USDA loan guarantees support biomass power plants

By Erin Voegele | November 02, 2012

Earlier this month the USDA Rural Development provided three biomass power plants with loan guarantees under its Rural Utilities Service. An 11.5 MW biomass power plant under development by Eagle Valley Clean Energy LLC in Colorado was awarded at $40 million loan guarantee, the Green Energy Team LLC in Hawaii was awarded a $72.88 loan guarantee for a 7.5 MW facility, and the East Texas Electric Cooperative Inc. received a $151 million loan guarantee to support the development of a 50 MW plant.

The Hawaii group, which represents the biomass project given the most support in this round of funding, is working to develop a woody biomass facility on Kaua’i Island. Construction on the plant is scheduled to begin in early 2013, with startup in 2014. Deutshe Bank is proving the project financing.

According to Green Energy Team, the plant will cost $90 million to build. Once complete it will provide more than 11 percent of the island’s energy needs, which is enough to power 8,500 households and replace 3.7 million gallons of oil use.

In a document outlining the project and loan guarantee award, the Green Energy Team stresses the importance of projects like this in generating renewable energy, and providing local economic development opportunities. Overall, the project is expected to generate 200 construction jobs, 39 permanent operating jobs, as well as work for subcontractors and local service providers.

As the seemingly endless 2012 election season finally draws to an end, keep projects like this one in mind. While political ads are often full of rhetoric about the ineffectiveness and overreach of government, it’s important to remember that not all government programs are worthless. Some government entities, like USDA Rural Development, play important roles in the continuing development of our industry; in this case as a component of its goal to create and enable a more prosperous and productive rural America.