The World's #1 Renewable Energy Network for News, Information, and Companies.

USDA Plants Seed Funding for Rural Clean Energy

The United States Department of Agriculture (USDA) announced on May 5 it has earmarked up to $12.3 million in grants and $57.8 million in loan guarantees for the Rural Energy for America Program (REAP). This followed a Dec. 2013 statement that the USDA will distribute $250 million to rural electric cooperatives through the Energy Efficiency Conservation Loan Program (EECLP).

This funding will support local renewable energy and energy efficiency projects and will facilitate the growth of distributed generation. Distributed generation involves building local renewable energy installations that can replace or complement utility-provided electricity. 

Lower Costs

According to a Nov. 2013 white paper from the National Agricultural and Rural Development Policy Center (NARDeP), “Wind and Solar Energy in the U.S.: Policy Recommendations for Rural Development,” low-interest loan programs such as REAP play a key role in giving rural communities access to solar and wind power. 

"The high initial cost of a residential-scale solar or wind system prevents many would-be buyers from installing renewable energy,” the NARDeP white paper said. "Although banking practices are changing, traditionally banks have not offered favorable loans for renewable energy projects even if they can be shown to offer consistent returns of reduced energy costs."   

To improve the affordability of energy efficiency and renewable energy in rural areas, NARDeP strongly recommended the continuation of programs like REAP that offer clean energy loans. NARDeP also recommended the expansion of property-assessed clean energy (PACE) financing in rural communities. 

Distributed Generation 

As renewable energy becomes increasingly common in the United States, distributed generation will play a growing role, especially in rural areas, according to NARDeP. 

The NARDeP white paper said distributed generation has fewer disruptive visual and environmental impacts than utility-scale rural renewable energy installations do. Distributed generation is also less likely to become a lightning rod for local controversy than large-scale rural renewable energy installations are. 

Versatile Technologies 

Wind and solar power can provide unique advantages and convenience in rural areas. According to the Union of Concerned Scientists’ fact sheet “Renewable Energy and Agriculture: A Natural Fit,” “Some of the best wind resources are found on agricultural lands. Each turbine uses less than half an acre, so farmers can plant crops and graze livestock right to the turbine's base.”

Many uses for solar power exist on farms, the fact sheet said. “Solar heat collectors can be used to dry crops and warm homes, livestock buildings, and greenhouses. Solar water heaters can provide hot water for dairy operations, pen cleaning, and homes. Photovoltaics can power farm operations and remote water pumps, lights, and electric fences.”

Program Structure 

The REAP program targets farmers, ranchers and small business owners. It offers grants and loan guarantees covering up to 25 percent of project costs. Agricultural producers may be located in non-rural areas, but small businesses must be in rural areas. 

According to the USDA’s May press release, the program is intended to support “a thriving middle class.”  

“Ultimately, reducing energy use helps pump capital back into rural communities,” said Secretary of Agriculture Tom Vilsack in the USDA’s December press release. 

The loan guarantees are used to provide credit enhancement to “expand the available credit structure” for financing, according to the program description on the USDA website. 

The USDA website said lenders participating in REAP must be federal- and state-chartered banks, Farm Credit System banks, savings and loan associations, or other organizations qualified by the USDA.

Businesses and agricultural producers may use the funds for retrofits, purchases and installation of equipment, energy-efficient facilities, business plans, energy audits, working capital, technical reports, land acquisition, feasibility studies, and some types of fees. 

The USDA expects many of the EECLP loans will be repaid via utility bills, according to a new report from the State and Local Energy Efficiency Action Network, "Financing Energy Improvements on Utility Bills: Market Updates and Key Program Design Considerations for Policymakers and Administrators.” These loans may be secured or unsecured and can be issued to any consumer class. The interest must be less than or equal to 1.5 percent above the utility's cost of capital. Most of the loans will be limited to 15-year terms.  

Growing Opportunities 

According to the USDA’s May press release, REAP has supported more than 8,200 renewable energy and energy efficiency projects for agricultural producers and rural small businesses since it was created by the 2008 Farm Bill. This funding has included over $264 million in grants and $212 million in loan guarantees.

The USDA said the number of farms with renewable energy technology onsite has doubled in recent years. The total increased from 23,451 in 2007 to over 57,000 in 2012, according to the Census of Agriculture. 63 percent of these systems were solar installations.

This article was originally published by the Clean Energy Finance Forum at the Yale Center for Business and the Environment. You can subscribe to our newsletter or email the authors of our articles by visiting our website.

Lead image: Farm solar via Shutterstock

RELATED ARTICLES

GE Digital Wind Farm

GE Introduces Digital Wind Farm that Could Boost Production 20 Percent, Re-ignites Alstom Buyout Talk

Meg Cichon, Associate Editor General Electric (GE) is pushing its wind farms to join the big data revolution with its new Digital Wind Farm, announced this week at Windpower 2015 in Orlando, Fla. amidst talk that its $15 billion offer to buy Alstom’s p...
Wind turbine

Bigger Wind Turbine Towers = Bigger US Development Opportunity

Meg Cichon, Associate Editor Wind energy already accounts for about 5 percent of U.S. electricity generation, which crowned the nation as the global leader in wind production late last year. There is now more than 65 gigawatts (GW) of capacit...
Wind turbines

Wind Energy Is Crucial in the Fight Against Climate Change, Says US Energy Secretary

Meg Cichon, Associate Editor

The opening general session at Windpower 2015 marked the first appearance by an U.S. energy secretary at the show, “which is surprising,” said current energy secretary Ernest Moniz, “but better late than never.”

Renewable Power Can Now Flow All Over Europe

Rachel Morison and Weixin Zha After almost two years of delays, Germany, France and their neighbors in central-western Europe connected their electricity markets on Wednesday under a system that lets prices dictate where power flows between countries. F...
A former mechanical engineer with graduate training in journalism and environmental studies, Kat Friedrich is a self-employed writer focusing on energy, sustainability and technology. She is the editor of Yale University's Clean Energy Finance Forum.

CURRENT MAGAZINE ISSUE

03/01/2015
Volume 18, Issue 3
file

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in Brazil – in partnership with GWEC, the Global Win...

Brazil is one of the most promising markets for wind energy.  Ranke...

EU PVSEC 2015 (European PV Solar Energy Conference and Exhibition)

The EU PVSEC is the largest international Conference for Photovoltaic re...

Wind Power Central America

Wind power projects are expected to reach 46GW of total installed capaci...

COMPANY BLOGS

EU PVSEC 2014 extends its Scope

Added focus on application and policy topicsAbstracts for conference con...

EU PVSEC 2014: Call for Papers Receives Great Response

More than 1,500 contributions apply for presentation in AmsterdamScienti...

Harnessing the #ElonEffect: Deconstructing the PR Success of Tesla’...

As most of the world has heard by now, Tesla and its co-founder, Elon Mu...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS