Renewable Energy Technology Assessments - Kauai Island Utility ...

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Kaua’i Island Utility Cooperative Renewable Energy Technology Assessments 6.0 Renewable Energy Financial Incentives interest loans and grants for rural development projects, including renewable energy projects in 2005. 58 Implication for KIUC: This program would indirectly benefit KIUC. This program could be used to obtain inexpensive financing for a customer owned renewable energy projects on the island, but it is too small to directly fund a large-scale KIUC project. 6.1.7 RUS Electric Loan Program Through direct loans and loan guarantees, the USDA Rural Utilities Service (RUS) provides capital for the construction and maintenance of rural electric generation, transmission, and distribution infrastructure. 59 States, territories, municipalities, cooperatives, and other organizations that provide retail electric service to rural areas are eligible for the program. Investments in renewable energy generating equipment are covered by the Treasury Rate Loan program, which provides loans at the US Treasury interest rate. These loans are available to both retail and wholesale generation providers, and are available for a term of up to 35 years. Normally, this interest rate would not be available to public or private borrowers with even the best credit rating. There is no expected termination date of this program in the foreseeable future. Implication for KIUC: The RUS Electric Loan Program could provide KIUC with lowcost financing for the addition of renewable generation assets. The low-interest loans would inevitably improve the economics of any of the proposed projects for this study. 6.1.8 High Energy Cost Grant Program The High Energy Cost Grant Program is administered by the Rural Electric Service of the USDA. This program is designed to help mitigate high home energy costs, in excess of 275 percent of the national average, through financial assistance. 60 The program has the authority to fund improvements to generation, transmission, and distribution system improvements; however, recent funding has included on- and off-grid renewable energy systems and implementation of demand-side management and energy conservation programs. States, political subdivisions of states, and agencies organized under state law are eligible to receive funds under this program. In 2003, $14.9 million in grants were distributed to projects in seven states. In 2004, $11.3 million in funding was authorized for funding of six projects. A number of conventional and renewable energy projects have been funded in Alaska and on Indian Reservations where the cost of 58 George Stuteville, NRECA, White House Agree on REDL&G, Published in Electric Co-op Today, October 29, 2004. 59 Information of the RUS Electric Program available at http://www.usda.gov/rus/electric/index.htm 60 USDA High Energy Cost Grant Program information available at http://www.usda.gov/rus/electric/hecgp/ 21 March 2005 6-11 Black & Veatch
Kaua’i Island Utility Cooperative Renewable Energy Technology Assessments 6.0 Renewable Energy Financial Incentives energy is often prohibitively high for the relatively low income levels of the populations in these communities. Some projects have also been funded on Hawaii. In 2003, Maui Electric Company received a grant which enabled the sale of solar water heaters. The funding level and proposal requirements for 2005 are expected to be similar to that in 2004. Implication for KIUC: This program is applicable to KIUC with residential rates at nearly triple the national average. This program could be an excellent opportunity for KIUC to receive funding for new generation resources. 6.1.9 Tribal Energy Program The purpose of the DOE Tribal Energy Program is to promote tribal energy selfsufficiency, economic development, and employment on tribal lands through the use of renewable energy and energy efficiency technologies. 61 The program provides funding assistance for the full range of project development including strategic planning, energy options analysis, capacity building, feasibility studies, educational programs, and project construction. The funding mechanism of the program is through grants to the tribal governments for each of the pre-development and development opportunities. Over the past two years 45 projects have been funded across the US for a total of $8.4 million. Projects included feasibility studies, project implementation, and other pre-development efforts. There is no current indication of what the funding level will be for 2005 and beyond, but will likely be similar to that in recent history. Implication for KIUC: Proceeds from this program would likely not directly benefit KIUC. Projects could be cooperatively pursued with other eligible parties. Currently the program does not apply to Hawaiian Home Lands. However, it may be possible to approach DOE with a compelling project concept and still receive funding. 62 6.1.10 Miscellaneous Loan Guarantee and Grant Programs From time to time various federal agencies such as the DOE, USDA, Environmental Protection Agency, Forest Service and others offer loans, loan guarantees, and grants for the development of renewable energy projects. These loans and grants are often targeted at specific technology development or policy objectives, which tend to change over time. For example, in recent years the USFS has issued grants for projects to selectively thin forests as a forest fire prevention measure. These types of grants generally follow large forest fire seasons which raise the public consciousness of forest 61 US Department of Energy, Renewable Energy Development on Tribal Lands, available at www.nrel.gov/docs/fy04osti/35509.pdf 62 Personal conversation with Roger Taylor, National Renewable Energy Laboratory, Denver, CO, November 10, 2004. 21 March 2005 6-12 Black & Veatch
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