There are several state agencies that promote the development of water projects in Wyoming and provide funding in the form of grants and loans, some of which can be used to fund small hydropower projects. Important sources of potential financial assistance include:
- Wyoming Water Development Commission (WWDC) – Feasibility studies,
- Office of State Lands State Loan and Investment Board (SLIB) – Project financing,
- Wyoming State Revolving Funds Program (SRF) – Project financing.
Each provides services to distinct entities (e.g., municipalities or irrigation districts).
The WWDC receives general fund appropriations, as approved by the Wyoming State Legislature and passed in the omnibus planning bill, to fund planning studies and cost share in construction projects. The WWDC funds hydropower feasibility studies throughout Wyoming as part of planning. At this time, hydropower studies do not qualify for construction funding through the WWDC. Planning studies are 100 percent funded through the WWDC – meaning there is no cost to the project applicant. Eligible WWDC funding applicants shall be a legal entity, such as a municipality or irrigation district that can legally receive state funds, incur debt, and generate revenues to repay a state loan. The Water Development Program’s Operating Criteria outlines requirements for new applications to the program such as a $1,000 application fee and a certified original of a resolution passed by the council or governing body of the sponsoring entity. There are other requirements such as the proposed projects must serve 20 or more municipal/domestic water taps with individual meters for each tap or 2,000 or more water righted acres. The applicant can apply for a Level II feasibility study if there is potential for hydropower development within their system. All applications for Level II projects new to the Wyoming Water Development Program must be submitted no later than August 15 of each year. There are different applications for municipal/joint powers water board water systems, agricultural water projects, and rural domestic water systems, so applicants should read the “Information for Applicants” link under Project Application Information on the WWDC website. The applicant will have to explain various details about their system and likelihood of hydropower development in the application. After all applications are received, the WWDC approves projects based on priority and type of project. Typically, hydropower projects are not a very high priority, but the WWDC has completed several hydropower feasibility studies in the past. Once a project is approved for funding, the WWDC is responsible for developing the scope of work in the contract and selecting consultants to complete the study and fund the project. Consultant selection occurs in early May each year and hydropower feasibility projects typically take one year to complete.
Once the feasibility study is completed, the results of the study are available for the project applicant so they can make an informed decision whether or not to pursue the construction of a project. The project owner can then apply to the Wyoming SLIB for a loan to construct the hydropower facility.
SLIB may provide loans to municipalities, irrigation districts, and special districts duly organized in the state to finance construction of hydropower development projects. All loan applications shall be accompanied by the feasibility study completed by the WWDC. If approved, the term of the loan cannot exceed 30 years and may be for a shorter term as determined by financial strength, repayment ability, security, and other factors. Typical terms of a loan from SLIB are 20 to 30 years at a 4 percent interest rate. SLIB also has a grant program, Chapter 3 – Mineral Royalty Grants, for which an application can be submitted for hydropower projects. The Office of State Lands website describes the application process in more detail.
Another potential funding opportunity for municipalities is the Wyoming State Revolving Funds Program (SRF). The Wyoming SRF consists of two separate but similar funds: the Drinking Water State Revolving Fund (DWSRF) and the Clean Water State Revolving Fund (CWSRF). Both funds are administered by the Wyoming Department of Environmental Quality, WWDC, and SLIB. Both funds make loans to public entities for infrastructure improvements and allocate a portion of the fund to green projects, including hydropower. SRF loans are normally at 2.5 percent interest rate up to 20-year term; however, at times SRF loans have even lower interest rates and/or include forgiveness of a portion of the principal when congressional appropriation bills contain special requirements. A municipality in Wyoming has recently acquired a 0 percent interest loan and 25 percent loan forgiveness from the DWSRF for the design and construction of a hydroelectric generation facility at the head of a water treatment plant. More detailed description of the funds and how to apply can be found on State Revolving Funds website.
Federal incentives include the Bureau of Reclamations’ WaterSMART grant program, the U.S. Department of Agriculture’s (USDA) Rural Energy for America Program (REAP), and the National Resources Conservation Service Environmental Quality Incentives Program (EQIP).
The Bureau’s WaterSMART grant program can help fund hydro project development. Eligible WaterSMART grant applicants include states, Indian tribes, irrigation districts, water districts, or other organizations with water or power delivery authority in the western United States. Successful WaterSMART hydro grant recipients typically include not only a hydropower project but also some type of additional public benefit such as water conservation or in-stream flows.
The USDA’s REAP can provide loan guarantees up to $25 million, project feasibility grants up to $50,000 covering 25 percent of study costs, and renewable energy project grants up to 25 percent of project costs with a maximum of $500,000. Hydropower is an eligible project type for REAP grants. Eligible REAP grant applicants are typically rural small businesses, including rural electric cooperatives, but not irrigation districts. Rural areas are generally considered those outside of Cheyenne and Casper.
The NRCS’s EQIP provides financial and technical assistance to agricultural producers to address natural resource concerns and deliver environmental benefits. Agricultural producers and owners of non-industrial private forestland and tribes are eligible to apply for EQIP. Eligible land includes cropland, rangeland, pastureland, non-industrial private forestland, and other farm or ranch lands. The applicants must control or own eligible land, comply with adjusted gross income limitation provisions, be in compliance with the highly erodible land and wetland conservation requirements, and develop an NRCS EQIP plan of operations prior to receiving funding. Irrigation districts, ditch companies, municipalities, or other entities do not qualify.
The Internal Revenue Service (IRS) has established an energy investment tax credit program that allows taxpayers to take advantage of federal tax incentives. Hydro projects greater than 150 kW are eligible for either the Investment Tax Credit (ITC) or the Production Tax Credit (PDC); the taxpayer is free to choose one or the other. The ITC can be claimed in year one of a project for 30 percent of depreciable capital costs and reduces the project’s depreciable basis by 15 percent. The PDC is worth 1.1¢/kWh for the first ten years of the project’s operations (with the PDC value escalating with inflation). Only private sector entities are able to take advantage of these tax credit incentives, and the eligible systems must be placed in service on or before December 31, 2016. In general, the original use of the equipment must begin with the taxpayer, or the system must be constructed by the taxpayer. Businesses that receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit.
Some Wyoming utilities offer incentives in the form of low-interest loans or grants to qualified renewable energy generating facilities.
Rocky Mountain Power’s Blue Sky Program allows customers to purchase renewable energy to supply their home or business for a flat rate per 100 kWh per month. Rocky Mountain Power (RMP) buys RECs on the customer’s behalf to equal their Blue Sky purchases. Annually, RMP teams up with Blue Sky customers to help support the installation of community-based, non-residential renewable energy projects in the RMP service area. Low-impact hydro projects are eligible to receive Blue Sky funds. The project has to be locally owned, commercial-scale with a capacity less than 10 MW and completed by the end of the year the funding is secured. The level of funding available is determined on a case-by-case basis; however, RMP is interested in providing enough funding to selected projects such that they will be economically feasible. All applicants are expected to pursue all other applicable forms of funding and must secure at least 40 percent of the project’s total costs from sources other than Blue Sky. RMP does not provide funding for project development assistance, only portions of the construction costs.
The North Carolina Solar Center at North Carolina State University, with support from the Interstate Renewable Energy Council, Inc. and funded by the U.S. Department of Energy, operates a Database of State Incentives for Renewables & Efficiency (DSIRE). DSIRE is the most comprehensive source of information on incentives and policies that support renewables and energy efficiency.