The Rural Energy for America Program (REAP) program will fund up to 50% of the cost of solar and energy efficiency projects. Here’s what Texas small businesses and agricultural producers need to know.
The REAP Grant has been around for a while, but the big news is that starting April 2023 it was expanded significantly. Applications will be received quarterly till September 2024, so now is the time to get your funding.
This program can be combined with other funding sources (Tax credits, utility rebates, etc,).
Combined, these could nearly pay for your entire project.
When the REAP Grant is combined with other tax and utility incentives, almost 100% of your solar and/or energy efficiency project could be paid for.
Imagine what this could do to help your business if you could nearly eliminate your energy cost?
That’s what the opportunity is for Rural Small Businesses throughout Texas.
Here’s a video version of this content as well:
There was $1.055 Billion dollars allocated for this program through the Inflation Reduction Act (IRA) of 2022.
That’s a lot of money, but it isn’t unlimited.
Therefore, there is competitive application process. We’ll cover more on that in the Scoring Criteria section.
Assuming you get selected, here’s how much you can receive.
If you are doing a renewable or energy efficiency project, as most of you will be, you can get up to 50% of the project cost paid for. This is subject to the minimum project size and maximum grant allocation above.
Note the REAP Grant will be considered taxable income. Good news is that allows it to be combined with the Investment Tax Credits (ITC). We have an entire article dedicated to this topic. In summary, you get a base credit of 30% + bonus credits for eligible areas/criteria. See below.
You will also get the Tax Deduction benefits. These are substantial in Year 1-5 (MACRS).
If your utility has incentives, you should be able to get those as well.
Added together, this adds up to a 80%+ of system cost.
Does that mean you could get a system for free? We’re not saying yes for sure, but it looks like that might be the case.
Take an example of a qualifying rural area that is in a low income area and the Oncor service territory. The ITC would be 40%, REAP up to 50%, and value of the Oncor incentive usually worth 5-20%.
If that isn’t free, it’s darn near close.
This program is designed for two types of users:
- Rural Small Businesses
- Agricultural producers (farms, ranches, etc.)
- Agricultural producers with must have at least 50 percent of their gross income coming from agricultural operations.
- They do not need to be in the rural area map shown below.
In order to be considered a “rural” small business you need to be located in a qualifying rural area with population of 50,000 or less.
Below is a snapshot of the Texas map with the unqualified areas in Yellow. You can see that a lot of the state, including smaller county seats, all qualify.
To verify for sure, plug your address into this tool.
There are two main types of improvements that will qualify. Renewable Energy and Energy Efficiency. Here’s examples of each:
Renewable Energy Systems
- Small and large solar generation
- Small and large wind generation
- Biomass (for example: biodiesel and ethanol, anaerobic digesters, and solid fuels)
- Geothermal for electric generation or direct use
- Hydropower below 30 megawatts
- Ocean (tidal, current, thermal) generation
Energy Efficiency Improvements
- High-efficiency heating, ventilation, and air conditioning systems (HVAC)
- Cooling or refrigeration units
- Doors and windows
- Electric, solar, or gravity pumps for sprinkler pivots
- Switching from a diesel to an electric irrigation motor
- Replacement of energy-inefficient equipment
The applications received each Quarter will be scored and the top projects awarded. It’s important to put together a solid project at a fair price in order to increase your chance of being awarded.
|Length of payback period
|Commitment of matching funds
|Disadvantaged or distressed community
|State Director/Administrator Points*
You can’t control if you are in a Disadvantaged or Distressed Community, but you can check.
Here’s a link to an ArcGIS Map with an overlay for qualifying communities. Here’s a snapshot of Texas for quick reference, but use the link above to check your specific address.
The submission window is currently open and will be till September 30, 2024. That’s your last chance to apply, but it is better to get an application in sooner than later. If it isn’t approved in the first quarter you submit, it will have chances again in the next quarter (within Fiscal Year).
Everything is done on a Quarterly basis, so while you can submit anytime you won’t receive notice of award till after that quarter closes. Here’s the quarters.
|April 1, 2023
|June 30, 2023
|July 1, 2023
|September 30, 2023
|October 1, 2023
|December 31, 2023
|January 2, 2024
|March 31, 2024
|April 1, 2024
|June 30, 2024
|July 1, 2024
|September 30, 2024
Taking a Holistic Approach
You may have already been contacted by a variety of solar companies, energy services companies, etc. who want to hep you take advantage of these grant programs. Before you choose a partner, consider a few things.
Cost is Important
In the grading criteria, payback is 15% of the score. Unfortunately, when grant money is available some companies jack up prices to make higher profit on the job.
Make sure you partner with a company that will be cost effective in their delivery to maximize your chances of being awarded a grant.
Maximized Benefits Are Worth More
Two of the scoring criteria (Energy generated/saved/replaced and environmental benefits) are tied to how much you save from the project. This is worth a combined 40% of your score.
It’s important you partner with a company that will help you evaluate all your possible options so you can put together a package that both reduces energy use and offsets the remainder with renewable.
This is our specialty, which is why we called our company Holistic Utility Solutions.
One Bite at the Apple
If you don’t make a round of funding, you’ll automatically be considered for the next round (within that Fiscal Year).
However, there are limits to how much you can get and you can only submit once per fiscal year. It is better if you have one good application that shows a well thought out, holistic strategy rather than going back for multiple small requests.
The REAP Grant is a phenomenal opportunity to reduce your farm, ranch or rural small businesses’ overhead cost for years to come.
Here’s how you can get started:
- Contact us.
- We can help with all these steps.
- If you haven’t already, register on SAM.gov and get a UEI.
- You need this at the time of your application.
- Complete an Energy Assessment
- You need an energy audit that will show your historic usage and projected energy savings as part of the application. We’re experts at these.
- The qualifications of your auditor and/or installer are a key part of your application. Don’t let an inexperienced firm selling questionable projects work on your project, or it may risk your getting selected.
- Submit Application
- There’s more detail here than we can cover, but it’s well laid out with the relevant forms on the link above
The expanded REAP Grant will help small businesses throughout Texas implement improvements that will lower their electricity cost, improve their facilities, and increase profitability for many, many years.
As with all Federal programs, there’s some complexity to navigating the process and paperwork.
We at Holistic Utility Solutions can help you with this process from application through construction, ensuring you get the right project at the right price.