Water Treatment, Energy and Climate Funding Opportunities for the Wastewater Sector
I. Federal Programs
In general, federal funding programs can be searched via the Grants.Gov website (www.grants.gov). The following summarizes key federal assistance programs that offer funding for water infrastructure, water treatment, water-energy efficiency, and co-digestion related projects.
A. U.S. Environmental Protection Agency (USEPA)
The Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) established the WIFIA program, a federal credit program administered by EPA for eligible water and wastewater infrastructure projects. Eligibility, requirements of, and opportunities for prospective borrowers are summarized below.
- Local, state, tribal, and federal government entities
- Partnerships and joint ventures
- Corporations and trusts
- Clean Water and Drinking Water State Revolving Fund (SRF) programs
The WIFIA program can fund development and implementation activities for eligible projects:
- Projects that are eligible for the Clean Water SRF, notwithstanding the public ownership clause
- Projects that are eligible for the Drinking Water SRF
- Enhanced energy efficiency projects at drinking water and wastewater facilities
- Brackish or seawater desalination, aquifer recharge, alternative water supply, and water recycling projects
- Drought prevention, reduction, or mitigation projects
- Acquisition of property if it is integral to the project or will mitigate the environmental impact
- A combination of projects secured by a common security pledge or submitted under one application by an SRF program
Eligible development and implementation activities are:
- Planning, preliminary engineering, design, environmental review, revenue forecasting, and other pre-construction activities
- Construction, reconstruction, rehabilitation, and replacement activities
- Acquisition of real property or an interest in real property, environmental mitigation, construction contingencies, and acquisition of equipment
- Capitalized interest necessary to meet market requirements, reasonably required reserve funds, capital issuance expenses and other carrying costs during construction
Program features include:
- $20 million: Minimum project size for large communities.
- $5 million: Minimum project size for small communities (population of 25,000 or less).
- 49%: Maximum portion of eligible project costs that WIFIA can fund.
- Total federal assistance may not exceed 80% of a project’s eligible costs.
- 35 years: Maximum final maturity date from substantial completion.
- 5 years: Maximum time that repayment may be deferred after substantial completion of the project.
- Interest rate is equal to or greater than the U.S. Treasury rate of a similar maturity at date of closing.
- Projects must be creditworthy and have a dedicated source of revenue.
- NEPA, Davis-Bacon, American Iron and Steel, and all other federal cross-cutter provisions apply.
The CWSRF provides funding assistance to a wide range of water infrastructure projects. States are responsible for operation of their CWSRF, project selection, and type of assistance awarded. As project recipients paid back their loan, that money is funneled back into the CWSRF to go towards new loans for future recipients creating the revolving funding program structure.
*The CWSRF is also the mechanism for delivering the various funding programs created under the Infrastructure Investment and Jobs Act.*
A wide range of water infrastructure projects can be funded by the CWSRF that are organized into eleven categories:
- Construction of publicly owned treatment works
- Nonpoint source
- National estuary program projects
- Decentralized wastewater treatment systems
- Water conservation, efficiency, and reuse
- Watershed pilot projects
- Energy efficiency (Assistance to any municipality or inter-municipal, interstate, or state agency for measures to reduce the energy consumption needs for publicly owned treatment works)
- Water reuse
- Security measures at publicly owned treatment works
- Technical assistance
Types of CWSRF Assistance:
- Purchase of debt or refinance
- Guarantees and insurance
- Guarantee SRF revenue debt
- Provide Loan Guarantees
- Additional Subsidization
- Earn interest
The EPA’s RFS program allows digester biogas from municipal WWTP digesters to be used as a transportation fuel feedstock. The biogas is designated as a “cellulosic” (D3) feedstock, thereby conferring the highest possible value for the associated renewable identification number (RIN). To qualify for RIN credits, the fuel must be in the form of compressed natural gas (CNG) or liquefied natural gas (LNG), or it must be used to produce electricity used to power electric vehicles. RIN credits are expressed in gallons of gasoline equivalents (GGE) which are determined as the equivalent amount of gasoline offset by the fuel.
USBR provides various federal funding opportunities to address water needs of Western states, including California. The funding opportunities range from water recycling, environmental water resources, aquatic ecosystem restoration, and water-energy efficiency.
Title XVI provides funding for the planning, design and construction of water recycling and reuse projects in partnership with local governments. The program was updated in 2015 by the Water Infrastructure Improvement for the Nation Act (WIIN) that established Title XVI as a competitive grants program.
