Rural Energy for America Program
Program Basics
The Rural Energy for America Program (REAP) amends the 2002 Farm Bill’s Energy Efficiency Improvements and Renewable Energy Systems Program (Section 9006) and combines it with an amended version of the 2002 Farm Bill’s program for grants for energy audits and assistance in using renewable energy technology and resources (Section 9005). The new, combined programs makes grants and loans available to farmers and businesses for energy conservation and production purposes and provides grants to agencies and groups to assist farmers with energy audits and assessments. REAP is administered by the Business Division of USDA’s Rural Development agency.
2008 Farm Bill Changes
The 2008 Farm Bill combines the 2002 Farm Bill’s Section 9005 program for energy audits and renewable energy development and the Section 9006 Renewable Energy Systems and Energy Efficiency Improvements Program into a new Rural Energy for American Program (REAP).
Four percent of REAP funding is secured each fiscal year for the energy audit and renewable energy development grants up to April 1 of the fiscal year, after which time the funding will be available for the energy efficiency improvement and renewable energy system grants and loan guarantees.
The criteria for selecting grant and guaranteed loan awards for energy efficiency and renewable energy projects no longer consider whether a renewable energy system is readily replicable; however the criteria now assess the expected energy efficiency of a renewable energy system.
The 2008 Farm Bill provides for up to 10 percent of funding to be used for feasibility studies for projects eligible for REAP funding.
The new Farm Bill raises the amount of the maximum loan eligible for a loan guarantee from $10 million to $25 million. The bill also raises the amount of loan guaranteed from 50 percent of total eligible project costs to 75 percent, and increases the maximum combined amount of a grant and a loan guaranteed under REAP from 50 percent to 75 percent of total eligible project costs.
A new provision reserves 20 percent of REAP funding provided each fiscal year for grants of under $20,000 until June 30 of each fiscal year.
REAP adds the requirement for the USDA to submit a report to Congress in 2012 on the implementation of REAP, including project outcomes.
Key Aspects of the Program
Grants and Loans to Farmers and Businesses for Energy Efficiency Improvements and Renewable Energy Systems – REAP provides competitive grants and loan guarantees to agricultural producers and rural small businesses to purchase renewable energy systems, including systems that may be used to produce and sell electricity, and to make energy efficiency improvements. USDA considers the following in awarding grants:
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type of renewable energy system to be purchase
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estimated quantity of energy to be generated by the renewable energy system
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expected environmental benefits of the renewable energy system
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quantity of energy savings expected to be derived from the activity, as demonstrated by an energy audit
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estimated period of time for the energy savings generated by the activity to equal the cost of the activity
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expected energy efficiency of a renewable energy system
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other appropriate factors
A grant cannot provide more than 25 percent of the cost of the activity carried out using the funds from the grant. The amount of a loan provided with a loan guarantee cannot exceed $25 million. Projects may receive both a grant and a loan guarantee but the combined amount of a grant and loan guarantee cannot exceed 75 percent of the cost of the funded activity.
USDA can provide up to 10 percent of the funds available for this component of REAP for grants to agricultural producers or rural small businesses to conduct feasibility studies for projects to make energy efficiency improvements and establish renewable energy systems eligible for REAP grants or loan guarantees. Agricultural producers or rural small businesses that have received other federal or state assistance for a feasibility study for the same project cannot receive this assistance.
USDA is required to provide adequate outreach about REAP at the state and local levels.
In addition, at least 20 percent of the funding for the REAP program is to be available for grants of $20,000 until June 30 of each fiscal year. Beginning on June 30, any remaining amount of the funding reserved for these smaller grants is to be made available for all REAP grants and loan guarantees.
Grants to Help Farmers with Energy Audits and Renewable Energy Development Assistance – REAP provides competitive grants for eligible entities that help agricultural producers and rural small businesses to (1) become more energy efficient and (2) use renewable energy technologies and resources. At least 4 percent of the funding provided for REAP each fiscal year is available for energy audits and renewable energy development assistance up to April 1 of the fiscal year. After April 1 of the fiscal year, the remaining funding will be available to fund grants and loan guarantees for financial assistance for energy efficiency improvements and renewable energy systems.
Entities eligible to apply for grants for energy audits and renewable energy development assistance include:
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units of state, tribal, or local government
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land-grant colleges or universities or other institutions of higher education
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rural electric cooperatives or public power entities
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any other similar entities, as determined by USDA
USDA uses the following criteria to select grants for funding:
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ability and expertise of the applicant to provide professional energy audits and renewable energy assessments;
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geographic scope of the program proposed by the applicant in relation to the identified need;
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number of agricultural producers and rural small businesses to be assisted by the program;
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potential of the proposed program to produce energy savings and environmental benefit;
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plan of the applicant for performing outreach and providing information and assistance to agricultural producers and rural small businesses on the benefits of energy efficiency and renewable energy development; and
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ability of the applicant to leverage other sources of funding.
