Energy grants available to agricultural producers and rural small businesses
USDA Rural Development has financial assistance through grants for agricultural producers and rural small businesses to purchase and install renewable energy systems and energy efficient improvement projects.
The grants are through the Rural Energy for America Program (REAP) and can cover up to 25 percent of a project’s cost for energy improvement.
“REAP is to help agricultural producers and small rural businesses make improvements for saving energy and to upgrade to more energy efficient programs,” says Debra Anderson, Sheridan’s Rural Development area specialist for REAP.
Anderson adds, “This allows for producers to pursue other avenues available for energy efficiency, rather than depending on standard practices.”
There are three components to the program, and they are the renewable energy system and energy efficiency improvement guaranteed loan and grant program, energy audit and renewable energy development assistance grant program, and the feasibility studies grant program.
REAP grants stem from the Renewable Energy System (RES) and Energy Efficiency Improvement (EEI) program of the Farm Security and Rural Investment Act of 2002.
REAP has been helping agricultural producers and rural small businesses since it first began operation in 2005.
As part of his “Win the Future” plan, President Obama called for 80 percent of America’s electricity to come from clean sources by 2035 – including wind, solar, nuclear, clean coal and natural gas.
Secretary of Agriculture Tom Vilsack has also helped by implementing cooperative programs and incorporating rural businesses to have a wide array of programs that will help attain the president’s energy goal.
All applicants must be U.S. citizens or legal residents, and eligible agricultural producers must obtain at least 50 percent of their gross income from agricultural production.
Qualified businesses must be in areas populated with 50,000 or less, employ 500 or fewer employees and gross $20 million or less in annual receipts.
Approved projects in the past for renewable energy have been for bio-energy, flexible fuel pumps, anaerobic digesters, geothermal, hydropower and small and large solar and wind projects.
“There is also an energy efficiency side of the program, and that side includes improvements that need to be verified by either an energy audit or assessment,” explains Anderson.
Energy efficiency improvements are improvements to a facility or process that reduce energy consumption. An energy audit would be conducted if the project’s cost exceeds $50,000.
The project must be for the purchase of a renewable energy system or make energy efficient improvements. The technology used for the projects needs to be replicable and available commercially.
Applicants for REAP funding must be the owners of the project and have control of all the revenues, expenses, operation and maintenance of the project. A third-party under contract may be used to assist the owner during the project.
Sufficient funds to allow the operation to be completed must be met, and debt service of the project has to be available.
REAP grants will not exceed 25 percent of the total eligible project costs, and the grant applicant is responsible for and must secure the remainder of the project expense.
For the renewable energy systems component, the range of grant funding is a minimum of $2,500 to a maximum of $500,000.
Allotted grant money for the energy efficiency improvements is half of that for the renewable – with a minimum of $1,500 and a maximum of $250,000.
“We always need more applicants,” comments Anderson. “We would like to see some of these funds go into our communities and see some of these projects happen in our constituency.”
Eligible project costs covered by the REAP grants are post-application purchase and installation of equipment, post-application construction, improvements or retrofitting, energy audits or assessments, permit and license fees, feasibility studies and technical reports and business plans.
Costs not covered by the REAP grants are agricultural tillage equipment, used equipment, vehicles and application preparation.
When determining the amount of a REAP grant, USDA Rural Development takes into consideration several different aspects of the project.
Aspects such as the type of renewable energy system to be purchased, estimated quantity of energy to be generated by the renewable energy system and the expected environmental benefits of the renewable energy system are also considered.
Other criteria the grant application looks for are the amount of energy savings expected to be derived from the activity and the estimated length of time it would take for the energy savings generated by the activity to equal the cost of the activity.