What Is the USDA REAP Grant?

If you’re in the agriculture business, you might be looking for ways to spend less money on electricity. However, this can require a hefty capital, especially for small and mid-sized operators. Fortunately, there’s a grant program that can help farmers of all sizes get the funding they need to make their rural farms, ranches, and small businesses more energy efficient: the USDA REAP Grant.

According to the US Department of Agriculture (USDA), the Rural Energy for America Program (REAP) offers loan financing and grant funding to rural agricultural producers and rural small businesses. It should be used for renewable energy efforts, such as biomass, geothermal, hydropower, and wind and solar generation. This grant offers a wide range of financial and technical support that can help farmers purchase new renewable energy equipment, conduct energy efficiency audits, and make other improvements that can help them save money and improve their operations. It’s an important resource for farmers and the agricultural industry as a whole.

USDA Eligibility for REAP Grants:

To be eligible for the USDA REAP grant, applicants must meet certain criteria. This includes being a rural small business or agricultural producer located in the United States. Applicants must own the project, and own or control the site for the project. Additionally, applicants must be able to demonstrate that their proposed energy efficiency project will provide savings on energy costs and reduce greenhouse gas emissions. The USDA also requires that the energy efficiency project be technically feasible, financially viable, and demonstrate a reasonable return on investment. Our team at First National Bank of Oklahoma is very familiar with the REAP grant requirements and can help you evaluate whether this program fits your needs. 

The USDA REAP program has been supercharged by the Inflation Reduction Act, which increased the size of the maximum REAP grant request to $1,000,000 for “renewable energy systems” and $500,000 for “energy efficiency improvements.” Renewable energy systems are defined as “a system that produces usable energy from a renewable energy sources and may include distribution components necessary to move energy produced by such system to initial point of sale and other components and ancillary infrastructure of such system,” such as wind, solar, renewable biomass, ocean, geothermal, or hydroelectric systems. Energy Efficiency Improvements are defined as “improvements to or replacement of an existing building or systems and/or equipment, owned by the applicant, that reduces energy consumption on an annual basis,” such as insulation, efficient lighting systems, and heating and cooling system upgrades. Grant request for both categories are limited to 50% of eligible project costs, which include 1) purchase and installation of new or refurbished equipment; 2) construction, retrofitting, replacement, and improvements; 3) fees for construction permits and licenses/fees required by an interconnection agreement; and 4) professional service fees related to the project for qualified consultants, contractors, installers, or other 3rd parties. 

The USDA REAP grant is available to all types of agricultural producers, including farmers, ranchers, forest owners, and other agribusiness operators. REAP grants are also available to rural small businesses. The grants are available for two main forms of assistance: financial grants and technical support. The financial grants are used to purchase new equipment or make energy efficiency upgrades to eligible buildings located in rural areas. This can include things like energy-efficient lighting, heating and cooling systems, irrigation systems, greenhouses, and more. The technical support component of the grant provides educational resources to help farmers understand how to use their new equipment or energy efficiency upgrades. This includes workshops on topics, such as solar power usage, crop rotation strategies, and soil testing techniques. These educational resources can help farmers learn how to get the most out of their investments in new technology or upgrades.

Location Requirements for REAP Grants:

To qualify for a REAP Grant, projects must be located in a rural area. To determine whether your project qualifies, check out First National Bank of Oklahoma’s mapping tool located here. 

Can USDA Reap Grants Be Combined With Other Solar Incentives?

In addition to USDA REAP grants, various solar incentives and programs are available at the federal, state, and local levels. These incentives can include tax credits, rebates, net metering, and renewable energy certificates (RECs). Each incentive program has its own set of eligibility criteria and requirements. Combining the USDA REAP program with other solar incentives has the potential to maximize financial benefits and accelerate the return on investment for solar projects. The USDA Reap Grant can be used in combination with other solar incentives, such as the Solar Investment Tax Credit (ITC) or solar renewable energy credits (SRECs). These additional incentives can help reduce the cost of installing a PV system, allowing farmers to take advantage of lower electricity rates and save money on their utility bills.

In addition to federal incentives, there are also state-level incentive programs that can be combined with the USDA REAP Grant. For example, in California, farmers may qualify for additional funds through the Self-Generation Incentive Program (SGIP) or the California Solar Initiative (CSI). While these incentives can help lower costs and increase returns on investment, it is important to remember that each incentive program has different requirements and qualifications. It is important to speak with an experienced solar installer who can guide you through the process and ensure that you are taking advantage of all available incentives.

Timelines:

The USDA REAP program was accelerated through the Inflation Reduction Act, which has created new application deadlines on the last day of the calendar quarter through September 30, 2024. There is no guarantee the REAP Grant program will be extended, so it is important to work diligently on your project now while the funding window is open! 

Conclusion:

The USDA REAP Grant is a valuable resource for farmers and rural businesses to help them reduce their energy costs, increase their profits, and create jobs in the community. With its focus on renewable energy sources like wind and solar power, this grant provides an innovative way of helping rural communities stay economically competitive while also promoting sustainability.

Whether you’re looking to install a new system or upgrade an existing one, the USDA REAP Grant can help make sure your project is successful. To maximize your chance of success, we recommend working with an experienced USDA packager who has experience working with the agency. First National Bank of Oklahoma has written many REAP grant applications and would be happy to visit with you about helping you apply for this special grant program.