans (on bill financing)

8 EECLP Overview EECLP- $Billions Eligibility Utilities in rural areas Purpose To help utilities manage their system load growth or a more beneficial load profile Interest Rate US treasury rate + 1/8 th % Interest Rate to Borrower Mark-up to end user Advances US treasury rate +borrowers interest rate from RUS +1.5% Capped at 1.5% above costs, waived on case by case basis (See 7 CFR ) Reimbursable Loan term Acceptable financial structures/ investments RUS Cushion of Credit Account 15 years or useful life of equipment On bill, on bill-tariff based structures, direct investments in the utility s system Available

9 Environmental Compliance Agreement- Applicable to RESP and EECLP Commitments: 1. Prior to re-lending, the RUS borrower will a. Conduct a screening of the consumer s proposed use of funds to determine if they fall within the Categorical Exclusions. b. Obtain sufficient information from the consumer to determine applicability of the Cat. Ex. or to evaluate an Environmental Report and determine if extraordinary circumstances exist. c. Document conclusions regarding the applicability of the Cat. Ex for each approved loan. d. Refer to RUS for further environmental review: i) Activities that do not meet the criteria for Cat Ex. ii) iii) Consumer applications with extraordinary circumstances; Consumer applications that may be in violation of 7 CFR , Limitations on actions during the NEPA process. Note: WEP staff will be assisting the RESP Applicant during this process. Attachments to the Agreement will provide guidance.

10 Some Activities Listed as Cat Ex Cooling System - Interior - Add/Replace Air Flow Efficiency - Interior - Add/Replace Air Destratification Airflow and fan speed reduction Ductwork system with centrifugal or vane axial fans Enclosed high-velocity fan Improve design and balance of duct system Increase pipe insulation Install local ventilation and makeup air hoods Open propeller fans Reduce Ventilation Loads Reduce ventilation rate to minimum Variable-air-volume (VAV) system to reduce fan energy use Improve Cooling Efficiency Increase chilled water design temperature Increase Condensing Efficiency Increase Condensing Unit Efficiency Install Double-Bundle Chillers Install High-Efficiency Compressor Install More Efficient Cooling System Install Refrigerated Space Doors or Curtains Lower condenser water design temperature Multiple Compressors and Controls for Air Conditioning Systems Optimize cooling tower flow controls Parallel unequal reciprocating compressor Reciprocating compressor Rotary compressor Screw compressor Use multiple chillers and optimization controls

11 RESP- Highlights Program launched in June Loans Obligated Brand new program- working out the bugs now Details for latest round for 2017: Announced in the Federal Register on November 20, 2017 Five Letters of Intent Received as of January 19, 2018 Letters currently under review Expect another open application period soon

12 RESP Loan Conditions 20 Year Maximum Loan Term 10 Year Draw Period Up to 4% for startup Must start repayment at 10 years Rurality ATTACHED to a dwelling/building/property 11

13 RESP Eligible Activities (NOSA Section E(d)) i. Lighting Improvements (Residential and commercial) ii. HVAC Systems iii. Building Envelope Improvements iv. Water Heaters v. Compressed Air Systems vi. Motors vii. Boilers, Dryers, Heaters and process related equipment viii. Energy Audits ix. On or Off Grid Renewable Energy Systems x. Energy Storage Devices xi. Energy Efficient Appliance Upgrades xii. Irrigation or Water and Waste Disposal System Efficiency Improvements xiii. Other Activities and investments directly related to Energy Efficiency Implementation 12

14 2017 RESP Forecast Approximately $45 Million available Loan Funds Five Letters of Intent Submitted by January 19, 2018 Total Requests Thus Far $15,500,000 13

15 RESP Future Adjustments/Improvements Allowance to replace manufactured homes Autos (electric, fuel cell, hydrogen?) 14

16 Custom Loan Options Partial Improvement Contributions Energy efficient improvements/enhancements on new dwellings 15

17 Issues/Concerns Energy Star program may go away 16

18 Rural Business-Cooperative Service Rural Energy for America Program (REAP) REAP Applicants and Borrowers Agricultural Producer Rural Small Business Individual or entity that receives 51 percent or more of their gross income from agricultural production crops, livestock, aquaculture, forestry operations, nurseries, dairies For-profit small business - as defined by the Small Business Administration (SBA) Rural area or non-metro community of < 50,000 17

19 Rural Business-Cooperative Service Rural Energy for America Program (REAP) Energy Efficiency Lighting Heat & Power Refrigeration HVAC Equipment and Processes Automated Controls Buildings Updates Renewable Energy Solar Wind Small Hydroelectric Anaerobic Digesters Biomass Geothermal Wave/Ocean Power The technology must be commercially available. Research and development projects do not qualify. 18

20 Rural Business-Cooperative Service REAP Loan and Grant Terms Renewable Energy Systems Energy Efficiency Improvements Grant amount cannot exceed 25% of Eligible Project Cost Minimum Grant Request $2,500 Total eligible project costs > $10,000 Minimum Grant Request $1,500 Total eligible project costs > $6,000 Maximum Grant Request $500,000 Total eligible project costs > $2 million Maximum Grant Request $250,000 Total eligible project costs > $1 million Loan amount (and combo loan and grant amount) cannot exceed 75% of eligible project cost Minimum Loan Amount Maximum Loan Amount $5,000 Total eligible project costs > $6,667 $25 million Total eligible project costs > $33.4 million Details USDA guarantees a commercial loan; applicant must have a willing lender. Terms are negotiated between the lender and borrower. Applications accepted year round Loan and Grant combo 75% of project cost 19

21 Rural Business-Cooperative Service REAP Program Key Points: Applicants must provide at least 75% of the project cost if applying for a grant only. Applicants must provide at least 25% of the project cost if applying for loan, or loan and grant combination. Projects greater than $200,000 require a technical report. Energy efficiency projects require an energy audit or assessment. Must use commercially available technology Open ongoing guaranteed loan application process Competitive grant program 20

Rural Business-Cooperative Service How do we get started? Applications for this program are accepted year round at your local USDA Rural Development office: https://www.rd.usda.

22 Rural Business-Cooperative Service How do we get started? Applications for this program are accepted year round at your local USDA Rural Development office: Who can answer questions? Contact your Rural Development Energy Coordinator: USDA Rural Development Resources: Mark Brodziski, Deputy Administrator Energy Programs

23 Contact Information : Bob Coates Rural Development Rural Utilities Service, Electric Program Robert.Coates@wdc.usda.gov Office: (202)

USDA Energy Program Opportunities

2017 Coleman Secondary Market Summit USDA Energy Program Opportunities Washington, DC December 5, 2017 Rural Energy for America Program (REAP) Promotes energy efficiency and development of renewable energy