Despite the success and popularity of the program, a Congressional “Conference Committee” is now deliberating just how drastically to cut REAP funding for 2012. “REAP is a successful clean energy program, generating jobs and economic development in rural communities while cutting pollution,” said Andy Olsen, Senior Policy Advocate for the Environmental Law & Policy Center. “Congress can create jobs and grow our economy, by continuing to renew and robustly REAP for 2012 and beyond.”

The greatest number of awards went to solar energy, for both solar electric and solar thermal (heat). For the entire year, REAP funded 478 solar projects in 44 states. Michigan fared the best with 48 awards followed by New York (39), Pennsylvania (36), Tennessee (34) and California (29). Farmers have always harvested the sun for growing food and fiber and now more are embracing solar energy for power and heat.

For the year 2011, REAP funded 55 wind power awards, with Iowa and New York leading with seven each. Wind power has flourished under REAP for both small and utility-scale technologies, but fell off significantly this year, from 164 projects in 2010.

Geothermal projects use the energy of the earth for efficient heating and cooling, saving money while cutting pollution. Fifty-nine awards sparked new project construction across the country. Leading states include Minnesota (13), Iowa (11) and Michigan (7).

Small hydroelectric projects were included in REAP in the 2008 Farm Bill revisions and new awards were made for a number of projects in the West (Oregon, Nevada, Idaho) and the southeast (Georgia and North Carolina).

The Rural Energy for America Program (REAP) is a Farm Bill program that enables farmers and rural small businesses to install diverse renewable energy or energy efficiency technologies to cut costs and increase profits. REAP provides loan guarantees and grants for up to 25% of the project cost, leveraging private sector investment and creating jobs. REAP is up for renewal in the new Farm Bill now being debated by Congress.

The Environmental Law & Policy Center (ELPC) has advocated for REAP from the program’s inception and has helped expand the program to benefit rural communities across the nation. ELPC is working to protect REAP funding and promote job creation and clean energy for rural communities.

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Michigan Senator Debbie Stabenow, Chairwoman of the U.S. Senate Agriculture, Nutrition and Forestry Committee, recently highlighted the importance of the Rural Energy for America Program (REAP) for energy creation and job growth. In this article, published on June 30, 2011 in the Huron Daily Tribune, she explained how REAP and other Farm Bill energy initiatives are helping farmers and rural small businesses invest in clean energy projects and boosting job creation and employment.
From the Huron Daily Tribune 06/30/2011

Energy production crucial part of Farm Bill

It may surprise you that Henry Ford was one of Michigan’s greatest agriculture pioneers. Nearly 100 years ago, he knew thatagriculture could be a source of homegrown energy. Ford once told a reporter that “the fuel of the future will come from apples, weeds, and sawdust – almost anything.” Energy production  is an important part of Michigan agriculture. That is recognized by the federal Farm Bill, which is updated ev ery five years. The Farm Bill includes an entire section devoted to energy from agriculture. As the Chair of the Senate Agriculture Committee, I am focused on writing a new Farm Bill that will help us reduce our dependence on foreign oil and support the work our Michigan producers are doing to become energy independent. Thanks to the work we did in the last Farm Bill, farmers and small business owners across Michigan have taken advantage of new energy  opportunities. They are creating energy from animal waste, installing solar panels and wind turbines, making  plastics from plant sources, and converting crop and forest residue into fuel. Each of these new opportunities also creates jobs for workers who design, build, market, and install these new products, creating a win-win for Michigan’s economy.

One example is Jim Reid, who testified  at our first Farm Bill field hearing  in East Lan sing last month. At our hearing, he spoke about how the last Farm Bill helped him reduce energy costs on his dairy farm in Jeddo, Michigan. That Farm Bill included a program called Rural Energy for America, or REAP, which helps farmers  and small business owners save money on their energy bills.

Mr. Reid used REAP to buy solar panels from Michigan Solar and Wind Power Solutions, a Michigan small business, and installed the panels on the roof of his barn. His energy bills are so much lower that he expects his new solar panels will pay for themselves  in just three years.

And these renewable energy programs  aren’t only for farmers – small business owners across Michigan are also tapping them. Lowell McDonald, who runs a local family-owned grocery store in Huron County, has used the program to cut back on energy bills as well. Since November, McDonald has saved nearly $7,000 on energy costs by installing a heat recovery system. McDonald tapped the innovation and expertise of a local Michigan business to install the system, continuing to support Michigan’s economy and support  local, small businesses.

