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USDA and Solar Energy
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United States Department of Agriculture - Rural Development Grant Programs
There are two primary programs that the
USDA employs to encourage the adoption
of renewable energy throughout the rural
community. The REAP Grant and the REAP
Loan. Combining these two programs with
other incentives (REC’s, Feed in
Tariffs, etc.) can dramatically reduce
payback periods and increase renewable
energy returns. The two programs are
outlined below:
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.
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. 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.
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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