As climate variability increases and energy costs continue to rise, producing on-farm, renewable energy has become an attractive option for many farmers and ranchers. In order to help producers save money and utilize renewable energy, the Rural Energy for America Program (REAP) provides grants and loans to farmers and rural businesses interested in making energy efficiency improvements. The program also supports the purchase of wind, solar or other renewable energy systems, and provides grants to help farmers with energy audits and renewable energy development.
Learn More About REAP:
USDA’s Rural Business-Cooperative Service administers REAP. The program offers two types of assistance:
Grants and Loan Guarantees 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 loan guarantees to improve the efficiency of existing energy-using operations or to install new renewable energy systems. Wind, solar, renewable biomass, anaerobic digesters, small-hydroelectric, and geothermal are among the energy systems that can be funded by REAP. There are limits to the amount of federal assistance available as follows:
The 2018 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. The 2018 Farm Bill includes a new provision that reserves the vast majority of the funding for grants to farmers and rural businesses by limiting the amount of funding that can be spent on loans guarantees to just 15 percent of the funds made available for the program each fiscal year.
Energy Audits and Renewable Energy Development Assistance Grants
In addition to energy efficiency and renewable energy development projects, REAP grants can also be used for energy audits and renewable energy planning and development projects. Grants for energy audits and planning are available only to units of government, higher education, rural electric cooperatives, and public utilities. These awards are used to establish programs to assist agriculture producers and rural small businesses with evaluating their energy usage and potential for incorporating efficiency improvements/renewable energy production systems. The 2018 Farm Bill maintains a four percent reservation of REAP funding each fiscal year for energy audit and renewable energy development grants until April 1 of each fiscal year, after which time any remaining funding will be made 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 to conduct energy audits and renewable energy planning and development assistance are limited to:
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, including the following project highlights:
Read more about how REAP has helped farmers and ranchers produce energy on their farms and cut costs:
The 2018 Farm Bill maintains 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 and other renewable energy and climate news 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. REAP was then reauthorized in the 2014 Farm Bill and subsequently reauthorized in the 2018 Farm Bill.
The 2008 Farm Bill provided REAP with only five years of direct (mandatory) funding, and the 2014 Farm Bill established a permanent funding baseline of $50 million per year for the program, which was subsequently maintained in the 2018 Farm Bill.
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 2018 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.
Recent Appropriations for REAP
|Fiscal Year||Discretionary Funding (in millions)|
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 $250,000 to a half of a million for REAP 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.
For the most current information on program funding levels, please see NSAC’s Annual Appropriations Chart.
Section 9007 of the Agriculture Improvement Act of 2018 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 December 2019.