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Rural Energy for America Program (REAP)

Providing grants to support energy efficiency and renewable energy development

Program Basics
The Rural Energy for America Program (REAP), Section 9007 of the Farm Bill (formerly Section 9006 Renewable Energy Systems and Energy Efficiency Improvements Program) offers the following assistance for projects located in rural areas:

  1. Guaranteed loans to promote energy efficiency and renewable energy development for agricultural producers and rural small businesses. The 2008 Farm Bill expanded the program to include ocean and hydroelectric source technologies as eligible renewable technologies. The loan limit has been increased to $25 million.
  2. Grants to agricultural producers and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements or to complete a feasibility study for a renewable energy system.
  3. In addition, the grant program will also provide grants for units of State, Tribal, or local government; institutions of higher education; rural electric cooperatives; or public power entities to conduct energy audits and provide renewable energy development assistance to agricultural producers and rural small businesses.

Project Examples

Maine Woods Pellet Company, LLC
Homeowners and businesses are increasingly looking to the wood pellet industry for a source of clean, efficient energy. USDA Rural Development provided a Renewable Energy Systems and Energy Efficiency Program Grant in the amount of $400,000 to Maine Woods Pellet Company, LLC, to purchase and install wood pellet manufacturing equipment.

The establishment of Maine Woods Pellet Company, LLC, in Athens, has led to the hiring of 26 full- and two part-time employees. These jobs have been filled by residents of Athens and the surrounding areas.

"This project occurred at a time when there is a great emphasis on renewable sources of energy and it proves that rural Maine can be a leader in this important and timely issue," said Jim Batey, Economic Development Director of the Somerset Economic Development Corporation.

Maine Woods Pellet Company, LLC produces 100,000 tons of pellets per year, replacing an estimated 12,000,000 gallons of fuel oil and reducing greenhouse gas emissions by 260,000,000 pounds. In addition, Maine Woods Pellet Company estimates that consumers will save 35-40 percent on their heating costs when using the product.

Rural Electric Convenience Cooperative finds Green Solution
The Rural Electric Convenience Cooperative (RECC) was looking for a way to add renewable energy to its portfolio. The cooperative decided to install a utility scale wind turbine. Beyond its environmental benefits, it would reduce their wholesale power requirements and be a hedge against rising fuel costs.

The co-op had access to a unique 60-foot reclaimed refuse mound at an abandoned coal mine in their service area near Farmersville. The height of the mound and the movement of the wind up the hill could generate adequate winds to support a 220 foot, 900 kilowatt wind turbine. The only problem left was how to make it affordable.

RECC's board voted to pursue the purchase of a wind turbine pending affordable financing. They applied for and received a Rural Development Renewable Energy grant for $375,000. By combining this grant with zero percent Clean Renewable Energy Bonds from Co-Bank backed by Rural Development, state grants, and green tags purchased by the Illinois Clean Energy Community Foundation, RECC put together adequate financing.

The wind turbine was installed and can produce 5,000,000 kilowatts a year, satisfying five percent of the co-op's power needs. That's a significant amount of power considering that the co-op serves 5,700 agricultural, commercial, and residential customers in a five county area. The turbine will improve the cooperative's environmental footprint, replace some of the power the coop purchases, and act as a hedge against unpredictable fuel costs.

Abbigator, Inc.
USDA Rural Development helped Abbigator, Inc become more efficient with a $49,934 grant to install an energy-efficient water pump and heating system at the company's alligator production facility. Abbigator expects to reduce its energy usage by 39 percent as a result of these improvements.

Applications and Financial Information
Grants are awarded on a competitive basis and can be up to 25% of total eligible project costs. Grants are limited to $500,000 for renewable energy systems and $250,000 for energy efficiency improvements. Grant requests as low as $2,500 for renewable energy systems and $1,500 for energy efficiency improvements will be considered. At least 20% of the grant funds awarded must be for grants of $20,000 or less.

Guaranteed loan can be up to 75 percent of total eligible project costs, has a minimum of $5,000, and are limited to a maximum of $25 million.

Applications and information on deadlines can be found by contacting state offices.

REAP was funded at $60 million for Fiscal Year 2009 (FY09) and $99.3 million for FY10.

Eligibility, Uses and Restrictions
Funds must be used for the purchase of a renewable energy system or to make energy efficiency improvements.

Renewable energy systems provide energy derived from wind, solar, biomass, biogas, ocean, hydro, or geothermal sources, or hydrogen derived from biomass or water using wind, solar, hydroelectric or geothermal energy.

Energy efficiency improvements typically involve installing or upgrading equipment that results in a significant reduction in energy use from current operations. Energy efficiency improvements to the business include HVAC systems, insulation, refrigeration, lighting, irrigation systems, pumping systems, air systems, motor systems, etc.

Note: Funds may not be used for agricultural tillage equipment, vehicles, or residential improvements.

Contact Information
To request further information or apply for funding under the REAP Program, please contact your state Rural Development office: www.rurdev.usda.gov/recd_map.html

A list of state Rural Energy Coordinators is available here:
www.rurdev.usda.gov/rbs/busp/EnergyCoordinatorList.doc

Last Updated November 4, 2009

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