September 19, 2014
On Thursday, September 18, the U.S. Department of Agriculture (USDA) announced a $68 million investment in 540 renewable energy and energy efficiency projects across the country through the Rural Energy for America Program (REAP).
The majority of the money, over $56 million, was distributed as loans. Another $12 million was awarded as grants. Of the 540 projects receiving support, 240 of them–totaling $5.2 million in grants and $55.3 million in loans–are focused on solar energy. Other project focus areas include geothermal technology, hydroelectic power, heating and cooling system upgrades, and LED lighting retrofits, among others. You can see a full list of this year’s REAP grant and loan recipients here.
Each state and several U.S. territories received at least one REAP award. However, North Carolina, where USDA Secretary Tom Vilsack made the announcement, is the big winner–$55.3 million of the $68 million in REAP loans and grants will go to farmers and businesses in that state. Most of that money will be distributed through 18 loans, each over $1 million, to farmers and business owners.
To support the program level of $68 million, USDA used unused mandatory farm bill funding from the 2008 Farm Bill, carried over from fiscal year 2013, as well as several million dollars that were appropriated by the FY 2014 omnibus appropriations bill. This funding is separate from the funding provided by the 2014 Farm Bill.
We expect that USDA will publish a follow-up Notice of Funding Availability (NOFA) to announce the availability of additional mandatory funding for the remainder of FY 2014. This funding will come from the 2014 Farm Bill, which provides $50 million per year. Given that the fiscal year ends September 30, USDA may choose to bundle the 2014 and 2015 farm bill funding together in a single NOFA later this year.
REAP, created in the 2008 Farm Bill, provides grants and loans for farmers and small businesses for installation of renewable energy systems and energy efficiency improvements. It also provides grants to help farmers with energy audits and renewable energy development. To date, REAP has supported over 8,800 renewable energy and energy efficiency projects in rural America through $276 million in grants and $268 million in loan guarantees.
Agricultural producers and rural small businesses are eligible to apply for grants or loans for renewable energy systems or energy efficiency improvements. Past projects that have received REAP support include:
Grants providing assistance for renewable energy systems and energy efficiency improvements cannot exceed 25 percent of the total project cost, and REAP loan guarantees cannot exceed $25 million. If farmers receive a grant and a loan guarantee, the total cannot exceed 75 percent of the project cost.
The 2014 Farm Bill established permanent baseline funding of $50 million annually for REAP; however, congressional appropriators are currently considering whether or not to cut this funding in FY 2015. The House Appropriations Committee has proposed to cut program funding to $30 million from $50 million. The Senate Committee has proposed that the program receive full funding in FY 2015. Congress is likely to decide whether or not to interfere with the farm bill-mandated funding level when it votes on a final government funding bill in December.