Why Rural Shops Should Consider the USDA

Columns From: Modern Machine Shop, ,

Posted on: 2/20/2014

Did you know that opportunities exist through the United States Department of Agriculture for machine shops hoping to become more energy efficient?

It’s amazing how many advanced U.S. manufacturing facilities are located seemingly in the middle of nowhere. Minden, Neb.’s Royal Engineered Composites, the composite parts producer profiled in this story, is a great example.

Of course manufacturers in all areas of the country are looking more closely at ways to improve their operations’ energy efficiency. Those located in rural areas might not be aware of the federal and state energy-efficiency initiatives and tax credits available to them through the United States Department of Agriculture (USDA). These programs are not geared solely toward agricultural or food-processing businesses. They actually apply to any rural business, whereby “rural” is generally defined as a town with fewer than 50,000 people and not immediately adjacent to one bigger than that.

This is pointed out in the white paper “Energy Efficiency Opportunities at USDA,” written by Kate Farley and published last August by the American Council for an Energy Efficient Economy (aceee.org). The paper lists a few programs that manufacturers in rural areas might consider. The largest and most well-known of them is the Rural Energy for America Program (REAP). REAP provides grants and loans to promote energy efficiency and renewable energy development through energy audits, renewable energy projects and feasibility studies for other REAP-eligible projects. For example, manufacturers could use a REAP grant to finance the purchase of a combined heat and power (CHP) system or a more efficient HVAC system. That said, the REAP application process can be cumbersome (go figure).

There’s also the Business and Industry Guaranteed Loan Program (B&I). According to the USDA, the B&I is for projects that reduce reliance on nonrenewable energy sources. However, a small portion of available funds have been used for energy efficiency projects, too. Eligible operations do not receive their loans directly from the USDA, but rather from USDA-approved lenders.

Two other USDA initiatives are the Rural Business Enterprise Grants (RBEG) program and the Rural Economic Development Loan and Grant (REDLG) program. The RBEG is geared toward emerging small operations with 50 or fewer employees and less than $1 million in projected annual gross revenues. The REDLG does not provide loans or grants to specific companies, but rather to nonprofit utilities such as rural electric cooperatives. The utilities then pass the loans through to local businesses that repay the utility directly.

Energy efficiency consultants can likely provide direction when it comes to these and other programs, and more information is available at ACEEE’s website. Heck, you might as well take advantage of manufacturing in the middle of nowhere.

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