RURAL SOLAR ENERGY

The USDA will help fund your solar project! The newly expanded REAP program is aiming to make renewable energy more accessible to businesses in rural areas and agriculture businesses in both high and low population areas.

Below, Solomon Renewables has broken down all of the important REAP information so business owners can determine if they qualify.

SEE IF YOU ARE IN A QUALIFIED AREA.

The REAP Grant is a huge opportunity for businesses to fund their renewable solar energy system.

REAP Example: 

The REAP grant is now 50% of the total cost:
REAP: $500,000×50%=$250,000

Investment Tax Credit (ITC): The ITC is 30% of the total cost:
ITC: $500,000×30%=$150,000

Modified Accelerated Cost Recovery System (MACRS): MACRS benefit is calculated by adding back 50% of ITC to the depreciable basis. Then, we apply the owner’s tax bracket to this amount.
MACRS: $500,000−$150,000×50%=$425,000
MACRS Tax Bracket assumption: 22%×$425,000=$93,500

Net System Cost:
Net System Cost:$500,000−$250,000−$150,000−$93,500= $6,500

The Rural Energy for America Program (REAP), backed by the U.S. Department of Agriculture, aims to financially assist rural businesses and property owners in adopting renewable solar energy solutions.
The first round of applications for the 2024 cycle of the REAP Grant must be submitted by March 31, 2024.
Submit your REAP applications to your nearest state USDA Office.
REAP offers two types of funding for renewable energy projects: guaranteed loan financing and grants.
Agricultural businesses and producers, provided that at least 50% of their gross income is derived from agricultural operations, are eligible to apply.
Eligible businesses include, but are not limited to, farmers, ranchers, animal feed manufacturers, breeding companies, farm machinery producers, and other small businesses in qualifying rural areas.
Eligibility extends to rural areas with a population under 50,000 and agricultural producers in regions regardless of population density.
MACRS, or Modified Accelerated Cost Recovery System, is a tax depreciation method for assets.
Depreciation is an IRS-approved method to account for the decreasing value of an asset (like solar panels) over time. This decrease in value, due to wear and tear or obsolescence, is deducted annually, reducing taxable earnings.
Loan terms are based on the use of funds, the lifespan of renewable energy equipment, and the business owner’s repayment capacity, with a maximum term of 40 years.
The maximum funding request for renewable energy system grants is set at $1,000,000.
You can apply for REAP funding and tax credits on the entire project cost. However, if you treat the REAP grant as income, you can claim a tax credit on the full project cost. If not, the tax credit applies only to the portion not covered by REAP.