Renewable Energy Systems & Energy Efficiency Improvements Program

Frequently Asked Questions

What Is Section 9006? (Also known as REAP)

The Renewable Energy Systems and Energy Efficiency Improvements Program, also known as Section 9006, was created as part of the Energy Title in the 2002 Farm Bill. It provides grants and loan guarantees to farmers, ranchers and rural small businesses.

Section 9006 will be known as the Rural Energy for America Program (REAP) in 2008. REAP improves the Farm Bill's extremely successful Section 9006 Renewable Energy/Energy Efficiency grant and loan guarantee program.

REAP is the only major Farm Bill energy program that directly benefits farmers, ranchers and rural businesses by providing access to start-up and operating capital for all clean energy technologies (primarily ethanol, biodiesel, wind, manure digesters, energy efficiency, biomass and solar).

The Rural Energy for America Program (REAP) directly helps farmers and rural businesses develop farm-based clean energy opportunities.

What Are Some of the 9006 Successes?

Since 2003 - nearly $215 million in grant and loan guarantee awards for more than 2,100 clean energy projects in virtually every state in the country.

With a cumulative value of billions of dollars, these projects -- including wind power, biofuels, anaerobic methane digesters, solar and other power, and energy efficiency -- are helping individual farmers and rural businesses and boosting rural economies.

How Much Funding Is Available?

2008 funding levels are still being determined.

In 2007, $23 million in funding will be available nationwide. 25% of the funding is set aside for grants, 25% for grant-loan guarantee combinations and 50% for loan guarantees.

Because a dollar of federal funding can support approximately $15 in loan guarantees, the program can support $180 million in loan guarantees.
Any funds not awarded for loan guarantees will be available to fulfill additional grant funding.

What Are the Grant Limits?

In 2007, grant funds could not exceed 25 percent of eligible project costs. Guaranteed loans could not exceed 50 percent of eligible project costs. Combination guaranteed loan and grant c could not exceed 50 percent of eligible project costs.

Renewable: A minimum grant of $2,500 and a maximum grant of $500,000. A minimum guaranteed loan of $5,000 and a maximum guaranteed loan of $10,000,000.

Efficiency: A minimum grant of $1,500 and a maximum grant of $250,000. A minimum guaranteed loan of $5,000 and a maximum guaranteed loan of $10,000,000.

Who Is Eligible for Funding?

The program is open to farms, ranches, livestock operations, rural small businesses and rural electric cooperatives.

To be eligible, you must be actively involved in the business and the proposed project. You must also show a "demonstrated financial need" for grant funding. Farmers must derive the majority of their income from farming.

What Is a Rural Small Business?

The definition of "small business" is based on the Small Business Administration's criteria based on the type of business. To determine if your business qualifies, see:

"Rural" means a community of fewer than 50,000 people not located within a larger metropolitan area. To determine whether a potential project is in a rural area, use the rural area determination map.

What Types of Projects Are Eligible?

Energy Efficiency: Any projects that save energy (electricity, propane or natural gas, or diesel fuel) are eligible.

Examples include:

  • dairy pumps and cooling systems,
  • grain dryers
  • weatherization of poultry houses,
  • efficient lighting and ventilation,
  • irrigation equipment,
  • industrial motors and supermarket refrigeration systems.

Renewable Energy: Renewable energy systems can include:

  • small and large wind turbines,
  • active or passive solar energy systems,
  • geothermal heating and cooling,
  • anaerobic digesters using food or livestock waste,
  • systems using biomass fuels, or
  • facilities producing ethanol or biodiesel.

Other uses that are eligible include:

  • Post application purchase of equipment (except ag tillage equipment/vehicles)
  • Post application construction
  • Feasibility Studies and Business Plans
  • Professional service fees (excluding application preparation)
  • Permit fees, energy audits, and costs associated with the environmental review
  • Working Capital (guaranteed only)
  • Land purchase (guaranteed only)

Can You Define Energy Efficiency and Renewable Energy?

Energy Efficiency: Replacement of equipment and/or improvements to a facility, building, or process that will reduce energy consumption.

Renewable Energy: Derived from wind, solar, biomass, geothermal, or hydrogen derived from these sources.

Biomass: Any organic material that is available on a renewable or recurring basis, including agricultural crops, trees grown for energy production, wood waste, wood residues, plant residues/fibers, animal wastes, fats, oil, and greases. Biomass does not include paper that is commonly recycled or unsegregated solid waste.

What Types of Projects Are Not Eligible?

  • For energy efficiency projects, grants cannot be used for a new facility unless that facility is replacing an existing facility.
  • The grant can only be used for identifiable energy efficiency improvements such as lighting, heating, refrigeration, motorized equipment or insulation.
  • Grants cannot support agricultural equipment or other vehicles.
  • For renewable energy systems, only proven, commercially available and pre-commercial technology is eligible.
  • Grants cannot fund research and development activities.
  • Projects that save fuel used in mobile sources (tractors, trucks) are not eligible.

Additional Assistance

The following professionals offer assistance in completing and filing 9006 applications. They are listed here for informational purposes, and this listing should not be considered an endorsement by the State of Indiana or the Office of Energy & Defense Development. If you or your organization would like to be included in this list, contact Eric Burch

Bruce Everly
(317) 440-7497
(317) 228 0134

Sarah Aubrey
Prosperity Ag Resources and Communications