Protect REAP, a federal program rural Kentucky can’t afford to lose

By Josh Bills | Kentucky Lantern

Over the past sev­er­al decades, rur­al Kentucky has faced sig­nif­i­cant changes. In Eastern Kentucky, a shrink­ing tax base, pop­u­la­tion loss, and the decline of long-stand­ing indus­tries has made resilience an ever-chang­ing chal­lenge. Through it all, our com­mu­ni­ties have adapt­ed and searched for new ways to build a stronger, more diverse economy.

Increasingly, a new cri­sis has emerged: the soar­ing cost of keep­ing the lights on. For small busi­ness­es and farms that are essen­tial to our local econ­o­my, elec­tric rates for com­mer­cial facil­i­ties have more than dou­bled over the last 20 years. When you lay­er in his­toric infla­tion, the math becomes over­whelm­ing. Overhead costs eat away at already thin mar­gins, forc­ing own­ers to choose between a new hire, a new piece of equip­ment, or sim­ply pay­ing the util­i­ty bill.

At Mountain Association, we have been sup­port­ing small busi­ness­es since 1976 and saw this ener­gy cri­sis com­ing ear­ly. In 2008, as costs began their steep climb, we launched an ener­gy sav­ings pro­gram. Through this work we con­tin­u­al­ly see one of the biggest chal­lenges fac­ing busi­ness­es is upfront capital.

That’s where the Rural Energy for America Program—REAP, for short—comes in. REAP is a fed­er­al pro­gram admin­is­tered by the U.S. Department of Agriculture that pro­vides guar­an­teed loan financ­ing and grant fund­ing to agri­cul­tur­al pro­duc­ers and rur­al small busi­ness­es for renew­able ener­gy sys­tems or ener­gy effi­cien­cy improve­ments. For a rur­al small busi­ness own­er, that means a grant can cov­er up to 25 per­cent of the cost of solar, a more effi­cient HVAC sys­tem, LED light­ing, or bet­ter insu­la­tion. These are the kinds of upgrades that pay for them­selves in a short time, reduc­ing over­head and improv­ing the bot­tom line. But for many, the upfront cost is sim­ply out of reach.

At Mountain Association, we have been pack­ag­ing REAP grants for our clients since 2009. To date, our team has secured more than 60 REAP grants for small busi­ness­es and farms across Eastern Kentucky, total­ing over $2.5 mil­lion for our clients. These ener­gy sav­ings projects keep rur­al busi­ness­es open and com­pet­i­tive. As a bonus, many of the projects are com­plet­ed by local con­trac­tors, allow­ing those fed­er­al invest­ments to go even fur­ther in sup­port­ing Eastern Kentucky’s econ­o­my. Without sup­port from pro­grams like REAP, some of the busi­ness­es and farms we work with sim­ply won’t make it as costs con­tin­ue to rise.

Mike Long is the gen­er­al man­ag­er of Long’s Pic Pac in Pineville, a town of about 1,630 peo­ple in Southeastern Kentucky. His father start­ed the busi­ness in 1964 with a $3,500 loan. Today, Mike is fight­ing to keep it the gro­cery store of choice for a com­mu­ni­ty where the medi­an house­hold income is just $27,159. Grocery stores typ­i­cal­ly run on a razor-thin 2.2% prof­it mar­gin. One bad year or one sea­son of sky-high demand charges and a rur­al store can vanish.

For Long’s Pic Pac, a REAP grant fund­ed 40% of a project to install solar pan­els on the store’s roof and a 60-kW bat­tery. The bat­tery can store excess solar ener­gy and vast­ly reduce the pun­ish­ing “demand charges” that make up more than half of the grocery’s month­ly pow­er bill. The result is an esti­mat­ed cost sav­ings of at least $15,000 per year—money that can go to staffing the deli, off­set­ting deliv­ery costs, or sim­ply keep­ing prices sta­ble for fam­i­lies in Pineville. Long expects to pay back the entire cost of the project in just four years.

The need for this pro­gram has nev­er been more urgent. With each dev­as­tat­ing flood or win­ter storm, util­i­ty com­pa­nies are forced to make expen­sive repairs to aging infra­struc­ture. Businesses and ratepay­ers pay for those repairs through high­er rates. As the fre­quen­cy and inten­si­ty of these storms increase, util­i­ties will con­tin­ue pass­ing those recov­ery costs back to us. For a busi­ness like Long’s Pic Pac liv­ing on a 2.2% mar­gin, this com­pound­ing cycle of dam­age, recov­ery, and rate hikes is a threat to its existence.

REAP is a proven, effi­cient tool that uses mod­est fed­er­al invest­ment to unlock pri­vate cap­i­tal and low­er oper­at­ing costs. But it only works if it is fund­ed and pro­tect­ed. It isn’t just an ener­gy pol­i­cy. It is the dif­fer­ence between clos­ing the doors and keep­ing the lights on.

Josh Bills is the Senior Energy Analyst at the Mountain Association. He can be reached at josh@mtassociation.org.