USDA REAP loan guarantee Maine funding available

Funding is available for energy projects at Maine's rural small businesses and agricultural producers through the USDA Rural Development agency's Rural Energy for America Program (REAP).  At stake is about $200 million in guaranteed loan funds available to finance renewable energy and energy efficiency projects in fiscal year 2016.

Since 2008, the USDA REAP program has provided grants and loan guarantees for renewable and energy efficiency projects at qualifying rural small businesses and agricultural producers.  Its loan program helps finance renewable energy systems and energy efficiency improvements.  Typical projects awarded funding in previous rounds include biomass fueled anaerobic digesters and biodiesel production, solar, wind, geothermal, efficient lighting conversions, motor upgrades, building envelope and HVAC improvements. 

REAP describes its loan guarantee program as lender-driven.  Usually, a qualifying farm or business will approach a lender to discuss financing a proposed project.  That lender then requests the USDA Rural Development loan guarantee, and if approved, makes and services the loan.  Guaranteed loan amounts can range from $5,000 to $25 million.  The guaranteed loan amount can cover up to 75% of the total eligible project cost, while 25% of project costs must come from other sources like business equity or other borrowed funds.

USDA Rural Development provides more information on its website about how to apply for a USDA REAP loan guarantee.  The Preti Flaherty team helps our clients understand how to benefit from REAP funding and other incentive programs for renewable energy and energy efficiency.  Contact Todd Griset to learn more.

USDA awards $68 million for energy projects

The U.S. Department of Agriculture has announced $68 million in grants and loan guarantees for renewable energy and energy efficiency projects.  The latest round of awards under the agency's Rural Development arm's Rural Energy for America Program will support 540 projects at farm and rural business sites across the country.

Since its creation in the 2008 Farm Bill, REAP has supported more than 8,800 renewable energy and energy efficiency projects nationwide with over $276 million in grants and $268 million in loan guarantees to agricultural producers and rural small business owners.  Eligible agricultural producers and rural small businesses may use REAP funds to make energy efficiency improvements or install renewable energy systems including solar, wind, biomass and anaerobic digesters, small hydroelectric, ocean energy, hydrogen, and geothermal projects.  (For looks at previous REAP winners, check out these posts from 2011 and 2013.)

In this year's REAP funding round, USDA awarded about $68 million in investment support.  Of this, $12,376,548 will come in the form of grants, while $56,449,244 will come as loan guarantees.  While most grants are under $100,000 per project (with some below $10,000), there were some larger grant awards: for example, a biomass anaerobic digester in California won $290,000, an off-grid solar project in Hawaii won $123,338, and a direct use geothermal heat pump in Oklahoma won $133,250. Of the loan guarantees, $55.3 million will go to support 22 solar photovoltaic projects in North Carolina, mostly ranging between 2 megawatts and 5 megawatts per project. 

In each case, funding is contingent upon the recipients meeting the terms of the loan or grant agreement. USDA's hope is that these grants and loan guarantees will enable American agricultural producers and rural small business owners to reduce their energy costs.

REAP was reauthorized by the 2014 Farm Bill, so expect USDA Rural Development to solicit more REAP projects later this year.  While not all sites may qualify, USDA's definition of eligibility is more broad than many assume.  The Preti Flaherty team helps our clients understand how to benefit from REAP funding and other incentive programs for renewable energy and energy efficiency.  Contact Todd Griset to learn more.

USDA announces renewable and energy efficiency funding

The United States Department of Agriculture has announced a new round of funding for assistance to agricultural producers and rural small businesses for energy efficiency and renewable energy projects.  USDA's Rural Energy for America Program (REAP) offers eligible farms and businesses incentives to improve their energy efficiency or produce energy from renewable sources.

USDA's mission includes revitalization of rural economies to create opportunities for growth and prosperity, support innovative technologies, identify new markets for agricultural producers, and make better use of natural resources. Authorized by the 2008 farm bill (formally the Food, Conservation, and Energy Act of 2008), the USDA REAP program's goals are to help agricultural producers and rural small businesses reduce energy costs and consumption and help meet the nation's critical energy needs.  Through the end of the 2012 fiscal year, REAP has funded over 6,800 renewable energy and energy efficiency projects, feasibility studies, energy audits, and renewable energy development assistance projects.

Today USDA announced that it will accept applications for three REAP program categories:

• Renewable energy system and energy efficiency improvement grant applications and combination grant and guaranteed loan applications until April 30, 2013
• Renewable energy system and energy efficiency improvement guaranteed loan only applications until July 15, 2013
• Renewable energy system feasibility study grant applications through April 30, 2013

USDA plans to make funding available despite the current federal budget sequestration, which appears to have cut REAP funding by at least $2 million in fiscal year 2013. 

