Updated September 12, 2024
The U.S. Department of Agriculture (USDA) Rural Energy for America Program (REAP) assists agricultural producers and rural small businesses with grant and loan guarantees to adopt solar energy for their operations. When combined with federal, state, and utility incentives and with solar’s ability to lock in your electric rate, an investment in solar makes smart business sense now and into the future.
Find out how you can reap–quite literally–the benefits of the USDA REAP grant for your solar project to add greater profitability and longevity to your business.
The U.S. Department of Agriculture distributes funds to help farmers and rural small businesses invest in renewable energy and energy efficiency through their Rural Energy for America Program (REAP). In 2024 and 2025, over $1 billion will be allocated to this fund.
From 2018-2022, $17 million was directed to Illinois farms and small businesses and $7 million to Missouri. The majority of applicants to the program received funding, and the Inflation Reduction Act substantially increased funding to the program, doubling the maximum grant award.
A USDA REAP grant can provide up to 50% of the cost of a solar PV system up to $1 million and a REAP loan can finance up to 75% of the cost of a system.
Farms must receive 50% of their gross income from agricultural operations. Farms and agribusiness do not have to meet any geographic eligibility requirements.
Small Businesses must meet SBA guidelines for a small business and be located in regions of less than 50,000 individuals. Use the USDA map (see link below) to determine geographic eligibility.
Note: After landing on the USDA Property Eligibility Site page, click on the Rural Business header. On the next page, click on the section with the Rural Energy for America Program (REAP). Accept the Property Eligibility Disclaimer and the webpage will automatically take you to the map and search function.
StraightUp Solar can connect you to consultants to assist in the REAP grant application process. Our partner consultants will help you establish your federal grant identification number, compile the necessary documentation on your company, write and submit the grant, and provide post-grant support.
USDA REAP grants are evaluated on several criteria. Don’t worry, StraightUp Solar’s consultants can assist your farm or business in how to maximize the application points. The criteria are:
Each REAP state director evaluates the REAP grant proposal and can add additional points for the amount of energy generated and saved, length of payback period, and location in a disadvantaged or distressed community.
REAP grants are awarded separately from the federal tax credits, state and utility incentives offered for investments in solar PV systems. The 30% Federal Investment Tax Credit can be immediately applied against your tax liability. For farms and businesses located in distressed communities or an energy community an additional 10% can be added to the federal tax credit. For systems located in both types of communities the additional tax credit would be 20%. Additionally, federal depreciation schedules and MACRS at the federal and state level apply to a solar installation.
For Illinois residents, the Illinois Solar Renewable Energy Credits (SRECs) can provide additional funding for your solar system. The credits are calculated based on the energy generated from your system and can reduce the cost of the solar PV system 30-35%.
Kristopher K, an Illinois organic farmer, went solar with a 60.2 kW array for his farming operation in 2019. He was able to take advantage of four incentives, significantly reducing the costs of solar. Hear him discuss how his REAP grant and other incentives helped his operation save money.
Energy bills continue to rise, so why rent your energy when you can own your own supply? Owning a solar system means immediate energy savings to your farm or business. The energy generated by your solar PV system goes toward your electricity use first and then out to the utility grid. Under current net metering arrangements, your utility will credit you for excess energy production. Our solar experts can design a system to offset up to 100% of your annual electricity usage.
StraightUp Solar can provide you with a payback estimate of your system with and without REAP funding. In many cases, the payback for a solar PV system on a farm is less than 5 years with the federal, state credits and utility savings, even before the REAP grant award is applied to the system. We can write a contingency contact to go into effect only if the grant is received.
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