Solar Panel Grants for Businesses

Solar Panel Grants for Businesses

With the ever-rising utility rates, going solar is more lucrative now than ever.

In the last decade alone, the cost of solar panels has decreased drastically, while their efficiency has increased. The solar buyer has more options to choose from depending on their needs and constraints. Federal tax credit for solar panels is another attraction for residential and commercial solar systems.

In its efforts to achieve its renewable energy targets, the federal government has come up with federal grants for solar panel installation for businesses. These solar grants are specifically tailored for small businesses that find it hard to accommodate the cost of solar power systems within their limited budget. 

Solar grants for small businesses are offered by USDA to make converting to solar power more manageable and to bring expenditure on energy consumption lower. In this article, you will find all information related to solar panel grants for businesses, specifically the USDA REAP program.

Why should you consider going solar?

“Going solar” is the latest fad among home and business owners. It is right that you are wondering if this is merely a short-term hype or something worth all the money and effort you are spending on it. 

You may already be aware that we are fast running out of known sources of fossil fuels. At the rate we are burning it up, it may last us a few more decades. More importantly, the pollution caused as a result of burning fossil fuels is wreaking havoc on our environment. So, going solar is not just about reducing your energy bills, it is also a matter of doing your bit for the survival of the human race.

Do you know that an hour of solar radiation received by the earth is enough to meet our energy needs for a year? When we harness this free solar energy, we can help our environment as well as bring down our dependence on fossil fuels.

Depending solely on grid power may not be a good idea for businesses. When you have provision to generate your own electricity, you no longer have to worry about blackouts. 

What is the USDA REAP grant program?

The Small Business Innovation Research (SBIR) is a US government funding program to help small businesses engage in research and development (R&D). organized by the Small Business Administration, this funding program is given as contracts or grants, provided the projects have commercial potential and meet the US government’s R&D requirements.

Using this funding program, agricultural producers discovered that installing solar systems is a money saver as well as a perfect solution for environmental challenges. After multiple R&Ds, REAP was founded. REAP stands for Rural Energy for America Program. It is offered by the US Department of Agriculture.

As part of the REAP, solar grants and loans are offered by USDA to small businesses and farmers to go solar. Converting to solar is easier with REAP grants, bringing down the cost of energy efficiency upgrades and new solar energy installations. 

REAP grants are designed for small and rural businesses and small farming and ranching operations. 

In 2022, the total amount of solar grants for small businesses given under REAP stood at $195 million. 

How much funding can you expect from REAP?

REAP grants and loans are awarded to those who can prove that going solar is beneficial for their business. Solar panel grants for businesses are offered for energy efficiency improvements as well as to fund the installation of solar energy systems. 

Grant/loan amount for solar installation: 25% of the project cost (in the range of $2,500 – $500,000)

Grant/loan amount for energy efficiency improvement: 75% of project cost (in the range of $1,500 – $250,000)

With the falling prices of solar installation, together with REAP grant, 30% federal solar tax credit, and other state and local rebates and incentives, the cost of going solar is quite low while the benefits are quite attractive.

By going solar, you are in effect locking the energy rates for the next 20-30 years.

Who qualifies for REAP grants and loans?

The USDA’s REAP grants and loans are exclusively designed for businesses. If your business comes under any of these categories, you are eligible to apply for it for the purchase and installation of a solar energy system.

  1. Your business is located in a rural area. An area is designated as rural when the population in the area is less than 50,000. If you have a business in a rural area, no matter what your business is, you are eligible for a REAP grant and loan. 
  2. You should own the business. REAP grants and loans are only given to those who are registered as owners of businesses. However, you don’t need to own the property on which your business is operating. If you are not the owner, you should have a lease for the property or a rental agreement. 
  3. It’s available only for your business. REAP grants and loans are given to set up solar panel systems in your business location and not in your residence. You also need to give an undertaking that the benefits of the solar power installation will be used only for the business. You can manage this with an energy audit by a professional.
  4. The financial health of your business must be good. You need to produce proof that your business is profitable enough to meet the expenses and debts involved. You can take the help of solar financing to manage this. 
  5. If you’re a farmer, nothing else matters. You qualify to be considered as a farmer if agricultural production constitutes at least 50% of your gross annual income. 

If you still have doubts about qualifying for the REAP grant or loan, you can use the NAICS website using your NAICS code to see if you are considered a “small business”. Another option for you is to check your business size on the SBA website. You can also look up the USDA website to know whether your business is located in an area eligible for REAP grant.

How can you spend the REAP grant money?

The REAP grants and loans can be spent on the purchase and installation of a renewable energy system. Solar energy, being the most popular among renewable energy sources, is eligible for funding with the REAP grant. The other renewable energy systems that can be funded with the REAP grant are the ones using wind, biomass, geothermal, and hydrogen energies. 

The REAP grant can also be utilized for energy efficiency improvement. This means making the existing electrical appliances and systems more efficient by preventing wastage and switching over to newer models. Here is a list of the improvements covered by the REAP grant.

  1. LED lights
  2. Improving insulation
  3. Energy-efficient windows and doors
  4. Refrigeration and cooling devices
  5. Higher efficiency ventilation, heating, and air conditioning systems
  6. Solar, electric, or gravity pumps for pivot sprinklers
  7. Switching over to electric motor for irrigation from the diesel ones
  8. Replacing any device that is energy-inefficient

Final thoughts on solar panel grants for businesses

If you are a small business owner or farmer, you can get the benefit of solar energy for your business at an affordable cost. The federal solar tax credit will cover only 30% of the cost of residential and commercial solar systems. This is where the REAP solar panel grants for businesses come in handy.

The eligibility criteria and application for the REAP solar grant and loan may look quite complicated at a glance. If you are willing to invest time and effort into understanding how it works, you can do it yourself. It would be worth it. 

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