Application requirements for REAP assistance vary depending on the type of assistance sought.  Those interested in applying for assistance can contact their local USDA office for more information, or consult a professional with experience working with the REAP program.

Preti Flaherty helps our clients evaluate whether REAP assistance is a good match for their businesses; I have assisted my clients in securing REAP funding for their energy projects.  Please contact us at 207-791-3000 for more information.

Federal budget sequestration's impacts on energy industry, consumers

Unless Congress enacts a plan to reduce the federal budget deficit today, a procedure known as "sequestration" will take effect immediately, cutting government spending until the budget can be resolved.  What will sequestration mean for the energy industry and consumers?

Under the Budget Control Act of 2011 (BCA), sequestration automatically kicks in unless the Joint Select Committee on Deficit Reduction proposes a plan to reduce the deficit by $1.2 trillion, and Congress subsequently enacts that plan.  For fiscal year 2013, sequestration could mean spending cuts of $85 billion over the remaining seven months of the fiscal year.  According to the federal Office of Management and Budget, nondefense program spending will be cut by about 9%.

Each federal agency's operations will be affected by the sequestration.  The OMB Report Pursuant to the Sequestration Transparency Act of 2012 (394-page PDF) details likely cuts, including reductions in funding available under the U.S. Department of Energy's High Energy Cost Grants program.  The High Energy Costs Grant program provides funding for improving and providing energy generation, transmission and distribution facilities serving communities with average home energy costs exceeding 275% of the national average.  For example, the Maine island of Monhegan's electric utility won a $420,154 grant under this program to replace the island's current switchgear, add a smaller, 40 kW generator to the power station's fleet, and add a 13 kW solar photovoltaic array to the power station's roof.

The sequestration could also slash funding for the U.S. Department of Agriculture's Rural Energy for America Program (REAP).  REAP provides assistance to agricultural producers and rural small businesses to complete energy projects, including renewable energy systems, energy efficiency improvements, renewable energy development, energy audits, and feasibility studies

Other programs affected include the DOE's Energy Efficiency and Renewable Energy program, from which $148 million could be cut.  Likewise, the Low Income Home Energy Assistance Program (LIHEAP), which helps keep families safe and healthy through initiatives that assist families with energy costs, faces $285 million in cuts.

The funding reductions will also mean cuts to DOE's energy-efficiency and cybersecurity programs.  Likewise, the processing of applications for development of oil, gas, and coal on federal lands and waters would slow down as agency employees are furloughed.  

Will Congress act to avert sequestration?  If it takes effect, how long will it be until Congress enacts a compliant deficit reduction plan?  What price will society pay?

Monhegan island electricity grid updates

Residents of the Maine island of Monhegan will soon benefit from upgraded electricity infrastructure, thanks to a grant from the U.S. Department of Agriculture.

Supplying electricity and other forms of energy on remote islands offers a unique set of challenges.  For islands too far from the mainland grid to be connected by undersea transmission cables, island utilities must both produce the power and distribute it to homes and businesses.  On small, remote islands, the lack of economies of scale can lead to very high electricity costs.  About 12 miles offshore, Monhegan one of those islands.  In recent years, customers served by the Monhegan Plantation Power District have paid electricity prices about 5 times higher than those on the mainland.

Propane tanks sit by the dock on Monhegan Island, Maine.

Yesterday the U.S. Department of Agriculture announced that the Monhegan Plantation Power District has won $420,154 from the USDA's High Energy Cost Grant Program.  That program provides competitively-awarded grants to improve and provide energy generation, transmission and distribution facilities serving communities with average home energy costs exceeding 275% of the national average. Grant funds may be used for on-grid and off-grid renewable energy projects, energy efficiency and energy conservation projects serving eligible communities.

On Monhegan, the grant will be used to replace the current switchgear, add a smaller, 40 kW generator to the power station's fleet, and add a 13 kW solar photovoltaic array to the power station's roof.  Currently, electricity is provided to about 100 accounts on Monhegan from a 300 kW diesel generator.  Demand for electricity on Monhegan varies seasonally, with many fewer consumers on the island during the winter months.  The new 40 kW generator and solar array are expected to be able to cover the winter load more efficiently than using the existing larger generator.

While Monhegan typifies the remote, inhabited small island, other islands face similar energy challenges.  Will Monhegan serve as an example for other island communities?

Commercial fishing and solar energy

Commercial fishing businesses tend to consume significant amounts of energy, but may be able to offset their energy expenses by turning to solar panels and other distributed electric generation.

The winter fishing fleet of Northeast Harbor, Maine.

According to the National Marine Fisheries Service, the U.S. commercial fishing sector landed $5.3 billion in seafood last year.  Alaska led the nation in total catch value in 2011, landing $1.9 billion in fish and shellfish.  Massachusetts came in second at $570 million, with Maine coming in third at $426 million.

