Rural Energy for America Program (REAP) : Renewable Energy Systems Grant

The Rural Energy for America Program (REAP), overseen by the U.S. Department of Agriculture (USDA) Rural Development, provides financial support to agricultural producers and small rural businesses to implement renewable energy systems and energy efficiency improvements. For fiscal year 2025, REAP has three competitive grant application deadlines: September 30, 2024, December 31, 2024, and March 31, 2025. Loan guarantees are available continuously and adhere to USDA guidelines under 7 CFR 5001.315. Additional funding may become available through future federal notices, including funds provided by the Inflation Reduction Act (IRA). Eligible applicants for REAP include agricultural producers earning at least 50% of their income from agricultural operations and small businesses located in eligible rural areas (with populations under 50,000). Small businesses must meet the Small Business Administration size standards and include for-profit entities, certain cooperatives, and tribal or governmental electric utilities serving rural communities. All applicants must have no delinquent federal debt or outstanding judgments and, if applying for loan guarantees, must demonstrate that the funds will remain within the United States. Funds from REAP can be used for various renewable energy projects, including biomass (biodiesel, ethanol, anaerobic digesters), geothermal, small hydropower, hydrogen, solar, wind, and ocean energy projects. Energy efficiency improvements such as advanced HVAC systems, insulation, lighting, and replacement of energy-inefficient equipment are also covered. Agricultural producers specifically may also apply for funding to purchase energy-efficient equipment for their production or processing operations. Each energy efficiency project requires an energy audit or assessment, while all projects must undergo an environmental review before award or construction. The funding structure for REAP includes grant opportunities that cover up to 50% of total eligible project costs (for certain projects), with renewable energy grants ranging from $2,500 to $1 million and energy efficiency grants from $1,500 to $500,000. Loan guarantees cover up to 75% of project costs, with a maximum 80% guarantee for loans approved in FY 2024 and FY 2025. Loan terms can extend up to 40 years depending on the asset’s lifespan, with interest rates determined between the lender and borrower. An initial guarantee fee of 1% and an annual 0.25% retention fee apply, in addition to customary origination fees set by the lender. REAP requires that applicants provide at least a 25% cost-share for loan-only projects, with federal grant support restricted to specific project types, such as zero-emission renewable energy systems, energy community projects, energy efficiency improvements, or certain Tribal business initiatives. Applicants interested in REAP should work with their local USDA Rural Development Energy Coordinator to submit applications and ensure compliance with program requirements, including adherence to relevant regulations under 7 CFR Parts 4280 and 5001. REAP is designed to promote energy independence by expanding renewable energy production and enhancing energy efficiency in rural areas. By reducing energy costs for agricultural and small business operations, REAP aims to contribute to a more sustainable energy landscape for rural America. For the latest information on funding, program updates, and regulations, applicants are encouraged to consult their local USDA office or review relevant federal notices.