To explore Title XVI opportunities, eligible applicants must contact their Region’s office, which can be found below. Complete this form to receive WaterSMART program notifications.
Contact Information: For more information regarding Title XVI, please contact Maribeth Menendez, at 303-445-2094 or firstname.lastname@example.org.
- Interior Region 7: Upper Colorado Basin – Brandi Rose, (801) 524-3639 or email@example.com
- Interior Region 8: Lower Colorado Basin – Brett Mooney, (702) 293-8506 or firstname.lastname@example.org
- Interior Region 10: California-Great Basin – Mike Dietl, (916) 978-5070 or email@example.com
WaterSMART includes three grants programs, Water and Efficiency Grants, Small-Scale Water Efficiency Projects and Water Marketing Strategy Grants. WaterSMART supports a broad range of eligible applicants, but applicants must be located in the Western U.S. or U.S. Territories. Eligible applicants include:
- Irrigation districts
- Water districts
- State, regional, or local authorities whose members include one or more organization with water or power delivery authority
- Other organizations with water or power delivery authority
- Nonprofit conservation organizations that are acting in partnership with and
with the agreement of an above listed entity
D. U.S. Department of Energy (USDOE)
EERE’s goal for its investments is to make clean energy technologies and services more available and reliable while lowering their direct and indirect costs, both to energy users and society as a whole. The EERE investment approach is designed to address specific gaps in the technology development pathway–areas where the private sector or other non-government stakeholders are unable to make the required investments to the scale or in the timeframe required for clean energy technologies to be commercialized. In order to realize its vision and achieve its mission EERE has created a set of strategic goals/areas of investment:
- Accelerate the development and adoption of sustainable transportation technologies
- Increase the generation of electric power from renewable sources
- Improve the energy efficiency of our homes, buildings, and industries
- Stimulate the growth of a thriving domestic clean energy manufacturing industry
- Enable the integration of clean energy into a reliable, resilient, and efficient electricity grid
- Lead efforts to improve federal sustainability and implementation of clean energy solutions
- Enable a high-performing, results-driven culture through effective management approaches and processes.
E. United States Department of Agriculture (USDA) – Rural Utilities Service
The USDA has financing programs for energy efficiency projects applicable to public agencies targeted at rural or agricultural communities. The Rural Utilities Service Offices provides financing for basic infrastructure including electricity, telecommunications, and water/waste systems. The Electric Program offers loans and loan guarantees for generation, transmission, and distribution facilities serving rural areas. Two programs for WWTPs to consider:
- The Energy Efficiency and Conservation Loan Program expands the types of projects that can be supported by the Electric Program to include energy efficiency activities, including distributed generation for on- or off-grid renewable energy systems.
- The High Energy Cost Grant Program offers competitive grants for community energy facilities, including renewable energy systems and energy efficiency projects serving extremely high energy cost rural communities.
Inflation Reduction Act
The passage of the Inflation Reduction Act (IRA) in 2022 expanded the current tax credit policy that increased incentives for biogas that elevates biogas to the same level as other clean electricity generation technologies. This means that CASA agencies that are developing projects to comply with SB 1833 now have a federal assistance program. There are some important elements to be aware of that are detailed below:
- Diminished benefit if tax exempt bonds used
- Construction start dates qualify
- Methane concentration levels define eligibility
- Compliance with BABA, prevailing wage and apprenticeship/journeyman mandates
This tax credit opportunity is managed by USDOE, U.S. Department of Treasury, and Internal Revenue Service. In February 2023, Treasury released Initial Guidance Establishing Qualifying Advanced Energy Project Credit Allocation Program Under Section 48C(e) that provides the most current explanation of how the agencies plan to implement this new assistance opportunity.
The application process for the Qualifying Advanced Energy Project Credit program will begin on May 31, 2023.
II. State Programs
The state of California has a variety of funding programs that support co-digestion projects or elements of co-digestion projects. The following are a selection of programs that were available at the time of this analysis or have been sources of funding for projects that have already been implemented or are in the process of being implemented at WWTPs.
A. EPA – Clean Water State Revolving Fund – Green Project Reserve
The SWRCB Division of Financial Assistance Clean Water State Revolving Fund (CWSRF) program offers low interest financing. The EPA requires CWSRF programs direct a portion of their capitalization grant toward projects that address green infrastructure, water efficiency, energy efficiency, or other environmentally innovative activities, referred to as the Green Project Reserve fund.
