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USDA REAP PROGRAM OFFERS GRANT FOR WIND TURBINES TO FARMERS Ben B.Boothe Sr. April 14, 2010 Rural Energy For America Program Grants/Renewable Energy Systems/Energy Efficiency Improvement Program (REAP/RES/EEI) The REAP/RES/EEI Grants Program provides grants for energy audits and renewable energy development assistance. It also provides funds to agricultural producers and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements. How does the B&I Guaranteed Loan Program compare to the Rural Energy for America Program Guaranteed Loan and Grant? To assist you in determining which program best fit your needs this comparison chart identifies each programs common and distinct requirements in an easy to read format. How much are the grants?The grants are awarded on a competitive basis and can be up to 25% of total eligible project costs. Grants are limited to $500,000 for renewable energy systems and $250,000 for energy efficiency improvements. Grant requests as low as $2,500 for renewable energy systems and $1,500 for energy efficiency improvements will be considered. At least 20% of the grant funds awarded must be for grants of $20,000 or less. Who is eligible? The program is designed to assist farmers, ranchers and rural small businesses that are able to demonstrate financial need. All agricultural producers, including farmers and ranchers, who gain 50% or more of their gross income from the agricultural operations are eligible. Small businesses that are located in a rural area can also apply. Rural electric cooperatives may also be eligible to apply. What types of projects are eligible?Most rural projects that reduce energy use and result in savings for the agricultural producer or small business are eligible as energy efficiency projects. These include projects such as retrofitting lighting and insulation, purchasing or replacing equipment with more energy efficient units. Eligible renewable energy projects include projects that produce energy from wind, solar, biomass, geothermal, hydro power and hydrogen-based sources. The projects can produce any form of energy including, heat, electricity, or fuel. For all projects, the system must be located in a rural area, must be technically feasible, and must be owned by the applicant. How to Apply?To apply for funding for the REAP Grant Program, please contact your Rural Development State Office. Reap Program………SIMPLE EXAMPLE How does it work?: Total cost to add turbines to an agricultural project: $2,440,000 Reap Grant: 25% or $500,000 whichever is less: So in this case: $500,000 grant. Reducing your cost for these units to: $1,940,000 USDA will guaranty a bank loan for 15 to 20 years term for up to: Federal guarantee for lenders on loans for eligible energy projects: Of the $2,440,000, the government will guarantee loans of 50% at a local bank, thus making it possible for the local bank to lend $1,220,000.00 The balance is $720,000, which is all that the owner would have to come up with, or get personal financing for, in this case, only about 30% of the total. But the same turbines, can produce about $340,000 per year in electricity, so therefore the farmer or operator would be able to pay for the turbines ($1,9400,000) in about 5.71 years. Back

Articles

USDA REAP PROGRAM OFFERS GRANT FOR WIND TURBINES TO FARMERS

Ben B.Boothe Sr.

April 14, 2010

Rural Energy For America Program Grants/Renewable Energy Systems/Energy Efficiency Improvement Program (REAP/RES/EEI)

The REAP/RES/EEI Grants Program provides grants for energy audits and renewable energy development assistance. It also provides funds to agricultural producers and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements.

How does the B&I Guaranteed Loan Program compare to the Rural Energy for America Program Guaranteed Loan and Grant? To assist you in determining which program best fit your needs this comparison chart identifies each programs common and distinct requirements in an easy to read format.

How much are the grants?The grants are awarded on a competitive basis and can be up to 25% of total eligible project costs. Grants are limited to $500,000 for renewable energy systems and $250,000 for energy efficiency improvements. Grant requests as low as $2,500 for renewable energy systems and $1,500 for energy efficiency improvements will be considered. At least 20% of the grant funds awarded must be for grants of $20,000 or less. Who is eligible? The program is designed to assist farmers, ranchers and rural small businesses that are able to demonstrate financial need. All agricultural producers, including farmers and ranchers, who gain 50% or more of their gross income from the agricultural operations are eligible. Small businesses that are located in a rural area can also apply. Rural electric cooperatives may also be eligible to apply. What types of projects are eligible?Most rural projects that reduce energy use and result in savings for the agricultural producer or small business are eligible as energy efficiency projects. These include projects such as retrofitting lighting and insulation, purchasing or replacing equipment with more energy efficient units. Eligible renewable energy projects include projects that produce energy from wind, solar, biomass, geothermal, hydro power and hydrogen-based sources. The projects can produce any form of energy including, heat, electricity, or fuel.

For all projects, the system must be located in a rural area, must be technically feasible, and must be owned by the applicant. How to Apply?To apply for funding for the REAP Grant Program, please contact your Rural Development State Office. Reap Program………SIMPLE EXAMPLE How does it work?:

Total cost to add turbines to an agricultural project:

$2,440,000

Reap Grant: 25% or $500,000 whichever is less: So in this case: $500,000 grant.

Reducing your cost for these units to: $1,940,000

USDA will guaranty a bank loan for 15 to 20 years term for up to:

Federal guarantee for lenders on loans for eligible energy projects:

Of the $2,440,000, the government will guarantee loans of 50% at a local bank, thus making it possible for the local bank to lend $1,220,000.00

The balance is $720,000, which is all that the owner would have to come up with, or get personal financing for, in this case, only about 30% of the total.

But the same turbines, can produce about $340,000 per year in electricity, so therefore

the farmer or operator would be able to pay for the turbines ($1,9400,000) in about 5.71 years.

Back

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