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Do you plan to remodel or retrofit any appliances in your store in the next 36 months? Worried about impending legislation about refrigerants?
If you are a rural grocer and answered yes, then keep reading about the Rural Energy for America Program (REAP), a funding opportunity that provides guaranteed loan financing and grant funding to rural small businesses for renewable energy systems or to make energy efficiency improvements.
"This is one of the single-best opportunities for rural grocers to upgrade their stores and impact their operations. There are opportunities to address future refrigerant requirements, improve operations, and improve profit," said Jonathan Tan, co-founder of Ratio Institute, a non-profit that works with over 1,000 grocery stores and chains to create store-level and enterprise sustainability solutions.
Phasing out hydrofluorocarbons (HFCs) is part of the EPA's impending legislation that is already taking effect in states like California, New York, Vermont, and Washington. The cost of switching to an HFC-free cooling system will only go up as the deadline nears, so experts recommend taking energy efficient steps, like putting doors on open display cases, now. Taking advantage of utility rebates and grant funding can help reduce the cost of compliance significantly.
Many IGA retailers have applied or are in the process of applying for REAP. We detailed how to get started in the fall webinar, How An Energy Grant Can Upgrade Your Store, which you can watch and find a recap of here.
Given that $2 billion has been allocated for the current fiscal year and IGA members are often great candidates for the funding, we asked Tan for the inside scoop and answers to retailers' most common questions.
There are three more application submittal opportunities this year:
Applications submitted by March 31 will have three chances to be selected, since applications not granted in a particular quarter automatically get submitted for the next quarter. The earlier we complete and submit an application, the higher the probability the project gets funded.
Funds can be used for any project where an energy reduction can be substantiated or for renewable energy projects, which is why we recommend considering REAP if you plan any remodel or retrofit in next 36 months.
Thus, upgrading refrigeration systems, refrigerants, and equipment can not only reduce operational costs, but it can help address pending action from the AIM Act (2020), which orders the production of HFCs to be phased down 79% by 2029 and 85% by 2036.
There are no new grant stipulations, but the basic eligibility requirements are:
As of the last deadline (December 31, 2023), Ratio Institute has submitted eight applications for independent retailers. Those eight applications were for over $4.5 million in projects and over $2.2 million in grant funds.
The projects included (but are not limited to):
All projects moving forward will be state dependent, scope dependent, and based on when an application is submitted. In general, we expect a probability greater than 50% of being funded.
In short, there is money available and the USDA wants to give it to rural grocers to help make their stores more energy efficient. With the impending regulations coming, there's no reason not to apply.
The earlier you apply, the better. If you submit a project application in September, it will be subject to remaining funds in the program. We expect this to reduce the chances of a project being selected and encourage retailers to start the application process now.
At present, we expect to submit more than 30 projects for Q1 (by the March 31 deadline) with total project costs of more than $15 million and grant funding of more than $7 million. Ratio Institute's goal is to support more than 100 IGA member locations with applications before the September 30 final application deadline. This would be more than $50 million in projects and more than $25 million in grants.
The first step to is to determine your store's eligibility. The REAP grant is for stores in communities of less than 50,000 people, so plug in your store address to the USDA-eligible rural area map here. You should have less than 500 employees and less than $40 million in annual revenue per store location.
If your store is eligible, the next step is to complete an energy audit. As IGA’s sustainability partner, Ratio Institute can do that at a reduced cost for Independent Grocers Alliance members ($500 invoiced by IGA). They will identify where your store is consuming the most energy and propose solutions to solve them. Complete the benchmarking survey, which takes about 15 minutes, and provide us with a minimum of 12 months’ worth of the following bills:
After Ratio Institute receives the assessment and bills, we will calculate:
Once the energy audit is complete, you can deliver it to your contractor to estimate a quote for recommended services. We can assist in the Scope of Work (SOW) development and consult with your contractor/vendor as part of the process to create the best project specific to each retailer's needs.
Finally, you will submit the energy audit and scope to the USDA via the application. Alternatively, Ratio Institute can submit the grant application on your behalf (Ratio Institute charges $1,000 for this service, which covers the $500 for the report and $500 for the initial application, plus 10% of the project costs based only on grant approval).