INSIDE RURAL DEVELOPMENT
Turning forest waste into energy
By Peter Thomas,Administrator
Business and Co-op Programs
USDA Rural Development
In the last issue of Rural Cooperatives,
I discussed some of the new energy
programs available at USDA Rural
Development. One of these programs,
the Renewable Energy Systems and
Energy Efficiency Improvements
Program (also know as the Section
9006 Program), was established by the
2002 Farm Bill. This program is part
of the larger initiative by the Bush
Administration to focus on the country’s
energy needs with a new emphasis
on renewable energy.
We have all witnessed the devastation
as a result of Hurricanes Katrina
and Rita and the effect the aftermath
has had on energy costs. This recent
tragedy highlights the need for a new
energy policy.
Although the Section 9006 Program
has been making grants for the past
two years, this year a guaranteed loan
program has been added. Before the
end of the fiscal year, two projects
qualified and received loans. One of
these is a 20 megawatt, wood-fired
biomass plant purchased, refurbished
and relocated to a site leased by Abitibi
Consolidated. The new plant, 17 miles
west of Snowflake, Ariz., will be adjacent
to an existing paper mill and will
be fueled by a combination of paper
fiber from the paper mill’s recycling
operation and wood waste obtained
through contracts with the USDA
Forest Service and other local milling
operations.
The partnership with the Forest
Service is part of the Healthy Forest
Initiative. The power output from the
facility will be sold to Salt River
Project and Arizona Public Service,
two of Arizona’s utility companies. The
parties have entered into two, 10–year
power purchase agreements and will
purchase 10 megawatts at 7.5 cents per
kilowatt hour.
For this $23 million project, a
local bank submitted an application for
$16 million to USDA Rural Development.
The Section 9006 program is
only authorized to fund up to 50 percent
of the eligible project costs. To
make the project a reality, a $10-million
loan was guaranteed through the
Section 9006 program while a $6-million
loan was guaranteed through
USDA’s Business & Industry (B&I)
Guaranteed Loan program. The balance
was provided by the borrower.
In addition to producing renewable
energy, there is another benefit to
the community. About 460,000 acres of
ponderosa pine trees from the 2002
Rodeo-Chediski Fire in northern
Arizona and timber from local overgrown
forests will be burned by the
plant. Overgrown forests are the result
of a forest having too many small
diameter trees per acre. The extended
drought in the region has created a
similar environment to the one they
faced before the forest fires in 2002.
This new plant will provide a use for
the unused trees and the timber from
the overgrown forests, thus alleviating
a potential fire hazard.
Finally, the project will save existing
jobs and create new ones in the local
community. The positive impacts are
endless.
USDA Rural Development will
continue to look for ways to provide
funding for projects which have a positive
financial impact on rural America
and provide new sources of energy.
Now, more then ever, we all need to
find ways to both conserve and use
new sources of energy. This is
President Bush’s charge, and I am
proud of the work Rural Development
is doing to answer the call.
