Spread the word

WATERTOWN, S.D. -- Darlene Bresson is an area specialist with the U.S. Department of Agriculture's Rural Development agency, and she's talking to farmers more today than in any of her 16 years with the agency.

She's based in Watertown, S.D., in a sub-office of her agency's Area 1 office in Aberdeen, S.D. The area covers 17 counties in of northeast South Dakota -- south to Brookings and Kingsbury Counties, west to Spink County, and up to the North Dakota border.

Among a host of larger programs she deals with, Bresson these days is promoting the agency's Rural Energy for America Program.

REAP offers loan guarantees and grants to be used for renewable energy systems, energy efficiency improvements, feasibility studies and energy audits for farms and small businesses.

Anita Hilliard of Bryant, S.D., is one of her clients.

"Typically, we don't deal with production; we haven't had a lot to do with farmers, except for programs where we can finance an individual farmer in buying shares in a cooperative," Bresson says.

Grants available

REAP is another opportunity to interact with producers.

Bresson visited Hilliard and shepherded her through the paperwork that in September landed the young farm woman a $32,940 grant and a $29,500 loan guarantee on a total project of about $130,000. The primary lender is Bryant State Bank and the guarantee is 85 percent.

The Hilliard project cut the energy use in drying by 28.6 percent, or 898.5 million Btus per year. The annual cost savings was calculated at $35,915.

"At first, it was kind of overwhelming," Hilliard says. "You wondered, 'Are we going to be able to qualify?' My father-in-law told me there was no way, but my brother-in-law set it all up to get the application going with Darlene. I had to fill out the paperwork."

Bresson says the program is largely unknown, but word-of-mouth is having an effect.

"We can finance up to 75 percent of a project -- 25 percent of it in the form of a grant and 50 percent in a guaranteed loan," Bresson says.

Bresson notes that REAP has been around since the 2002 farm bill and was renewed in the 2008 farm bill, but it's only been pushed heavily in the past three years. Many farmers don't know about it, but dryer dealers usually do.

"We get a lot of referrals from the dryer dealers, also through the Farm Service Agency, if they go to the FSA for a bin loan," Bresson says. "We didn't really start putting emphasis on it until about three years ago. It's slowly growing as we do some outreach."

A state energy committee goes through the technical report on each application, including the qualifications of the project team -- the contractor, the engineer and whether the equipment manufacturer and dealer offer sufficient service. There is a basic 10-point evaluation system for getting a project approved.

"Part of the process is doing an energy audit. You get their fuel bills, electric bills for the past two years and you show the efficiency and compare it to the manufacturer's specs."

If the new system is judged to deliver a 35 percent increase in efficiency, that delivers the maximum "points" in the eligibility formula.

"The two most important things are first, how much energy are they going to save, and two, what's the pay-back. How many years will it take to recoup the initial investment," Bresson says.

As for a "payback" period, this is a simple calculation of the total cost of the project divided by the annual energy cost savings. If the project is $100,000, for example, and the annual dollar savings is $30,000, then there is a 3.3-year payback.

"One of the requirements is that they need the grant to make the project financially feasible over the long term," Bresson says. "Typically you have big up-front costs with wind generators or a geothermal system. This makes it more economically viable over the long term."

There was considerably more interest in the program this past year with the high cost of natural gas and propane.

"It hit their pocketbooks hard, plus we had wet grain," Bresson says. "People are looking at it again this year because of the wet, late crop.

"With the older systems we're replacing, I'd say we're seeing less than a four-year payback. Why wouldn't you do it?" she says. "A lot of the people who try for the grant and go through the audit tell us they would have done it years before if they'd known there was that much savings."

Renewable energy

Grain dryers is an obvious project, but REAP also works with renewable energy.

In 2008, Rural Development completed 12 of the grants applications in Area 1. Nine were approved. The government caps its energy efficiency project pay-outs at $250,000, accounting for 25 percent of a project up to $1 million.

The cap is $500,000 for renewable energy projects -- a 25 percent limit that puts entire projects at $2 million.

In 2009, there have been 25 applications so far -- one feasibility project, four geothermal projects and 20 grain dryers. So far, 19 were approved.

"These projects are awarded in 'rounds' within each year," Bresson says. "The first round had five, this one had five and the last one had nine. Statewide there are probably 50 applications or more, and I don't think they're done awarding yet. I truly expect next year we could double it, at a minimum."

While she realizes states such as Iowa always will have bigger participation in REAP and other programs, it is her goal to be competitive.

"Per capita, I want to at least match if not exceed Iowa," she says. "Also, I want to develop the renewable portion. We need to do that. I believe in that."

Among other things, Bresson is working with Harvest Wind, a locally owned wind project in the Milbank, S.D., area.

Bresson notes that Rural Development has some 40 programs to deal with.

Single family housing programs still is the largest, she says. The agency doesn't require a down payment and works in conjunction with the state housing authority.

In housing, the "rural" in the programs means that projects are appropriate for every place in South Dakota except for the Sioux Falls and Rapid City metropolitan areas, so to speak. In the REAP program, the population must be 50,000 or less.

Water and environmental programs work to replace systems that sometimes have been in the ground for 80 years.

People in Bresson's area, may contact her at 604-886-8202 ext. 4, or e-mail her at darlene.bresson@sd.usda.gov .