A grant recipient may use the grant funds to assist agricultural producers and rural small businesses by conducting and promoting energy audits or providing recommendations and information on how to improve energy efficiency and use renewable energy technologies in their operations.
A grantee may not use more than 5 percent of a grant for administrative expenses. In addition, a grantee that conducts an energy audit for an agricultural producer or rural small business must require that, as a condition of the energy audit, the agricultural producer or rural small business pay at least 25 percent of the cost of the energy audit.
Legislative Authority
Section 9001 of the Food, Conservation, and Energy Act (FCEA) of 2008 amends Title IX of the Farm Security and Rural Investment Act of 2002 by combining and amending Sections 9005 and 9006 in a new program, the Rural Energy for America Program, to be codified at 7 U.S.C. Section 8107.
Funding
The 2008 Farm Bill provides mandatory funding for REAP in the amounts below, plus authorization for an appropriation of an additional $25 million each fiscal year from FY2009-FY2012 should the Appropriations Committee determine additional funding is needed and possible.
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Rural Energy for America Program (REAP) Funding |
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2008 |
2009 |
2010 |
2011 |
2012 |
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$0 |
$55m |
$60m |
$70m |
$70m |
Please note: The funding levels in the chart above show the amount of mandatory funding reserved by the 2008 Farm Bill for this program to be provided through USDA’s Commodity Credit Corporation. However, Congress does at times pass subsequent appropriations legislation that caps the funding level for a particular year for a particular program at less than provided by the farm bill in order to use the resulting savings to fund a different program. Therefore, despite its “mandatory” status, the funding level for a given year could be less than the farm bill dictates should the Appropriations Committee decide to raid the farm bill to fund other programs under its jurisdiction.
Implementation Basics
USDA’s Rural Development agency issued a proposed rule, which combined a number of Rural Development grant programs, including the Rural Energy for America Program. The rule has not been made final. USDA has not yet issued 2009 guidelines for REAP.
Examples of Grant and Loan Recipients under the 2002 Farm Bill’s Section 9006 Program
The Energy Efficiency Improvement and Renewable Energy System projects funded under the 2008 Farm Bill’s REAP program will likely include a mix of projects similar to those funded under the 2002 Farm Bill’s Section 9006 Program. These included renewable energy production from large and small wind and solar systems, projects to generate energy from biomass and geothermal sources, as well as projects to improve energy efficiency. Here are some examples.
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The Three Corner Field Farm in New York received a combined grant and loan guarantee for $35,000 to help pay for a solar system to provide 25 percent of the dairy’s energy.
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In Monona, Iowa, D.J. Keehner Farms, Inc. received an $11,561 grant to replace a propane heating system with a more energy-efficient geothermal heating system expected to reduce energy costs by 78 percent.
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In Pennsylvania, the Fairview Swiss Cheese Plant received funding from several sources, including Section 9006, for an anaerobic digester that will provide energy to the cheese plant using cheese whey from the plant and cone batter waste from an ice cream cone company to make 40 million cubic feet of biogas each year – the equivalent of 28 million cubic feet of natural gas. The biogas will be used in a boiler to produce electricity for processing milk into cheese. The wastewater from the digester will flow into a treatment facility where the solids will be removed and clean water discharged.
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Peter Seely received a grant of $12,325 to install a photovoltaic panel for his farm, a 25-acre CSA located in Sheboygan County, Wisconsin from which vegetables are distributed to approximately 500 households.
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Solaqua Power & Art, a renewable energy, business incubator located in Chatham, NY received a $49,608 grant to purchase and install a photovoltaic renewable energy system. The 25 kilowatt system is part of a redevelopment project at the vacant Columbia Box Board Mill to provide over 90 percent of the power for a regional foods restaurant and brew pub.
USDA Contact Information
REAP is administered by the Rural Business-Cooperative- Service (RBCS) division of USDA’s Rural Development agency. The program website is: http://www.rurdev.usda.gov/rbs/farmbill/index.
In March, the RBCS issued a Notice of Solicitation for Applications for FY2009 funds for REAP grants to provide assistance for energy audits and renewable energy development assistance, with grant applications due June 9, 2009.
In May, the RBCS issued a Notice of Solicitation for Applications for FY2009 funds for REAP loans and grants for renewable energy systems and energy efficiency improvements and for grants for renewable energy feasibility studies. Applications are due July 31, 2009.
A link to the list of Energy Coordinators in USDA Rural Development state offices is posted on the website: http://www.rurdev.usda.gov/rbs/busp/9006grant.htm.
William Hagy, Deputy Administrator for Business Programs, USDA Rural Development, bill.hagy@wdc.usda.gov, 202-720-7287.