The USDA REAP grant program is a powerful resource designed to help farmers and rural businesses boost America’s energy independence by covering up to 50% of the installation cost for a solar energy system. 
When you combine this substantial grant with tax incentives and long-term electricity savings, investing in solar becomes an easy choice for many. However, securing this competitive grant isn’t guaranteed and requires a fair amount of work to apply.
Paradise Energy has helped hundreds of farmers and businesses secure the REAP grant—with a near-100% success rate in many of the states we serve. Drawing from this experience, we’ve put together this blog to break down what the USDA REAP grant is, who qualifies, and the essential steps in the application process to help you maximize your chances for success.
What is the USDA REAP Grant for Solar?
The United States Department of Agriculture (USDA) Rural Energy for America Program (REAP) is a highly sought-after opportunity for agricultural producers and rural commercial businesses to receive grants for energy-efficiency improvements and renewable energy projects, like solar.
In 2023, the grant funds received a massive injection of money, pushing the grant coverage up to 50% of the total installation cost of your solar panel system, with a maximum funding limit of $1 million. The 50% grant is available through 2027.
Who Qualifies for the USDA REAP Grant?
The eligibility criteria for the USDA REAP Grant have undergone significant changes since its previous iteration before 2023. Most farms and rural small businesses in an eligible area should qualify for grant funding. However, meeting the eligibility requirements does not guarantee securing this highly competitive grant.
Farmers (Schedule F) Qualify for the USDA Grant
If you use Schedule F, you will file as an agricultural producer. To qualify, the majority of your income (51%) must come from the farm. Additionally, the majority of the electricity you use (51%) must be consumed by farm operations — not by personal residences attached to the property. Any electricity you use for your residence will not count toward your 51%. You must also be free of any owed back taxes to the IRS.
Businesses (Form 1065 or 1120) Qualify for the USDA Grant
If you file a 1065 or 1120, you will be applying as a rural small business. The rules for qualifying are similar to those for farms: the majority of electricity consumed (51%) on the property must be for business purposes only, and the applicant can’t owe any back taxes. Most businesses that operate out of a residence do not qualify.
Additionally, the business must be located in a qualifying area. The USDA defines this as an area with a population of 50,000 residents or less. You can use the USDA's Eligibility Map to determine if your business is in a qualifying area. If your property is close to a qualifying area but not quite within the shaded portion, check with a USDA Grant professional to determine whether it qualifies.
When Can You Apply for the USDA REAP Solar Grant?
In previous years, the USDA REAP Grant covered a smaller percentage of a project, and grant submissions were split into two rounds. However, with additional funding from the Inflation Reduction Act, the program boosted its grant size and increased the number of rounds. There are now only three rounds per year: March 31, September 30, and December 31. The June 30 round has been removed.
How To Apply For A USDA REAP Grant For Solar
The grant application process is typically handled by your solar installer or a third party. However, active customer participation is required to complete the process successfully.
Required Documentation
This will include providing financial statements and tax returns from the past 3-5 years (depending on the entity), lease agreements if applicable, and your approval and signature on multiple documents. Missing documents must be submitted within 15 days, or the application will be rejected.
Important Details
Any costs incurred before the USDA provides notice that your REAP Application is "Complete" are not eligible for reimbursement. However, once the application is complete, applicants do not have to wait for formal approval to begin project work.
Digital documents or forms must be signed individually. Batch signing of documents will result in rejection.
How Do The USDA REAP Grant Rounds Work?
Anyone seeking a REAP Grant must submit their application in a specified round. A portion of the overall program’s funding bucket is split between each round and allocated to qualifying businesses and farms through the REAP Grant.
If there are more qualifying systems than the round’s budget can serve, the highest-scoring applications will receive the grants first until the funding runs out. The likelihood of every qualifying applicant receiving a grant reward depends on the number of people who apply.
If you aren’t awarded a grant in the round you applied, your application will automatically roll over to subsequent rounds in the same calendar year.
The Safer Option: Take the 25% USDA Grant
We are seeing a lot of competition for the 50% USDA REAP Grant. If your project likely won’t score well or you’d feel better going for the sure thing, you can always apply for a 25% grant. This program, supported by the USDA through the Inflation Reduction Act, also provides grants for other efficiency-related projects for farmers and rural businesses. Because of its lower amount, we expect this to be much less competitive than the 50% REAP Grant.
How Does USDA REAP Grant Scoring Work?
Your USDA REAP grant application will be evaluated and ranked based on the following:
- Environmental Benefits (10 points): Points are awarded based on the positive effect on resource conservation, public health, and/or the environment.
- Energy Generated, Replaced, or Saved (25 points): Points are given based on how much or what percentage of energy you generate, replace, or save.
- Commitment of Funds (10 points): Points are awarded if more than 50% of matching funds are committed.
- Previous Grantees and Borrowers (15 points): Most of the points go to applicants who have never received the grant. None are given if you received this grant less than two years ago.
- Simple Payback (15 points): The shorter your system’s payback, the higher the points.
- State Director and Administrator Priority Points (10 points): Additional points may be awarded for veteran status, socially or economically disadvantaged status, type of technology used, geographic diversity, and more.
The scoring system no longer awards points for “Existing Businesses” or applications requesting $250,000 or less.
Frequently Asked Questions About the USDA REAP Grant for Solar Energy
Understanding the USDA REAP Grant process can be complex, with numerous deadlines, eligibility requirements, and funding guidelines to consider. To make it easier, we’ve compiled answers to some of the most frequently asked questions about the program. Whether you're wondering about application timelines, tax implications, or how to improve your chances, this guide has you covered.
When Should You Apply for a USDA REAP Grant For Your Solar Installation?
There’s no doubt that a grant covering up to 50% of your system’s installation costs is huge. Coupled with other widely available incentives, 90% or more of your installation costs could be covered within the first year.
But there’s no guarantee the USDA REAP Grant will stay at this 50% level, and it’s not something you’ll want to miss. The current program only extends through 2027. What happens after that is still unclear.
The best time to start the solar system and grant application process is now. The sooner you submit your application, the better your chances of getting this grant.
That's where we come in! Our team of grant experts has helped more than 500 customers secure over $30 MILLION in USDA funds, and we're ready to help you achieve the same.
Request your free custom quote to take the first step towards controlling an unpredictable cost, tax savings, and increased profitability.
Last updated: November 2024
