By Matthew D. Ernst
ST. LOUIS, Mo. — The 2018 farm bill Congress passed in late December fully funds the Rural Energy for America Program (REAP), providing mandatory financing for the effort established in 2002. REAP is designed to promote “energy efficiency and renewable energy for agricultural producers and rural small businesses,” according to the U.S. Department of Energy.
REAP has proven popular with many farm and rural businesses, and applications for one type of funding are due at the end of January. Most grant applications are already underway; interested producers can contact state rural development offices for more information. The USDA lists those offices at its Rural Development website, www.rd.usda.gov/files/RBS_StateEnergyCoordinators.pdf
(It should be noted that at press time for Marketplace, the federal government shutdown of USDA offices because of a lapse in further funding was still ongoing, and calls placed to these offices were met with recorded messages explaining the workers could not respond to voicemails or emails during the furlough. There is no information at this time about how this will affect application deadlines, or how else potential applicants may obtain the necessary information.)
The USDA created the REAP program in the 2008 farm bill, converting a program established six years earlier. The program, administered through USDA Rural Development, offers two kinds of grants and loan assistance.
One grant program, Renewable Energy Systems & Energy Efficiency Improvement Guaranteed Loans & Grants, was the most commonly awarded REAP in this region in 2018. These provide guaranteed loan financing and grant funding to agricultural producers and rural small businesses for renewable energy systems, or to make energy efficiency improvements.
These REAP grants can fund up to 25 percent of a project’s total cost, with loan guarantees up to 75 percent of a project cost. Eligible renewable energy projects include wind, solar, biomass and geothermal, and hydrogen derived from biomass or water using wind, solar or geothermal energy sources.
Many REAP-funded projects provide information for energy alternatives and other energy decisions on farms and rural businesses. Based on a survey of the USDA award database, livestock and poultry farms have particularly benefited from programs funded through REAP – such as an energy audit program for Kentucky poultry houses that ran from 2008-14. Agricultural engineers provided energy assessments for 144 poultry farms and identified projects to cut energy costs.
After receiving feedback from the REAP-funded energy audits, the Kentucky farms decided whether to invest in the energy projects.
According to a final project report, the farms footed about 70 percent of projects totaling more than $6 million. A Kentucky state cost-share program combined with other federal and private grant funding sources for the remaining energy upgrades. The upgrades reduced energy usage – one of the REAP program goals – finding that installing additional insulation and LED light bulbs could trim annual electricity costs by more than $7,000 per farm.
These kinds of projects, though not directly connected into alternatives like wind and solar, serve to directly reduce rural electric usage.
The majority of funds spent for REAP projects are guaranteed loans. Through 2014, REAP funds were heavily allocated toward solar panel installation and other solar projects. Investments also occurred for other alternatives, including wind energy, anaerobic digesters and biomass energy projects.
Three local beneficiaries
Another program, Energy Audit & Renewable Energy Development Assistance Grants, is to help producers and rural small businesses conduct and promote energy audits, as well as providing renewable energy development assistance. This program was not as widely awarded in the Midwest and upper South during the 2018 fiscal year, with a search of the USDA award database only showing three awards in this region through this second part of the REAP program.
One award was made in March 2018, a $50,000 grant to the Fairfield County Port Authority in Ohio. The grant pays for 75 percent of an energy audit for manufacturing businesses outside of Violet Township. Businesses can then decide whether to make energy-saving improvements, based on the audit results, to potentially reduce operating costs.
“We applied for this grant because the average manufacturing facility in Fairfield County was built in 1968 and likely has a need for some upgrades,” said Patrick O’Malia, Fairfield County Economic and Workforce Development specialist.
The second award, also made last March, was a $75,000 grant to fund an energy audit program offered through Berea College in Kentucky. A $100,000 grant was also made to the Southeast Tennessee Resource Conservation & Development Council, which provides energy assessments to eligible businesses, including poultry producers.
The Kentucky grant funds the Berea College Center for Energy, which conducts energy audits for small businesses in rural Kentucky. The center highlights a REAP-funded audit of a rural Kentucky grocery store that identified $27,000 in annual cost savings by making energy-efficient upgrades in cooling and lighting equipment.
The REAP program is not without critics. Taxpayers for Common Sense (TCS), the nonpartisan watchdog group that monitors government spending, called permanent funding for REAP one of the 2018 farm bill’s “Top 10 Worst Provisions,” in December 2018.
“The Farm Bill Conference Committee should have axed mandatory funding for this wasteful program (as the House farm bill version recommended) so individual companies and businesses could cover these normal costs of doing business themselves,” stated the TCS. “No other farm bill energy title program received permanent funding in this farm bill or in past bills, instead having to be re-justified every five years when a farm bill is debated.
“But REAP is an exception to the rule, and it reeks.”
Supporters of the program insist it strengthens rural America. “Since 2008, REAP has provided hundreds of millions of dollars in grants and loan guarantees to fund thousands of renewable energy projects across the country,” stated a National Sustainable Agriculture Coalition update.
“Farmers and rural businesses have used REAP funding to replace irrigation motors and grain dryers, install solar panels, purchase and install wind turbines and make energy efficiency upgrades.”