Rural Businesses, Farmers Lose While USDA’s Rural Energy Program is Frozen

The recent freeze to federal grants and loans has impacted countless federal programs and simultaneously left rural businesses and farmers in a lurch.  Among the most impacted programs has been the Rural Energy for America Program (REAP). As a result, farmers and businesses alike may be on the hook for millions of dollars of energy efficiency and energy independence improvements they have already purchased or installed. 

Since its inception, REAP has funded tens of thousands of projects that empower farmers, ranchers, and rural businesses to reduce energy costs and move towards energy independence. However, the recent funding freeze has paused REAP funds even for those with a valid, legal contract. 

This blog post takes a closer look at REAP’s investments from 2014 to 2025, highlighting their critical role in making long-lasting impacts on rural communities, and what stands to be lost if the US Department of Agriculture (USDA) continues to withhold payments on signed contracts.

What is REAP?

The Rural Energy for America Program (REAP) offers grants and loan guarantees to farmers, ranchers, and rural small businesses for energy efficiency improvements and renewable energy systems. Administered by the Rural Development division within USDA, REAP helps farmers and rural businesses improve their bottom line by cutting energy costs and increasing energy efficiency. 

Whether it is installing solar panels, upgrading irrigation systems, or modernizing heating and cooling equipment, these projects help reduce electricity consumption and increase energy independence, saving money that can be reinvested in the business. The Inflation Reduction Act (IRA) of 2022, as previously reported by NSAC, boosted REAP’s funding, appropriating $820.25 million through FY2031 and increasing federal cost-share and maximum grant sizes for grant-based projects. 

Between 2014 and 2025, REAP assisted approximately 17,026 farms and 32,710 rural small businesses to reduce energy costs and promote energy independence, creating approximately 2,600 new jobs and saving more than 4,700 existing jobs in rural America. 

Every State Benefits from REAP

REAP delivers tangible benefits to rural businesses and agricultural producers across the country. REAP has helped small businesses and farmers in every single state lower energy costs, improve resilience, move towards energy independence, and contribute to a more sustainable future.

Pennsylvania ($83.4 million), Minnesota ($79.8 million), Illinois ($75 million), and Iowa ($74.6 million) are the largest recipients of REAP grants, but every state has benefited from the addition of Inflation Reduction Act (IRA) funds to the program in 2023 and 2024. 

The IRA has injected a boost into the oversubscribed REAP, creating specialized funding streams for renewable energy systems and efficiency improvements. Between 2023 and 2025, more than $1 billion in IRA funds supported 6,822 REAP projects, with renewable energy systems receiving the majority of allocations.

IRA funded REAP projects have driven $2.75 billion in rural economic development.

The additional funding for REAP from the IRA reached every state, reinforcing its broad national impact. Pennsylvania ($48.1 million), Iowa ($42.1 million), and Michigan ($41.6 million) received the largest amount of IRA-funded grants, demonstrating the program’s bipartisan benefits and its role in supporting rural businesses and agricultural producers nationwide.

The interactive map below shows the total REAP grants and loans awarded in each state from 2014 to 2025, as well as the total funded specifically by the IRA.

Driving Renewable Energy and Efficiency: A Deep Dive into the Rural Energy for America Program (REAP)

Between 2014 and 2025, REAP has invested over $4.8 billion across more than 19,000  grants and loan guarantees in renewable energy and energy efficiency projects, spurring more than $14.7 billion of rural development invested in rural communities. REAP grants require matching funds from recipients, so for every dollar USDA invests in REAP grants, it generates $8.72 in total project spending and investment, amplifying the economic impact for rural communities (see Figure 1). 

REAP funding grew significantly, spiking during the COVID-19 recovery years due to IRA funding, with 2024 marking a record $3.5 billion in total investments, $2.1 billion from grants and $1.4 billion from loan guarantees. Renewable energy systems like solar dominate REAP’s portfolio, with most awards granted to farms and small businesses. REAP remains a popular option for farmers and rural businesses for increasing resilience and lowering energy costs. 

Figure 1: REAP Invests in Rural America

A Period of Growth: Funding and Grant Trends

The number of grants and loans that REAP supports remained relatively steady until 2023, when the number of awards more than doubled. This investment not only reduced energy expenses for farmers and small businesses but also strengthened rural energy independence by accelerating the adoption of renewable energy and efficiency upgrades.

Figure 2: The Number of REAP Investments 

The average REAP grant between 2014 and 2024 was $59,435.75, with significantly higher average grant sizes in 2023 and 2024 following the addition of IRA funds. The addition of these funds has allowed thousands more farms and rural businesses to enact cost-saving energy measures that work well for their operations. More than 8,362 farms received REAP grants funded by the IRA specifically. This significantly increased the number of farms that took advantage of the program to reduce their energy costs, become more energy independent, and enhance their long-term viability.

Figure 3: Average REAP Grant Amounts 

The program’s primary focus has been the Renewable Energy Systems and Energy Efficiency Improvement Loans and Grants. This component has awarded the lion’s share of grants and has an average grant size of $88,444, higher than the $78,498 average for the Energy Audits and Renewable Energy Development grants but less than the $220,109 average for the Technical Assistance grants. 

Renewable Energy Systems and Energy Efficiency Improvement Loans and Grants provides grants and loan guarantees to help rural businesses and farms install renewable energy systems (e.g., solar, wind, biomass, geothermal) or make energy efficiency improvements (e.g., upgraded insulation, lighting, HVAC systems, and irrigation systems). Grants can cover up to 50% of project costs. 

Energy Audits and Renewable Energy Development Grants provide grants to state, tribal, or local governments, universities, rural electric cooperatives, and other organizations to conduct energy audits and feasibility studies for rural businesses and farms. These grants help farmers and rural businesses assess opportunities for energy savings and renewable energy projects before development. 

Figure 4: REAP Grants and Loans by Program

Pathways Forward: Enhancing REAP’s Impact

REAP has delivered significant benefits to rural communities and farmers in every state, helping them cut energy costs, improve efficiency, and strengthen their businesses. Now, with additional support from the IRA, REAP has expanded its reach, proving its value and popularity as a critical tool for rural economic growth. Yet, the ongoing pause of all IRA payments is directly undermining this growth.

In the immediate term, USDA must urgently provide specificity and clarity for how it will release frozen funds and swiftly honor its legal obligations to farmers, businesses, and organizations by immediately releasing funding on all signed contracts.

In the longer term, continued investment in REAP is necessary to ensure farmers and small businesses can keep accessing these cost-saving opportunities. Opportunities also remain to improve upon the already successful program, such as moving away from the false solution of anaerobic digesters. As Congress debates the next farm bill, lawmakers must recognize REAP’s nationwide success and secure its future. 

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