Alternate Energy Revolving Loan Program (AERLP)

Loan Guidelines

General Information | Application Procedure | Ranking Criteria
| Approval Process | Owner Requirements | Lender Guidelines

I. General Information and Program Eligibility

A. The Alternate Energy Revolving Loan Program (AERLP) was created by the Iowa legislature to promote development of alternate energy production facilities in the state of Iowa. Administrative responsibility for the program was given to the Iowa Energy Center.
B. Most individuals and organizations are eligible to receive AERLP funds. Since AERLP funds are provided solely by Iowa’s investor-owned utilities, gas or electric utilities that are not required to be rate-regulated are not eligible for loans under this program. The borrower does not need to be an Iowa citizen. The alternate energy production facility (AEPF) must be physically located in Iowa.
C. AERLP funds are provided to qualified individuals and organizations on a competitive basis. Limited loan funds are available and not all applications may be selected for loans.
D. Qualified alternate energy production facilities are solar energy production, wind, biomass (waste management, resource recovery, refuse-derived fuel, agricultural crop or residue, and wood-burning) and small hydro facilities. A facility is defined as all land, systems, or improvements that are located at the project site and are necessary to the construction and operation of the facility, including the transmission or distribution interconnect facilities necessary to conduct the energy produced by the facility.
E. Energy Center loan funds cannot be used to refinance existing loans or to conduct feasibility studies and/or permitting activities.
F. The Iowa Energy Center will provide no more than fifty (50) percent of the loan at zero percent interest with the remainder of the loan supplied at an interest rate negotiated between the AERLP applicant and the selected lender.
G. An AEPF is eligible for no more than $250,000 (two hundred fifty thousand dollars) in Iowa Energy Center AERLP funds outstanding at any time.
H. The maximum AERLP loan term allowed is twenty (20) years.
I. Any AERLP loan made pursuant to this program will become due in its entirety upon sale of the facility for which the loan was made.
J. The interest rate upon delinquent payments will accelerate immediately to the current legal usury limit (Sec. 535.2 and 535.3, Code of Iowa).

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II. Technical Application Procedure

A. Technical Application forms are available from the Iowa Energy Center. This form will provide the information used to determine the technical merit of the proposed project and to rank the applications (see Ranking Criteria).
B. The Iowa Energy Center or its designee will review the application’s eligibility and simple payback analysis (calculated from information provided on the technical application) to ascertain the likelihood of attaining the projected AEPF project benefits. The Energy Center will provide a written opinion regarding the project’s technical merit to the lender.
C. If the project benefit calculations depend upon sales of energy to an outside purchaser, a copy of the energy purchase agreement must be provided to the Energy Center with the Technical Application. Applications received without appropriate agreements will be considered non-responsive and returned to the applicant.
D. The applicant may initiate discussions with a lender (see Loan Approval Process) at any time.
E. The lender will review the loan application on its own merits and make the final loan decision based on its findings and the Energy Center’s technical opinion and letter of commitment.
F. Technical application cycles for projects with a total financed capital cost of $50,000 or less will be accepted on a continuous basis. All other application cycles run on a quarterly basis and will close on, or the next business day following, October 31, January 31, April 30 and July 31. Technical applications must be postmarked by the closing date of a cycle to be considered during that cycle.

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III. Ranking Criteria

A. The AERLP was designed to encourage development of a wide variety of alternate energy production projects. To ensure fair competition across alternate energy technologies and AEPF sizes, portions of the AERLP funds are set aside for specific technologies and/or sizes of facilities:

10% Small Wind (20kW or less)
20% Large Wind (greater than 20kW)
5% Solar Energy Production
15% Small Hydro
20% Biomass (waste management, resource recovery, refuse-derived fuel, agricultural crop or residue, wood-burning)
30% Uncommitted

Applications will be ranked against others of the same technology type and/or facility size. Unobligated, set-aside funds will be reallocated to the uncommitted category.
B. All applications that meet the Energy Center’s criteria for completeness and technical feasibility will be ranked according to the AEPF simple payback and the applicant’s requested Energy Center loan term. The Energy Center will recommend that loan funds be provided to the highest ranked projects, up to the level of funding available for given technologies or facility sizes, in that application cycle.
C. Applicants whose projects are not ranked highly enough to be selected for Energy Center loan funds, but are otherwise technically sound, are encouraged to resubmit the application during a future application cycle.

