How much are you paying for the energy bills at your farm or rural business? With inflation, increasing government regulations, and tighter supplies, energy costs aren’t going down. Whatever higher costs utilities are having to pay, they just pass the costs on to you. Solar energy can be expensive too, even though in the long run you recover your investment.
But with the USDA REAP grant, the whole energy cost equation shifts dramatically.
With a REAP grant or loan, your farm or rural business can save thousands of dollars in addition to the already generous solar tax credit, which currently sits at 30% of the total project cost. By combining these with other solar installation savings opportunities, you can get solar energy working for you — and paid off in just a few years — and gain complete energy independence.
It’s the game-changer of the century for farms looking for ways to permanently cut costs and escape energy inflation.
So if you own a farm or rural business, stop where you are, turn everything else off, and spend a few minutes learning about the USDA REAP Grant program.
What is the REAP grant?
REAP stands for Rural Energy for America Program, and it comes from the US Department of Agriculture.
Though often referred to as the REAP grant, there are actually two ways to benefit from this program. You can apply to receive a grant or a loan.
The intent behind the program was to help agricultural producers and rural small business owners stay competitive and defray the often large upfront costs of renewable energy as well as other energy efficiency improvements.
Many rural businesses and farms use large amounts of energy to power their businesses. In fact, it’s often one of their top three expenses. And these costs have usually remained largely out of their control. The utilities can do whatever they want, and you have no recourse because there’s no competition.
But with solar power especially, you can liberate your farm or rural small business from the monopolistic utility company. Let’s look at the two types of REAP opportunities.
The USDA grant
For most of its history, the USDA REAP grant provided funding for up to 25% of the total costs of solar energy or another type of renewable energy or efficiency project. But as of 2023, some grants can now be sought for up to 50% of the cost of the project.
Renewable energy system grants for solar and other projects can range from a minimum of $2500 to a maximum of $1 million. For energy efficiency grant awards, the range goes from $1500 to $500,000.
Even for rural small businesses who don’t need a large solar array, these low minimums allow just about any project to reduce the overall cost by substantial margins.
The USDA loan
REAP loans can provide guaranteed solar loan financing for 75% of the total cost of the project. They also come with fees that can change year to year. As of 2024 there is an initial guarantee fee of 1% of the total cost, plus an annual retention fee. The maximum REAP loan amount currently sits at $25 million.
You can also get a combined grant and loan for the same project, but the total cannot exceed 75% of the project’s overall cost.
Updated terms and fees can be found on the USDA REAP page.
Who is eligible for a REAP grant or loan?
The USDA REAP program has been specifically designed to help agricultural producers and rural small businesses reduce their energy costs and their dependence on fossil fuels. Thus, to qualify for a REAP, you must have the right kind of business, and be located in an eligible area. Yes, this may include those who want to reduce greenhouse energy costs (like an actual greenhouse).
You will also need at least 12 months of utility bills, meaning brand new businesses cannot apply for the REAP. At least 50% of your energy usage must be for your business, and your total eligible project costs will not include any portion of the system that produces energy for non-business energy purposes.
So for farms that double as residences, it can be problematic to determine how much energy goes to your business. But when you work with an expert, you can determine your total eligible project costs.
Agricultural producers
An agricultural producer can apply for USDA REAP funding as long as at least 50% of their gross income comes from agricultural production. Such businesses likely use Schedule F when they file their taxes.
This includes poultry farms, which are especially ideal for solar power because of the long roofs and wide open spaces typical of poultry houses. But any farm should consider pursuing a USDA grant or loan, because if you don’t have any large buildings, if you have unused ground space, you can also install ground-mounted solar panels.
Rural small businesses
This is where the news gets very good and often surprising.
Many businesses don’t realize they can win USDA REAP grants, because they often only hear it associated with farms and agricultural producers.
But as long as you meet the location requirements, just about any rural small business can win a REAP grant or loan. Such rural small business owners likely file their taxes using a form 1065 or 1120. Ag Solar’s parent company, Lattice, has helped businesses like dentists and doctors’ offices fund their solar projects with the REAP.
If you think your business doesn’t qualify but want to slash your energy costs with solar, don’t count yourself out until you’ve confirmed whether or not you qualify.
In addition to the location requirement, you also need to be one of the following types of businesses:
- Private entity such as a sole proprietorship, partnership, or corporation
- Cooperative
- Electric utility that provides service to rural customers and is not government run
- Tribal corporation or business that meets certain requirements
You must also meet the Small Business Administration’s size definitions for a small business.
You can contact Ag Solar and we can find out on your behalf if you don’t want to hassle with it.
Location eligibility
In general, your rural small business must be in an area with fewer than 50,000 people. That’s why the small town doctor’s office, school, grocery store, or restaurant can very likely qualify for USDA REAP funding.
But the specifics matter, of course. 50,000 people in how big an area? Use the REAP website to check if your rural business is eligible for grants.
Is there an application deadline?
Each year, the USDA looks at their funding, the number of projects in their backlog that haven’t yet been approved, the number of projects they can realistically fund, and various other factors to determine a window of time when new REAP applications can be submitted.
