Farmers and farm businesses are installing solar panels on buildings to cut energy costs. Although investing in solar or other green energy can be quite costly, a REAP grant can help.

REAP (Rural Energy for America Program) grants award money to ag producers and rural small businesses for renewable energy projects and energy-efficiency improvements.

To be eligible for the grants, Deb Yocum, Southern Regional coordinator, USDA Rural Development, said, “Ag producers must receive at least 50% of their income from ag operations. Ag producers may apply for projects that are located in rural or non-rural areas as long as there’s production on-site.”

A “rural area” is defined as having a population under 50,000, and rural small business projects should be located in a rural area. Rural small businesses must be private for-profit entities, cooperatives, a rural electric utility or tribal entities or businesses.

Renewable energy systems eligible for REAP grants include biomass (anaerobic digesters, biofuels), wind generation, ocean (tidal, current) generation and solar generation. REAP funds can also be used for energy efficiency improvements such as insulation, cooling/refrigeration units, doors and windows and replacement of inefficient equipment.

“The investment in REAP due to the Inflation Reduction Act has provided additional funding to the program,” said Yocum. “The maximum grant threshold for projects is also increased. Renewable energy projects that do not produce greenhouse gasses (GHG) are eligible for up to 50% of the cost of the solar panels, inverters and installation costs.”

The minimum REAP project size is $10,000; the maximum is $1 million. Yocum said the threshold for efficiency improvements under REAP has been increased from $250,000 to $500,000.

REAP grants are competitive and based on a scoring system. “REAP applications have four quarterly batch deadlines,” said Yocum. “We will take an application at any time and review them quarterly.”

USDA regulations allow REAP to reserve at least 20% of the annual funding available for grants of $20,000 or less. Yocum said such applications have a greater chance of being awarded because they aren’t competing with larger projects requesting higher amounts.

She explained that an important provision of REAP is that applicants must submit a complete application with an environmental review before incurring any project costs. “After you have an idea of what you want to do, obtain detailed quotes from installers,” she said. “File the application, then ensure you are in touch with a staff person who will confirm the application is complete, including the environmental review, after which time you can actually spend money and start the project. If you start the project before you have a complete application or start before a complete environmental review, the project may not be eligible for funding.”

One of the first steps in filing a REAP application is registering the business entity in the System for Award Management (SAM). Although SAM registration can take a while, it’s a crucial aspect of the application process and an important start to a project. When registering for SAM, it’s important to use the same name and address for the business as the applicant will use for the REAP application.

The entity that will own the REAP project is the entity that should be registered in the SAM. Prior to registering in SAM, applicants should gather supporting documentation, including the correct legal name and address of the farm or ag business. Once an applicant has successfully registered in the SAM, a unique identity is assigned, which is then provided to the agency.

“All applicants must own and control the systems that will be financed for the useful life of the project,” said Yocum. “Documentation such as tax statements, business licensure and lease agreements that show you will own the equipment and own the site will be required. A detailed bid for the project is also required.”

Yocum recommended applicants obtain multiple quotes to compare vendor pricing. Also recommended is obtaining a breakdown of cost details such as the number of solar panels and price per panel, number of inverters and installation costs.

“Unless the project is 100% off-grid, we want to see documentation that you have engaged with your utility provider,” said Yocum. “How much power are they willing to purchase, and what price are they going to purchase that for? Then we want to know how you intend to fund the remainder of the project. If the funding will be through a loan, the applicant must obtain a letter from the lender.”

Some applicants choose to use a professional grant writer to help them through the application process. Although the cost of this service is not included in the grant, applicants can obtain assistance through their state energy coordinator.

After submitting an application, the applicant should obtain confirmation from a rural development staffer that the application is complete and no further information is required. Yocum emphasized the fact that finished projects or projects started prior to going through the application process are not eligible for REAP.

The REAP application is a tiered process – the larger the total project cost, the more information will be required. Once a grant is awarded, the farmer or ag business has 24 months to complete the project.

More information on REAP grants and the application process is available at rd.usda.gov/inflation-reduction-act/rural-energy-america-program-reap.

by Sally Colby