It is important to note that since the SWRCB updated its CWSRF Intended Use Plan, effective in the 2019/2020 fiscal year loan funding cycle, there will be changes to the application review and evaluation process in an effort to provide consistency in its selection process and better manage the increased demand for funds. The major changes include:
- Establishing a funding target based on a sustainable financing level supported by an updated capacity analysis.
- Developing a “Fundable List” of applications, and limiting eligibility during the fiscal year to applications on the Fundable List with the exception of Severely Disadvantaged Communities and Disadvantaged Communities.
- Using a priority scoring system for project selection. This score consists of three components: primary score, secondary score, and readiness score.
- Offering partial funding to large projects.
- Reimbursing constructions costs incurred prior to approval of financing under limited conditions.
Projects must receive a priority score above the established threshold score (which changes each year) for inclusion on the Fundable List.
B. California Energy Commission (CEC) – Energy Conservation Assistance Act Program
The CEC offers a low interest loan program (1 percent interest rate for cities, counties, special districts, and public schools) for cities and schools to implement energy efficiency and renewable energy projects. The maximum loan amount available is $3 million per application. The CEC accepts applications on a first-come, first-served basis. As of March 2019 there is approximately $12 million in funds available, with expected additional funds added in both July 2019 and January 2020.
Any loan received must be repaid from the energy savings obtained by the project and must be paid back within a maximum of 20 years. To apply, an agency must complete a loan application, a summary of the energy efficiency project in the loan request table, a governing body resolution, California Environmental Quality Act (CEQA) documentation, and documentation of an applicant’s authority, documentation of the utility billing data, and a feasibility study must have been completed within the past two years.
C. California Energy Commission (CEC) – Electric Program Investment Charge (EPIC)(https://www.energy.ca.gov/research/epic/faq.html)
EPIC was created by the California Public Utilities Commission (CPUC) in December 2011 to support investments in clean energy technologies that provide benefits to the electricity ratepayers of Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and Southern California Edison Company (SCE). The EPIC program funds clean energy research, demonstration and deployment projects that support California’s energy policy goals and promote greater electricity reliability, lower costs, and increased safety. CEC through EPIC intends to fill critical funding gaps within the energy innovation pipeline to advance technologies, tools, and strategies of near zero-net-energy residential homes and commercial buildings, high-efficient businesses, low-carbon localized generation, sustainable bioenergy systems, electrification of the transportation system, and a resilient grid that is supported by a highly flexible and robust distribution and transmission infrastructure. These smarter, safer energy advancements provide ratepayers with better electricity services, reduce air pollution, foster economic development, and help achieve the State’s policy goals at the lowest possible cost.
EPIC funds will provide approximately $162 million annually from 2012‐2020 primarily to address policy and funding gaps related to the development, deployment, and commercialization of next generation clean energy technologies. Of this amount, the CEC administers approximately $130 million per year.
D. CEC Alternative and Renewable Fuel and Vehicle Technology Program (ARVFTP) (https://www.energy.ca.gov/transportation/arfvtp/)
The CEC’s ARVFTP program provides grant money to accelerate development and deployment of advanced transportation and fuel technologies. The grant program was established in 2008 by Assembly Bill 118, and has been extended until 2024 by Assembly Bill 8. The program has funded to date $22 million towards the installation or upgrade of natural gas fueling stations, including CNG fueling facilities at WWTPs. This program does not have funding allocated to natural gas or CNG fueling stations for the 2018-2019 fiscal year.
E. California Public Utilities Commission (CPUC) – Self-Generation Incentive Program (SGIP)
The CPUC’s SGIP provides incentives to support existing, new, and emerging distributed energy resources. Qualifying technologies include wind turbines, waste heat to power technologies, pressure reduction turbines, internal combustion engines, microturbines, gas turbines, fuel cells, and advanced energy storage systems. This program has been extended through at least the end of 2019 and provides significant funding for renewable fueled engine generator alternatives as well as for cogeneration technologies.
The current rate for power generation is $0.60/watt with an additional $0.60/watt for the biogas adder. The SGIP program limits the amount of electricity that can be exported to no more than 25 percent of on-site consumption on an annual basis.
F. California Air Resources Board (CARB) Air Quality Improvement Program
This is an incentive program administered by the Air Resources Board to fund clean vehicle and equipment projects, research on biofuels production and the air quality impacts of alternative fuels, and workforce training.
