Farm Bill Passed – Implications for Small Wind Funding

The Agricultural Act of 2014, commonly known as the Farm Bill, received the approval of both houses of the U.S. Congress and was signed by President Obama on February 7, 2014. Although the bill largely deals with agricultural subsidies and nutrition assistance (“food stamps”), it contains $881 million for continuing funding of the Department of Agriculture’s (USDA) rural renewable energy and biofuels programs.

The section on energy (Title IX) specifies how the funds will be used to encourage investments in alternative energy technology and production of renewable biomass for biofuels through education, research, and financial assistance programs. It also encourages the manufacture and production of other renewable biochemical and bio-based products through federal procurement and financial assistance programs.

Specifically, in regards to small wind technology, the bill’s most significant section deals with the Rural Energy for America Program (REAP). REAP grants can fund up to 25 percent of a renewable energy system (solar, wind, biogas) or energy efficiency upgrade and provides additional support through loan guarantees. There are 8,250 projects installed to date.

REAP now organizes the grant process for renewable energy systems and energy efficiency improvements into three tiers by cost of activity: 1) $80,000 and below; 2) between $80,001 and $199,999; and 3) $200,000 and above. The application, evaluation and oversight processes become more comprehensive with each subsequent tier. Blender pumps and feasibility studies are no longer eligible for REAP funding. Councils (i.e. non-profit entities or affiliates) are now eligible to apply for energy audit and renewable energy development assistance grants.

REAP expenditures have declined since funding peaked at $361 million in fiscal year 2010. Although program funding is reduced to $50 million in mandatory funding and $20 million in discretionary funding per fiscal year from 2014 through 2018, the program continues to provide assistance to agricultural producers and small businesses in rural America for adopting renewable energy and improving energy efficiency.

The Rural Energy Self-Sufficiency Initiative program was completely defunded in the new bill, and the Forest Biomass for Energy Program was also repealed.

In a new provision, an Energy Efficiency Report for USDA Facilities will require analysis of energy use in USDA headquarters and major facilities, documentation of energy audits and efficiency projects conducted, and identification of potential energy savings projects.

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