INSIDE RURAL DEVELOPMENT
Wind, biofuel projects funded
By Jack Gleason,
Acting Administrator
USDA Rural Development
Business and Cooperative
Programs
nergy is a key part of
President Bush’s domestic
agenda, and one of the
newer loan guarantee programs
available through
USDA Rural Development is the
Renewable Energy and Efficiency loan
program. These loans are designed to
encourage agricultural producers and
small rural businesses to create renewable
and energy-efficient systems.
Two generations of the Neppel family
operate Neppel Farms Inc., in
Armstrong, Iowa, a 2,000-acre, grain
and livestock farm, which includes a
3,400-head sow confinement operation
and 16,000 hogs. It also markets 200
cattle annually.
Faced with an annual electric bill
from their livestock operation that
exceeded $200,000 per year, the
Neppels decided to pursue their own
windmill after taking a closer look at
two wind turbines of the nearby Spirit
Lake School district.
The farm received a $402,500 Renewable
Energy Systems grant from
USDA Rural Development to install a
1.5 MW wind turbine. It also received a
$250,000 interest-free loan from the
Iowa Energy Center and a loan for the
balance from their local lender. Total
project cost was $1.6 million.
In addition to help from USDA
Rural Development staff in Iowa, the
Neppel family also worked with a professional
grant writer. The 1.5 MW turbine
went on-line in August, 2004, and
is now producing close to 5 million
kilowatt-hours of electricity annually,
enough to light up 400 Iowa homes for
a year. The electricity is being purchased
by Alliant Energy under a longterm
contract. The family calculates
that is should achieve return on investment
in 15 years.
The Neppels say the best way to
avoid or limit start-up problems is to
make sure you “work with a first-class
contractor” with a solid track record.
They also advise securing power-purchase
and interconnection agreements
early in the process, and to secure a
warranty and maintenance contract.
Their success with wind power is also
prompting interest from others in the
area to put up their own turbines.
Another example of a successful
energy start up is in the town of
Luverne, Minn., where Agri-Energy
LLC is located. This company is located
in the southwestern corner of
Minnesota, surrounded by corn and
soybean farms.
This project began producing
ethanol in 1998 as a 12-million-gallonper-
year dry-mill plant using 10 million
bushels of corn annually from its members.
In 1998, USDA Rural Development
provided a Business and Industry
loan guarantee on a $5 million loan to
construct the plant. This project was
the first of its kind in Minnesota.
Three years later, Rural Development
was approached by another
lender, Heartland Business Bank of
Wisconsin, to guarantee another $5
million loan to refinance debts at a
lower rate and to expand the ethanol
plant. The company has continued to
perform in an exceptional manner.
Agri-Energy currently has about $24
million in annual sales.
This plant employs local residents,
buys approximately 10 million bushels
of corn per year from local farmermembers
and increases their income by
selling a value-added product derived
from corn.
USDA Rural Development is a venture
capital source for rural America
and has $17 billion to invest in the rural
economy this year. For more information
on the Renewable Energy and
Efficiency program or our other guaranteed
loan programs, contact a Rural
Development office in your state, which
you can find listed on our website:
www.rurdev.usda.gov. We look forward
to working with you.
