The US Department of Agriculture is now accepting applications to provide up to $20.8 million in grants and loan guarantees to agricultural producers and rural small businesses to make energy efficiency improvements or to build renewable energy projects. This will support $10.4 million in grants and $40.4 million in loan guarantees. These incentives are available through USDA’s Rural Energy for America Program (REAP) and will be allocated through state and national competitions.

Eligible renewable energy projects include projects that use renewable biomass, anaerobic digesters, geothermal for electric generation, geothermal for direct use, hydroelectric (30 megawatts or less), hydrogen, small and large wind, small and large solar and ocean (including tidal, wave, current, and thermal) energy.

In determining the amount of a loan guarantee, the following six criteria will be considered: the type of renewable energy system to be purchased, the estimated quantity of energy to be generated by the renewable energy system, the expected environmental benefits of the renewable energy system, the quantity of energy savings expected to be derived from the activity, as demonstrated by an energy audit, the estimated period of time it would take for the energy savings generated by the activity to equal the cost of the activity and the expected energy efficiency of the renewable energy system.

Grants

A project can receive a grant of up to $250,000 for a feasibility study and up to $500,000 for efficiency improvements and generation projects. However, no one entity may receive more than $750,000 in grants and no grant can exceed 25% of the project’s costs.

The minimum renewable energy system grant request is $2,500. The minimum energy efficiency improvement grant request is $1,500.

Loan Guarantees

Loans are made by private lenders, but the USDA will guarantee a loan of up to $25 million per loan request. The minimum loan amount is $5,000. Up to 75% of the total eligible project costs can be covered through the REAP guaranteed loan program, reduced by the amount of any grant received under the program.

For Fiscal Year 2013, the guarantee fee amount is one percent of the guaranteed portion of the loan. There also is an annual renewal fee of 0.25% of the guaranteed portion of the loan.

The application due dates depend on the type of assistance sought. Applications for renewable energy system and energy efficiency improvement grants, a combination grant and guaranteed loan and renewable energy system feasibility study grants are due by April 30, 2013. Applications for renewable energy system and energy efficiency improvement guaranteed loans will be accepted until July 15, 2013.

Renewable Energy System and Energy Efficiency Improvement Guaranteed Loan and Grant Program

REAP is designed to help agricultural producers and rural small businesses reduce energy costs and consumption and help me the country’s energy needs.

The renewable energy system and energy efficiency improvement guaranteed loan and grant program provides financial assistance to agricultural producers and rural small businesses to purchase, install and construct renewable energy systems, make energy efficiency improvements, use renewable technologies that reduce energy consumption and participate in energy audits, renewable energy development assistance and feasibility studies.

Grants must be used towards the project costs for the purchase, installation and construction of renewable energy generation systems.

Examples of eligible project costs include post-application purchase and installation of equipment (new, refurbished, or remanufactured), except agricultural tillage equipment, used equipment and vehicles, post-application construction or improvements (other than residential), energy audits or assessments, permit and license fees and feasibility studies and technical reports.

Guaranteed loan and grant eligibility is limited to rural small businesses and agricultural producers. An agricultural producer is an individual or entity directly engaged in the production of agricultural products (crops, livestock, forestry products, hydroponics, nursery, and aquaculture) with 50% or more of their gross income derived from the operations. A private entity is considered a small business in accordance with the Small Business Administration’s Small Business Size Standards.

The lender also must be eligible for the program. Most lenders are eligible.

For both loan guarantees and grants, the project must meet certain conditions, including, among other criteria, that the technology is pre-commercial or commercially available and replicable and the applicant must be the owner of the project and control the revenues, expenses, operations, and maintenance of the project.

Feasibility Study Grants

The REAP feasibility study grant program assists eligible applicants in completing a feasibility study for a renewable energy system that can qualify for a REAP renewable energy system grant and/or guaranteed loan.

The program provides financial assistance to applicants that need to complete a feasibility study required in applications for a USDA or other government agency energy program.

Additional Information

The application solicitation can be found in the March 29, 2013 Federal Register at pages 19183-19190 here: http://bit.ly/REAP2013.

Additional information on REAP programs is available at http://www.rurdev.usda.gov/energy.html.