In a risk-adverse industry, the term “indoor agriculture” eases electric utilities into a conversation about indoor legalized recreational marijuana production.
Preparation and planning is paramount to adjusting to the demands of this “green rush,” as growers build more and larger operations with little thought to energy efficiency. As utilities — particularly those in the western United States — begin to see firsthand, the development of the legalized recreational marijuana market within their service territories, they are developing a variety of responses to this new industry segment.
Industry awareness about the energy footprint of indoor cannabis production was triggered by the seminal 2011 study and paper by Evan Mills with Energy Associates, Energy Up in Smoke: The Carbon Footprint of Indoor Cannabis Production .1 This paper presented the energy industry with some mind-boggling facts:
It should be noted that these facts are from a study now several years old that was completed prior to legalization in Colorado, Oregon, Alaska, Washington and Washington, D.C. We can expect that the energy footprint has only grown since the report.
To better understand why it takes so much energy to produce cannabis indoors, it is important to have some working knowledge of the growing process. When grown indoors, cannabis producers typically provide between 18-24 hours of light per day to encourage quick and dense foliage growth lasting from 4-8 weeks. As the plant moves into the pre-flowering and flowering phase, the grower will deploy a different lighting strategy that requires a change in the lighting spectrum and a 12-hours on/12-hours off photoperiod. Most plants are in this phase for 6-10 weeks. Individual lamps used for each of these phases consume between 600-1000 watts, cover 16 square feet of canopy and generate a tremendous amount of heat, which must be removed to keep the plants at a comfortable temperature of 68 to 78 degrees F.
Commercial indoor grow operations are designed to reduce the natural growth cycle length of the cannabis plant. With an outdoor grow operation, it usually takes 25 weeks from start to finish, allowing for only one crop cycle per year. In a controlled indoor grow operation, the complete life cycle ranges from |2-|8 weeks depending on the strain and technique. The total yield is only limited by space, which means lighting systems are running 24 hours a day and the cannabis plants are on a constant rotation.
The commercial production of indoor cannabis is on par with energy needs from data centers.
Let’s explore some the technologies being deployed that are driving up the energy footprint for indoor grow processes.
Broadly speaking, the energy components of indoor cannabis production can be broken into four main categories:
The commercial production of indoor cannabis is on par with energy needs from data centers. As utilities begin to grapple with how best to work with this new customer segment, it will be critical for utilities to:
As reports were being distributed about the energy intensity of indoor agriculture, a number of states had legalized or were about to legalize recreational cannabis. It became apparent that indoor agriculture was going to be a significant opportunity for utilities in the West.
Utilities either were going to see this as an opportunity to expand their customer base, or they were going to have to identify the best ways to encourage growers to start considering energy-efficient measures in their grow operations.
The Northwest Energy Efficiency Alliance (NEEA) is exploring ways to provide regional support to utilities that want to self-fund conservation efforts for indoor cannabis producers.
At the most recent BPA/NEE A Efficiency Exchange Conference, held in Portland April 21-23, interested utility staff got to tour indoor agriculture facilities that included a medical grow operation. They learned that the grower had zero interest in LED lighting solutions, because it was determined that due to the size of the large plants, HID lamps worked best and this type of lighting was the tried and true method. The grower also did not see any value in a special time-of-use rate, especially since lighting systems were running 24 hours per day. In fact, this grower was considering a 2,000-watt lighting solution to spur even more growth.
A utility should position itself to be the first option for cannabis growers who want to proactively manage energy consumption.
Many of the grower’s systems were assembled and designed ad hoc, which demonstrated other opportunities for increased efficiency. For example, an unvented, tankless water heater was being used to generate CO2 for the grow rooms. Water was constantly recirculated through the unit to keep it running, with a reservoir outside to emit the excess heat.
Throughout the West, utilities have adopted a number of different approaches to working with indoor cannabis producers. Some utilities have simply used existing conservation programs, such as small business, direct-install models to help make these new commercial customers more energy efficient. Other utilities are busy building infrastructure to meet the new load. In Pacific County, Washington, a new substation is being constructed to meet the demand from indoor cannabis growers. PUD Commissioners and staff are grappling with a new marijuana growing complex that will draw approximately 35 MW compared to 6 MW used by Pacific County PUD’s largest long-term customer, Weyerhaeuser. Eventually the Commission voted to implement a new rate structure for large commercial, small or large industrial customers that require a three-phase, 300 kVA or more of cumulative transformer capacity.
Inland Power & Light, which serves eastern Washington and northern Idaho, reports that power sales to the indoor agriculture customers (small and large commercial) are inconsistent at best with I MW of sales through 7 MW of connection for indoor agriculture. It should be noted that demand is definitely trending upwards for this customer class.
