Utilizing USDA Loan Guarantees for Community Solar or Utility-Scale
Utilizing USDA Loan Guarantees for Community Solar or Utility-Scale Solar Projects Midwest Solar Expo May 23, 2017
Presented by Ron Omann Energy Coordinator
Rural Energy for America Program
Rural Business-Cooperative Service
Purpose Program designed to help eligible applicants reduce energy costs and consumption and help meet the Nation’s critical energy needs.
Funding provided for the purchase and installation of: 1. Energy Efficiency Improvements (EEI) 2. Renewable Energy Systems (RES)
Rural Business-Cooperative Service
Financial Assistance Grant Guaranteed Loan
•25% of Project (500K max) •Highly Competitive
• Not Direct Financing • Funds Available
Program Trends – Minnesota Funded Grant Projects REAP Applications Submitted v. Awarded 500
0.9
450
0.8
400
0.7
350 0.6 300 0.5 250 0.4
200 0.3 150 0.2
100
0.1
50
0
0 2009
2010
2011
2012
Applications
2013
Funded
2014
Percentage
2015
2016
6
Rural Business-Cooperative Service
Improve Profits for Your Rural Small Business, Farm or Ranch with REAP Energy Efficiency
Renewable Energy
Lighting
Solar
Heating
Wind
Cooling
Small Hydroelectric
Ventilation
Anaerobic Digesters
Fans
Biomass
Automated Controls
Geothermal
Insulation
Wave/Ocean Power
Rural Business-Cooperative Service
Eligible Applicants Agricultural Producer
Rural Small Business
• Individual or entity that receives 51 percent or more of their gross income from agricultural production – crops, livestock,
•
aquaculture, forestry operations, nurseries, dairies
For-profit small business as defined by the Small Business Administration (SBA)
•
Rural area or non-metro community of < 50,000
Rural
Rural Business-Cooperative Service
Small • US Small Business Administration Size Standards • New Solar Company = Solar Electric Power Generation = 250 Employees • Start-up LLC + Affiliates need to be below size standard
Rural Business-Cooperative Service
Business • (1) A private for-profit entity, including a sole proprietorship, partnership, and corporation; • (2) A cooperative (including a cooperative qualified under section 501(c)(12) of the Internal Revenue Code); • (3) An electric utility (including a Tribal or governmental electric utility) that provides service to rural consumers and must operate independent of direct government control; and • (4) Tribal corporations or other Tribal business entities (as described in paragraph (4)(i) and (ii) of this definition). The Agency shall determine the Small Business status of such Tribal entity without regard to the resources of the Tribal government. • (i) Chartered under Section 17 of the Indian Reorganization Act (25 U.S.C. 477), or • (ii) Other Tribal business entities that have similar structures and relationships with their Tribal governments as determined by the Agency.
Rural Business-Cooperative Service
Community Solar Eligibility Must be an eligible applicant and have an eligible project Applicant must own and control the system Applicant must determine system type and negotiate & enter contracts Subscribers not subject to eligibility requirements as long as they are purchasing power or credits under agreement and not owning/leasing equipment
Rural Business-Cooperative Service
REAP Guaranteed Loan Assistance
Up to 75% of Eligible Project Costs Minimum Loan Amount
$5,000
Maximum Loan Amount
$25 million
Total eligible project costs > $6,667
Total eligible project costs > $33.4 million
REAP Loan Guarantee Percentages by Loan Size 100%
90% 80% 70% 60%
50% 40% 30%
20% 10% 0% < $600k
$600k - $5 million Guaranteed
$5 - $10 million Unguaranteed
$10 - $25 million
Rural Business-Cooperative Service
Loan Requirements Interest Rate
Terms
Equity
Payments
Personal Guarantees
• Negotiated between borrower and lender
• Routinely 20-25 years • MN 25 years due to PPA • None Required • No Balloon Payments • Not required for passive investors
Rural Business-Cooperative Service
Application Timeline • When can we apply for funds? During pre-construction – planning and design Applications can be accepted after project completion
Rural Business-Cooperative Service
How to Apply •
Contact the USDA Rural Development State Energy Coordinator: http://www.rd.usda.gov/files/RBS_StateEnergyCoordinators.pdf
•
Submit applications any time of year.
Ron Omann Energy Coordinator Rural Development [email protected] Office: (651) 602-7796 www.rd.usda.gov
Renewable Energy Lending
USDA Guaranteed Lending © 2016 Live Oak Banking Company. All rights reserved. Member FDIC
Live Oak Bank – A Unique Approach to Lending
Chartered in 2008, Live Oak took a new approach to lending Focus
on specific industries where we could become experts and add
value National footprint, but targeted lending to low number of industry verticals Vertical strategy staffs each lending group with folks focused only on one field Manage risk Provide superior customer service Educate the industry and learn ourselves 20
Government Guaranteed Lending
Live Oak is well-versed in SBA lending 2nd
largest SBA lender in country We will fund over $1.5B this year across 12 industries Moving into USDA guaranteed lending was a natural step Similar underwriting standards Robust secondary market With some marked differences State-by-state implementation Larger, more complex projects Rural eligibility 21
USDA REAP and Live Oak’s Solar Lending
Utility-scale projects nationwide Largest
REAP lender in the country Deployed $100 million+ in calendar 2016; expect to triple that this year
Have worked with a wide range of developers, offtakers, technologies, state regulatory environments and sites
22
USDA REAP and Live Oak’s Solar Lending ADVANTAGES
Openness to technology, developer and system variations Allows
us to meet customer need and stay at leading edge of industry development Ability to do a wide range of projects National footprint Substantial funding for REAP and B&I – “unlimited runway” Suits a range of sizes from
Presented by Ron Omann Energy Coordinator
Rural Energy for America Program
Rural Business-Cooperative Service
Purpose Program designed to help eligible applicants reduce energy costs and consumption and help meet the Nation’s critical energy needs.
