U.S. Department of Agriculture public hearings on Section 9006 of the Farm Bill 2002
regarding Renewable Energy Loan and Grants Program
by Scott Sklar, President of The Stella Group, Ltd., Washington, D.C., December 4,2002

The Stella Group, Ltd is a strategic technology firm specializing in project and poolicy development to drive projects in distributed energy including advanced batteries and controls, energy efficiency, fuel cells, heat engines, minigeneration, microhydropower, modular biomass, photovoltaics, solar thermal and small wind energy systems.

This new USDA renewable energy grant and loan program should be leveraged with existing USDA (FmHA, RUS) and SBA loan programs. The projects should be replicable in nature and not designed as one-of-a-kind installation. Such a replicability requirement will drive lower costs through economies-or-scale of manufacturing and deployment. Such replicability and standardization will insure quality of installation and assurance of a long-term maintenance and servicing infrastructure.

Priority should be given to on-farm distributed energy on farms or farm cooperatives. In the case of electric generation, any project should be less than 20 megawatts. This priority will help the most farmers. Additionally, larger biomass wind and biomass projects are already adequately funded through the market and the size of this new USDA program would have very limited impact on these larger projects.

The program should set-aside ten percent for innovative technology validation. Even this program should only support companies that already offer the technology in other sectors and are just accommodating it to the farm sector. Technologies such as biogas, fuel cells, heat engines, and solar thermal utilizing concentrated solar should be a priority because of their low emission and flexibility in the rural market.

The rest of the program should focus on the existing portfolio of clean distributed energy technologies that displace diesel and reciprocating engines and lower fossil fuel use as well as traditional grid-electric power.

The $23 million dollar program is very limited and should provide it's grants, limited to 25 percent of the total, that are leveraged with other state and federal programs. State clean air act implementation plans have grants for clean energy, as do the state system benefit trust funds. To this end, an innovative grants program that is aggressively leveraged with these state programs and then leveraged with the farmer and loans will insure the best success and reach the most farmers.

The remaining 75 percent of the program should be leveraged with USDA and SBA programs as well as loan programs offered by states. In many cases, the monthly loan payment for new distributed energy systems is less than the monthly cost of fuel from traditional fossil fueled systems. This immediately saves the farmer money and displaced imported energy.

Geographic diversity should be the goal over the long term, not the short tenn. States which offer leveraging through their environmental and energy grant and loan programs should receive first consideration. This will provide a type of market concentration that lower costs in installation and servicing. Thus the program should be focused in certain broad geographic regions on a year-by- year basis. This decision should be transparent with input from state and manufacturers to achieve the greatest cooperation.

Finally, a public call for input from states and local governments to solicit leveraging from their existing programs would have great benefit. Loans or loan guarantees need to be made more available and at longer loan terms at a minimum of 15 years to equipment guaranteed life which could go from 20 to 25 years.

Making grants, loans and loan guarantees to intermediaries such as cooperatives, native American tnbes, local governments and businesses would allow multiple installations to a wide group of users and insure standardization and replicability.

If you have any further questions, please do not hesitate to contact me either by phone 202-347- 2214 or bye-mail at solarsklar((i),aol.com. Thank you.

Scott Sklar, President
The Stella Group, Ltd.
1616 H Street, N. W., 10th floor Washington, D.C. 20006-4999
Phone: 202-347-2214 Fax -2215 E-mail: solarsklar@aol.com
Message beeper: 7591858@skytel.com
or 202-347-2214 (via answering service) Website: www.thestellagroupltd.com