Josh Bills
Mountain Association
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 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.
