For a REAP EEI project to be eligible for a loan guarantee under this part, it must meet the criteria specified in § 5001.102(a) through (c) and also specified in paragraphs (a) through (d) of this section and be for a borrower eligible to submit an application for the project in accordance with § 5001.126. If taxable bonds are utilized as debt instruments the provisions of § 5001.105(b)(19) must be met.

1. (a) The EEI project must use less energy on an annual basis than the original building and/or equipment that it will improve or replace as demonstrated in an energy assessment or energy audit as applicable.

   1. (1) If the project's total project cost is greater than $80,000, the energy assessment must be conducted by an energy auditor, an energy assessor, or an individual supervised by either an energy assessor or energy auditor. The final energy assessment must be validated and signed by the energy assessor, the energy auditor who conducted the energy assessment, or by the supervising energy assessor or energy auditor of the individual who conducted the assessment, as applicable.

   2. (2) If the project's total project cost is $80,000 or less, the energy assessment may be conducted in accordance with paragraph (a)(1) of this section or by a person that has at least 3 years of experience and completed at least five energy assessments or energy audits on similar type projects. Eligible EEI include, but are not limited to:

      1. (i) Efficiency improvements to existing RES; and
      2. (ii) Construction of a new building only when the new building is used for the same purpose as the existing building and if, based on an energy assessment or energy audit, as applicable, it is more cost effective to construct a new building that will use less energy on annual basis than to improve the energy efficiency of the existing building.
2. (b) The EEI project must be for a commercially available technology.

3. (c) The EEI project must be located in a rural area unless the borrower is an agricultural producer and the Application supports the production, processing, vertical integration, or marketing of agricultural products. If the agricultural producer's operation is in a non-rural area, then the application can be for only EEI components that are:

   1. (1) Directly related to and have a use and purpose limited to an agricultural production operation such as vertically integrated operations; and
   2. (2) Part of and co-located within the agricultural production operation.

4. (d) The EEI project must have technical merit. The Agency will use the information provided in the technical report submitted with the application (see § 5001.307(e)) to determine whether the project has technical merit. In making this determination, the Agency may, at its discretion, engage the services of other Government agencies or other recognized industry experts in the applicable technology field to evaluate and rate the technical report.

   1. (1) Technical report areas. When making its technical merit determination, the Agency will evaluate the technical report using the areas specified in paragraphs (d)(1)(i) and (ii) of this section as applicable.

      1. (i) EEI project with total project costs of $80,000 or less. For these projects, the Agency will evaluate the following areas to determine the technical merit:

         1. (A) Project description;
         2. (B) Qualifications of EEI provider(s); and
         3. (C) Energy assessment (or energy audit if applicable).

      2. (ii) EEI projects with total project costs of greater than $80,000. For these projects, the Agency will evaluate the following areas to determine the technical merit:

         1. (A) Project information;
         2. (B) Energy assessment (or energy audit as applicable); and
         3. (C) Qualifications of the contractor or installers.
   2. (2) Pass/pass with conditions/fail assignments. The Agency will assign each area of the technical report, as specified in paragraph (d)(1) of this section, a “pass,” “pass with conditions,” or “fail” according to provisions of § 5001.106(e)(2).
   3. (3) Determination. The Agency will compile the results for each area of the technical report to determine if the project has technical merit in accordance with provisions of § 5001.106(e)(3).
   4. (4) Further processing of applications. Projects will be further processed in accordance with provisions of § 5001.106(e)(4).

[85 FR 42518, July 14, 2020, as amended at 89 FR 79711, Sept. 30, 2024]