REAP Aids Rural Businesses Facing Rising Energy Costs

Rural communities across Eastern Kentucky are confronting a new economic strain as electricity costs climb, adding pressure to regions already grappling with population loss, a shrinking tax base and the decline of traditional industries.

For small businesses and farms, commercial electric rates have more than doubled over the past 20 years, according to the document, while inflation has further tightened already narrow margins. Owners are increasingly forced to weigh basic operating costs against hiring, equipment purchases and other investments needed to stay competitive.

Mountain Association, which has worked with small businesses in the region since 1976, said it began focusing on energy savings in 2008 as power costs accelerated. The organization says one of the biggest barriers to cutting those costs is the upfront capital required for efficiency upgrades and renewable energy systems.

That is where the Rural Energy for America Program, or REAP, comes in. The U.S. Department of Agriculture program offers grant funding and guaranteed loans to agricultural producers and rural small businesses for projects such as solar installations, efficient heating and cooling systems, LED lighting and insulation. For many businesses, supporters say, the program helps bridge the gap between long-term savings and costs that would otherwise be unaffordable.

Mountain Association said it has helped secure more than 60 REAP grants for businesses and farms across Eastern Kentucky since 2009, bringing in more than $2.5 million. Supporters argue the projects do more than lower utility bills: they can also keep rural employers open, improve competitiveness and generate work for local contractors who complete the installations.

One example is Long’s Pic Pac in Pineville, where general manager Mike Long is trying to sustain a family-owned grocery store that began with a $3,500 loan in 1964. In a town of about 1,630 residents, the store serves a community with a median household income of just $27,159, while operating in an industry that typically posts profit margins of about 2.2%.

A REAP grant covered 40% of a project at Long’s Pic Pac to install rooftop solar panels and a 60-kilowatt battery system. According to the document, the battery stores excess solar power and helps reduce costly demand charges that account for more than half of the store’s monthly electric bill. The projected savings — at least $15,000 a year — could help support staffing, delivery costs and preserve price stability for local families, with the full project cost expected to be recovered in about four years.

Advocates say the stakes are rising as floods and winter storms damage aging utility infrastructure, prompting costly repairs that are then reflected in higher rates for businesses and households. For companies operating on slim margins, they say, that cycle of damage, recovery and rate increases can threaten long-term survival.

Supporters of the program describe REAP as a relatively modest federal investment with large positive impact for rural economies, helping businesses unlock private capital and reduce operating costs. As debate continues over federal priorities, they argue that preserving the program could make the difference between keeping doors open and shutting them for good.