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Tapping into the USDA Rural Energy for America Program

March 25, 2009

Cross-posted from the CERTs Get Answers Blog, this post is an interview between Clean Energy Resource Teams Staffer Joel Haskard and USDA Rural Development “Rural Energy for America Program” grant writer, Kellye Rose.

The Rural Energy for America Program (REAP) guidelines are about to be released. What is this program and why should Minnesotans be interested?

Iowa farm with wind turbines - Photo courtesy NRCS This is a great program for people in the rural areas to receive funding help with renewable energy and energy efficiency projects related to business use (not residential). There are both grant opportunities (up to 25% of eligible project cost) and guaranteed loan opportunities (up to 50% of project cost). You can also apply for a combination grant and guaranteed loan. The guaranteed loan is a guarantee from the government to your local lender, who may then be willing to give you a lower interest rate. (The loan funds do not come directly from the government.)

There is $60 million in this program for 2009, nationwide, up from roughly $17-23 million annually in previous years. Applicants can be either rural small businesses or agricultural producers, and projects can be any of the following: wind, solar, geothermal (ground source heat pumps), bioenergy (including biofuels and anaerobic digestion, among others) hydrogen, energy efficiency (grain dryers, irrigation systems, building envelope and lighting improvements, energy efficient equipment). Energy efficiency grants require either an energy assessment or an energy audit (if projects costs more than $50,000) performed by a utility or a knowledgeable energy manager or engineer.

What is your advice for someone interested in accessing REAP funds?

Don’t wait till the last minute! Start gathering what you need for your project and make the necessary decisions—do you have the equipment and installer decided on? What is the cost of the entire project to be? Check with your local authorities about the need for permits. Large projects (over $200,000 in project cost) may require information that can take a year to get, so find out now what will be required. Make sure you and your project are eligible to apply and start ensuring you have all the prep-work done well before the grant deadlines.

What are the pros and cons of writing REAP proposals on your own versus hiring a professional grant writer like yourself?

Using a professional grant writer can strengthen the application and increase your odds of getting a grant, while reducing your stress levels and freeing up your time for other things. Grant writers experienced with the program know the ins and outs of the process and what to pay special attention to. A good grant writer will be looking for any “problem areas” that may exist and help you address those items before the application is mailed. The downside of using a professional is the added cost.

Each applicant will need to review the documentation available from the USDA on how to prepare the grant, and make their own decision if it is something they feel comfortable handling, or if they would be better served to spend additional money to hire experienced and knowledgeable help. Click here to view program details >>

What are common mistakes applicants make?

SE CERT Solar Tour DON’T start the project until you get the application mailed. Any money spent on equipment or installation before the application is mailed is then ineligible for inclusion in the grant budget. Money CAN be spent on necessary background “decision-making” items such as permitting fees, engineering or feasibility studies, etc., but NO MONEY CAN BE SPENT on equipment or labor.

Also, DON’T underestimate the amount of information to supply to the USDA, and DO allow enough time to get all the supporting evidence together. This is NOT an application where you can simply fill out and sign a few forms. The USDA wants to be assured this is a good project which will be successful, and they need proof to make that judgment and award the grant. These grant applications are scored by the government reviewers, with grant funds first going to the highest scoring applications and on down, until the funds are gone.

It seems Minnesota does very well in bringing in renewable energy dollars, but besides grain drying, we don’t do so well on energy efficiency. Why do you think that is? How can we take better advantage of these dollars?

That’s true—Minnesota is not seeing the number of energy efficiency applications—and therefore grant awards—that one would expect. One reason is the lack of qualified rural energy auditors who can perform a sound audit on a grain dryer or irrigation system and other farm needs. Improvement in this area is being seen however; Stearns Electric Association has a good irrigation audit program for their customers. And a new USDA funding program just released in March 2009 is making grant funds available for utilities and other organizations to set up audit service and renewables assistance programs to offer audits to their customers at reduced rates.

Another way to increase the number of energy efficiency grant applications (and renewable energy applications, for that matter) would be to get more rural small businesses aware of this grant and to apply for the grants to help pay for some of their improvement projects. There are any number of ways to implement RE in businesses—obvious ones like wind for building power, solar thermal for heating hot water used in the building, geo-thermal installations in large commercial buildings to reduce energy use. I’ve heard of a project that used solar thermal to heat the hot water that was used in the ZAMBONI at the ice-rink! But other things as well—installation of passive solar (daylighting systems) over office space to reduce electric light needs, improving building envelope (windows and insulation), replacing highly energy consumptive manufacturing equipment or processing equipment with more energy efficienct equipment.

Are there new incentives and programs in this year’s REAP?

On-farm energy audit - photo courtesy CPRC&D Yes, there are two new programs this year. The Energy Audit and Renewable Energy Assistance Program came out on March 11th. This makes grant funds available to utilities and other organizations to set up Audit and Assistance programs to help their clients, with the clients then being able to get these services at a substantially reduced cost. This is NOT funding that goes directly to the ultimate consumer, but rather funding which helps to build the network for services related to the project that the consumer will need.

The second program directly funds the project applicant. The new Feasibility Study program will fund up to 25% of the costs for an applicant with a proposed project to get an independently produced feasibility study. The feasibility study is required for larger projects (over $200,000). It assesses the economic, technical, managerial, and market feasibility of the project. The USDA REAP Feasibility Study details are not announced yet, but announcement is expected any day. Agricultural producers continue to be eligible to apply for the same type of funding under the USDA Value-Added Producer Grant Program, which pays up to 50% of the cost of the planning work.

There is another new incentive in the market this year, from the Department of the Treasury. Changes have been made to the Investment Tax Credit program to remove the “cap” (the maximum amount you could get) and to allow an applicant to choose to take a grant in lieu of a tax credit. The details as to how this will work, how to apply for the grant, etc. are not released yet. The Investment Tax Credit HAS been combinable with USDA grants in the past, on the same project. BUT it is not expected that one would be able to take both a USDA grant (25%) with a Treasury grant (30%) on the same project. More will be known once Treasury releases rules for the program; be sure to keep in touch with your tax accountant!

If you had any parting thoughts about the program to share with people, what would it be?

Think about your energy needs and how you can either reduce your use or supply the energy via renewables. Energy Efficiency is ALWAYS the first step—if you are not yet efficient, get efficient before or at the same time you install renewables. You want to be sure that you are planning and installing a renewable energy system that is going to meet your needs, and the more efficient you are, the smaller your renewable energy system will need to be.

Make a realistic assessment of your project—how much energy savings (or energy offset) can you capture through an efficiency or renewables project? Do you have the funds to cover the 75% or can you get a loan? Do you know the local ordinances regarding permitting and environmental assessments? If you are not using all the energy, can you sell to the utility—and if so, what will they pay you? Have you researched your equipment options, and have you chosen a reputable, knowledgeable installer?

For further assistance and to learn more…

Program details, guidelines, and forms: USDA Rural Energy for America Program Web site >>

Grant writers: If you need help, Kellye Rose and her associates are happy to provide assistance. Rose Consulting Service is the only Minnesota-based company listed on the official REAP program grant writers list for our region. Kellye J. Rose, President, Rose Consulting Service, http://www.roseconserve.com, toll free 866-357-4315, local 952-808-0315.

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