RUS Funding for Efficiency Projects - Plains Justiceplainsjustice.org/files/Jim Elliott...
Transcript of RUS Funding for Efficiency Projects - Plains Justiceplainsjustice.org/files/Jim Elliott...
RUS Funding for Efficiency Projects James F. Elliott
Acting Deputy Assistant Administrator Rural Utilities Service – Electric Program
Benefits of Energy Efficiency
• Reduced costs to end users of energy
• Power system load modification leading to reduction in overall system demand
• More efficient use of electric capacity at the distribution, transmission, and generation levels
• Possibility of deferred power generation capacity
• EE programs and support functions can create jobs
Recovery Through Retrofit
• In May 2009 Vice President Biden charged the White House Council on Environmental Quality (CEQ) with developing a proposal for Federal Action that will grow green job opportunities and boost energy savings by retrofitting homes for energy efficiency
• CEQ has facilitated an interagency process to develop a report with recommendations with specific Federal actions addressing barriers to the development of a national-scale home retrofit market
• The CEQ RTR Team is comprised of multiple Federal Agencies including Energy, Agriculture, Labor, Housing, EPA and others
Rural Economic Development Energy Efficiency Effort (REDEEE)
• REDEEE is the USDA team supporting Recovery Through Retrofit
• REDEEE consists of Rural Utilities Service, Rural Housing Service, Rural Business Service and Community Facilities
• USDA’s Rural Development programs are a perfect vehicle for supporting energy efficiency for housing, businesses, farms and utilities
Recovery Through Retrofit Barriers
• Barriers to improving home energy efficiency improvements:
– Access to Information – Consumers do not have access to reliable and straightforward information about home energy retrofits
– Access to Financing – The upfront costs of home energy efficiency improvements are often beyond the average homeowners budget
– Access to Skilled Workers – There are currently not enough skilled workers and entrepreneurs to accommodate retrofit programs on a national scale
Potential Funding Associated with REDEEE
Rural Business / Cooperative Service
• Rural Economic Loan Program
Rural Housing Program • 502 Guaranteed Program • 502 Direct Program • 504 Direct Program
Community Facilities
• Direct Loans
• Direct Guarantees
• Grants
Rural Utilities Service
• Federal Financing Bank
Rural Business REDLG Program
Rural Economic Development Loan (REDL) and Grant (REDG) Programs provide financing to eligible Rural Utilities Service electric or telecommunications borrowers (Intermediaries)
– Promotes rural economic development – Promotes job creation projects
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Rural Utilities Service (RUS) Energy Resource Conservation (ERC) Program
• Eligible to RUS borrowers with active loans • Provides deferments of principal to allow for energy efficiency
improvements: – caulking, weather-stripping, heat pumps systems, water heaters,
central heating and air conditioning system replacements, ceiling/flooring/duct insulation, and storm and thermal windows
• 42 current ERC deferments provide annual funding of $13.8 million for efficiency improvements
• 365 RUS have participated providing $205 million in energy efficiency investment
Recovery Through Retrofit RD-DOE�Home Energy Score (HES) Rural Pilots
SC: Central Electric Power Cooperative
IN: Hoosier Energy Rural Electric Cooperative
VA: Central Virginia Electric Cooperative
TX: United Electric Cooperative Services
Home Energy Score (HES) Rural Pilots
South Carolina Rural Electric Assoc – SC • Group includes 20 consumer owned electric cooperatives &
a wholesale power supply cooperative • 200 homes targeted for HES Pilot
Hoosier Energy Rural Electric Cooperative – IN • G&T Cooperative with 18 members based in Bloomington,
Indiana • 100 homes targeted for HES Pilot
Home Energy Score (HES) Rural Pilots
United Electric Cooperative Services, Inc. - TX • Electric Distribution Cooperative based in Cleburne, Texas • 250 homes targeted for HES Pilot
Central Virginia Electric Power Cooperative - VA • Electric Distribution Cooperative based in Arrington,
Virginia • 200 homes targeted for HES Pilot
Energy Efficiency (EE) Loans at RUS
• 2008 Farm Bill explicitly identifies energy efficiency as an eligible RUS loan purpose
• RUS expects to publish a proposed rule imminently which will launch a new program focused on retail energy efficiency
• A purpose of the proposed EE program is to foster the creation of new and permanent jobs in rural areas
Energy Efficiency Loans at RUS
• This is an opportunity for USDA to partner with sister departments such as DOE
• The regulation will allow new financing opportunities for RUS borrowers to provide energy efficiency and weatherization activities to businesses and homeowners in rural America
• The program is to be funded out of existing authority and appropriations
RUS Electric Program – Retail Lending Footprint
• Currently over 90% of rural electric cooperatives (RUS’s primary borrowers) have some form of energy efficiency program.