Catching this seafood comes at a price.  Diesel and other marine fuels account for a significant fraction of commercial fishermen's expenses.  Onshore, electricity powers stationary facilities like freezers, refrigerators and pumps for holding tanks, with seafood processing operations consuming even more power.

The location of many commercial fishing businesses -- typically located on the coast, often on a pier or wharf exposed to the sun and wind -- may create an opportunity for fishermen to offset their energy costs by producing their own electricity.  One Maine lobsterman recently added a 10-kilowatt solar array to his wharf in Harpswell. Funded in part by an $11,750 grant through the U.S. Department of Agriculture's Rural Energy for America Program, last month Potts Harbor Lobster added 44 solar panels to two roofs on the Reversing Falls Lobster wharf in South Harpswell.

In addition to USDA REAP grants, additional incentives are available that may shorten the payback period for distributed generation projects at commercial fishing facilities.  For example, Maine's net energy billing law allows consumers to use solar or other distributed generation to effectively spin their electricity meters backwards.  Consumers in almost every state can use similar net metering programs to sell excess power back to the grid, offsetting their electricity bill.  Other states, like Massachusetts and New Jersey, allow consumers to produce and sell solar renewable energy credits (sometimes called SRECs) from grid-connected solar photovoltaic panels.  These SREC sales can create a significant revenue stream for people and businesses who develop qualified renewable power projects.

Not every site may be well-suited for distributed generation projects.  Given relatively high capital costs for many small renewable power projects, payback periods may be too long for some businesses to make the investment.  However, as the cost of electric transmission increases across the country, the traditionally self-reliant fishing industry may increasingly turn to solar energy and other distributed generation technologies.

Corn, ethanol, drought, and demand

Corn plays an important role in current United States transportation fuel policy - but environmental and economic factors are putting the pinch on corn ethanol producers.

The U.S. Renewable Fuel Standard program requires transportation fuel sold in the United States to contain at least a minimum volume of renewable fuel.  This renewable fuel is generally ethanol, produced by fermenting sugars contained in plant feedstocks like sugar cane and sugar beets, or sugars produced by converting plant-based starches like corn starch.  The program's goals include reducing greenhouse gas emissions from the transportation sector, reducing petroleum imports, and encouraging the development and expansion of the domestic renewable fuels sector.

In the U.S., more than 95 percent of operating ethanol plants reportedly use corn starch as their feedstock.  According to the U.S. Department of Agriculture, U.S. farmers planted 96.4 million acres of corn this year, the highest corn acreage since 1937.  Favorable field conditions this spring led to the quickest planting pace on record, with nearly all of the corn planted by May 20 and plants emerged by June 3.

This summer's high temperatures and widespread drought conditions - with nearly 56% of the area of the 48 contiguous states experiencing drought - have hurt the U.S. corn crop, resulting in reduced estimates for this year's crop.  This anticipated reduction is driving corn prices up, with the commodity trading at over $7 per bushel (contrast a 2007 U.S. Energy Information Administration analysis of transportation biofuels assuming corn prices of about $2 per bushel).  This price increase is cutting into ethanol producers' bottom line.

At the same time, transportation fuel consumers are driving less.  Between increased fleet efficiency prompted by both governmental mandates and a natural desire to cut costs, and the overall slowdown in the national economy, overall demand for ethanol fuel has not grown at the pace previously projected.

According to Reuters, the average ethanol plant operating in Illinois is currently losing 32 cents on every gallon it produces.  As a result, many ethanol plants are running below their production capacity, and several have announced planned closures.  EIA data shows that ethanol production dropped 4% last week to 821,000 barrels per day, the lowest production rate since July 23, 2010.

Proponents of blending ethanol into transportation fuels point to its nature as a renewable biofuel, lower cost than gasoline, and ability to be produced domestically.  Critics question the wisdom of converting a potential food crop into an energy commodity, as well as the economic and environmental consequences of current pro-ethanol policies.  Whatever the ultimate outcome, the climatic and economic conditions affecting the corn ethanol industry may be calling into question the sustainability of the current system.

USDA funding for biomass energy crops

The U.S. Department of Agriculture has announced $9.6 million in funding for biomass energy crop production in New York, North Carolina and Arkansas. The funding under the Biomass Crop Assistance Program (BCAP) focuses on expanding the production of non-food energy crops for use in manufacturing liquid biofuels and renewable electricity.

Miscsnthus - the dwarf garden variety, related to the giant hybrid energy crop.

BCAP, created in the 2008 Farm Bill, is run by USDA's Farm Service Agency (FSA). BCAP is designed to help farmers and forest land owners switch to crops that can be used to produce usable energy. In many cases, these new energy crops can have significant start-up costs and can take several years before they are ready for harvest. Developing the facilities need to convert these crops into energy products can also involve significant lead time. To overcome these obstacles, BCAP will pay energy crop producers reimbursement for up to 75 percent of the costs of establishing perennial crops. BCAP will also pay for annual maintenance of these crops, for up to five years for herbaceous crops and eleven years for woody crops.

