The two primary programs available to farms include:
1. Natural Resources Conservation (NRCS) Environmental Quality Incentive Program (EQIP)
2. United States Department of Agriculture (USDA) Rural Energy for America Program (REAP)
For an applicant to be considered agricultural they must be directly engaged in the production of agricultural products, including crops (including farming); livestock (including ranching); forestry products; etc., whereby 50% or greater of their gross income is derived from those products. Additionally, rural small businesses can apply for grants through the USDA-REAP program. A business is considered a small business if they are located in a rural area as defined by the USDA and meet the Small Business Administration’s (SBA) small business size standards by the North American Industry Classification System (NAICS). Let’s take a deeper look into each of these programs.
The NRCS-EQIP program is available to agricultural producers and aims to cover up to 75% of new equipment costs. The program requires a farm to have an energy audit completed by a qualified auditor. The farm can then use the results from that energy audit to apply to EQIP for payments to cover any of the energy efficiency improvements recommended in the energy audit report as long as it has a reasonable payback and has a payment offered by the program. Additionally, if the farm owner is not in a rush to get new equipment installed, EQIP offers payments that will cover about 75% of the cost of the energy audit. Typically, the energy audit is completed in one fiscal year and the recommended improvements are completed during the next fiscal year. The payment offerings and rates will vary by state, and NRCS typically offers one funding round per fiscal year. The EQIP program offers payments on equipment such as, but not limited to:
The application deadlines are posted online and can vary by state. Interested farm producers should reach out to their local NRCS office to determine next steps and available offerings.
Links to each state’s NRCS contacts:
USDA NRCS: Conservation by State & State Office Contacts
USDA NRCS: Service Center Locator
The USDA-REAP program is available to both agricultural producers and rural small businesses. Included is a direct link to the USDA-REAP website to determine location eligibility for rural small businesses. USDA REAP - Location Eligibility
Historically, the REAP program offered grants of up to 25% of total eligible project costs bi-annually. However, in April of 2024, with increased funding from the Inflation Reduction Act (IRA), the USDA increased grant application periods to quarterly rounds (3 per year) and increased the allowable grant to up to 50% of eligible project costs. For energy efficiency projects, an applicant can request 50% of their project cost up to a maximum of $500,000; and for renewable energy projects an applicant can request up to 50% of their project costs, up to a maximum of $1,000,000. To qualify for the 50% project cost reimbursement for renewable energy projects the projects must not emit greenhouse gas emissions at the site. Example renewable energy projects that would qualify for the credit are: solar, wind, hydro, and geothermal projects.
Projects that emit greenhouse gases at the site, such as biogas and biomass projects, are limited to 25% of eligible costs, up to the maximum of $1,000,000. The REAP application deadlines fall on December 31st, March 31st, and September 30th of each year with a final application deadline set for September 30th, 2027. After the final application deadline, the REAP program will then be re-evaluated and is subject to change based on the regulations set forth in the USDA Farm Bill current at that time.
It is important to note that NRCS-EQIP and USDA-REAP cannot fund the same project.
USDA-REAP allows a farm or rural business to apply for one energy efficiency project and one renewable energy project per federal fiscal year (October 1 – September 30). The current Notice of Funding Opportunity (NOFO), published on October 16, 2024, has provisioned approximately $180,000,000 per fiscal year to the IRA REAP program, with an additional $20,000,000 set aside for underutilized renewable energy technologies. For the purposes of the current NOFO, an underutilized technology is defined as technologies which do not produce greenhouse gases at the project level and make up less than 20% of the total grant dollars obligated at the end of the fiscal year, two (2) years prior to the current year.
All federal grant/payment programs are competitive, thus not all applicants will be awarded funding. It is recommended that a farm or business not purchase equipment or begin construction until they have received notification of funding approval and are contracted, or told by the NRCS or USDA that they may begin their project. If a farm starts a project ahead of approval that may jeopardize the payment or grant award.
In summary, there are many federal grant and funding opportunities available for farm owners that wish to enhance the efficacy of their operations. The grants and payments can be made using multiple government programs, but only one award per program is allowed. To maximize the awards for energy efficiently the planned solutions must not produce greenhouse gasses and need to be supported by an energy audit or assessment.
Bethany Reinholtz, Project Manager
GDS Associates, Inc. - Madison, WI
608.354.0188 or
bethany.reinholtz@gdsassociates.com