Applications being accepted for USDA blender pump funding

By Kris Bevill | April 15, 2011

The USDA has opened its application window for Rural Energy for America Program funding, which can now be used to help finance blender pump installations. Applications must be filed with the state office in which the project is located by June 15. Funding is available in the form of grants, loan guarantees and combinations of the two.

The average cost to install a complete blender pump system, including tank and dispenser, can range up to $10,000. The USDA said the program has $42 million available for grants and another $70 million for loan guarantees. Grants may be used for up to 25 percent of the eligible project costs. Loan guarantees are available to cover up to 75 percent of the project costs.

Under Secretary for Rural Development Dallas Tonsager said applicable projects also include audits of energy improvements and feasibility studies for renewable energy systems, but the addition of blender pump installations is an important step toward meeting the Obama administration’s goal of installing 10,000 blender pumps throughout the U.S. within the next five years. “Clearly the biofuel industry, the ethanol industry particularly, has to have greater infrastructure capacity in order to continue to grow,” he said. “We simply have to take the steps necessary to build these renewable industries if we’re going to move away from our dependence on foreign oil.”

The REAP funding is constrained to rural areas and only those projects located in communities of 50,000 people or fewer are eligible for the program. Further, eligible convenience stores and gas stations must have annual average receipts of no more than $27 million. Eligible stand-alone fueling stations are limited to those with no more than $14 million in average annual sales.

Tonsager noted that “it would be good” to be able to provide funding for blender pumps in metropolitan areas, and the USDA is exploring ways to do just that, but he pointed out that a large amount of traffic moving through urban areas originates in areas eligible for REAP funding. Adding blender pumps as an eligible project to REAP is one step in “keeping the ball moving” toward continued biofuels growth, he said.

Todd Campbell of the USDA Rural Development Business and Cooperative Program leads the agency’s outreach effort for development of blender pumps and said that while the program is restricted in its funding capabilities, it still provides a great opportunity for biofuel infrastructure expansion. “We believe that with 160,000 fueling stations across the country and only 2,600 of those offering higher than an E10 blend, there are tremendous opportunities for station owners to qualify for the program and get a good return on investment,” he said. Campbell also noted other programs, such as the Clean Cities Coalition and various state programs do provide funds for higher ethanol blend systems in metropolitan areas. The federal government is also offering a 30 percent infrastructure tax credit through the end of the year.

Because of REAP’s short timeframe for applications, the USDA is hosting a series of workshops to explain the modifications of the program and to ensure applicable parties are aware of the funding opportunity. One of the first events was held in Florida on April 14. Other workshops to be held during April are scheduled for Minnesota, Michigan, Wisconsin and Nebraska, with specific dates and times to be announced soon.

More information on the REAP funding announcement, including contact information for each state’s rural development energy coordinator, has been published to the Federal Register.