What’s at Stake: Energy Savings and Renewable Energy for Producers and Rural Businesses
December 5th, 2012
Due to Congressional inaction, the 2008 Farm Bill has expired without a new bill or extension to take its place. In the absence of a farm bill, numerous innovative programs that invest in sustainable agriculture systems are shut down and left without mandatory funding. This is the ninth post in our 10-week “What’s at Stake?” series that highlights expired farm bill programs and what that means for farmers and communities throughout the country.
Energy saving measures and energy producing facilities that use wind, solar, biomass, and other renewable sources can decrease energy costs and provide additional income for farmers, ranchers and rural businesses. Increased use of renewable energy also reduces U.S. dependence on foreign energy sources and, in many cases, provides environmental benefits.
The Rural Energy for America Program (REAP) provides guaranteed loans and matching grants to farmers, ranchers and rural businesses to increase energy efficiency or produce energy from renewable energy sources. In addition, REAP provides grants to organizations, companies, educational institutions, and others to assist with energy audits.
REAP grants and loans serve a broad cross-section of rural USA: Montana Example
Since its enactment in the 2002 Farm Bill and reauthorization in the 2008 Farm Bill, REAP funding has been used in all 50 states to provide home-grown energy and energy savings. Montana provides good examples of REAP funding at work.
The National Center for Appropriate Technology (NCAT), headquartered in Montana, provides information about REAP and assistance to farmers, ranchers and small businesses. REAP applications and awards in the state doubled every year from 2009 through 2011.
“Interest and use of REAP grants and loans in Montana started slowly. But over the past three years, it has become an increasingly recognized, more valuable tool in financing clean energy projects,” said Al Kurki, NCAT program specialist. “REAP funds shorten technology payback periods, especially when matched with utility incentive funds.”
REAP funds a wide variety of projects in Montana that vary in size, type and who is served. Here are a few examples:
- K’s Supermarket in tiny Stanford installed energy-efficient coolers to save money otherwise thrown at utility costs.
- Montana Flour and Grains, a specialty mill in Fort Benton, generates its own electric energy using a wind turbine.
- In Polson, Flathead Lake cheese factory uses solar panels to heat water for its cheesemaking process.
- Irrigators in the Gallatin and Helena Valleys are using REAP grants or loans to install variable speed irrigation pump drives. This technology can save thousands of dollars in energy costs every year and can also reduce the amount of water used for irrigation.
Nationwide Benefits of REAP
In March 2012, USDA issued a report summarizing the use of REAP funding from 2009 through 2011. Funding was used in every state to provide home-grown energy and energy savings. Overall, during the 3-year period covered by the report, REAP accomplished the following:
- Supported 5,733 renewable energy and energy efficiency projects nationwide;
- Generated or saved an estimated 6.5 million megawatt hours of power;
- Provided $192 million in grants and $165 million in loan guarantees to agricultural producers and rural small business owners for renewable energy systems and energy efficiency improvements; and
- Fostered partnerships that have leveraged an estimated $800 million from other sources.
Since the Program was first established in the 2002 Farm Bill, it has provided resources for more than 13,000 rural small businesses and agricultural producers, saved enough energy to power nearly 600,000 American homes for a year, and funded more than 1,000 solar projects and more than 560 wind projects.
In addition to individually owned businesses, REAP has provided loans to community-owned energy production facilities. One example is a wind turbine in Wiota, Iowa. Twenty-two local investors contributed funds needed to meet the matching fund requirements for a REAP guaranteed loan. The wind turbine began generating power in Spring 2012 and is expected to provide electricity for 25 years to Wiota and to provide power to help meet the needs of neighboring communities.
Status of Funding for the Renewable Energy for America Program
The 2008 Farm Bill established REAP by amending the 2002 Farm Bill’s Energy Efficiency Improvements and Renewable Energy Systems Program and combining 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. REAP was provided with both mandatory funding and authorization for up to $25 million in discretionary funding each year.
In FY2009, REAP received a total of $60 million ($55 million mandatory and $5 million discretionary); FY2010, REAP received a total of $99.3 million ($60 million mandatory and $39.3 million discretionary); and in FY2011 the total funding was $75 million ($70 million mandatory and $5 million discretionary). In FY2012, REAP mandatory funding was limited to $22 million, with an additional provision of $3.4 million in discretionary funding.
What’s Next for the Rural Energy for America Program?
Both the Senate-passed Farm Bill and the House Agriculture Committee approved Farm Bill provide funding for REAP but the Senate bill is more generous. The Senate Bill authorizes $48.2 million per year in mandatory funding for FY2013-FY2017, with authority for the appropriation of up to $20 million in each of those years. The House bill provides no mandatory funding but does authorize appropriations up to $45 million annually for FY2013-FY2017. In the meantime, the 6-month continuing resolution that expires on March 17, 2013 includes a token $3.42 million in REAP funding.
REAP will continue into 2013 on a lifeline but its future should be much brighter. Both the Senate and House Farm Bills include a new 3-tiered application process with separate, more streamlined processes for smaller grants and loans. In addition, the Senate Farm Bill would cap grants at the lesser of $500,000 or 25 percent of the project’s cost. Both these improvements are supported by NSAC because they would result in REAP funds going to more projects around the country, especially those that can help small and mid-sized farmers and ranchers achieve energy efficiency and greater energy independence. Congress should adopt a new Farm Bill with at least the $48.2 million a year mandatory funding provided in the Senate Farm Bill.