What REAP Is
The Rural Energy for America Program is administered by USDA Rural Development — a different agency branch than the NRCS or FSA programs on this site. REAP provides grants and guaranteed loans to agricultural producers and rural small businesses for renewable energy systems and energy efficiency improvements.
REAP is the only program in this guide that has no connection to land improvement, conservation practices, or habitat restoration. It is an energy program. The eligible costs are solar panel arrays, wind turbines, anaerobic digesters, geothermal systems, and energy efficiency upgrades to farm buildings and equipment. If you are running a significant agricultural operation with high energy costs, REAP is worth knowing about.
REAP grants cover up to 50 percent of total eligible project costs, with a grant cap that changes each Farm Bill cycle. USDA guaranteed loans can cover up to 75 percent of total eligible project costs, with the combination of grant and loan not exceeding 75 percent. Applications are accepted on a rolling basis and funded competitively.
REAP is most relevant for agricultural operations with significant and identifiable energy costs: grain dryers, irrigation pumps, cold storage for specialty crops, large livestock operations with heating and ventilation loads. A row crop farmer with a farmstead and standard equipment generally has limited energy loads that make solar or wind economics compelling even with a 50% grant. The program makes more sense for operations where energy is a material input cost.
What REAP Funds
Renewable energy systems eligible for REAP grants include solar photovoltaic systems (the most common application), small wind turbines, biomass systems, anaerobic digesters, geothermal systems, and hydrogen energy systems. The system must be installed on agricultural land or at a rural small business location.
Energy efficiency improvements to existing systems also qualify — upgrading irrigation equipment, replacing inefficient grain handling motors, improving building insulation and HVAC for livestock facilities. Efficiency project grants are capped lower than renewable energy system grants.
Ineligible uses include energy systems for residential use only (the system must serve the agricultural operation), systems that are primarily for sale of energy rather than on-site consumption, and projects that have already been completed or purchased before the application is approved.
How REAP Works
Applications go to your USDA Rural Development state office, not your county FSA or NRCS office. USDA Rural Development has a separate network from the NRCS and FSA offices that administer the other programs on this site.
REAP applications require a technical report from a certified energy auditor or engineer verifying the system design, estimated energy production, and projected cost savings. This technical report requirement means the application process involves more upfront investment than EQIP or CRP signup. You typically need to work with a renewable energy contractor and potentially an independent energy auditor to assemble the required documentation.
Grant awards are announced after a competitive review. If awarded, the grant is paid after the system is installed and USDA Rural Development inspects the completed work. You pay the contractor, the system is installed, USDA inspects, and then the grant portion is reimbursed. REAP is a reimbursement grant, not advance funding.
REAP and ITC Interaction
The federal Investment Tax Credit (ITC) for solar and other renewable energy systems is separate from REAP and can be stacked with a REAP grant. A REAP grant reduces the total project cost, which in turn reduces the base on which the ITC is calculated. The interaction between REAP and ITC requires accounting guidance specific to your tax situation. Work with a tax professional and the USDA Rural Development office to understand how the two interact before committing to a project budget.
Reach out to the USDA Rural Development Illinois State Office in Springfield to discuss REAP eligibility and current application cycles. This is different from your county NRCS or FSA office. Find the Rural Development contact at rd.usda.gov.