Rural Michigan businesses cash in on federal grants to ditch reliance on electric companies

Federal funding is helping increase American energy independence—and allowing rural Michiganders to cut ties with their electricity companies.

MICHIGAN—John Baird isn’t your typical, tree-hugging sort of environmentalist. 

He said he likes the concept of “going green,” but admits he still drives a gas-guzzling, diesel truck to the office every morning. So, the large, solar photovoltaic array that will soon sit next to his small business in Baroda isn’t really about enlisting in the battle against climate change.

Instead, it’s about saving some cash and, if all goes well, ditching his electric bill—forever. 

“I mean, I do like the idea of clean energy, but I don’t think I would consider myself extreme when it comes to that. I just like things to make sense financially,” Baird said. “Nothing against electric companies, but it’s kind of nice to know you’re creating all your own electricity, too.”

What’s the deal?

This summer, Baird’s self-storage company in Berrien County was among several rural, small businesses in Michigan (and several hundred nationwide) that were picked to receive a federal grant through the US Department of Agriculture’s Rural Energy for America (REAP) program.

The initiative, funded through the Biden-Harris administration’s Inflation Reduction Act, is designed to boost American energy independence and help small businesses, particularly in rural communities, to lower (or totally eliminate) their monthly electricity costs—namely through grants and loans that can cover up to 75% of the cost of their own renewable energy systems.

Baroda Estates Mini Storage received a $20,000 REAP grant in July—part of more than $300 million in federal funding that has been awarded through the program to help support clean energy projects in hundreds of towns across the US, including in the state of Michigan.

Forty-six other projects in Michigan received funding last year; Baird’s plan was among five Michigan projects picked to receive funding in the latest round announced this summer.

“There’s some red tape you have to go through and it takes a little bit of time, but it’s not terrible,” Baird told The ‘Gander. “We haven’t done very much with the government in the past. It’s one of those things where it probably doesn’t make a lot of sense without the grants.”

How does it work?

Encouraging the widespread adoption of solar, wind, and other forms of clean, renewable energy fits neatly with the Biden-Harris administration’s broader, nationwide goals to curb greenhouse gas emissions, which are—by far—the largest contributor to global climate change.

But even for Michiganders who are less enthusiastic about the environmental benefits of renewable energy, the federal grant program is set to provide some tangible economic rewards.

The federal REAP grant will cover about half the costs of a new, $40,000 solar photovoltaic system that’s set to be installed this year next to Baird’s self-storage business, he said. 

Another federal tax credit baked into the Inflation Reduction Act will also allow Baird to recoup another 30% of the installation and purchase costs—which will translate to an 80% discount on his new solar array, which he expects will generate 100% of the electricity used by his business.

All told, Baird expects to save about $4,800 a year on his electricity costs, break even on the project in less than two years, and never have to worry about paying an electric bill ever again.

“Obviously, we want clean air. We want clean water. It’s good to try to be energy efficient. I mean, those are all good things. Unfortunately, sometimes, it becomes a situation where the numbers just don’t add up,” Baird said. “If you were doing it without any grants, it’s hard to make the numbers come out. But with these grants, you can make it make a lot more sense.”

What other businesses got grants?

Other REAP grant recipients announced in Michigan this summer include a veterinary clinic in Interlochen, a local farm on the Old Mission Peninsula, and a bike shop in Traverse City.

Inhabitect, an eco-minded landscaping design company in Northern Michigan, also received a $20,000 grant to install a new, roof-mounted solar array at its offices in Leelanau County—which will ultimately end up saving the small business about $1,400 in annual electricity costs.

“I was raised by home farmers, where we really paid attention to the earth and what was going on and the habitats around us,” Inhabitect President Nathan Griswold told The ‘Gander. “We claim to be a green company and we are—but having solar up there will really show that we’re taking the extra step and making a real investment into the green, clean energy industry.”

Like Baird, Griswold said that he heard about the federal grant funding opportunities and tax credits through a friend of a friend—and was surprised at how quickly they were awarded. 

Eventually, he even hopes to start getting rebates from his power provider from the excess energy generated by his new rooftop array. And with Griswold’s newfound energy savings on his monthly electric bill, he hopes to be able to reinvest back into growing his landscaping company.

“I likely would not have made this investment without the grant,” Griswold explained. “And I think that there’d be many other [rural small businesses] that would benefit if they knew about it.”

He added: “I think that in rural areas, we need this type of support. … I’ll take that money [saved on electricity costs] and invest back into my team to guarantee good paying jobs and create better benefit packages. … It’s really a great investment from the Biden-Harris administration.”

Is it just for businesses?

The REAP grants are only available to agricultural producers and small businesses.

But through incentives provided through the Inflation Reduction Act, homeowners can also reclaim up to 30% of the cost of installing a new solar power system as a federal tax credit. There is no maximum amount that can be claimed—and there’s still plenty of cash up for grabs.

Under the law, that incentive is slated to decrease to 26% for systems installed in 2033 and to 22% for systems installed in 2034 before expiring in 2035 unless Congress were to renew it.

Many utility companies, like the Lansing Board of Water & Light, also offer rebates of up to $2,000, which can also help significantly reduce the upfront costs of a new solar system.

Those without the cash to invest in a new solar system can still take advantage of the federal incentives through the Michigan Saves program, which provide grants, loans, and other financing for homeowners who want to make the transition to cleaner forms of energy.

Recently signed state laws have also enabled Michigan homeowners to earn credits off their next bill for any extra power generated by their solar systems—which can also help reduce installation costs over time and allow homeowners to recoup their investments even faster.

Additional state legislation introduced this year could also create additional rebates of up to $1,000 for installing solar power and battery storage systems at home, with the goal of lowering costs and creating new incentives for Michiganders who make the shift to renewable energy.

READ MORE: Federal investments put union workers at heart of clean energy boom

For the latest Michigan news, follow The ‘Gander on Twitter.

Follow Political Correspondent Kyle Kaminski here.