Small Hydropower Loan Program Terms

The Board of Directors of the Colorado Water Resources and Power Development Authority (“Authority”) has authorized $150,000 (up to $15,000 each) of matching grant funds for the evaluation and development of small hydropower projects (10 megawatts or less) for 2017. Applications for the Matching Feasibility Grants will be accepted on a first come first served basis through 2017. The Small Hydropower Loan Program complements the Colorado Renewable Energy Standard signed by Governor Bill Ritter on March 22, 2010, which requires investor-owned utilities to obtain 30% of their power from renewable sources by 2020.

1. Funding

This program is being funded from $10 million of un-restricted Authority cash. Loan repayments will be returned to the Authority’s Water Operations Fund.

2. Borrower Eligibility

Colorado cities, towns, counties, water districts, water and sanitation districts, metropolitan districts, water conservancy districts, water conservation districts, irrigation districts and any enterprise created by the foregoing are eligible to receive a Small Hydropower Loan.

3. Eligible Projects (10 megawatts or less)

Eligible projects consist of new hydropower facilities (turbines, mechanical and electrical), pipelines, necessary remodel/reconfiguration of the building housing the facilities and transmission lines.

4. Loan Amount and Terms

Loans are limited to a maximum of $5 million per governmental agency. The interest rate is two percent, and the maximum term is thirty years.

Annual loan repayments would be structured to begin 12 -18 months from the execution of the agreement. This should allow a full year of revenues prior to the first annual loan repayment.

Loan applications will be considered on a “first in, first served” basis. Upon approval of a project loan by the Authority’s Board, the borrower would have six months to execute the loan. If the borrower fails to execute a loan and/or to meet the conditions imposed by the Board within this six month period, a new application with full Board review and approval is required. (The Board’s priority is to obligate funds for projects that are very close to construction.)

The Authority and the Colorado Water Conservation Board operate in a partnership to jointly fund small hydropower facilities in Colorado.  Governmental Agency’s seeking funding of $5 million or more can receive the first $5 million from the Authority, and the remaining will be available from the Colorado Water Conservation Board. 

5. Conditions Precedent for a Small Hydropower Loan

Since there are limited funds available for this program, it is imperative that the governmental agency is prepared to initiate construction shortly after executing the loan agreement. The following items should be completed or expect to be completed prior to executing a loan agreement:

1. A FERC or BOR exemption or permit is required.

2. The governmental agency must have a contract to sell or a plan to use within its system the energy produced from the hydropower project.

3. All required project funds are in place.

4. Final design and costs are available with construction contract imminent Governmental agency must demonstrate an ability to repay the Small Hydropower loan (feasibility study or a financial/cash flow statement), and

5. Security for the loan (hydropower revenues or utility system revenues) is in place.  If security for the loan is solely from revenues from the sale of electricity, the governmental agency must have a debt service reserve of funds equal to or greater than 1 year of debt service for the loan.

6. Matching Grants for Feasibility Studies, Design and Permitting

Applications for matching grants for feasibility studies, permitting activities or final design on a potential hydropower project will be accepted through the end of 2017. These applications would be reviewed by staff and the grants awarded throughout the year. For 2017 the Authority has budgeted $150,000 for these matching grants. Matching grants of up to $15,000 will be available for each governmental agency. At this time, a governmental agency will be limited to one such matching grant. The governmental agency’s matching funds may consist of funds expended on a matching basis with the grant for studies, permitting, final design and other costs associated with the FERC or Bureau of Reclamation permitting or exemption process. Funding for matching grants in 2017 and thereafter will be reviewed annually during the budgeting process by the Authority’s Board of Directors. The Colorado Water Resources and Power Development Authority Board of Directors added a condition to the SHLP Matching Grants on March 1, 2014. All grants going forward should note that if the Contractor is not borrowing funds from this program, a waiver from reimbursing the Authority the amount of the grant must be requested from the Authority.

Program Documents: