REAP grants for solar: How to get financing for your system
Going solar isn’t cheap, but Uncle Sam can help bring down the cost significantly with REAP grants.
REAP, which stands for the Rural Energy in America Program, is a federal program that provides grants and guaranteed loans for renewables and energy efficiency projects. The financing is set aside for rural small businesses and agricultural producers.
Depending on your location, REAP grants can cover up to half of the project’s cost. That goes a long way toward making solar more affordable.
“This program helps increase American energy independence by increasing the private-sector supply of renewable energy, and by decreasing the demand for energy through energy efficiency improvements,” the U.S. Department of Agriculture says in a fact sheet. “Over time, these investments can also help lower the cost of energy costs for small businesses and agricultural producers.”
Since 2018, REAP investments have soared past $137 million in Minnesota, the fourth-highest amount in the country. Wisconsin has accounted for more than $9 million.
Let’s dive in and learn more about REAP.
REAP grants: The basics
REAP is administered by the USDA. It’s a competitive application process, and the program plans to allocate more than $1 billion by the end of fiscal year 2024.
Applications are scored based on several criteria, including the energy generated by the system, length of the payback period and environmental benefits.
REAP recipients must be an agricultural producer where more than half of their income comes from farming, or a rural small business. To check to see if you live in a rural area, click here.
REAP funding includes loan guarantees for loans up to 75% of the project costs, and grants for up to 50% of the bill. Applicants can also combine grant and loan funding up to 75% of the cost.
And even if you’re getting a large REAP grant, you can still collect a 30% tax credit for installing solar.
Inflation Reduction Act
The Inflation Reduction Act, which was passed Congress last year, boosted investments in renewable energy and energy efficiency projects in numerous ways. One of those improvements was increasing REAP funding.
Under the IRA, the max grant size for renewable energy projects was increased to $1 million and to $500,000 for energy efficiency projects.
Also thanks to the IRA, the federal government’s share was increased to 50% if the project meets certain criteria, such as being a zero-emissions renewable energy system or being in what’s known as an “energy community.”
Those energy communities include areas where a coal-fired power plant was closed, as well as areas with higher unemployment rates and higher rates of people working in fossil fuel industries. Census tracts in Cook and Lake counties qualify as energy communities, according to this map.
How to apply
Potential applicants are encouraged to contact their USDA Rural Development state energy coordinator to discuss their project. Here’s a list of contacts to get started.
More information about applying for REAP can be found on the USDA website.
If you have any questions about REAP or about how solar can benefit you, don’t hesitate to give Wolf Track Energy a call.
Read more from Northland’s solar energy experts:
- Solar for Schools grants in Minnesota: Learn how to apply in 2024
- SolarSense applications due soon: Learn how to apply with Minnesota Power
- Wolf Track Energy team grows with Real Solar merger
- REAP grants for solar: How to get financing for your system
- Net metering in Minnesota: What to know