Farm bill funding for implementing on-farm energy conservation

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On-farm energy conservation emerged a clear winner in the new Farm Bill. Congress appropriated more dollars than the previous Farm Bill to assist farmers and ranchers in implementing energy conservation measures. A brief overview of each program in the Farm Bill with energy conservation funding is as follows:

Rural Energy for America (REAP) Program

With significant carryover funding from FY2013, a $3.5 million increase in the FY14 omnibus appropriations bill, and a $250 million mandatory funding expansion in the five-year Farm Bill, the Rural Energy for America (REAP) program is expected to issue a Notice of Funding Availability for FY14 applications. Mandatory funding of $50 million per year has been designated and the application process has been simplified and streamlined. Though feasibility studies were removed as eligible project costs, renewable energy and energy efficiency projects can still receive up to $500,000 in grants and/or up to $5 million in loan guarantees. REAP will employ three tier levels of awarding projects - projects costing $80,000 or less, from $80,000 up to $200,000, and projects larger than $200,000.

Energy Efficiency and Conservation Loan Program

The Energy Efficiency and Conservation Loan Program went into effect in December 2013. It will receive $250M in year 1. This program will be run through the Rural Utilities Service and will provide low-interest loans to rural electric coops who will in turn lend it to cooperative members to implement energy conservation measures. Rural electric cooperative members will need to lobby their association to pursue these funds.

Value-Added Producer Grant

The Value-Added Producer Grant (VAPG) is also in the Rural Development Title and is funded at $63M. VAPG has expanded its focus to include renewable energy and energy efficiency associated measures.

Environmental Quality Incentives Program (EQIP) Program

EQIP in the Conservation Title has conservation practices that fund energy audits and efficiency upgrades. The typical EQIP application process must be followed to take advantage of these conservation practices and energy conservation must be recognized as resource concern.

Rural Energy Savings Program

The Rural Energy Savings Program is included in the Rural Development Title and is authorized at $75M per year with discretionary funding. Because it is funded with discretionary funding, it will be very difficult to get this program funded each year. 

A series of workshops will be offered by Michigan State University Extension around the state on March 11-13. The purposes of the workshops are twofold: first, to help dairy farmers learn how they can reduce their energy expenses and second, provide information that will enable dairy farmers to gain access to utility rebates and federal dollars to implement recommended energy conservation practices. MSU studies have shown, on average, a potential of 40 percent reduction in energy expenses when recommended energy conservation practices are implemented for farms and rural businesses (see Table 1). To learn more about the workshops, including registration information, visit the Energy Conservation: Impact on the Bottom Line registration page.

Table 1. Average Energy Efficiency Saving - Michigan Farm Energy Program

Homestead Operation

Ave. % Energy Cost Savings

Ave. Pay-back (Yrs.)

Average Energy Saved ($)

Dairy

49%

2.7

$8,223

Greenhouse

39%

3.8

$33,343

Field Crops**

41%

2.2

$7,142

Grain Drying**

35%

8.0

$15,688

Irrigation**

73%

3.9

$14,506

Hogs**

23%

3.4

$4,745

Beef**

49%

3.8

$1,261

Food Processing/Marketing

36%

4.9

$8,360

Rural Business

38%

2.2

$26,777

Totals Ave. (225)

40%

3.8

$13,924

               ** Field Operations not included. 

Recent developments on the renewable energy front are underscoring the value of energy efficiency in the move to a cleaner, less expensive energy future. Improved efficiency should be the option of first choice for meeting the nation’s growing energy demands. As the nation’s farms, ranches and forestlands strive to meet 25 percent of our energy needs by 2025 with renewable resources, including solar power, wind energy, biomass, biofuels, hydropower and geothermal energy, more efficient use of energy will make that renewable energy goal easier to reach.

For more information about the energy conservation workshops contact Charles Gould at 616-994-4547 or gouldm@msu.edu. For more information on energy conservation programs in the Farm Bill contact Al Go at 517-353-0643 or goaluel@egr.msu.edu.



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