In other words, there is an application window, and it may not be exactly the same every year. And sometimes, they run multiple windows in the same year. For 2024, the final application window goes from June 30th to September 30th.
There are a few additional requirements to making a successful application. The process is cumbersome, as you would expect from a federal program, and that’s why it’s much simpler to ask an industry expert like Ag Solar to handle your grant application for you.
We specialize in agricultural solar energy, and have successfully submitted numerous REAP applications for more than $10 million in funding, leading to dozens of completed projects that are now saving rural small businesses and farms thousands of dollars every year in energy.
Give us a call, use our contact page, or just get a solar quote and we can incorporate your REAP application into your quote once it has been successfully submitted and accepted.
You can also contact the state energy coordinator at your state’s branch of the USDA and ask questions of them.
What projects can you fund with a REAP grant or loan?
USDA grants can be used to fund a wide range of renewable energy systems and energy efficiency improvements for your farm or rural business. Here’s a quick rundown.
Renewable Energy Projects
Solar power generation
Solar energy is, in many ways, the best type of renewable energy system. It requires relatively little infrastructure, makes no noise, generates energy year-round, can be installed quickly, always recovers the initial investment because there are very few ongoing costs, and doesn’t disrupt your business during the installation process.
This is why Ag Solar exists — because we have seen over and over again how compatible solar energy is with most farm operations, and that the energy savings you can earn are just too big to pass up — especially when you fund part of your project with a REAP grant.
Wind power generation
Wind can be a great supplement to solar, and can also stand on its own in certain parts of the country with frequent and abundant wind.
Biomass
Biomass projects are a little more technical and require ongoing resources to sustain the operation. The USDA REAP grant can be used to fund three types of biomass renewable energy systems:
- Biodiesel and ethanol
- Anaerobic digesters
- Solid fuels
Geothermal
Geothermal also requires more disruption to a business to set up, in most cases, and has a high initial cost. But once it’s running, it’s out of the way and can be a great source of energy.
Hydropower
This is probably the most expensive and logistically intensive renewable energy system. You can’t just throw up a dam over the weekend. But water keeps flowing, making hydropower quite a winning option in the right circumstances. The USDA REAP funds projects that will produce under 30 megawatts of power.
Hydrogen
Probably the most cutting edge branch of renewable energy and one that has yet to gain widespread usage, you can use the REAP to partially fund a hydrogen power project for your business.
Ocean power
Getting energy from the ocean can be done in three ways that the REAP will fund:
- Tidal
- Current
- Thermal
All of these require additional infrastructure to make happen, and can obviously only be used by rural small businesses that are close enough to the ocean.
Energy efficiency improvement projects
In addition to renewable energy projects, you can also fund energy efficiency improvements with the REAP. Ag Solar doesn’t focus on these uses for it, but you can save a lot of money on energy if you can implement some of these solutions.
Plus, if you can go solar and simultaneously make at least one energy efficiency improvement, the energy generated by your solar panels will go much further. In other words, if your farm or rural small business is using 5000kW per month now, but you can reduce that to 4000kW with efficiency improvements, you don’t need as much solar to meet more of your energy needs.
The REAP can be used to fund the following projects:
- High efficiency HVAC systems — heating, ventilation, air conditioning
- Insulation
- Lighting – including LED lighting
- Cooling and refrigeration units
- Doors and windows
- Smart thermostats and energy management systems
- Electric, solar, or gravity pumps for sprinkler pivots
- Switching from diesel to electric irrigation motors
- Replacement of energy-inefficient equipment
Grant scoring — How REAP grant funding is determined
With expanded funding, more and more eligible projects that are applying for REAP grants are being successful. But not every project receives the same percentage of funding.
To increase your chances of successful completion for your application and getting maximum funding, it helps to know how the USDA scores grant applications. You can earn up to 100 points, and the higher scoring applications get priority. Once funding has been disbursed for a particular application window or for that fiscal year, all remaining projects either get no funding or get bumped to the next opportunity.
So it’s to your advantage to score as high as possible. Here are the primary scoring criteria:
Energy generated, saved or replaced (25 points)
Using power bills in combination with projected solar energy generation, you can maximize the amount of energy your solar project will save.
Think in terms of percentages, not raw amounts. Obviously, if you only use 3000kW per month, you’re not going to build a solar power array that generates 10,000. What matters more is what percentage of the amount you use can be replaced through solar.
And remember, your total eligible project costs will not include the percentage of energy that goes to non-business purposes.
Previous REAP funding (15 points)
This is the easiest criteria to receive points for. As long as you haven’t received any REAP grant awards in the past, you get all 15 points. This is why it’s smart to create a project that will accomplish big goals. Don’t just try to replace 20% of your energy usage. Go bigger, because if this is your first attempt at REAP funding, you want to get the biggest possible grant.
Length of payback period (15 points)
Using higher efficiency solar panels will reduce your payback period because you’ll be making more solar energy per dollar. And, the more energy usage you can replace with solar, the faster you’ll make back your investment.