These are examples of how the Farm Bill turned out to be a win-win for Michigan’s economy. Producers pay lower energy bills, and small businesses  create new jobs by supplying farmers and other business owners with new equipment.

As we move forward on writing the next Farm Bill, I will keep building  on the great strides we have made and realize the potential recognized by Henry Ford more than 100 years ago. By making the right choices, we can help our farmers save money while creating new jobs in every part of Michigan.

Senator Debbie Stabenow is Chair of the Senate Agriculture Committee.

To help the public understand the new REAP rule, ELPC is holding a webinar on Wednesday, April 27, at 3:00 pm Central Time. The webinar will be recorded for later viewing if you are unable to participate. This article summarizes the funding notice and the Interim Rule.

Funding Notice

The Notice of Funds Availability (NOFA) announces the availability of $70 million in REAP funding this year, based on the 2008 Farm Bill’s mandatory allocation of the same amount. USDA will issue a supplemental NOFA for additional funding if Congress allocates additional discretionary funding in the still-uncertain FY2011 budget

Application deadlines are as follows:

• June 15 for clean energy project grants and combined grants and loan guarantees;
• June 15 for loan guarantees only;
• June 30 for renewable energy Feasibility Studies grants;
• June 30 for Energy Audits and Renewable Energy Development Assistance grants.

Please read the NOFA for additional important application information. Since it is based on the REAP Interim Rule also proposed today, the remainder of this article summarizes the Interim Rule.

Interim Rule

The REAP Interim Rule is effective today and issued on an emergency basis to reflect changes made three years ago in the 2008 Farm Bill. Although effective immediately, USDA is requesting comments on its proposal and may change the rule in response to comments. The deadline for comments is June 13, 2011.

Here are highlights of the new rule’s requirements, focusing primarily on changes from the existing REAP rules and prior funding notices. Please check back on FarmEnergy.org soon for a more comprehensive summary of all of the rule’s requirements.

ELPC also is holding a webinar on Wednesday, April 27, at 3:00 pm Central Time to discuss the new rule. The webinar will be recorded for later viewing if you are unable to participate.

Key points in the rule include:

General

• Flexible fuel retail blender pumps are now eligible for REAP grants and loan guarantees. To qualify for a REAP award, gas stations must be owned by a rural small business. These pumps dispense gasoline blended with ethanol or biodiesel. (Biogas pipelines, transmission lines from wind farms, and other conveyance equipment are not included in this proposal.)
  • Note: Blender pump applications can receive up to 25 scoring points unique to pumps, based on number of additional pumps and USDA’s discretionary authority.
• Eliminates the “rural restriction” for agricultural producers located in non-rural areas – for example, commercial nurseries.
• Includes ocean energy and small hydropower (under 30 megawatts) as eligible technologies. Removes the financial need requirement (was not in 2008 Farm Bill).
• All REAP agreements terminate 2 years after signing unless USDA agrees to extension.

Renewable Energy and Energy Efficiency Grants and Loan Guarantees

• Higher funding limits for loan guarantees – up to 75% of total project costs; and the maximum amount of the loan guarantee was increased from $10 million to $25 million.
• USDA makes clear that applicants also can use the production tax credit (PTC) and other passive third-party equity contributions (although tax rules still cause a “haircut” to the total PTC).
• Energy efficiency improvements are exclusively for existing capacity improvements – USDA will not issue grants or loan guarantees to support capacity expansion (intended to address use of REAP to purchase larger grain dryers).

Feasiblity Studies and Audits/Development Assistance

Apart from the changes discussed in “General” above, the rules for the feasibility study grants and the energy efficiency audits and renewable energy development assistance grants appear to be similar to prior agency guidance contained in funding notices. We will summarize those requirements in a forthcoming article.

What the Interim Rule Does Not Address

• No streamlined applications for smaller, “off-the-shelf” pre-certified equipments such as wind turbines and solar panels.
• Did not eliminate the costly and unnecessary “two meter” requirement for farms that install wind turbines and solar panels where some small portion of the power generated may flow to the home.
• No increase in feasibility study grant limits (currently $50,000 per project, which is very low for large community energy developments).
• Non-profit entities are not eligible to conduct energy efficiency audits and renewable energy development assistance.
• Unclear yet if USDA eliminated the application preference for loan guarantees.

Farm Energy Success Stories highlights clean energy projects that were made possible with grants and loan guarantees from the Farm Bill’s Rural Energy for America Program (REAP).

Download an electronic version of the report here.

For a hard copy, send a request with your full information contact to ELPC.