USDA REAP Program

The USDA Rural Energy for America Program (REAP) provides grant funding to rural small businesses and agricultural producers across the U.S. to be used for implementing renewable energy systems or making improvements to overall energy efficiency.

In 2008, Congress created REAP to provide funding to farmers and rural business owners who chose to invest in sustainability practices. According to the National Sustainable Agriculture Coalition (NSAC), “REAP has provided hundreds of millions of dollars in grants and loan guarantees to fund thousands of renewable energy projects across the country.”

The goal of this program is to increase the supply of clean energy in the private sector and reduce greenhouse gas emissions through projects serving local communities, including priority populations in disadvantaged and low-income communities. Over time, these efforts should reduce energy costs overall for agricultural producers and rural small businesses.

In 2023, the USDA expanded funding for the REAP grant to a record level – just over $1 billion. This is an unprecedented investment to assist rural America in becoming more energy-independent by reducing their energy costs through solar energy.    

The REAP grant can provide funding for up to 50% of total project costs – 40% from the Farm Bill and an additional 10% from the American Reinvestment Act. This level of grant funding has only been guaranteed through 2024, so now is the time to act.

When combined with the Investment Tax Credit (30+%), a business owner could be eligible for 70+% savings on their total project cost. In addition, the maximum grant size also increased from $500k to $1 million dollars.      

For example, a $100,000 solar PV installation on a rural business property would require an investment of $30,000 or less to install.

Who Can Apply for REAP Grants?

The REAP program aims to assist small businesses throughout rural America, not just those directly engaged in agriculture.

• Agricultural producers
  • An entity directly engaged in the production of agricultural products with at least 50% of gross income coming from agricultural operations.
• Small businesses
  • Must be located in eligible rural areas AND one of the following:
    • Private for-profit entity (sole proprietorship, partnership, or corporation)
    • A cooperative (including those qualified under Section 501(c)(12) of IRS code)
    • An electric utility (including a tribal or governmental electric utility that provides service to rural consumers and operates independently of direct government control)
    • A tribal corporation or other tribal business entities that are chartered under Section 17 of the Indian Reorganization Act (25 USC 477) or have similar structures and relationships with their tribal entity without regard to the resources of the tribal government.
  • Must meet the Small Business Administration size standards in accordance with 13 CFR 121.

Source: USDA REAP Grants in California

Additional qualifications for applicants:

• Individual borrowers must be citizens of the U.S. or live in the U.S. after being legally admitted for permanent residence.
• Private-entity borrowers must demonstrate that funds will remain in the U.S.
• Agricultural producers and small businesses must:
  • Be financially solvent
  • Be the owner of the business
  • Not be delinquent on or have outstanding federal taxes
  • Not be delinquent on debt
  • Have no judgment or debarment

What Is an Eligible Area?

Projects must be located in rural areas with populations of 50,000 residents or fewer.

Exception: Agricultural producers may submit projects in non-rural areas if the project is associated with on-site production

Use the USDA’s Eligibility Map to check your business’s or project’s address for eligibility.

USDA REAP Grant Terms

• Renewable Energy System Grants:
  • $2,500 minimum—$1 million maximum
• Energy Efficiency Grants:
  • $1,500 minimum—$500,000 maximum

USDA REAP Grant Additional Requirements

• Applicants must provide matching funds.
• All projects must have technical merit and use commercially available technology. 
• Energy efficiency projects require an energy audit or assessment.
• All projects require an environmental review prior to award or construction.

Source: USDA REAP Grants in California

Can USDA REAP Grants Be Combined With Other Solar Incentives?

Yes! The USDA REAP Grant may be combined with local, state, and federal solar incentives and energy tax credits.

Learn more and schedule solar energy system services with TENCO SOLAR by contacting our team today.