Please note that the Grassroots Guide has not yet been updated to reflect changes made by the 2018 Farm Bill, which was passed and signed into law in December 2018. We are in the process of updating the Guide and expect to publish an updated version in the spring of 2019. In the meantime, please use this guide for basic information about programs and important resources and links for more information, but check with USDA for any relevant program changes made by the 2018 Farm Bill. Also, check out our blog series covering highlights from the new farm bill.
With increasing climate variability and rising energy costs, more and more farmers and ranchers are seeking to produce their own renewable energy and reduce energy costs on their farms and ranches. The Rural Energy for America Program (REAP) provides grants and loans to farmers and businesses for energy efficiency improvements and purchase of wind, solar or other renewable energy systems, and also provides grants to help farmers with energy audits and renewable energy development.
Learn More About REAP!
USDA’s Rural Business Service administers REAP. The program offers two types of assistance: grants and loans to farmers and rural businesses for energy efficiency improvements and purchase of renewable energy systems, and grants to help farmers with energy audits and renewable energy development.
Grants and Loans to Farmers and Businesses for Energy Efficiency Improvements and Purchase of Renewable Energy Systems
Farmers and ranchers and rural small businesses can apply to REAP for either grants or loans to improve the efficiency of existing energy-using operations or to install new renewable energy systems such as wind and solar. There are limits to the amount of federal assistance available as follows:
The 2014 Farm Bill maintains a 20 percent reservation of REAP funding each fiscal year for smaller grants of under $20,000 until June 30 of each fiscal year. However, the 2014 Farm Bill removed a provision that authorized USDA to provide up to 10 percent of the funds available for this component of REAP for grants to farmers or rural small businesses to conduct feasibility studies.
Grants to Help Farmers with Energy Audits and Renewable Energy Development Assistance
In addition to energy efficiency and renewable energy development projects, REAP funding is also available for energy audits or renewable energy development. Four percent of REAP funding is reserved each fiscal year for the energy audit and renewable energy development grants up to April 1 of the fiscal year, after which time any remaining funding will be available for the energy efficiency improvement and renewable energy system grants and loan guarantees.
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.
REAP funding may not be used to subsidize renewable energy delivery through ethanol blender pumps.
Agricultural producers and rural small businesses are eligible to apply for grants and loans for energy efficiency improvements and purchase of renewable energy systems.
USDA considers the following criteria in awarding REAP grants and loans for energy efficiency improvements and the purchase of renewable energy systems:
Entities eligible to apply for grants for energy audits and renewable energy development assistance include:
USDA considers the following criteria in awarding REAP grants for energy audits and renewable energy development:
Since 2008, REAP has provided hundreds of millions of dollars in grants and loan guarantees to fund thousands of renewable energy projects across the country. Farmers and rural businesses have used REAP funding to replace irrigation motors and grain dryers, install solar panels, purchase and install wind turbines, and make energy efficiency upgrades.
REAP has been used to:
Read more about how REAP has helped farmers and ranchers produce energy and cut costs:
The 2014 Farm Bill establishes a three-tiered application process that reflects the size of proposed projects. Applications in Tier 1 will compete with other applications in Tier 1, and so on. Tier 1 projects will cost no more than $80,000; Tier 2 projects will cost between $80,000 and $200,000; and Tier 3 projects will cost at least $200,000.
Producers and eligible entities interested in enrolling in REAP should contact their state’s renewable energy coordinator.
Read about the latest news on REAP on our blog!
Congress created REAP in the 2008 Farm Bill by combining the 2002 Farm Bill’s Energy Efficiency Improvements and Renewable Energy Systems Program with an amended version of another 2002 Farm Bill program for grants for energy audits and assistance in using renewable energy technology and resources.
Farm Bill Funding
Unlike the 2008 Farm Bill, which provided REAP with only five years of funding, the 2014 Farm Bill established a permanent funding baseline of $50 million per year for the program. That means that as long as Congress renews REAP authority before 2019, the next farm bill will not need to provide new funding in order to continue the program after 2018.
Rural Energy For American Program Funding
|Fiscal Year||Mandatory Funding (in millions)|
|5 yr projection||$250|
|10 yr projection||$500|
Please note: The funding levels in the chart above show the amount of mandatory funding reserved by the 2014 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. In addition, REAP is subject to automatic cuts as part of an annual sequestration process established by the Budget Control Act of 2011. Therefore, despite its “mandatory” status, the funding level for a given year could be less than the farm bill dictates should the Appropriations Committees decide to raid the farm bill to fund other programs under its jurisdiction.
REAP is one of a small handful of farm bill-funded programs that also receives an annual appropriation as part of the annual agricultural appropriations bill. Recent appropriations bills have provided between half a million dollars and $3.5 million for REAP (see chart below), and have dictated that these dollars be spent on loan guarantees. Because of the way loan guarantees work, these small amounts generate significant program levels. For example, appropriations of $500,000 in FY 2016 generated $7.6 million in loan guarantees.
The discretionary funding level for REAP is determined each year by Congress in the annual agricultural appropriations bill. The chart below shows what the program has received in recent years. Future funding cannot be projected as funding levels will be determined a year at a time by Congress.
Past Rural Energy For America Program Funding
|Fiscal Year||Discretionary Funding (in millions)|
Section 9007 of the Agricultural Act of 2014 amends Section 9007 of the Farm Security and Rural Investment Act of 2002, to be codified at 7 U.S.C. Section 8107.
Last updated in October 2016.