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

Is the Spanish Government Putting the Brakes on Solar PV?

US Capitol

Republicans and Democrats Back Bill to Level the Playing Field for Renewable Energy

Vince Font, Contributing Editor U.S. Senators Chris Coons and Jerry Moran are leading a bipartisan effort to reintroduce tax code legislation aimed at leveling the playing field for renewable energy investment. The Master Limited Partnerships Parity Act w...
African vultures wind turbines

Ecological Map Could Save Vultures from Fledgling African Wind Farm Development

Becky Allen, British Ecological Society Ecologists have developed a new map that could help Lesotho's first wind farms generate low carbon energy without putting the region's vulnerable vulture population at risk. The map is part of a study published today in the...
Pope Francis

The Common Goals of the Pope and Clean Energy

Paul Stinson, EDF Pope Francis turned a keen eye toward the environment and the problem of climate change with his encyclical,“Laudato Si” (“Praised Be”). As a clean energy advocate, I’m heartened that Pope Francis recognizes the need t...
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

Volume 18, Issue 3
1505REW_C11

STAY CONNECTED

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

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in South Africa – in partnership with GWEC, the Glob...

Wind Energy in South Africa has been expanding dramatically, growing fro...

CanWEA Winter Solstice Fundraising Dinner

CanWEA Winter Solstice Fundraising Dinner December 1, 2015 Toronto, Ontario

CanWEA Annual Conference and Exhibition

The annual CanWEA Conference & Exhibition has helped companies marke...

COMPANY BLOGS

Don't Fear The C-Suite

A lot of people are uncomfortable selling to the C-Suite (Chief Financia...

Solar Power Helps Detroit Community Light Streets

Residents of Highland Park, a city almost surrounded by Detroit, receive...

How to Survive the Solar ITC’s Expiration

The Solar ITC is set to expire at midnight on December 31, 2016. That se...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS