USDA Rural Development offers more than 40 programs for families, businesses, farmers and communities. Each month, a different program will be highlighted in our guest editorial.
Today’s column will focus on the Rural Energy for America Program (REAP), a program that helps agricultural producers and rural small businesses create energy independence by reducing their energy usage and improve their profitability.
REAP is available to agricultural producers (51 percent or more of gross income comes from agriculture production) and rural (any area that has a population of 50,000 or less and is not adjacent to or is not a contiguous part of an urbanized area) small businesses (as classified by the Small Business Administration). The goal of the program is to reduce energy use and cost, and to help meet the Nation’s energy needs. REAP has two types of funding assistance available: grants and/or guaranteed loans. Assistance is available for energy efficiency improvements and renewable energy systems.
The REAP grant has funding available for up to 25 percent of total eligible project costs. Minimum total project costs are $6,000 (grant of $1,500) for energy efficiency projects and $10,000 (grant of $2,500) for renewable energy systems. Maximum total project costs are $1 million (grant of $250,000) for energy efficiency projects and $2 million (grant of $500,000) for renewable energy systems.
The REAP guaranteed loan can cover up to 75 percent of the total project costs. The guaranteed loan can guarantee up to 85 percent of a loan through an eligible lending institution. REAP guaranteed loans have a minimum loan amount of $5,000 and a maximum amount of $25 million. An applicant may also be able to get a loan/grant combination where 50 percent of the total project costs could be covered by a guaranteed loan and 25 percent could be covered by a grant. REAP guaranteed loans have a significant amount of funding available with quicker turnaround time than a grant.
Energy projects that will help save energy dollars for the business or farm operation may be eligible. Projects funded in Nebraska include: converting diesel/natural gas/propane irrigation engines to electric irrigation motors, installing variable frequency drives on electric motors, replacing grain dryers, replacing heating ventilation and air conditioning (HVAC) systems, replacing refrigeration units in grocery stores, replacing lighting to LED, adding insulation, replacing windows, and replacing doors. An energy audit is required for all energy efficiency improvement projects.
Michael Ortmeier in North Bend, NE switched from a diesel irrigation motor to a more efficient electric motor with a variable frequency drive. This project proposes to save 155,192 kWh annually which is enough energy for 14 homes. An annual dollar of produced energy of $1,170 is expected.
Renewable energy can be used for energy replacement or energy generated and sold to the power grid. Projects funded in Nebraska include: wind turbines to power center pivots, solar panels for stock wells, solar panels for businesses, geothermal heating and cooling, biodiesel plant that converted waste vegetable oil into biodiesel.
Ron Keogh in Oakland installed a 25 kW Dakota wind turbine on a 100 foot monopole tower which generated an estimated 112,200 kWh of electricity annually, enough energy to power 10 homes. An annual dollar of generated energy of $14,197 is expected.
Please note: Personal residences are not eligible.
Applications must be on file with Rural Development prior to incurring any expenses or beginning any work on the project. The application process for both energy efficiency and renewable energy projects include: REAP template application, energy audit (energy efficiency) or energy resource assessment (renewable energy), bids for project components, tax returns for the previous three years and an environmental review.
For energy efficiency projects, energy audits will document current usage (based on historical use) and also project usage and savings after improvements are complete. The audits are completed with the assistance of power utilities and UNL’s Manufacturer’s Extension Partnership.
For renewable energy projects, energy resource assessments are completed by the applicant with the assistance of the vendor.
The upcoming deadline for REAP grants is October 31. REAP guaranteed loans compete on a monthly basis for funding. Inquire about REAP and see if your project qualifies.