The funding announced this week includes nearly $4 million to fund the production of up to $4,000 acres of grass crops including miscanthus and switchgrass in North Carolina. These crops will be sent to a refinery proposed by Chemtex International where they will be converted into 20 million gallons of bioethanol per year. The refinery is also expected to produce chemicals and biogas. North Carolina farmers will be paid an initial amount to establish the grass crops, plus five years of annual payments for crop maintenance, on top of their crop sales.

$4.2 million in BCAP funding will also support the establishment of up to 3,500 acres of shrub willow in northern New York. Project sponsor ReEnergy Holdings LLC will buy the willow crop as a fuel for biomass electricity production in the area.

BCAP will also provide an additional $1.2 million in funding for an expansion of miscanthus production in northeast Arkansas. Project sponsor MFA Oil Biomass LLC anticipates using the crop to produce a pelletized fuel for both heating use on the producing farms and sale into pellet fuel markets.

USDA funds energy projects

Businesses are taking advantage of incentives to reduce their consumption of energy from the utility grid through both energy conservation and distributed renewable generation.  A number of programs provide grant funding for part or all of these projects, on top of other incentives like tax benefits.

The U.S. Department of Agriculture runs several energy incentive programs under the Rural Energy for America Program (REAP).  These programs take different shapes; some offer payments or grants, while others offer loans and loan guarantees.  All are designed to promote the development and commercialization of renewable energy sources including wind, solar, geothermal, hydrogen, ocean waves, hydroelectric, biomass, and biofuel (ethanol, biodiesel, etc.)

REAP’s Renewable Energy Systems/Energy Efficiency Improvement grant program is one funding source for farm and commercial projects.  REAP conducts periodic solicitations for project proposals, and awards grants on a competitive basis.  Grant winners can receive up to 25% of their total eligible project costs, capped at $500,000 per project for renewable energy systems and $250,000 per project for energy efficiency improvements. 

When USDA published its Notice of Funds Availability for REAP this spring, an estimated $70 million in REAP funding was expected this year, based on the allocations in the 2008 Farm Bill.  In response to the request for applications, projects were proposed and selected in every state.

In August 2011, the USDA announced $183,339 in grant funding for 8 Maine projects.  Most of these grant awards were for solar energy projects; two projects included solar and energy efficiency, while one focused on a biomass project.  For example, the Bancroft Contracting Corporation in South Paris won $40,000, split between a rooftop solar array expected to produce 270,050 kilowatt-hours per year and energy efficiency improvements.

USDA’s REAP program is one tool businesses can use to help finance innovative and cost-effective energy efficiency and renewable energy projects.

June 28, 2010 - federal grant money for ethanol R&D; Syncrude found guilty in oil sands duck kill

Here's a "do you know..." for you: do you know anyone doing biomass R&D, especially working with cellulosic ethanol? There's a round of federal grants for research and development of handling processes and feedstock logistics. Grants are expected to average $5.5 million each.

DOE, USDA issue funding opportunity for biomass R&D

Up to $33 million is available for biomass research and development projects through a joint funding opportunity from DOE and the U.S. Department of Agriculture (USDA). The funding opportunity aims to develop new technologies in biofuels, bioenergy and high-value bio-based products.

Pre-applications are due July 13. 
DOE is interested in developing systems to handle large amounts of biomass feedstocks, such as wood chips and wood wastes.

One goal of this funding opportunity is to develop logistics systems that can handle and deliver large amounts of feedstock year-round for cellulosic biofuels production.  DOE’s Biomass Program is focusing its R&D efforts on ensuring that cellulosic ethanol is cost competitive by 2012. For more information on the agencies’ biomass goals, see DOE’s multi-year program plan and the USDA’s Bio-preferred Program, which aims to create a market pull for new products and technologies.

In the news: a Canadian judge has found oil sands developer Syncrude Inc. guilty of quasi-criminal charges related to the death of 1,600 ducks that became mired in oily settling ponds.  Allegedly, Syncrude knew or should have known that a large flight of ducks was inbound (one source says Syncrude had 48 hours notice based on radar) at a time when most natural ponds were frozen.  Syncrude was found guilty of depositing materials hazardous to ducks without deploying its "duck protection systems" in time to prevent these ducks from landing on the settling ponds.  The federal charges could be as high as $300,000 per bird.

Tide power: Irving has walked away from its exclusive rights to evaluate tidal power at 11 Crown-owned sites in the Bay of Fundy.  With Irving's relinquishment, the government will likely issue another RFP for the sites.