On Friday, USDA officials announced the latest round of Rural Energy for America Program (REAP) funding. Part of the Obama administration’s emphasis on renewable energy, REAP provides loan guarantees and grants to producers and small businesses to install energy efficient energy systems.

The funding is “typically” for projects “to reduce energy use,” said Judy Canales, USDA Business Programs Administrator. “Within these systems, we include projects that generate energy from wind, the sun, biomass, geo-thermal sources or others that produce hydrogen from biomass or water using renewable energy. Awards are made on a national, competitive basis for the purchase of renewable systems and to make energy efficiency improvements. REAP also funds energy audits and feasibility studies.”

The USDA “anticipates about 1,900 REAP (project) announcements this year,” continued Canales, in a conference call with the press. “In Fiscal Year 2010, USDA Rural Development awarded 2,400 REAP loans and grants totaling $159 million. The Obama administration is committed to reducing our nation’s use of fossil fuels and to protect our environment. (REAP) helps us meet these important goals.”

One hindrance for the widespread adoption of biofuels is the lack of gas station pumps able to handle the fuels. The White House wants 10,000 “flex-fuel” pumps across the country within five years (representing a five-fold increase over the current number.  

“By building infrastructure to put biofuels produced in America in our fuel tanks, USDA is supporting the clean energy economy we need to ensure our long-term prosperity and help us out-compete the rest of the world,” said Agriculture Secretary Tom Vilsack, in a statement. “USDA is working to support the research, investment and infrastructure necessary to build a nationwide biofuels industry that creates jobs in every corner of the country.”

So, how many flex-fuel pumps will be installed due to the latest funding?

“About 200 in this round of announcements,” said Dallas Tonsager, Agriculture Under Secretary for Rural Development. “We anticipate some more in a round coming up…

“As we continue to look at the expansion of the biofuels industry, we’re looking at each of the key components that have to be addressed to help that industry continue to grow. It is so essential for agriculture in the long run to develop these alternative uses for our agricultural products. We want to keep the ball rolling in every way we can.”

During recent appropriations, both the House and Senate cut REAP funding. Canales was asked if the USDA has provided Congress with a cost/benefit analysis on the program.

Cost/benefit

Canales: “Indeed, we have (done so). People need to understand there is a (REAP) grant component that helps people make strong determinations through feasibility studies and can serve as very important seed money for projects.

“But with the loan guarantee – with $1 that can expand to at least $15 – … banks make the actual loan to a business. That draws in a private partner that’s critical, a community bank, and leverages other sources because these funds aren’t 100 percent (of the project cost). If it’s a grant, it (pays) for 25 percent of a project. If it’s a loan, it’s 75 percent of a (project’s cost). These are leveraged dollars throughout.”

The USDA has “pretty good data on jobs created, saved, farmers assisted, amount of energy generated and greenhouse gas reductions,” said Tonsager.

Energy costs are an “enormous part” of any farm operation, continued Tonsager. REAP “addresses energy costs in a multi-dimensional way. It can (help with) energy efficiency, improvements to poultry operations, energy efficient corn dryers, solar, wind, and geothermal. We’re looking at all kinds of energy sources and improvement projects.

“It’s beginning to add up. (REAP) has been three years in business and we’re typically doing 1,500 to 2,000 projects a year and it’s starting to have a dramatic effect. It’s starting to lead to a lot of energy generation, a lot of greenhouse gas reduction.

“It’s also stimulating a lot of ideas and creativity among people.”

Tonsager was also asked about REAP’s viability in light of the financial shenanigans surrounding the Department of Energy’s (DOE) renewable loan program dealings with Solyndra, a company that made solar photovoltaic panels. In 2009, with White House backing and cheerleading, the DOE provided a $535 million loan guarantee to the ascendant company.

Then, just weeks ago, Solyndra filed for bankruptcy and laid off its work force. The FBI, among other law-enforcement agencies, is now looking into the company and Congress is sure to hold hearings on the matter.

“We can make very strong case for the program because of its very diverse use,” said Tonsager, pointing to REAP funding for projects in 49 states and Puerto Rico. REAP “is in very high demand and there is a significant number of greater applicants for the program than what we can fund.

“(As for the) recent controversy, I don’t think there has been time to have impacted our programs. … It’s just become an issue in recent times. (The DOE program) really do have some different focuses and scale. A lot of (REAP) is focused on relatively small programs.

“In any event, we understand the budget deficit is causing a significant debate in Congress. We understand the need for reductions in costs and use of federal resources. We think (REAP) is a very worthy program and we hope Congress, as it considers various matters, continues to support REAP.”

Funding for current REAP projects is already available and committed and is not in jeopardy of being cut.

Another round of REAP projects -– some 500 -- should be announced in a few weeks.

“So, there is another chance (for those who apply) to get a project funded this year,” said Tonsager.