G. CARB Carl Moyer Memorial Air Quality Standards Attainment Program (https://www.arb.ca.gov/msprog/moyer/moyer.htm)
This program provides grants for cleaner-than-required engines and equipment to achieve reductions in emissions of key pollutants for California to meet its clean air commitments under regulatory requirements. Eligible projects include cleaner on-road trucks, school and transit buses, off-road equipment, marine vessels, locomotives, agricultural equipment, light duty vehicle scrap, and lawn mowers. New funds are available to reduce emissions in the communities most affected by air pollution. Community Air Protection (CAP) grants, implemented by air districts, to reduce public health impacts of mobile source engines as an early step to implement Assembly Bill 617. Grants are administered by local air districts.
H. CARB Hybrid and Zero-Emission Truck and Bus Voucher Incentive Program (HVIP) (https://www.californiahvip.org/)
The HVIP is a voucher incentive that provides point-of-sale discounts to purchasers of low nitrogen oxides (NOx) trucks and buses. Districts wanting to replace diesel refuse trucks with CNG vehicles under this program would be eligible for a voucher.
I. CARB Low Carbon Fuel Standard (LCFS)
The LCFS program includes biomethane from mesophilic anaerobic digestion of wastewater sludge, fats, oils and grease (FOG), food waste and other high strength substrates at a WWTP. The biomethane produced must be used as vehicle fuel and could be dispensed on-site through a CNG vehicle fueling station (for example, for transit buses or refuse hauling vehicles), or may be injected into the natural gas pipeline system (“common carrier pipeline”) for dispensing at an off-site CNG vehicle fueling station. Each metric ton of carbon dioxide equivalent emission from vehicle fuel that is offset represents one LCFS credit. These credits are in addition to the EPA’s RFS RIN’s described above. The value and marketability of LCFS credits depend upon demand and typically vary throughout a given year.
J. CalRecycle – Waste Diversion/Greenhouse Gas Reduction Grant & Loan Program
The Waste Diversion/Greenhouse Gas (GHG) Reduction Grant and Loan Programs support projects that implement or expand organics processing (e.g., composting or anaerobic digestion). The purpose of this investment is to further the purposes of the California Global Warming Solutions Act (Assembly Bill 32), reduce methane emissions from landfills and further GHG reductions in upstream resource management and manufacturing processes; benefit disadvantaged communities by upgrading existing facilities and, where warranted, establish new facilities that reduce GHG emissions; result in air and water quality improvements; and create jobs.
This program is also part of California Climate Investments. California Climate Investments projects include affordable housing, renewable energy, public transportation, zero-emission vehicles, environmental restoration, more sustainable agriculture, recycling, etc. At least 35 percent of these investments are made in disadvantaged and low-income communities.
The GHG Reduction Grant and Loan program is a highly competitive program. To qualify for funding, applicants must demonstrate that the proposed project increases the quantity of organics (green waste and food waste) newly diverted from landfills and measurably reduces GHG emissions. Per CalRecycle, ‘newly diverted’ means “tons of California generated materials that are currently being landfilled or used as ADC that will instead be diverted as a result of this project.” CalRecycle is looking for projects that will divert large quantities of organics from landfills. The proposed project could qualify for this loan program as renovation/rehabilitation projects are allowed and the installation of a larger, more efficient engine could accept an incremental increase in food waste feedstock in addition to what is currently processed at the WWTP. However, for the application to be competitive, an agency would need to first complete the project design and CEQA documentation, as well as show that with the completion of this project there is a commitment to process additional organics that are currently landfilled (e.g., document the quantity of additional organics to be processed).
K. Bay Area Air Quality Management District (BAAQMD) Climate Tech Finance Program
BAAQMD’s Climate Tech Finance program offers subsidized financing for public and private facilities to adopt emerging technologies that reduce greenhouse gas emissions.
Public-sector facilities can apply for loans ranging from $500,000 to $30 million, with terms of up to 30 years. Small businesses can apply for loan guarantees on loans of up to $20 million, with a maximum guarantee of $2.5 million. Projects may be eligible for up to 90 percent guarantees through this program. The Air District also provides engineering evaluation and technical assistance to borrowers to evaluate proposed projects. This program is being offered through a partnership with the California Infrastructure and Economic Development Bank (IBank).