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REAP Grant
The USDA's Rural Energy for America Program (REAP) provides grants to agricultural producers and rural small businesses for energy-efficiency improvements and renewable energy projects. As of summer 2023, the grants can cover up to 50% of the total installation cost of solar systems, with a cap of $1 million. This substantial coverage, combined with other incentives, can significantly offset the expenses associated with installing solar systems.
Eligibility Criteria:
Farmers (Schedule F):
● The majority of income (51%) must come from the farm.
● The majority of electricity used (51%) must be for farm operations, not personal residences on the property.
● No owed back taxes to the IRS.
Businesses (Form 1065 or 1120):
● Rural small businesses qualify.
● The majority of electricity consumed on the property must be for business purposes.
● No owed back taxes.
● Business must be located in a qualifying area (defined as an area with a population of 50,000 residents or less).
General Eligibility:
● Most farms and rural small businesses in eligible areas could qualify.
● Use the USDA's Eligibility Map to determine if the property is in a qualifying area.
Application Periods (2023-2024):
The REAP Grant program has expanded its grant size and increased the number of rounds due to additional funding from the Inflation Reduction Act. For the period from summer 2023 to the end of 2024, there are five chances to apply:
Q1: July–September 2023
Q2: October–December 2023
Q3: January–March 2024
Q4: April–June 2024
Q5: July–September 2024
Tips for Applicants:
● Understand and fulfill the eligibility criteria.
● Clearly document the solar project, emphasizing its benefits and alignment with the grant program's goals.
● Seek professional assistance to ensure a strong application.
● Demonstrate a solid financial plan.
● Highlight the community and environmental impact of the solar installation.
● Submit applications on time and stay informed about any updates or changes to the grant program.
By following these guidelines, farmers and rural small businesses can enhance their chances of qualifying for the USDA REAP Grant and receive significant support for their solar projects.
USDA REAP Grant Rounds Overview:
Grant Allocation:
● The total grant funding is divided among specified rounds.
● Funds are allocated to qualifying businesses and farms
● Highest-scoring applications receive grants until the funding for the round is exhausted.
Application Rollover:
● If not awarded in the initial round, applications automatically roll over to subsequent rounds within the same calendar year.
● If not awarded in 2023, reapplication is required for 2024 rounds.
Open to All Sizes:
● Unlike previous years, all rounds are open to projects of all sizes.
● Special allocation for projects under $20,000 in the July-September 2023 round.
USDA REAP Grant Scoring Criteria:
Environmental Benefits (5 points):
● Positive effects on resource conservation, public health, and/or the environment.
Energy Generation / Replacement/Savings (25 points):
● Points based on the amount or percentage of energy generated, replaced, or saved.
Commitment of Funds (15 points):
● Higher percentage of project funding results in more points.
Previous Grantees and Borrowers (15 points):
● Most points for never receiving the grant; none if received less than 2 years ago.
Existing Business (5 points):
● Points awarded for meeting the definition of an existing business.
Simple Payback (15 points):
● Shorter system payback leads to higher points.
Size of Request (10 points):
● Points for requests of $250,000 or less for renewable energy systems or $125,000 or less for energy efficiency improvements.
State Director and Administrator Priority Points (10 points):
● Additional points for veteran or socially/economically disadvantaged status, technology type, geographic diversity, etc.
Application Process:
● Typically handled by solar installers or third parties.
● Requires financial information, details about the proposed solar system, and approval/signature for various documents.
● Professional assistance, such as grant writers, can enhance the application's chances.
Safer Option: 25% Grant:
● An alternative program offering a 25% grant for efficiency-related projects.
● Expected to be less competitive than the 50% REAP Grant.
When to Apply:
● The program is currently scheduled to run through the fall of 2024.
● The grant covers 50% of installation costs, and coupled with other incentives, over 80% of costs could be covered in the first year.
● Given the competitive nature and the program's timeline, it is advisable to start the application process as soon as possible.
How to Get Assistance:
● Professional assistance is available, with grant experts helping secure over $12 million in USDA funds.
● Early application increases the chances of success.
By understanding the rounds, scoring criteria, and application process, applicants can navigate the USDA REAP Grant program effectively and improve their chances of securing funding for solar projects.
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