Biomass 2005 Conference Blue ver2

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					 USDA-Rural Development-
– Biomass Conference
      •   Georgia Center for Continuing Education, Athens, GA
      •   Rob Langston, Atlanta, GA Phone/FAX 404-250-9889
      •   August 30, 2005
    What is USDA-RD-RUS?
 R.U.S. is the successor to the Rural
  Electrification Administration (REA) that
  helped electrify rural America following the
  Depression years.
 Mission: Increase economic opportunity
  and improve the quality of life for rural
 Authority through the R.E. Act of 1936
    Historical RUS Activity
 To provide financing for rural electric
  generation, transmission and distribution
 Oversight of borrowers
 Engineering and O&M support
   That RUS can only provide financing for rural
    electric cooperatives
   R.E. Act requires beneficiaries of financing to be
    “persons in rural areas”
   This requirement can be more-broadly interpreted,
    under 7 CFR 1710.101 to include providing of
    financing non-coop entities, as long as the
    „beneficiaries‟ are „rural‟
      Other Eligible Entities
 Corporations
 States, territories, & subdivisions/agencies
 Municipalities, peoples utility districts
 Cooperative, non-profit, and limited-
  dividend, or mutual associations
 The only prohibition (of the RE Act) is that
  loans cannot be made to individual
Reasons For USDA’s Decision
To Support Renewable Energy

  Part of President Bush’s National
 Energy Policy (NEP); a plan to increase the
 utilization of renewable energy and
 improve energy efficiency

  Declining word petroleum reserves

  Clean air and environmental issues
    How Can RUS Support
“Biomass” and “Renewables”?

   RUS can provide financing and grants to
    eligible recipients
      How Much Funding is
 $200 million in electric loan funds is
  available in FY 2005-2006
 Funds are reserved for renewable energy
 Loan applications are processed on a
  priority basis (meaning a relatively-prompt
  loan review process)
        RUS Loan Programs

              Loan Options:
Direct loans –
        of RUS-appropriated funds, or

RUS Guaranteed loans –
        of federal “FFB” money, or of private
        money with CFC or CoBank
               Interest Rates
   Interest rates are similar but not identical for
    direct vs FFB-guaranteed loans, so timing
    may become the deciding factor.

   The applicable interest rate is the published
    rate at time of each draw of funds
    Example Rates and Terms
 Presently approx. 1.7% for 1-year fixed
 Presently approx. 3.6% for 7-year fixed
 Presently approx. 5% for 30-year fixed
 Terms of 1, 2, 3, 5, 7, 10, 20, and 30 years
 Maximum term not-to-exceed „useful life‟
All Loans are “Reimbursement”
 Details are in 7 CFR 1710
 “Reimbursement” means that RUS loan
  funds are not available to the borrower „up
  front‟ to complete the construction
 Construction expenditures are „reimbursed‟
  to the borrower either at the end of the
  project, or as „progress payments‟ if part of
  a construction contract
        Example Projects Financed
   To date, RUS has financed numerous photovoltaic and
    wind powered renewable systems nationwide, generally
    through existing local cooperatives
   Recently-announced was a $20 million RUS loan to a
    privately-owned power company in GA
   Project will use plasma arc technology to convert used
    auto tires into energy and saleable byproducts
             Renewable Loans – To Date
             Renewable Loans – To Date
    Borrower                    Type                Units          Amount        Approval Date
Navajo Tribal Utility      OFF-GRID PV         485 – 640 W UNITS   $4,861,000        12/20/00
Basin Electric Power       WIND POWER             2 – 1300 kW      $3,800,000         1/9/02
 Coop./East River                                  NORDEX
Rosebud Sioux Tribe        WIND POWER             1 – 750 kW        $566,000         9/12/02
                                                 NEG MICON
 Navopache Electric        ON – GRID PV         5 UNITS TOTAL      $3,145,000         5/1/03
    Coop., Inc.                                     467 kW
East Kentucky Power       LANDFILL GAS           5 PROJECTS        $27,645,000       9/25/03
     Coop., Inc.                                    22 MW
  Dairyland Power         LANDFILL GAS              3 MW           $4,960,000        9/25/03

    Basin Electric        HEAT RECOVERY             30 MW          $36,000,000       9/25/03

Washington Electric       LANDFILL GAS              4.8 MW         $7,320,000        8/31/04
   Coop., Inc.
Illinois Rural Electric    WIND POWER              1.85 MW         $1,300,000        8/31/04
  Dairyland Power         Anaerobic Digester       3.75MW          $9,830,000        9/27/04
   P R Power Co.          Plasma Arc Torch         8.86 MW         $19,602,000       9/28/04
Advantages of RUS funding

   Interest rates are at the „government‟s cost
    of money‟, typically lower than from other
    market sources (especially for „non-
    conventional‟ projects, unproven
    technologies, or new entities)
           Advantages (cont.)
   RUS may constitute a single agency for
    multiple oversight and reporting areas (i.e.,
    environmental, rate regulatory, financial,
          RUS Requirements
   Must demonstrate project:
    – Eligibility for RUS financing (i.e., must provide
      electricity to “rural area”)

    – Feasibility to ensure loan repayment

    – Adequate loan security
 Environmental Requirements
 Must comply with all environmental laws,
  including federal, state and local laws
 Federal requirements may be more stringent
 RUS environmental review must be
  completed before site preparation or
  construction begins
 (reference 7 CFR Part 1794)
 Business Plan Requirements
 1. Specifics of intended project
 2. Org. chart with names/titles of principals
 3. Corp. governance and accounting
 4. Construction & long-term financing plans
 5. Fuel supply plans
 6. Construction work plan (engineering)
 7. Feasibility studies
 8. O&M plans
 9. Determination of „useful life‟
Business Plan Req’mts (cont.)
 10. Environmental studies
 11. Interconnection agreements
 12. Purchase power agreements
 13. Contract inventory & status (accounting)
 14. Customer electricity market assessments
 15. By-product market assessments
 16. Future expansion plans
 17. Any other useful info.
Business Plan Req’mts (cont.)
 Information submitted should be
  sufficiently detailed and comprehensive,
  commensurate with the credit risk
  associated with the amount financed
 Should include credit experience of the
     Certifications and Other
 Competetive bidding
 Equal opportunity and non-discrimination
 Debarment and suspension
 Restrictions on lobbying
 Federal debt delinquency
 Drug-free workplace
            RUS’ Security
 Non-RUS equity requirement of 20+% of
  total project financing
 RUS holds a first mortgage on the facilities
  owned by the applicant
 RUS requires annual audit and financial

RUS Web Site
“Electric Program” Sub-Pages
   FAQ‟s
   Staff Directory (incl. GFR‟s by state)
   Loan Programs
   Interest Rates
   Federal Register
   Renewable Energy
   Forms
   Borrower Directory
   Links
 Also Visit the “USDA-Rural
   Development” Website
For news about renewables
 and energy efficiency, as
 well as other loans and grants
RUS Encourages You to Visit Us
          Your First Steps
 Determine if you might have an interest in
  RUS financing for a renewable energy
 Research the available web-based
 Contact the RUS “General Field Rep.” for
  your state, who will assist you further
      GEORGIA RUS Contact
 Rob Langston, GFR
 USDA-Rural Utilities Service
 40 Chastain Cove NE
 Atlanta, GA 30342

   Phone/Fax 404-250-9889

   Email
Questions Are Welcome At
        This Time

        Thank You,
       Rob Langston

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