Rural Energy for America Program

Important Update:

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. 

Promoting on-farm and rural renewable energy production and energy efficiency

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!

• Program Basics: Learn more about how this program works
• Eligibility: Find out who can utilize this program
• The Program in Action: Read success stories from those who have used this program
• How to Apply and Program Resources: Learn more about the application process and where to find more information
• Program History, Funding, and Farm Bill Changes: Learn about important policy changes and funding levels provided by the Farm Bill

Program Basics

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:

• REAP grants cannot provide more than 25 percent of the total cost of the activity carried out using the funds from the grant.
• REAP loan guarantees cannot exceed $25 million.
• Projects may receive both a grant and a loan guarantee but the combined amount of a grant and loan guarantee cannot exceed 75 percent of the total cost of the funded activity.

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.

Eligibility

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:

• Type of renewable energy system to be purchase;
• Estimated quantity of energy to be generated by the renewable energy system;
• Expected environmental benefits of the renewable energy system;
• Quantity of energy savings expected to be derived from the activity, as demonstrated by an energy audit;
• Estimated period of time for the energy savings generated by the activity to equal the cost of the activity;
• Expected energy efficiency of a renewable energy system; and
• Other appropriate factors.

Entities eligible to apply for grants for energy audits and renewable energy development assistance include:

• Units of state, tribal, or local government
• Land-grant colleges or universities or other institutions of higher education
• Rural electric cooperatives or public power entities
• Any other similar entities, as determined by USDA

 USDA considers the following criteria in awarding REAP grants for energy audits and renewable energy development:

• Ability and expertise of the applicant to provide professional energy audits and renewable energy assessments;
• Geographic scope of the program proposed in relation to the identified need;
• Number of agricultural producers and rural small businesses to be assisted;
• Potential of the proposal to produce energy savings and environmental benefit;
• Plan of the applicant for performing outreach and assistance to agricultural producers and rural small businesses on the benefits of energy efficiency and renewable energy development; and
• Ability of the applicant to leverage other sources of funding.

The Program in Action

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:

• A farmer with 750 acres of farmland, 10,000 laying hens, and 75 milking cows in Castalia, Iowa used REAP to install solar panels on his farm. The project reduced his utility bills by 90 percent. The 360 solar panels on the roof of his poultry barn and farm sometimes generate more electricity than needed, allowing the farmer to “bank” the extra electricity on the grid.  REAP also helped fund smart meters for the chicken coop and other buildings to monitor where electricity demand is highest.

• A Vermont farmer used a REAP grant to replace an evaporator on his maple syrup cooker.  He plans to purchase and install a new system that will increase syrup production efficiency and reduce annual fuel consumption by 56 percent.

• A family ranch in Nebraska used REAP funding to install five wind turbines to decrease its draw of electricity from the local utility by 30 percent.

• REAP grant awards in Tennessee were made to a sausage making company and a plant nursery to install solar energy projects.

Read more about how REAP has helped farmers and ranchers produce energy and cut costs:

• Rural Energy Awards Help Farmers Keep the Lights On
• USDA Awards $173 Million for 1,100 Renewable Energy Projects

How to Apply and Program Resources

 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!

Program History, Funding, and Farm Bill Changes

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

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.

Discretionary Funding

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

Authorizing Language

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.