Inland Power & Light recommend that g utilities set up specific policies and s procedures for this new customer class. To mitigate risk, it recommends is having customers pay for all utility J!. Costs up front.
Accurate sizing for kVA transformer needs also is important. Rumors that g growers will forecast low on their 1 energy needs to keep costs down are i circulating. Unfortunately, this leads to transformers getting blown as the grower surpasses forecast, which happened to a utility in Oregon. One solution is for the utility staff to conduct the sizing to accommodate reasonable load growth at the site.
Commercial indoor agriculture for recreational and medical marijuana is a rapidly evolving customer segment for utilities. As more states legalize cannabis, expect energy load forecasts to go up. NEEA is exploring ways to develop a regional indoor agriculture pilot program for Washington and Oregon, which seeks to identify a common energy baseline for this market. Once the region has real-time data, we can accurately determine the energy savings potential between the two states. One key difference between Washington and Oregon is that in Oregon, cannabis can be grown in a residential building. This will require that Oregon utilities are prepared for load growth both in the commercial/industrial sector as well as in the residential sector.
Utilities operating in states that have legalized medical and recreational cannabis production can safely assume that a majority of that production will occur indoors. Indoor growers can generate a higher number of annual crop cycles, compared to a single cycle occurring in an outdoor grow operation. The potency of indoor cannabis is higher than outdoor grow operations, which brings in higher retail sales. Finally, cannabis grown indoors lowers the chance of pollination of female plants, which is detrimental to the quality of end product.
Utilities are in a strong position to be seen as a good resource for supporting growers who want to start a business in their service territory. Utilities can provide necessary hookups safely and reliably for customers who traditionally may have tried to avoid utilities, or in some cases, outright steal power from them. To some extent, this represents a paradigm shift as indoor cannabis growers begin to recognize that utilities can actually be a powerful asset to them as they grow and refine their business.
CLEAResult tracks the policy, laws and opportunities for efficiencies in states where marijuana is legal. Utilities that are, or will soon be, providing electricity for indoor agriculture, and that are interested in delivering more energy efficient services to these growers, should consider the following to get started:
Internal Strategic Planning: As utilities prepare to serve commercial indoor agriculture growers, it will be critical to develop an internal strategic plan. Utilities should identify their current capacity to serve this new load and identify which existing customer class they will be brought in under. Some utilities consider this commercial/ industrial load while others might consider it agricultural load. In Colorado and Oregon, utilities will find this load both in single-family and multifamily applications. In most cases utilities will not have to reinvent the wheel to serve commercial indoor agriculture growers. However, it will serve utilities well to recognize there are some nuances to this customer class, and any customization should make sense for the grower and for the overall success of the utility.
Customer Outreach: Now is the time to begin direct outreach to this newly legalized market segment. Historically, utilities have delivered power safely and reliably to their customers. With the legalization of recreational cannabis, utilities can now serve as a partner to commercial-grade, indoor cannabis growers. For those utilities with staff constraints, outreach to established cannabis grower industry associations can result in labor and time savings. This will help utilities reach more growers at a time, and growers who are members of industry associations are more likely to have strong business acumen. Take the time to educate the industry associations about your services, and how your utility can help with accurate power needs and line hookups. Once the utility builds trust with these growers, they will be more likely to reach out and provide utilities with the information needed to manage load.
Data Collection: Once relationships with growers have been established, the next step is to conduct site assessments of the grow facilities. Even though lighting could represent the greatest opportunity for savings, it is also the most critical component to the overall quality and finish of the product. It may be easiest to help growers with the air conditioning, heating and ventilation systems. If a utility can deliver energy efficiency measures in this part of the operation without sacrificing product quality, it will go a long way in establishing trust with the growers. This then could potentially enable the utility to have conversations with the growers about induction or LED lighting solutions that won’t negatively impact overall yield or quality
Partnerships: We advocate for a regional approach to working with indoor cannabis growers. Utilities in Colorado and Washington are at different levels of engagement and understanding as it relates to this newly legalized customer class. By developing a regional platform to address the indoor cannabis industry, utilities will have the opportunity to better understand the specific needs of these growers. Utilities can also share strategies that have worked well in terms of supporting new growers and methodologies for implementing energy efficiency
If a regional approach can be developed for this customer class, an energy baseline for these growers can be identified. Then, a comprehensive understanding of what the utility and growers need to cooperate can be developed.
At the end of the day, a utility should position itself to be the first option for cannabis growers who want to proactively manage energy consumption. Energy makes up to 48 percent of total operational cost to produce cannabis. As the cannabis market becomes more competitive, growers should look to their utility to help them streamline those costs. From an energy efficiency perspective, there is a lot of opportunity to create savings for growers, which in turn will increase customer satisfaction and create mutual benefits for utilities and growers.