Funding provided for the purchase and installation of: 1. Energy Efficiency Improvements (EEI) 2. Renewable Energy Systems (RES)
Rural Business-Cooperative Service
Financial Assistance Grant Guaranteed Loan
•25% of Project (500K max) •Highly Competitive
• Not Direct Financing • Funds Available
Program Trends – Minnesota Funded Grant Projects REAP Applications Submitted v. Awarded 500
0.9
450
0.8
400
0.7
350 0.6 300 0.5 250 0.4
200 0.3 150 0.2
100
0.1
50
0
0 2009
2010
2011
2012
Applications
2013
Funded
2014
Percentage
2015
2016
6
Rural Business-Cooperative Service
Improve Profits for Your Rural Small Business, Farm or Ranch with REAP Energy Efficiency
Renewable Energy
Lighting
Solar
Heating
Wind
Cooling
Small Hydroelectric
Ventilation
Anaerobic Digesters
Fans
Biomass
Automated Controls
Geothermal
Insulation
Wave/Ocean Power
Rural Business-Cooperative Service
Eligible Applicants Agricultural Producer
Rural Small Business
• Individual or entity that receives 51 percent or more of their gross income from agricultural production – crops, livestock,
•
aquaculture, forestry operations, nurseries, dairies
For-profit small business as defined by the Small Business Administration (SBA)
•
Rural area or non-metro community of < 50,000
Rural
Rural Business-Cooperative Service
Small • US Small Business Administration Size Standards • New Solar Company = Solar Electric Power Generation = 250 Employees • Start-up LLC + Affiliates need to be below size standard
Rural Business-Cooperative Service
Business • (1) A private for-profit entity, including a sole proprietorship, partnership, and corporation; • (2) A cooperative (including a cooperative qualified under section 501(c)(12) of the Internal Revenue Code); • (3) An electric utility (including a Tribal or governmental electric utility) that provides service to rural consumers and must operate independent of direct government control; and • (4) Tribal corporations or other Tribal business entities (as described in paragraph (4)(i) and (ii) of this definition). The Agency shall determine the Small Business status of such Tribal entity without regard to the resources of the Tribal government. • (i) Chartered under Section 17 of the Indian Reorganization Act (25 U.S.C. 477), or • (ii) Other Tribal business entities that have similar structures and relationships with their Tribal governments as determined by the Agency.
Rural Business-Cooperative Service
Community Solar Eligibility Must be an eligible applicant and have an eligible project Applicant must own and control the system Applicant must determine system type and negotiate & enter contracts Subscribers not subject to eligibility requirements as long as they are purchasing power or credits under agreement and not owning/leasing equipment
Rural Business-Cooperative Service
REAP Guaranteed Loan Assistance
Up to 75% of Eligible Project Costs Minimum Loan Amount
$5,000
Maximum Loan Amount
$25 million
Total eligible project costs > $6,667
Total eligible project costs > $33.4 million
REAP Loan Guarantee Percentages by Loan Size 100%
90% 80% 70% 60%
50% 40% 30%
20% 10% 0% < $600k
$600k - $5 million Guaranteed
$5 - $10 million Unguaranteed
$10 - $25 million
Rural Business-Cooperative Service
Loan Requirements Interest Rate
Terms
Equity
Payments
Personal Guarantees
• Negotiated between borrower and lender
• Routinely 20-25 years • MN 25 years due to PPA • None Required • No Balloon Payments • Not required for passive investors
Rural Business-Cooperative Service
Application Timeline • When can we apply for funds? During pre-construction – planning and design Applications can be accepted after project completion
Rural Business-Cooperative Service
How to Apply •
Contact the USDA Rural Development State Energy Coordinator: http://www.rd.usda.gov/files/RBS_StateEnergyCoordinators.pdf
•
Submit applications any time of year.
Ron Omann Energy Coordinator Rural Development [email protected] Office: (651) 602-7796 www.rd.usda.gov
Renewable Energy Lending
USDA Guaranteed Lending © 2016 Live Oak Banking Company. All rights reserved. Member FDIC
Live Oak Bank – A Unique Approach to Lending
Chartered in 2008, Live Oak took a new approach to lending Focus
on specific industries where we could become experts and add
value National footprint, but targeted lending to low number of industry verticals Vertical strategy staffs each lending group with folks focused only on one field Manage risk Provide superior customer service Educate the industry and learn ourselves 20
Government Guaranteed Lending
Live Oak is well-versed in SBA lending 2nd
largest SBA lender in country We will fund over $1.5B this year across 12 industries Moving into USDA guaranteed lending was a natural step Similar underwriting standards Robust secondary market With some marked differences State-by-state implementation Larger, more complex projects Rural eligibility 21
USDA REAP and Live Oak’s Solar Lending
Utility-scale projects nationwide Largest
REAP lender in the country Deployed $100 million+ in calendar 2016; expect to triple that this year
Have worked with a wide range of developers, offtakers, technologies, state regulatory environments and sites
22
USDA REAP and Live Oak’s Solar Lending ADVANTAGES
Openness to technology, developer and system variations Allows
us to meet customer need and stay at leading edge of industry development Ability to do a wide range of projects National footprint Substantial funding for REAP and B&I – “unlimited runway” Suits a range of sizes from
