On March 31, USDA announced that applications for the Rural Energy for America Program (REAP) funding under the Inflation Reduction Act (IRA) are now open. 

The Inflation Reduction Act (IRA) included substantial climate, health care, and climate provisions. Part of the legislation’s climate focus was a boost to REAP, including grants with an increase in government cost-share contributions. The IRA appropriated $820.25 million for REAP through fiscal year (FY) 2031. 

REAP offers grants and loans for energy audits, the creation of renewable energy systems, and energy efficiency improvements. It serves farmers, rural businesses, state and local governments, tribal governments, universities, rural electric cooperatives, resource conservation and development councils, and electricity providers and transmitters. The REAP programs currently accepting proposals for funding offer assistance only to agricultural producers, small businesses, and electricity retailers, wholesalers, and transmitters.

Available funding and underutilized technologies

As NSAC previously reported, under the new IRA REAP funding the government pays a higher proportion of the costs for grant-based projects. Under the IRA funding, the maximum grant size was increased from $250,000 to $500,000 for energy efficiency projects and from $500,000 to $1 million for renewable energy systems. The federal share was raised to 50% for all energy efficiency projects, all zero-emission renewable energy projects, all projects in designated energy communities, and projects submitted by eligible tribal entities. Loan guarantees can be combined with grants to cover up to 75% of total eligible project costs. REAP projects are scored at the state level based on a rubric available at the REAP program page.

This notice includes $1.055 billion in (IRA) funding. It includes the remainder of the FY22 mandatory Farm Bill carryover funding as well as FY23 and FY24 IRA funding that was not announced on Dec. 16, 2022. As mandated by the IRA, the funding includes a set-aside for “underutilized” renewable energy technologies. The funding notice defines underutilized technologies based on two factors. First, they must not produce greenhouse gasses “at the project level” (i.e., the project must have net-zero emissions). Second, the proposed technology must have received less than 20 percent of the total grant dollars during the grant round two years ago.

Applicable REAP sub-programs

Two REAP sub-programs are open under the funding notice. However, the Energy Audit (EA) and Renewable Energy Development Assistance (REDA) Grants are dependent on Farm Bill funding and are not open on the website at this time. Applications for this program are submitted and ranked nationally. You can submit applications to your local office. There is one annual competition. Applications received after January 31 in a given year will be ranked for the following fiscal year. 

One of the programs that is currently open is Renewable Energy System (RES) and Energy Efficiency Improvement (EEI) Grants and Loans. Grants and loan guarantees are available for implementation of renewable energy systems and energy conservation projects based on the following guidelines:

• Eligible entities:
  • Agricultural producer
  • Rural small business
• Eligibility factors:
  • Projects must be located in rural areas with populations of 50,000 residents or fewer
  • Additionally, the applicant must:
    •  own the project and own or control the project site
    • have sources of revenue to manage and maintain the project, including debt servicing
    • have legal authority to apply for and carry out the grant
    • apply for a Unique Entity Identifier, on Standard Form-424, “Application for Federal Assistance”; and
    • be registered and active on the System for Awards Management (SAM)
• Applicable project types:
  • RES:
    • Biomass (e.g., biodiesel and ethanol, anaerobic digesters, and solid fuels)
    • Geothermal for electric generation or direct use
    • Hydropower below 30 megawatts
    • Hydrogen
    • Small and large wind generation
    • Small and large solar generation
    • Ocean (tidal, current, thermal) generation
  • EEI: Installation and construction of energy efficiency improvements. Applications for these must include energy audits or energy assessments.  These projects may include:
    • High efficiency heating, ventilation and air conditioning systems (HVAC)
    • Insulation
    • Lighting
    • Cooling or refrigeration units
    • Doors and windows.
    • Electric, solar or gravity pumps for sprinkler pivots
    • Switching from a diesel to electric irrigation motor
    • Replacement of energy-inefficient equipment
• Grant terms:
  • Renewable Energy System grants. At 25% funding level: $2,500 minimum and $1 million maximum. At 50% funding level, the minimum rises to $5,000.
  • Energy Efficiency Grants. At 25% funding level: $1,500 minimum and $500,000 maximum. At 50% funding level, minimum rises to $3,000.
• For FY23 and FY24, the following application windows apply:
  • June 30, 2023
  • September 30, 2023
  • December 31, 2023
  • March 31, 2024
  • June 30, 2024
  • September 30, 2024
• Small projects: To ensure that small projects can be funded, not less than 20 percent of Farm Bill and IRA funds will be available until June 30 of each year to fund grant requests of $20,000 or less, including the grant portion of combined grant and loan guarantees. Each State Rural Development (RD) office will receive a set-aside for this purpose. Set-asides may be held at the national level by state request. Such applications must be submitted by March 31 each year.
• Larger projects: Applications for any amount above $20,000 fall into the unrestricted category. Unrestricted Farm Bill funds, if any, and IRA funds will be available in each state to fund applications in any amount requested. These must be received by June 30 to compete for FY23 funding.
• Loan guarantees: The RD National Office will fund loan requests, including those that are part of a combined funding request (with grants). Fifteen (15) percent of these funds will be for Energy Efficiency Equipment and Systems (EEE) proposals.
• Ranking: Highest-ranked combined grant + loan applications receive funds via the state. Others may be submitted to the national competition.
  • Location in a disadvantaged community or a distressed community now adds 15 points to the application. All Federally Recognized Tribes and Alaska Native Villages are placed in this category, as well.
  • Environmental benefits: projects not producing greenhouse gases at the project level receive at least 5 and up to 10 points.
  • Commitment of documented funds now receives a lowered maximum of 10 points in ranking.
  • No points are now awarded for being an existing business.
  • Other factors receive the same points as in the past, and are as follows: energy generated/saved/replaced (25 points), not a previous recipient (15 points), length of payback period (15 points), state director/administrator points (10 points).
• Submit applications through your local office. The relevant forms are here.

The Energy Efficiency and Conservation Loan Program (EECLP) provides loans for energy efficiency and conservation projects for wholesale electricity suppliers, electricity transmission service providers, and businesses that serve retail electric consumers. Businesses must provide the service with assets that they own or control. Businesses must serve eligible rural areas, and can check with their General Field Representative (GFR) to determine whether they qualify. Businesses should also contact their GFR to begin the loan application process.

Borrowers under EECLP can design their own programs, but the funding must be used to serve on of the following purposes:

• Improve energy efficiency and/or reduce peak demand on the customer side of the meter;
• Modify the electric load such that there is a reduction in overall system demand;
• Stimulate a more efficient use of existing electric facilities;
• Attract new business and create jobs in rural communities by investing in energy efficiency, and/or
• Encourage the use of renewable energy fuels for demand-side management or to reduce the use of fossil fuel use within a service territory.

In addition, the following projects are also eligible for EECLP program loans:

• All energy efficiency measures on a consumer premises
• Distributed generation for on or off grid renewable energy systems
• Demand side management investments
• Energy audits
• Consumer education and outreach programs
• Power factor correction equipment on the consumer side of the meter
• Re-lamping to more energy efficient lighting
• Other energy efficiency program investments approved by RUS Residential and commercial energy audits
• Community awareness and outreach programs

The substantial funding increase from the IRA represents an important opportunity for rural businesses, farmers, and electricity providers to make substantial improvements to their systems. The implementation of new renewable energy systems and reduction of emissions from existing systems offer substantial benefits for reducing agriculture’s contributions to climate change.