Funding for rural renewable energy projects slashed

Enlarge Image

Vern Spaur of SPS of Oregon, shown here with his son Vern Spaur, Jr., used a REAP grant to help fund a hydropower turbine in an irrigation ditch that generates about $700 worth of electricity per month.

A key program that funds energy diversification and efficiency in Oregon’s rural areas has seen it’s funding slashed for the upcoming year. The Rural Energy for America Program, commonly called REAP, funded anaerobic digesters for the first time last year, as well as small-scale hydropower projects.

But the program, which receives much of its funding from the federal Farm Bill, will see a reduction of about two thirds of its funding levels following deep cuts at the federal level.

REAP funded 36 projects in Oregon in 2011, from grants totaling $1.29 million. One recent project at Northeastern Oregon auto retailer SPS of Oregon was atypical only for its use of small-scale hydro.

SPS owner Vern Spaur said he used a $19,695 REAP grant combined with tax breaks and other incentives to fund a $75,000, 10.5 kilowatt turbine in an irrigation ditch. SPS is located between Wallowa and Lostine, and the ditch runs 7 miles from the Lostine River.

Spaur, with his family, runs a salvage yard and repair shop along that stretch, and also a small ranching operation that used to be a larger part of business. Working repair and salvage jobs for insurance companies, custom repair and towing, SPS spends mightily on power. But with the 10.5-kilowatt hydro turbine, Spaur said, those costs are reduced.

“Overall, throughout the whole year, it will match the power that we’re using,” he said. “During peak demands I can spend $1,000 a month on power and this will generate $700 a month.”

The turbine sends surplus power to a utility through a grid intertie, banking energy credits for later use. Spaur now plans a second turbine in the ditch to power heat for the shop.

The SPS project is typical of REAP’s impacts in rural Oregon. Most are improvements for less than $20,000 that target farms, ranches, orchards and other rural businesses.

The projects are diverse: from irrigation improvements and lighting retrofits to solar systems and wind arrays. Often combined with funding programs and incentives from the Oregon Department of Energy and Energy Trust of Oregon, REAP grants are a major force in varying energy options in rural Oregon, and often provide long term cost-savings to businesses hardest hit by inefficiencies. Oregon’s REAP program is presently leading the nation in its ability to fund solar installations, in part through scoring criteria that favors projects paired with incentives from Energy Trust.

Looking to 2012, “We’re going to be hit pretty hard,” said Don Hollis, a Pendleton-based renewable energy coordinator for the U.S. Department of Agriculture. “We’re not going to fund anywhere near as many projects.”

Hollis said he wasn’t certain how much the funding in the program would be reduced by — the federal offices have yet to make allocations to state programs — but the entire national program received only $22 million this year, compared with $70 million in 2011. Oregon’s program cuts will likely be proportional, and the state is likely to see about 69 percent less funding than in years past.

The decline will increase competition for those looking for energy solutions in rural areas, and in some cases, limit disposal opportunities where waste is feedstock.

Farm Power Northwest, for example, a Skagit County, Washington company, received two of REAP’s largest grants in 2011, both for anaerobic digesters in the dairy-friendly area of Tillamook County. The digesters offer manure disposal to farmers looking for a way to manage their waste stream. They burn methane harnessed from the manure to create electricity, then process the manure into fertilizer. The company received $100,000 grant and a loan of $2,650,000 for a digester currently under construction at 2075 McCormick Loop Road and another $500,000 grant and a loan of $1 million for a digester planned for the Misty Meadow Dairy off of Highway 6, the first digesters funded by REAP in Oregon.

“Hopefully there will be more in the future,” said Hollis, who said increased digester construction could someday cure a manure problem in Tillamook. The problem is currently so large its only barely helped by the two new digesters.

For now, REAP will fall behind other programs in funding such opportunities in Oregon. It isn’t yet clear whether Energy Trust or the Oregon Department of Energy plans to retool offerings in the face of the REAP rollback.

Lee van der Voo, lvdvoo*at*gmail.com, is a freelance writer for Sustainable Business Oregon.