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 program 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:

• type of renewable energy system to be purchase;
• estimated quantity of energy to be generated by the renewable energy system;
• expected environmental benefits of the renewable energy system;
• quantity of energy savings expected to be derived from the activity, as demonstrated by an energy audit;
• estimated period of time for the energy savings generated by the activity to equal the cost of the activity;
• expected energy efficiency of a renewable energy system;
• 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:

• units of state, tribal, or local government;
• land-grant colleges or universities or other institutions of higher education;
• rural electric cooperatives or public power entities;
• any other similar entities, as determined by USDA.

USDA uses the following criteria to select grants for funding:

• ability and expertise of the applicant to provide professional energy audits and renewable energy assessments;
• geographic scope of the program proposed by the applicant in relation to the identified need;
• number of agricultural producers and rural small businesses to be assisted by the program;
• potential of the proposed program to produce energy savings and environmental benefit;
• 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
• 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.

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. As seen in the chart below, Congress decided to add more than the authorized appropriation to REAP in FY2010.

Rural Energy for America Program (REAP) Funding
2008	2009	2010	2011	2012
$0	$55m + $5m	$60m + $39.3m	$70m	$70m

Please note: In the chart above, for each year the first number is the mandatory funding level reserved by the 2008 Farm Bill for this program to be provided through USDA’s Commodity Credit Corporation. The second number is the amount that Congress has added to the program in subsequent appropriations legislation. Therefore, despite its “mandatory” status, the funding level for a given year could be more than the farm bill dictates should the Appropriations Committee decide to provide additional funding to the program.

Implementation Basics

USDA’s Rural Development agency issued a proposed rule in 2008, which combined a number of Rural Development grant programs into a common platform, including the Rural Energy for America Program. NSAC joined with other organizations to oppose this rule, which was cumbersome and complicated. The rule was not finalized.

USDA then issued an interim final rule for a common platform combining numerous loan guarantees including REAP loan guarantees. This proposal also engendered opposition. The interim final rule was withdrawn in September 2009.

Ultimately, in 2009, USDA issued a Notice of Solicitation of Applications for REAP grants and loans. USDA awarded a record number of grants and loan guarantees to more than 1,500 farmers, ranchers and rural small businesses for renewable energy and energy efficiency projects. A number of these awards were provided to farmers to purchase more energy efficient grain dryers. Examples of REAP grants and loans awarded to farmers in 2009 including:

• A $12,300 grant to a Vermont farmer to replace an evaporator on his maple syrup cooker.  He plans to purchase and install a new system that will increase syrup production efficiency and reduce annual fuel consumption by 56 percent.
• A $14,725 grant to a family ranch in Nebraska to install five wind turbines to decrease its draw of electricity from the local utility by 30 percent.
• Grant awards in Tennessee to a sausage making company and a plant nursery to install solar energy projects.

In addition, in 2009, a total of $1.3 million was awarded for 51 feasibility study grants to help develop new REAP projects.

In 2009, USDA also issued a notice of grant applications to implement the new Energy Audits and Renewable Energy Technical Assistance provision to REAP to help farmers and rural small businesses cut energy costs and develop clean energy projects.  The Energy Technical Assistance program distributed $2.2 million for 22 projects around the country. An example is the Kit Carson Electric Cooperative of New Mexico, which received New Mexico’s first ever REAP grant in 2009 for $100,000.   The grant is for energy efficiency and solar projects, and will provide more energy audits and technical assistance.  The grant helps the coop provide more energy audits and technical assistance for energy efficiency and solar electric development effort.

USDA has not issued yet issued any notices or due dates for FY2010 REAP. Given the complexity of REAP grant and loan applications, you should contact your state’s USDA Rural Development Energy Coordinator before the formal USDA announcement of funding.  The website for finding Energy Coordinators is provided below.

For up-to-date application deadlines and links to current RFAs, visit NSAC’s quick guide to farm bill programs and grants: http://sustainableagriculture.net/publications/grassrootsguide/farm-bill-programs-and-grants.

USDA Contact Information

REAP is administered by the Rural Business-Cooperative- Service (RBCS) division of USDA’s Rural Development agency.  The REAP website is: http://www.rurdev.usda.gov/rbs/farmbill/index.html.

Information about REAP is available from your state USDA Rural Development Office Energy Coordinator. Energy Coordinators can be found at the USDA website:  http://www.rurdev.usda.gov/recd_map.html

USDA Contact: William Hagy, Deputy Administrator for Business Programs, USDA Rural Development, , .

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