Overview

Today, May 26, 2009, USDA issued a Notice of Solicitation for Applications (NOSA) for Rural Energy for America Program (REAP) grants, loan guarantees and feasibility study funding.  Applications are due on July 31.

The full Federal Register notice can be found here.

This year’s program highlights, including changes made in the 2008 Farm Bill, include:

Types of Funding Assistance

REAP provides loan guarantees and grants or combinations of the two.  Grants for feasibility studies are a new feature this year, with application instructions and ranking criteria explained in the NOSA.  NOTE: USDA is currently requesting comments on its feasibility study guidelines.

Maximum awards  are as follows:

• Renewable energy system grants – $500,000 or 25% of eligible project costs, whichever is less.
• Energy efficiency grants – $250,000 or 25% of eligible project costs, whichever is less.
• Loan guarantees – $25 million or 75% of eligible project costs, whichever is less.
• Feasibility studies – $50,000 or 25% of eligible study costs, whichever is less.

Small Grants, Feasibility Studies, Ocean/Hydropower

• 20% of REAP funding is set aside for grants of $20,000 or less (assuming it is used); USDA will add 10 points to the application score for these projects.
• 10% of REAP funding is set aside for feasibility study grants.
• Ocean and small hydropower projects (30 MW or less) are now eligible for REAP funding.

Applications and Scoring

The NOSA provides for four types of applications: loan guarantee only, grant only, loan guarantee plus grant (combo) and feasibility study only.  The official combo and feasibility study application options are new.

Although most applications can be submitted electronically through the Grants.gov website, applications for loan guarantees and combos must be submitted in hard copy form.

USDA has made a few changes to the scoring criteria, in part to reflect changes in the 2008 Farm Bill:

• Project “replicability” is removed as a scoring criterion.
• The expected energy efficiency of a renewable energy system is added as a criterion.
• For a combo application, the grant portion must score at least 20 points out of 35 for technical merit in order for the project to be considered eligible.

USDA also has added new application requirements:

• Only one type of application can be submitted for any one project -a feasibility study only, loan guarantee only, grant only or combo application.
• Projects can use either pre-commercial or commercial technologies, including foreign technologies, as long as an applicant can provide proof that the technology works and there are people available who can adequately install and service the project.

Loan Guarantee Changes

The maximum loan guarantee has increased from $10 million to $25 million. USDA will guarantee:

• 85% of a loan up to $600,000.
• 80% of a loan greater than $600,000 and up to and including$5 million.
• 70% of a loan greater than $5 million up to and including $10 million.
• 60% of a loan guarantee over $10 million.

Loan guarantees and combos cannot exceed 75% of project costs – this is an increase from 50% of project costs in previous years.

The annual fee for loan guarantees for 2009 is a 1% origination fee with annual renewal fee of 0.25% of the loan amount.