Changes to USDA Grant Program Target Solar Energy

Now into its third year, a new USDA grant program helps farmers, ranchers and rural small businesses make the commitment to install renewable energy and energy efficiency systems. But the deadline for this years applications is fast approaching on June 27, and submissions for solar energy projects have had the poorest showing of all technologies. In response, the USDA enacted new rule changes to the program in hopes to reverse the trend.

Section 9006, the Renewable Energy and Energy Efficiency Investments program, provides up to 25 percent of project costs with a total of $23 million in funding for grants and loan guarantees. Section 9006 was created in the 2002 Farm Bill and is in its third year. The program provides for rural economic development, clean energy and energy security and may be reauthorized and increased in the next Farm Bill, expected to be passed in 2007. The funding is available to farmers, ranchers and rural small businesses (which provide many good niche opportunities for solar). The agriculture and rural sectors have responded with increasing interest, according to Andy Olsen, Policy Advocate for Environmental Law and Policy Center (ELPC). Applications increased from 148 in 2003 to 249 in 2004. Grants increased accordingly, with 113 grants in 2003 and 167 in 2004. So far, the greatest funding amounts have gone to large-scale wind projects and biogas digesters. In terms of the greatest number of awards, energy efficiency ranks at the top with 73 awards, wind power with 72 and anaerobic digestion at 67 awards for both 2003 and 2004. Solar energy, on the other hand, has lagged behind, with eight awards in 2003 and four awards in 2004. Grant amounts for solar projects varied from $5,000 to $500,000 (actually, $499,350) for projects including solar space heating, irrigation power, water pumps and more. The program funds solar heat and power projects, with a minimum award of $2,500 and a maximum award of $500,000. New Rules Should Help Solar Applications “New rule changes this year should improve the odds for solar applications,” Olsen said. “The old rules placed solar systems at a disadvantage. We sought and won rule changes in 2005 that help solar projects. This program could help close the sale for rural solar energy projects, but there’s only one month left to act,” said Olsen. Applications are scored by a point system following established criteria. Following are some key rule changes for application scoring in 2005 that can help solar projects: – Renewable energy projects geared towards energy replacement (e.g., solar systems) now score higher. – Projects that exceed environmental rules, such as most solar projects, score higher. – Smaller organizations now score higher. – Applicants who have not yet received a grant score higher. – Payback is now one of the least-important evaluation criteria. – Smaller projects have lower application requirements. Another change in the program this year is the announced intention by USDA to provide loan guarantees. They expect to announce those rules in June or July and have set aside one-half of the funding for loan guarantees. Any amount not used for loan guarantees will be used for grant awards. Tips for Successful Applications Doing your homework can help to win a grant. Winning these funds requires completing an application and taking other steps to increase the chances for award. The paperwork is not unlike that required for a bank loan. Winning technologies have prevailed due to strong organizing efforts. Key elements of success have included using approaches that can be replicated across several applications. In addition, state-level efforts for energy efficiency and digesters have helped marshal resources to find projects and finish applications. Applicants can adopt some useful approaches that can help win project award and increase solar power usage in rural America: – Work with the USDA Rural Energy Specialist in your state early as possible. They can provide clarification and guidance. A complete list is provided at this link: http://www.elpc.org/farmenergy/contacts.htm – To make the June 27 deadline, focus on projects where the development spadework has already progressed. The grant may help win the sale. – Know the program. A dedicated web site at www.farmenergy.org, provides summary information, links and resources for the program. The main USDA web site is at http://www.rurdev.usda.gov/rbs/farmbill/ – Team up with others. It helps to build alliances, such as from the state energy or agriculture office. – Seek a letter of support from Congressional representatives. Senate and Congressional in-district offices are happy to help by providing a letter of support for your applications. – Get letters of commitment for all project funding. Having these letters of commitment demonstrates project readiness and scores higher. “We really hope to see the solar industry come on strong this year. This is a great opportunity to make seal the deal on rural solar energy projects,” said Olsen.

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