The USDA's Rural Energy for America Program (REAP) provides financial support through grants and guaranteed loans for renewable energy systems and energy efficiency improvements aimed at rural small businesses and agricultural producers. Open for Fiscal Year 2025, REAP has three grant deadlines: September 30, 2024, December 31, 2024, and March 31, 2025, while guaranteed loans are accepted on an ongoing basis. This program is structured to reduce energy costs, encourage renewable energy, and contribute to American energy independence.
Eligibility for REAP includes rural small businesses and agricultural producers with at least 50% of their gross income derived from agricultural production. Projects must be located in rural areas (defined as populations of 50,000 or fewer), but agricultural producers may apply for projects in non-rural areas if related to their on-site production operations. Fundable activities cover a wide range of renewable energy systems, including solar, wind, hydropower, biomass, geothermal, and ocean energy. Energy efficiency improvements are also eligible, such as upgrades to HVAC systems, insulation, lighting, doors, windows, and irrigation motors.
Funding through REAP covers up to 75% of eligible project costs, with individual grants capped at $1 million for renewable energy systems and $500,000 for energy efficiency improvements. Projects must be matched by applicants to meet either a 25% or 50% Federal grant share, depending on project type. Loans can cover up to 80% of costs with terms set by lenders, up to a maximum of 40 years. Interest rates and fees are negotiated between borrower and lender, while loan guarantees include an initial fee of 1% of the guaranteed amount and a 0.25% retention fee annually.
To apply, a technical assessment (such as an energy audit) is required for energy efficiency projects, and all projects must undergo an environmental review. For more details, applicants should refer to REAP regulations under 7 CFR Part 4280 and consult with their State Rural Development Energy Coordinator.