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IV. Loan Approval Process

A. Recommended applicants will be notified by mail after the Energy Center completes its ranking process. The letter will contain an Owner Agreement and instructions for completing the loan approval process. The Owner Agreement, that commits the AEPF owner to the requirements described in AEPF Owner Requirements, must be fully executed prior to release of Energy Center loan funds. If a lender was not specified at the time of application, the applicant will be instructed to provide the name of a lender to the Energy Center within thirty (30) days.
B. Applicants are cautioned that technical qualification by the Energy Center does not guarantee financial qualification by a lender. Equipment orders, construction contracts, etc. entered into before the loan approval process is completed are entirely at the risk of the applicant. The Energy Center shall not be liable for any costs incurred by the applicant if a loan is not actually issued.
C. Expenses associated with construction begun prior to the closing date of the application cycle are not eligible for AERLP funds.
D. The applicant must complete the loan approval process by the close of the next application cycle or within 90 days of technical approval for applications received under the continuous cycle. Extensions to this deadline may be granted at the discretion of the Energy Center.
E. Notification will be sent to the applicant’s lender. This letter will include copies of the Technical Application, pertinent AERLP legislation, Program Guidelines, and the Energy Center’s Participation Agreement that will allow Energy Center loan funds to be released to the lender (see Guidelines for Lenders). The Energy Center Participation Agreement must be fully executed prior to release of Energy Center loan funds. The lender, an Energy Center representative and an Iowa State University officer will sign the Energy Center Participation Agreement.
F. The loan approval process is completed upon full execution of a loan note, Energy Center Participation Agreement, and Energy Center Owner Agreement. At that time, the Energy Center’s loan funds will be transferred to the lender for disbursement to the applicant. The Energy Center will work with both the applicant and the lender to complete the loan approval process in a timely manner.

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V. AEPF Owner Requirements

A. A start-up report is due to the Energy Center thirty (30) days after the AEPF becomes operational. The start-up report will include:

1. the size, type and manufacturer(s) of the AEPF installed
2. actual installed costs of the AEPF
3. type of energy user (e.g., residential, commercial, industrial, etc.) the AEPF serves
4. two (2) photographs of the AEPF
5. a schematic diagram of the entire system which identifies all major components and controls
6. the owner’s reasons for installing the system
7. the owner’s expectations of the system and any difficulties or unexpected problems associated with installation of the AEPF

The report should not exceed ten (10) typed pages in length.
B. Annual reports are also required. Applicants will submit a report to the Energy Center one year after the AEPF becomes operational. These will include:

1. the actual monthly and annual energy production and associated project cost benefits
2. the operation and maintenance costs of the project (including reasons for both scheduled and unscheduled downtime)
3. annual operation hours of the AEPF
4. summary of the AEPF owner’s general assessment of the system, including the benefits and problems associated with the system

C. The Energy Center reserves the right to tour all AEPF sites for inspection and performance verification purposes.
Metering of AEPF energy production and consumption (where appropriate) must be provided by the owner (associated costs may be included in the initial loan request). The Energy Center reserves the right to review the type of metering or energy production verification system used with the AEPF.
D. Performance data (e.g., installed costs, energy produced and/or consumed by the AEPF, details of project benefits and operation/maintenance details) from the AEPF will be considered public information and may be distributed by the Energy Center. The operational details and identity of the specific facility at which the AEPF is installed may, be considered proprietary during the loan processing period if requested in writing by the applicant. It is preferred that scheduled public visits to the AEPF be allowed, but allowances may be made to restrict general public visits.

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VI. Guidelines for Lenders

A. Loans will be made through any bank, savings and loan or credit union selected by the prospective AEPF owner.
B. The Energy Center will provide no more than fifty (50) percent of the loan, up to $250,000, at zero percent interest with the remainder of the loan supplied at an interest rate negotiated between the AERLP applicant and the selected lender. The lender may choose, at its own discretion, to loan any amount above the minimum fifty (50) percent match required.
C. The Energy Center will discuss the application with the lender for the purposes of determining the Energy Center’s participation in the loan, the loan term, repayment methods, and any other issues relating to the specific loan or the loan program.
D. The lender will tie both its share and the Energy Center’s share of the total loan funds to a single loan note. Upon execution of a Participation Agreement with the lender, Iowa State University will transfer the Energy Center’s share of the loan funds to the lender for disbursement to the borrower. The lender is responsible for collecting monthly loan payments from the borrower, which will include payments due to both the lender and the Energy Center. The lender will, in turn, forward the Energy Center’s share of the collected payment to an address or account specified by the Energy Center. Payment may be via an Automated Clearing House (ACH) or by a lender’s check. The Energy Center’s loan funds will be repaid in consecutive equal monthly installments in accordance with the loan repayment schedule. The lender may amortize its share of the loan funds.

Contact Information:

Iowa Energy Center
2521 University Boulevard, Suite 124
Ames, IA 50010-8229
Phone: (515) 294-3832
Fax: (515) 294-9912
E-mail:iec@energy.iastate.edu
Internet: http://www.energy.iastate.edu

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