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Rebates and Incentives for
Agriculture Solar Energy
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REBATES/INCENTIVES
Solar incentives come in many different forms and differ
in timing, eligibility, and value.
USDA Rural Energy for America Program (REAP) Grants and Loans
The REAP Grant Program provides grants for renewable
energy development assistance. It also provides funds to
agricultural producers and rural small businesses to
purchase and install renewable energy systems and make
energy efficiency improvements. Aimed at small business
and farm customers, the typical size of a REAP Grant is
$20,000 based on a project cost of $80,000.
For larger projects, the Grant/Loan combination is
designed to work with local lenders to cover up to 25%
of the solar system cost. The REAP Guaranteed Loan
Program encourages the commercial financing of renewable
energy projects. Under the program, project developers
will work with local lenders, who in turn can apply to
USDA Rural Development for a loan guarantee up to 85
percent of the loan amount.
Both programs can be combined with various other
incentives to drastically reduce the cost of a renewable
energy investment.
State Grants
States offer a variety of grant programs to encourage
the use and development of renewables and energy
efficiency. Most programs offer support for a broad
range of technologies, while a few programs focus on
promoting a single technology, such as photovoltaic (PV)
systems. Grants are available primarily to the
commercial, industrial, utility, education and/or
government sectors. Most grant programs are designed to
pay down the cost of eligible systems or equipment. In
recent years, the federal government has offered grants
for renewables and energy efficiency projects for
end-users. Grants are usually competitive.
Corporate Tax Incentives
Corporate tax incentives include tax credits, deductions
and exemptions. These incentives are available in some
states to corporations that purchase and install
eligible renewable energy or energy efficiency
equipment, or to construct green buildings. In a few
cases, the incentive is based on the amount of energy
produced by an eligible facility. Some states allow the
tax credit only if a corporation has invested a minimum
amount in an eligible project. Typically, there is a
maximum limit on the dollar amount of the credit or
deduction. In recent years, the federal government has
offered corporate tax incentives for renewables and
energy efficiency.
Performance Based Incentives (PBIs)
Performance-based incentives (PBIs), also known as
production incentives, provide cash payments based on
the number of kilowatt-hours (kWh) or BTUs generated by
a renewable energy system. A "feed-in tariff" is an
example of a PBI. To ensure project quality, payments
based on a system’s actual performance are generally
more effective than payments based on a system’s rated
capacity.
Rebates
States, utilities and a few local governments offer
rebates to promote the installation of renewable energy
systems and energy efficiency measures. The majority of
rebate programs that support renewables are administered
by states, municipal utilities and electric
cooperatives; these programs commonly provide funding
for solar water heating and/or photovoltaic (PV)
systems. Most rebate programs that support energy
efficiency are administered by utilities. Rebate amounts
vary widely by technology and program administrator.
Solar Renewable Energy Credits
A single SREC represents one megawatt hour (1,000
kilowatt hours) of electricity generated by a solar
photovoltaic system. Renewable portfolio standards (RPSs)
require utilities to use renewable energy or renewable
energy credits (RECs) to account for a certain
percentage of their retail electricity sales -- or a
certain amount of generating capacity -- according to a
specified schedule. Most U.S. states have established an
RPS. The term “set-aside” or “carve-out” refers to a
provision within an RPS that requires utilities to use a
specific renewable resource (usually solar energy) to
account for a certain percentage of their retail
electricity sales (or a certain amount of generating
capacity) according to a set schedule. Values vary
greatly by state.
Whether you have a single location or are interested in
solar throughout a national portfolio of properties,
Hannah Solar can help you determine the most
advantageous programs available. Contact us for a
comprehensive economic evaluation.
Rural Energy for America Program Guaranteed Loan Program
(REAP LOAN)
The REAP Guaranteed Loan Program encourages the
commercial financing of renewable energy (bioenergy,
geothermal, hydrogen, solar, wind and hydro power)
projects. Under the program, project developers will
work with local lenders, who in turn can apply to USDA
Rural Development for a loan guarantee up to 85 percent
of the loan amount.
Guaranteed Loan Specifications
Loans Limits: |
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Loans
up to 75% of the project’s cost
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Maximum
of $25 million, minimum of $5,000
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Maximum percentage of guarantee (applies to whole loan): |
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85% for loan of $600,000 or less
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80% for loans greater than $600,000 but $5 million or
less
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70% for loans greater than $5 million up to $10
million
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60% for loans greater than $10
million up to $25 million
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Fees and Interest Rates |
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Lender’s customary interest rate, fixed or variable,
negotiated by lender and business Lender’s customary
fees, negotiated by lender and business
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One-time guarantee fee equal to 1% of guaranteed
amount
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Annual renewal fee
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Benefits to Businesses
Benefits include higher loan amounts, stronger loan
applications, lower interest rates and longer repayment
terms that can assist businesses that may not qualify
for conventional lender financing.
Benefits to Lenders
Lender benefits include expanding lender’s loan
portfolio, allowing lenders to make loans above loan
limits, protecting guaranteed portion of loan against
loss by the Federal Government, existing secondary
market for REAP guarantees, helping to satisfy Community
Reinvestment Act (CRA) requirements, and allowing
lenders to use their own forms, loan documents, and
security instruments.
Eligibility: Borrowers, Lenders, Location
New definition being determined. Borrowers must be an
agricultural producer or rural small business.
Agricultural producers must gain 50% or more of their
gross income from their agricultural operations. An
entity is considered a small business in accordance with
the Small Business Administration’s (SBA) small business
size standards NAICS code. (http://www.sba.gov/size/index.html).
Most lenders are eligible, including national and
state-chartered banks, Farm Credit System banks and
savings and loan associations. Other lenders may be
eligible if approved by USDA.
Eligible Project Costs
Eligible project costs include: 1) Post-application
purchase and installation of equipment, 2)
Post-application construction or improvements, 3) Energy
audits or assessments, 4) Permit or license fees, 5)
Professional service fees, 6) Feasibility studies and
technical reports, 7) Business plans, 8) Retrofitting,
9) Construction of a new energy efficient facility only
when the facility is used for the same purpose, is
approximately the same size, and based on the energy
audit will provide more energy savings than improving an
existing facility, 10) Working capital, 11) Land
acquisition.
Rural Energy for America Program (REAP) Grants
The REAP Grant Program provides grants for renewable
energy development assistance. It also provides funds to
agricultural producers and rural small businesses to
purchase and install renewable energy systems and make
energy efficiency improvements.
How much are the grants?
The grants are awarded on a competitive basis and can be
up to 25% of total eligible project costs. Grants are
limited to $500,000 for renewable energy systems. Grant
requests as low as $2,500 for renewable energy systems
will be considered. At least 20% of the grant funds
awarded must be for grants of $20,000 or less.
Who is eligible?
The program is designed to assist farmers, ranchers and
rural small businesses that are able to demonstrate
financial need. All agricultural producers, including
farmers and ranchers, who gain 50% or more of their
gross income from the agricultural operations are
eligible. Small businesses that are located in a rural
area can also apply. Rural electric cooperatives may
also be eligible to apply.
What types of projects are eligible?
Eligible renewable energy projects include projects that
produce energy from wind, solar, biomass, geothermal,
hydro power and hydrogen-based sources. The projects can
produce any form of energy including, heat, electricity,
or fuel.
For all projects, the system must be located in a rural
area, must be technically feasible, and must be owned by
the applicant.
How to Apply
Hannah Solar can handle your REAP application as part of
our turnkey development service. Our clients have been
awarded hundreds of thousands of dollars through the
REAP process. Let us help you determine if your project
is eligible under the USDA guidelines. |
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