What is the Rural Energy for America Program
The Rural Energy for America Program, also known as the USDA REAP Grant, offers grants and guaranteed loans to support rural small businesses and farmers across the United States.
Program Objectives
> Provide government grants to service providers who work with farms and rural small businesses for energy audits and renewable energy planning and development.
> Provide grants and guaranteed loans for farmers (agricultural producers) and rural businesses to fund energy efficiency improvements and purchase renewable energy systems, including solar energy systems and battery storage.
What REAP Funding Is Available
> Combined grant and guaranteed loan funding for up to 75% of the total eligible project costs.
> Grants for up to 50% of the total eligible project costs.
> Loan guarantees that cover up to 75% of the total eligible project costs.
Who May Apply for REAP
> All agricultural producers located anywhere in the U.S. (both rural and non-rural areas)
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- Even if an agricultural producer is located in a city or town with a population greater than 50,000, they may still qualify for a REAP grant. As long as 50% or greater of gross income is derived from agricultural production and that production serves a rural community.
> Any small business located in a USDA REAP eligible map.
Note: Applicable small businesses DO NOT need to be farmers. For instance, a manufacturer or car dealership if located within an eligible area may apply.
Solar Incentives Combined with REAP
The USDA REAP Grant can be combined with Washington state solar incentives and Oregon solar incentives & utility incentives (such as Energy Trust of Oregon), as well as federal incentives.
Federal
- Rural Energy for America Program: 50% of the total system cost up to $1,000,000
- Federal Investment Tax Credit (ITC): Reduce the taxes you pay by 30% with the potential for applying the remaining tax credit to the following year if tax liabilities are less than 30% of the system cost.
- Domestic Content: Add an additional 10% to the 30% Federal Investment Tax Credit if your project uses American-made materials!
- The Modified Accelerated Cost Recovery System (MACRS) allows farmers and small businesses to recover the cost of installed equipment through tax deductions over a 5-year period. [site: seia.org]
- When purchasing or financing a solar energy system or battery storage system with funds provided by a USDA REAP program, recipients will have the opportunity to deduct up to 90% of the total cost of the system in the first year under the Modified Accelerated Cost Recovery System.
- More adders are available. Speak with an A&R Solar representative to learn about how you can maximize your REAP Grant.
State & Utility Solar Incentives
Energy Trust of Oregon (ETO): Solar Energy Incentives
Net Metering: With net metering, also referred to as net energy metering (NEM), utility companies compensate you with energy credits every time you send excess electricity back out to the grid. These credits can later be used when you need them. Think of it as a bank. You make a deposit when you have excess energy, and you make a withdrawal when you have a deficit of energy production.
Is the REAP Grant Taxable Income?
> The Tax Cuts and Jobs Act (TCJA) passed in December 2017 made the rules around nonshareholder contributions more stringent. As a result, most companies are taking grant money into their calculable income.
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- State grants should NOT reduce the taxable basis. Instead, it should be treated as income
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- Federal grants, including REAP, should NOT reduce the ITC basis
> Businesses in Oregon would pay both state and federal income tax on the grants.
Note: For accurate tax information regarding the USDA REAP grant, please consult a certified tax professional.
REAP Application Deadline
In response to stakeholder feedback, more frequent grant competitions have been added. Six quarterly application windows are open and complete applications compete by the score in the following quarter.
- Q1 is April 1, 2023 through June 30, 2023
- Q2 is July 1, 2023 through September 30, 2023
- Q3 is October 1, 2023 through December 31, 2023
- Q4 is January 2, 2024 through March 31, 2024
- Q5 is April 1, 2024 through June 30, 2024
- Q6 is July 1, 2024 through September 20, 2024
Let A&R Solar Help You Get the Most from REAP
Applying for a REAP grant or loan takes attention to detail and a resource many farmers and small business owners don’t possess – time.
Since 2007, A&R Solar has worked with many small businesses to simplify the application process by helping businesses navigate the scoring system, and meet the necessary criteria for application submissions.
That’s why leveraging our solar industry expertise can help you maximize your REAP success.
With over 4,000 solar and battery installations across Washington and Oregon, as well as the most NABCEP-certified solar professionals in the Pacific Northwest, A&R Solar possesses a team of solar experts that can manage everything from application to permitting, all the way to installation.
Not to mention a dedicated service department that’s ready to respond and act to any issues with your system.
If you’re ready to make the switch to renewable energy and save up to 90% on the cost of your system, then now is the time to contact A&R Solar to learn more about your USDA REAP eligibility!