REAP funds: President Biden’s IRA looks to lower energy costs and build America’s clean-energy economy

On March 31, the U.S. Department of Agriculture (USDA) Secretary of Agriculture Tom Vilsask announced USDA is accepting applications, starting April 1, for $1 billion in grants to help agricultural producers and rural small businesses invest in renewable energy systems and make energy-efficiency improvements. 

USDA is making these $1 billion in grants available under the Rural Energy for America Program (REAP), with funding from the president’s Inflation Reduction Act (IRA), which works to invest in combatting the climate crisis. 

“Supporting renewable energy and energy-saving systems helps the people of rural America create thriving, livable communities,” Vilsack said. “When we invest in rural communities, we are supporting hard work which sends a ripple effect across our country.”

“Clean energy is critical to the future of our economy, and the IRA provides the Biden-Harris administration with resources to build a more prosperous rural America, while tackling the climate crisis and lowering energy costs,” he added.

REAP

USDA Rural Development hosted an IRA REAP stakeholder call, titled “Investing in America” on March 31, where USDA Rural Business-Cooperative Service (RBCS) Administrator Dr. Karama Neal and USDA RBCS Senior Climate Advisor John McAuliff gave an update on the program. 

“This legislative action reflects the critical goals of the Biden-Harris administration, addressing both immediate economic needs and including the largest-ever financial investment in clean energy for the future since the passage of the Rural Electrification Act of 1936,” said Neal. 

She continued, “This is an important opportunity for rural communities to build long-term resiliency, reliability and affordability of rural electric systems to access multiple forms of clean, dependable and affordable renewable energy and to increase access to higher blends of biofuels.”

She noted the IRA calls for up to $1 billion in loans for renewable energy infrastructure and up to $9.7 billion for financial assistance for renewable energy systems, energy efficiency improvements and other purchases as well as improvements for rural electric cooperatives. 

Additionally, IRA calls for up to $500 million in grants for infrastructure improvements to blend, store or distribute biofuels and up to $2 billion for RBCS’s REAP. 

“This investment positions us to achieve the greatest reduction in carbon dioxide, methane and nitrous oxide emissions we have ever seen,” Neal said. “We’re thrilled to see significant investment in this program through the IRA as we’re hearing from producers and small businesses reducing costs and expense is critical.” 

She added, “With this investment from the IRA, we are well positioned to reach out to businesses and producers in communities that might not have previously had access to this program.” 

Program outlines

According to McAuliff, RBCS’s REAP provides guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements.

Available funding can cover up to 50 percent of total eligible project costs, which is up 25 percent before the passage of the IRA. They can also apply for loan guarantees on loans covering up to 75 percent of total eligible project costs, and combined grant and loan guarantee funding can cover up to 75 percent of total eligible project costs. 

Under the REAP guidelines, an agricultural producer is defined as an individual or entity receiving 50 percent or more of their gross income from agricultural products – crops, livestock, aquaculture, forestry operations, nurseries and dairies – whereas a rural small business is a for-profit small business defined by the Small Business Administration as a rural area or non-metro community of less than 50,000 people. 

For the purpose of REAP, renewable energy projects must be commercially viable, but projects can include solar, wind, small hydroelectric, anaerobic digesters, biomass wave or ocean power projects, and energy efficiency projects can include lighting, heating, cooling, ventilation, fans, automated controls and insulation.

“Of the $1 billion announced for REAP, $144 million is set aside for underutilized technologies,” McAuliff said. “The maximum grant size doubles to $500,000 for energy efficiency and $1 million for renewable energy systems.” 

Starting April 1, the funds will be obligated over six quarterly cycles. Applications can be submitted in the next five quarterly cycles. He noted the changes announced March 31 only apply to grants, not loans. 

Underutilized technology 

For the purpose of the March 31 notice, Congress asked RBCS to define underutilized technology, which is technology that doesn’t emit greenhouse gases and is made up of less than 20 percent of the pool of REAP projects two years prior. 

Meaning, for Fiscal Year 2023, which ends in September, non-emitting technology includes everything except solar and energy efficiency projects. 

“One of the big new changes in the program is how the federal share is distributed,” said McAuliff.

All energy efficiency projects and zero-emission renewable communities as defined in the IRA and projects submitted by Tribal entities are eligible for up to 50 percent federal share. 

However, all other projects that do not fit into one of the above categories can be eligible for up to 25 percent of federal share. 

Additionally, McAuliff noted a few changes to the scoring of applications. Projects serving disadvantaged or distressed communities or ones with additional environmental benefits can receive up to 15 and 10 points, respectively, on the scoring portion of the application. 

USDA will hold competitions quarterly through Sept. 30, 2024. The funding will also include the creation of the first underutilized technology fund in the REAP program, with $144.5 million available in dedicated funding. 

USDA is particularly interested in REAP projects that will help rural communities recover economically through more and better market opportunities and improved infrastructure, reduce climate pollution and increase resilience to the impacts of climate change, conserve and protect farmland and invest in underserved communities. 

The program is part of the Biden-Harris administration’s Justice40 Initiative, which aims to ensure 40 percent of the overall benefits of certain federal investments flow to disadvantaged communities that are marginalized, underserved and overburdened by pollution.

To ensure small projects have a fair opportunity to compete for the funding, USDA will set aside at least 20 percent of the available funds until June 30 of each year for grant requests of $20,000 or less, including the grant portion of a combined grant and guaranteed loan request.

Brittany Gunn is the editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.