In addition to power company rebates, agricultural producers and rural small business owners are eligible for federal “REAP” grants that reimburse up to 25% of the costs for energy efficiency improvements to existing business-related facilities, buildings or processes.

The grants, administered by USDA Rural Development, were part of the 2008 Farm Bill as Section 9007 Rural Energy for America Program (REAP), which replaced Section 9006, Rural Energy/Energy Efficiency Program. In 2009, $55 million is allocated for payments under the program.

Eligible REAP energy efficiency projects include “anything that saves energy,” such as replacing existing lighting, ventilation, motors and other equipment with more efficient alternatives, says Teresa Bomhoff, rural energy coordinator for Iowa's Rural Development office in Des Moines.

Guaranteed loans are also available to finance up to 75% of costs for larger energy improvement projects. Loans and grants can also be combined for up to 75% of the project cost. Maximum REAP payments are $250,000 for grants and $25 million for loans.

In addition to energy efficiency improvements, REAP grants and loans are available for renewable energy projects that produce heat, electricity or fuel from wind, biomass, solar, geothermal, anaerobic digestion, hydrogen, hydroelectric and ocean.

REAP energy efficiency applications require detailed documentation, including a comprehensive, energy-savings analysis and formal energy audit by a qualified outside party for requests greater than $50,000. Bomhoff encourages applicants to submit proposals early in the year, although 2009 due dates have not yet been published in the Federal Register. Work on projects must not precede the date the application is received by Rural Development, but can start prior to the award of funds.

“Once they file an application, they can purchase equipment and start the project, as long as they understand there is no guarantee they will receive funding,” Bomhoff says.

Applications and more information are available through local USDA Rural Development offices and www.rurdev.usda.gov/ia/rbs.html or other Rural Development websites.

Table 1. Federal Grants and Guaranteed Loans Available to Agricultural Producers (Contact Local Rural Development Office)1
Grant - 25% of total eligible costs
Guaranteed loan - 75% of total eligible costs
Combination grant and guaranteed loan - 75% of total eligible costs
Renewable energy Energy efficiency
Minimum grant $2,500 $1,500
Maximum grant $500,000 $250,000
Minimum g-loan $5,000 $5,000
Maximum g-loan $25,000,000 $25,000,000
Grant for 25% of total eligible costs for a stand-alone feasibility study
1Chart created by Rural Development