Tuesday, June 1, 2010

USDA Issues Call for Energy Grant, Loan Applications for 2010

The United States Department of Agriculture (USDA) recently announced that it has allocated $60 million in 2010 energy grants for the Rural Energy for America Program (REAP). Beginning in 2003, the program has each year offered grants and loans to farmers and other producers, tribal government entities, rural electricity cooperatives and public power utilities. The aim is to promote renewable energy and encourage economic activity in rural America.

On paper, a REAP grant may not exceed 25 percent of the costs of eligible projects, which include solar hot water systems, solar photovoltaic (PV) panels, wind turbines, geothermal systems and anaerobic digesters, among other energy technologies. Energy efficiency improvements are also eligible. Grants are limited to $500,000 for renewable energy systems and $250,000 for energy efficiency improvements.

In practice, however, smaller projects may stand a better chance at receiving REAP funding: according to the USDA, "projects seeking REAP grants of $20,000 or less are greatly favored."

REAP also makes available guaranteed loans worth up to 75 percent of a projects cost, with a minimum loans size of $5,000 and a maximum size of $25 million. A combined loan and grant under REAP may not exceed 75 percent of the project’s cost.

The deadline to apply for REAP loans and grants for the 2010 funding cycle is June 30. To qualify, applicants must operate in a USDA-designated rural area.

REAP was originally called the federal Renewable Energy Systems and Energy Efficiency Improvements Program, which began in fiscal year 2003. It was founded by the USDA on the heels of the 2002 federal Farm Security and Rural Investment Act, and was allocated $23 million a year through 2007. A major switch came in 2008, when the Food Conservation and Energy Act changed the program’s name to REAP.

About 88 percent of REAP funds are expected to be used by rural small businesses looking to buy new energy efficient systems or make smaller energy efficient changes. Again, the application deadline is June 30, 2010. Don’t miss your chance to qualify.

**Note that businesses — such as farms and other rural commercial entities — that install a renewable energy system in 2010 may qualify for a treasury grant worth 30 percent of project costs. Since companies are not permitted to participate in more than one federal grant program, the treasury’s program may be a better option of the two for the current year.