Location in disadvantaged or distressed community (15 points)
You can also receive points if your project site will be in an economically disadvantaged area. And there are a lot more of these than you may imagine, because it includes rural development areas. Use this map to see if your location lies within such an area.
Commitment to matching funds (10 points)
This is another easy one to meet as long as you can secure and verify that you have the funds to match the grant. Remember — you can get REAP funding for up to 50% of the total project cost. But there is also a 30% federal tax credit. That means, if you can win the 50% grant, you can pay for the entire project for just 20% of the cost.
But, you don’t receive the tax credit until the following tax year. That’s why you need to have the 50% matching funds to make the project happen. But you will get that 30% back eventually.
So, do everything you can to secure and verify that you have the matching funds, and you can score these 10 points on your grant application.
Environmental benefits (10 points)
When it comes to solar, the environmental benefits are obvious. You’re reducing or eliminating the greenhouse gasses required to generate the energy your business requires to operate.
A good application simply spells out the savings your project will generate, which you can determine with a quick environmental review. Your power bills, solar quote, and other information should enable you to get these 10 points.
State director/administrator points (10 points)
This last category is largely out of your hands, and can vary by state. Contact your state energy coordinator, or an industry expert like Ag Solar, to find out more.
Here are more do’s and don’ts for writing the strongest possible REAP application. When you work with Ag Solar, our grant writers ensure your application will be as strong as it can possibly be. We’ve done so many of these, and our experts have learned how to complete applications that win big funding awards, and as quickly as possible, too.
Examples of real REAP grant winners
Ag Solar has installed numerous solar energy projects for farms and rural businesses that have also partially funded their projects using the USDA REAP grant.
Here are some farms and rural businesses with terrific solar and REAP grant success stories.
Agricultural solar REAP projects
Poultry farm project
Spencer Pope was a solar skeptic. But he was also spending lots of money on energy each month, and heard his poultry farm might be able to qualify for some grant funds.
He did. And he used his funding to install solar that generated 20% of his electricity. But after his $250 monthly savings started adding up, he realized what a great deal this was, and came back for more, now owning a 47kW solar energy system.
Pope’s poultry farm now generates 100% of its electricity with solar energy.
Energy audit program
Why help one poultry farm, when you can help over a thousand save big money on energy?
The University of Georgia won a grant amount of $100,000 for its energy audit program. They used the funds to conduct audits on over a thousand poultry farms, which helped numerous farmers make energy efficiency improvements that saved them lots of money over time.
This is a great example of the flexibility of the REAP. The university is not rural. But its project affected rural businesses, so it still qualified for and won funding.
Small business solar REAP projects
Now, let’s look at some rural businesses that won REAP grants for solar energy.
Dentist office REAP grant
Located in Jesup, Georgia, Armstrong Family Dentistry won a grant amount of $8750 to help install a 14kW solar energy system.
Within two years, Armstrong had fully recovered its investment costs, thanks to grant funds as well as the federal solar investment tax credit. In 25 years, Ag Solar projects he will save over $170,000 on his power bills.
Pediatric office REAP grant
Located in the same small town, Jesup Pediatrics won a $14,965 grant to help pay for a 16.4 kW solar energy system. The total cost of the system was $60k, but with the REAP and the federal tax credit, they paid less than half of that, and have already recovered their investment.
Over 25 years, Ag Solar projects that they will save more than $167,000.
A brief history of the REAP
The USDA REAP was created in the 2008 Farm Bill. It was a combination of two earlier farm-related bills concerning energy efficiency, renewable energy, and energy audits.
The Pope Farm was one of the first to win a grant, which happened in 2009.
In 2014, the REAP was renewed, and then again in 2018. The 2014 version made the temporary funding of the previous program permanent, with a baseline of $50 million per year, which continued through the 2018 bill.
Then, in 2023, the REAP was amended again as part of the Inflation Reduction Act, the nation’s largest ever investment in renewable energy. Previously, the maximum grant award was 25% of project costs. Now, many projects can qualify for 50%.
There has simply never been a better time for agricultural producers and rural small businesses to go solar. With the REAP grant, the solar tax credit (investment tax credit), depreciation, and other cost savings, you can realistically expect to pay for less than 20% of the actual cost of your solar array.
How to apply for the USDA REAP grant or loan
Your best option of submitting the most successful USDA REAP application for your farm or rural small business is to use a company like Ag Solar to help.
Applying for grant funding requires preparation, an understanding of eligibility, and time. This isn’t something to rush or throw together at the last minute.
So, check the application submission period to see if your application will be considered right away. If you submit outside the window, that doesn’t mean it won’t count. But it won’t be formally considered until the next window opens.
The application forms are on this USDA webpage.
As you’ll see, the process looks daunting.
Your best approach is to use a company like Ag Solar that has years of expertise working with REAP applications. With help from our grant writers, you won’t have to figure everything out by yourself, and you won’t risk missing key information or submitting a less effective application that won’t get scored as high.
Contact Ag Solar and ask us about helping with your REAP application