RUS FY12 Funding and EE
• RUS Electric Program FY12 Funding Level – $6.6 Billion – Distribution, Transmission, Renewables, Smart Grid,
Carbon Capture and Sequestration, Energy Efficiency
• Not targeted at specific energy efficiency technologies but allows borrowers to utilize a wide variety of energy efficiency products and services
• Envisioned to include a relending program that enables borrowers to lend to businesses or homeowners. Ultimate consumer could repay the loan through on-bill financing
RUS Energy Efficiency Loan Program
• General Provisions RUS financed Energy Efficiency Programs must:
– Be developed and implemented by an eligible borrower and applied within its service territory
– Provide for the use of State and local funds where available to supplement RUS loan funds
– Incorporate the applicant’s policy applicable to the interconnection of distributed resources
– Incorporate a quality assurance plan
General Provisions Continued
• RUS financed Energy Efficiency Programs must:
– Demonstrate that the program can be expected to be cost effective
– Show that the program will have no net negative cumulative impact on the borrower's financial condition
– Result in energy savings or peak demand reduction – Be approved in writing by RUS prior to the investment of
funds for which reimbursement will be requested
Financial Structures for Consumer Loans
• Loans made to a RUS borrower’s consumers located in a rural area where: – Consumers may be wholesale or retail – Loans may be secured or unsecured – Loan receivables are owned by the eligible borrower
• Loans may be serviced directly by the Eligible Borrower or by a financial institution
• The rate charged the Consumer should be less than or equal to the Treasury rate plus 1%
Eligible Activities and Investments
• All energy efficiency measures on a consumer premises that would typically transfer with title under applicable state law
• Distributed Generation: On or off grid renewable energy systems; Fuel cells
• Demand side management (DSM) investments • Energy audits • Consumer education and outreach programs • Power factor correction equipment on the Consumer side of the
meter • Re-lamping to more energy efficient lighting • Other investments approved by RUS as part of an EE Program
Performance Thresholds
• Appliance upgrades must achieve a reduction in energy consumption for the appliance equal to or greater than 20%
• Cooling system improvements must be designed to achieve a SEER increase of not less than 20%, and the improved SEER rating must be greater than or equal to the minimum applicable SEER standard promulgated by the U.S. Department of Energy for the cooling system
• Building envelope improvements must be designed to achieve a reduction of annualized baseline energy consumption (measured in Btus) greater than 10% for the building
Performance Thresholds Continued
• Projects that involve fuel switching must demonstrate an annualized energy reduction in dollars per million Btu of 20%
• Energy audit recommendations when taken together must achieve an overall reduction in annualized energy consumption of at least 10%
• Heating system improvements must demonstrate an annualized energy reduction in dollars per million Btu of at least 20%
• Other activities must demonstrate energy savings which will be determined on a case by case basis by RUS, but in any event not less than a 10% improvement in energy efficiency
Business Plans
• Eligible EE Program must have a business plan which: – Identifies the responsible management team – Identifies target consumers and promotional activities – Lists targeted activities and investments and corresponding expected
efficiency gains – Estimates dollars to be invested in each activity or investment – Describes the use of contractors to deliver the program – Describes the process for documenting and perfecting collateral
arrangements – Contains an assessment of risks including an estimate of prospective
consumer loan losses consistent with an established loan loss reserve
Quality Assurance Plans
• Eligible EE Programs must have a quality assurance plan with the following elements: – The use of qualified energy managers or professional engineers to evaluate
program activities and investments – Energy audits shall be performed for energy efficiency investments
involving the building envelope at a consumer premises – Energy audits must be performed by certified energy auditors – Follow up audits shall be performed within one year – Single system upgrades (such as a ground source heat pump) must be
designed and installed by certified and insured professionals
Loan Provisions
• Maximum term for loans shall be 15 years unless the loans relate to ground source loop investments which may be up to 30 years
• Loan feasibility must be demonstrated for all loans • Loans shall be secured • Loan advances shall be on a reimbursement basis except for
an initial advance of up to 5% of the total loan amount • Loan Amounts
– May not exceed 100% of Net Utility Plant less total outstanding debt – Consumer education and outreach programs may not exceed 4% of
the total loan amount
Other Required Support Documentation
• Comparison of projected annual growth in demand before and after incorporating the EE Program
• An itemized estimate of the energy savings and peak demand reduction to be obtained for each category of eligible activities and investments to be pursued
• A report of discussions and coordination conducted with the utilities power supplier
• An estimate of the amount of direct investment in utility-owned generation to be deferred as a result of the EE Program
• A description of efforts to identify state and local sources of funding and how they are to be integrated in the EE Program