Rural Energy for America Program (REAP) – All You Need To Know

What Is REAP?

The Rural Energy for America Program, also known as the UDSA REAP Grant is a federal government initiative aimed at assisting small agricultural and rural businesses in adopting sustainable energy solutions. REAP seeks to promote energy independence, reduce operational costs, and increase reliance on clean energy among small businesses across the country. In fiscal years 2023 and 2024, the federal government expanded the scope and budget allocation for REAP, inviting applications for both grants and loan guarantees. This initiative paves the way for an energy-efficient rural industrial landscape in the US. Here are some quick facts about REAP before we delve into details on eligibility, the application process, the REAP scoring rubric, and more:

• REAP is a competitive program where all applicants in each state compete against each other to secure the grant and/or loan guarantee.
• REAP will host six quarterly contest rounds with grant sizes of $1,500 - $500,000 for energy efficiency projects and $2,500 - $1 million for renewable energy systems.
• A total of $145 million is earmarked for REAP across fiscal years 2023 and 2024, which will be allocated through 700 grant and loan awards.
• The active application windows currently are March 31, 2024, June 30, 2024 and September 30, 2024.

What Type of Funding is Available under REAP?

Here are the types of funding small businesses can compete for under the USDA REAP program:

• Loan guarantees or loans covering up to 75% of the total eligible project costs.
• Grants covering up to 50% of the total project cost.
• Combined grant and loan guarantee funding for up to 75% of the total eligible project costs.

What Are The Application Windows For REAP?

Applications for REAP are accepted year-round at the nearest USDA Rural Development Office. You can find details on state-specific USDA Rural Development Offices here.

Who is Eligible For REAP?

Any business meeting the following criteria is eligible to apply for REAP:

• The business must be located in rural areas. You can check here if your business’s location qualifies as a rural area.
• The business must qualify as a small business according to the criterion of the U.S. Small Business Administration. You can check here if your business qualifies.
• For agricultural producers, at least 50% of the gross income must come from the direct production of agricultural products.

Additional Requirements For REAP

Here are the additional requirements applicants must meet to qualify for applying to REAP grants and loans:

• Applicants must provide at least 25% of the project cost if applying for a loan
• All projects must demonstrate technical merit and utilize commercially available technology.
• Energy efficiency projects require an energy audit or assessment
• All projects require an environmental review 

Understand the Scoring Rubric

Applicants are evaluated using a competitive scoring system that includes factors such as the length of the payback period, total energy savings, location of the facility, and more. This scoring rubric enables REAP authorities to prioritize those projects that align most with the program’s objectives and result in the most positive impact on America’s renewable energy initiatives. Understanding the Scoring Rubric and its applicability to a project will enable applicants to present the best possible case for their cause. Here is a detailed breakdown of the scoring rubric employed by the REAP authorities:

A more detailed explanation of each scoring criterion is available here.

REAP For Montanans and Idaho Residents

Montana

Montana’s industrial landscape aligns well with the eligibility requirements for REAP. The state’s economy is predominantly driven by the primary sector, including industries such as construction, agriculture, healthcare, manufacturing, mining, and energy production. Montana boasts over 27,000 farms spread across 27 million acres, ranking second in agricultural production after California. Often referred to as America’s Heartland state, Montana has a total land area of 93 million acres of land, with a significant 62% utilized for agricultural purposes.

This highlights a significant overlap between the small business size standards required to qualify for REAP, as listed by the U.S. Small Business Administration, and the industrial and occupational landscape in Montana. Consequently, small business owners in the state emerge as highly suitable candidates for REAP.

Idaho

Idaho emerges as another strong contender for the REAP program thanks to its robust foothold in small businesses. The small industries and businesses profile in Idaho are experiencing significant growth. Private employment and occupation in The Gem State are primarily spread across construction, healthcare, trade, manufacturing, and technical & professional services.

There is indeed a significant overlap between the small business size standards required to qualify for REAP, as listed by the U.S. Small Business Administration, and the small industries demography in Idaho. This makes businesses in The Gem State prospective candidates for the grants and loan guarantees offered by REAP.

State-Specific Technical Assistance

To ensure that residents in each state have a complete understanding and accessibility to the REAP process, the federal government has curated a state-specific technical assistance team. This team includes a Rural Business-Cooperative Service State Energy Coordinator. You can find the contact details of the Energy Coordinator for Montana, Idaho, and all other states here.

A Plethora of Benefits of Embracing Solar Energy

There has never been a better time to join the solar energy movement. From tax incentives and bonus depreciation to tax credits, interest-free loans, and property tax relief, there are abundant opportunities for small businesses to capitalize on their journey toward solar adoption. Even if a small business covers only a percentage of the total project cost to install solar panel systems through REAP, there is still a wide array of benefits that contribute to the savings. These include:

Federal Tax Credit

Through the Federal Tax Credit, investors in solar panels can apply for a tax credit amounting to 30% of the cost of their installed solar panel system. This credit can be claimed in the tax return for the year following the installation.

