Section 9006 - Renewable Energy and Energy Efficiency Investments Program

Recommendations

Note: See the news on a new bill that encompasses many of these recommendations.

The single most important change to the Section 9006 program would be to boost funding for the program from its current $23 million annual appropriation to up to at least $250 million by 2012. Applications for Section 9006 continue to outpace available funding by at least a three to one margin, and hundreds of millions of dollars in projects have gone unfunded. ELPC has received numerous reports of farmers, ranchers and rural small businesses not applying due to insufficient funding.

Even with its current limited funding, since 2003 the Section 9006 program has provided $90 million in grant and loan guarantee awards for more than 800 worthy wind power, anaerobic digester, biofuel, energy efficiency, solar and other projects across the country. These projects are worth nearly $1 billion.

When completed, the projects from the first four years of the program (2003 to 2006) will result in:

  • 330+ megawatts of locally-owned wind power generation capacity.
  • 170 million gallons annually of ethanol and biodiesel production.
  • Millions of dollars in annual energy savings.
  • CO2 pollution reduction of more than 1.4 million tons annually, thereby helping to reduce agriculture’s carbon footprint.

Additional Improvements

Although Section 9006 is a successful program, significant additional energy, economic and environmental gains are possible with the following improvements.

  • Boost mandatory annual funding to at least $250 million by 2012. Section 9006 has proved its worth, value and popularity and is a very successful program. Ramping up the funding for the program over the next five years would allow the program to continue to expand to meet current growth and expected stronger growth from the program changes recommended above. For example, funding could be ramped up as follows:
    • $90 million (2008)
    • $190 million (2009)
    • $130 million (2010)
    • $180 million (2011)
    • $250 million (2012)
  • Create a block grant rebate program (up to 25% of total program funds) to encourage more low-cost, turnkey energy efficiency and renewable energy applications such as lighting, heating, motors, and small wind and solar projects. USDA would issue competitive block grants to appropriate state agencies which would then use these funds for technology-specific rebates.
  • Solve the “PTC offset” that occurs with grants to utility-scale wind and anaerobic digester projects that sell their power to utilities. These projects lose some of the value of the federal production tax credit (PTC) based on the amount of the Section 9006 grant. Restructuring the Section 9006 grants as production-based payments, as a number of state grant programs already have done, would avoid this unintended consequence.
  • Expand eligible applicants for the Section 9006 program to include all farming operations, including those in non-rural areas such as commercial greenhouse operators in suburban areas.
  • Provide competitive feasibility and planning grants for funding feasibility studies and market development plans for renewable energy projects. These grants would help potential project developers assess project feasibility prior to incurring large out of pocket expenses. 
  • Increase Loan Guarantee Limits. Loan guarantees are a desirable financing tool for larger wind power and bioenergy projects. USDA’s current Section 9006 loan guarantee limit is $10 million.