Changes to the USDA’s REAP allows more projects to qualify.
By Anna Austin | May 23, 2011

The USDA’s Rural Energy for America Program grant deadline is approaching and it’s important to note two changes the agency made to the program in 2011.

REAP was part of the 2008 Farm Bill and is now in its third year. The program provides grants and loans for energy audits, energy efficiency and renewable energy development, as well as funding for agricultural producers and rural small businesses to conduct feasibility studies for renewable energy systems. Funding is limited to $50,000 for feasibility studies, is awarded on a competitive basis (a point system) and can cover up to 25 percent of total eligible project costs, or $500,000 maximum.
Eligible candidates for feasibility studies and renewable energy system funding assistance include projects that will use biomass, biogas, wind, solar, geothermal, hydropower and hydrogen-based sources to produce heat, electricity or fuel.

U.S. Secretary of Agriculture Tom Vilsack announced in mid-April that $61 million in guaranteed loans and $42 million in grants would be available in 2011, while noting the program changes. The first is that agricultural producers in nonrural areas are now eligible for REAP assistance, as previous guidance mandated that those in urban areas were ineligible for the program. This provision includes agriculture producers such as greenhouses/nurseries and dairies that receive at least 50 percent of their gross income from agriculture. Preference will be given to those that employ less than 15 people and see less than $1 million in annual revenue; nonprofits and public projects are not eligible.

Small businesses (fewer than 500 employees and annual revenue less than $6 million) must be located in rural areas, as was the case for REAP qualifiers in 2010.

The second change made to the program allows REAP to provide funding for the installation of flexible-fuel pumps.

 In short, these changes will allow more projects to qualify, but the program remains highly competitive. According to the USDA, grant requests of less than $25,000 are highly favored, and strong preference is given for technology that is commercially available, or has a proven operating history and has an established design, installation and service industry. Precommercial technologies that have emerged through the research and development process and have commercial potential may qualify, but require substantially more documentation.

The USDA’s application deadline for the 2011 funding cycle is June 15. Applications can be acquired from and submitted to state rural development offices.

—Anna Austin