USDA rules end upfront REAP grants for farm energy projects

The USDA issued rules requiring Rural Energy for America Program (REAP) applicants to finance and complete projects and show a full year of energy savings before applying for federal support. The rules were released last week and take effect Oct. 16, ESG News reported.

Farmers previously could apply for grants before construction began, with funding covering up to 50% of eligible project costs. That model has been in place since Congress authorized REAP in 2008. Under the revised framework, the upfront capital and the completion risk sit with the applicant, and federal money arrives only after a project has run for a year.

NSAC counts more than $4.8 billion in REAP grants and loan guarantees issued between 2014 and 2025, spanning more than 19,000 projects. The list runs from solar arrays and wind installations to manure biodigesters and energy efficiency upgrades. USDA data shows nearly 64% of REAP projects since 2017 involved solar.

Richa Patel, a policy specialist at NSAC, said projects can cost thousands or hundreds of thousands of dollars. "For a lot of farmers, that just simply won't be possible, especially with these times already being so financially uncertain," she said. ESG News reported that farmers are already absorbing higher fuel and fertilizer costs alongside the administration's tariff policies.

A USDA spokesperson said the revisions "are intended to help the program pay for actual production and results of projects, not just projections." The administration suspended REAP applications earlier this year while rewriting the regulations and restricted solar project eligibility last year.