Bonus Depreciation

Bonus depreciation allows business owners to claim a 100% depreciation bonus for qualifying capital equipment purchased and placed in the preceding fiscal year. You can find the list of generally qualifying capital equipment for bonus depreciation here. In essence, bonus depreciation enables solar power investors to depreciate 100% of the value of their solar module (minus any other federal tax incentives) in the first year itself, despite the average lifespan of a solar panel system being 40+ years. This represents a significant tax-saving advantage for adopters of solar energy.

This array of savings opportunities provided by REAP makes solar energy adoption a cost-effective and viable capital investment proposition for small businesses. It enables them to achieve energy independence and reduce energy costs in the long run.

Applying For REAP

Applying for REAP can be an arduous process that may take months to complete. Each step requires meticulous attention to detail in gathering the necessary information, filling out the appropriate applications and tax forms, and presenting all information cohesively. Understanding the process before diving into the application ensures a smooth process with minimal stress or hiccups.

Applicants also have the option to apply simultaneously for both the grant and the loan guarantee. If their application qualifies for both incentives, they will be disbursed accordingly. Here is a systematic, step-by-step method to approach the application for REAP:

1. Getting Started – Prepare Before You Apply

• Contact your Local Rural Development State Energy Coordinator to formally initiate the process. Here are the contact details of state-specific energy coordinators.

• Begin by drawing up the costing, estimations, and design of the project for which you are seeking to obtain a grant or loan guarantee.

• Obtain a Universal Entity Identifier by registering here.

• Contact your local utility for interconnection agreements, bringing them on board for plans to construct and operate a system connected to the electricity grid. Get the contact information of concerned government utility representatives from the Montana Electrical Board for Montana residents or the Idaho Electrical Board for residents of Idaho

• If you are unsure about your capabilities to draw up an impressive application, you may also consider hiring a professional grant writer

2. Gather All Application & Tax Forms Needed For REAP

• The primary Form 4280 is divided into 3 categories based on project cost: 
  •  Form 4280-3A for projects with a total cost of less than $80,000 (Find instructions to fill it out here.)
  •  Form 4280-3B for projects with a total cost of more than $80,000 but less than $200,000 (Find instructions to fill it out here.)
  •   Form 4280-3C for projects with a total cost of $200,000 or greater (Find instructions to fill it out here.)
• Form SF 424 - Application For Federal Assistance
• Form SF 424 C – Budget Information - Construction Programs
• Form SF 424 D – Assurances – Construction Programs

3. Complete Application Forms & Gather Supporting Documents

After filling out the application forms above, gather supporting documents which include:

•   Environmental Checklist
•   Renewable Energy System Vendor Certification
•   Energy Efficiency Improvement Vendor Certification

4. Submit The Application

Once you have completed the application forms and gathered all the supporting documents, it's advisable to create a photocopy of each document for your reference and review. Double-check all details to ensure accuracy and completeness. Afterwards, carefully review your application to ensure it is in order.

Following this, send your complete application to the Local Rural Development State Energy Coordinator. You may utilize cloud storage, file compression, or file transfer services to submit large files efficiently.

5. Await REAP Selection

Please note that evaluating REAP applications can be a lengthy process, often taking months. We kindly ask for your patience during this period. Make sure to check your email frequently for any follow-up questions or requests for additional information. It's crucial to respond to these inquiries promptly to prevent your application from becoming inactive.

Throughout the waiting period, maintain open communication with the Local Rural Development State Energy Coordinator. They can provide updates and guidance as needed. Thank you for your cooperation and understanding.

6. Grant Award & Disbursement

Selected projects will receive a grant award determination from the USDA followed by a grant reward agreement. It is important to adhere to the terms and conditions of the agreement, execute and complete the project according to the timelines and retain all invoices & proof of payment. All the while, beneficiaries must stay in touch with the Local Rural Development State Energy Coordinator.

Conclusion

REAP serves as a significant boost to small companies in the private sector located in rural America, empowering them to spearhead energy independence initiatives and lower their energy expenses over the long term. This endeavour not only contributes to reduced operational costs but also fosters sustainable and balanced market dynamics by eventually lowering product and service costs.

At EonTech, we invite you to reach out to us to explore how your small business can qualify and effectively compete for a REAP grant or loan guarantee. This opportunity can kick-start your journey towards harnessing sustainable and renewable solar power, positioning your business for long-term success and environmental stewardship. Let's work together to unlock the potential of REAP for your business's benefit.