Energy costs are up across the board, so make sure you’re doing everything in your power to get the most from your energy provider.
Energy efficiency has been top of mind for indoor agriculture for decades, but as more states legalize cannabis, technology matures, and supply chain disruptions shine a light on food security and local economies, indoor grow operations are expanding throughout the US.
However, in 2022, operators of controlled environment agriculture (CEA) facilities should expect greater scrutiny and attention surrounding their facility’s resource use. Business owners should be prepared to not only justify water and electricity use, but also associated carbon emissions and, above all importance, improvement plans.
Understanding and getting ahead of the following trends and practices will help large scale operations stay on top of business impacts, resource use and social demands.
Resource Benchmarking and ESG Reporting: Increased resource benchmarking will become core to compliance and a strategic business advantage. Expect to see increased data requirements from regulators and resource suppliers. For example, water districts may impose stricter requirements for wastewater quantity and quality. Utilities and regulators may demand to know how much electricity a facility will use annually and during grid peak demand, and its total carbon implications of a facility and its supply chain.
While specific ESG reporting requirements may vary, companies generally are expected to provide information that is material to their business, consistent, accurate and complete. Adopting and integrating industry-standard KPIs into your operational planning sets you up for success.
TIP 1: Ensure that you can articulate your facility’s annual electricity kWh, peak demand, therms of gas, gallons of water used, gallons of water reused, gallons of wastewater and sources of electricity with associated carbon intensity.
Contextualizing Resource Inputs: Be prepared to articulate the value your business is providing in the context of resource use and other industries. For example, an outdoor vegetable producer can only provide short-term transient jobs, while an indoor operation provides jobs year-round. In addition, indoor facilities can reduce miles traveled from the cultivation site to the consumer, with resource savings from transportation, water use and low spoilage.
TIP 2: give context to the resources it takes to create a unit of your product — especially compared to other consumables or facilities. Can you correlate and justify each of the previously mentioned resources with facility (square feet), production (output of final product) and economic (direct revenue, total economic) values? How does your water consumption per serving compare to, for example, beef or pharmaceuticals? How much GDP does your industry and facility use compared to other manufacturing industries such as glass manufacturing or steel smelting?
Attention to Facility and Grid Flexibility: 2022 will see an increased focus on when electricity is used throughout the day and throughout the year, along with a demand for more flexibility. Most consumers are charged a flat price per kWh.
However, it costs utilities drastically different amounts to meet the demands of the grid at different times (less in the middle of a cool spring night versus the afternoon of a heatwave). In addition, with increased renewable resources such as solar and wind, the variability in costs and carbon impacts on a single day or season are becoming more dramatic. As increased demand puts pressure on an old grid, the timing of when industrial facilities use power will become more important than simply how much they use.
To avoid large-scale blackouts and reduce pressure during peak demand events, utilities are getting creative. Expect them to offer increased financial incentives to reduce power during peak times, create different rate structures for time of the day use, or implement emergency curtailments to avoid blackouts.
TIP 3: Be prepared to alter the time of facility energy consumption or curtail certain loads (partially or fully) during peak events. Expect to be paid for this directly, or expect to realize lower energy bills as a result.
Focus on Energy Self-sufficiency and Redundancy: Energy resiliency, security and redundancy (having backup power redundant to the power provided by your utility) are becoming increasingly important. Severe weather, fires, floods and off-season freezing have exposed the fragility of the grid. Many utilities are beginning to normalize the idea that power outages are now business as usual, calling the events “public safety power shutoffs.” Businesses with millions of dollars in live inventory are realizing the need to protect their crops and plan for unexpected outages.
TIP 4: Plan for facility-wide power resilience and risk mitigation. Take matters into your own hands and consider investing in assets that will give your facility autonomy from the grid. Solutions include a combination of battery storage, solar, increased energy efficiency and small-scale power generation.
Declining rebates as LED markets mature: Although LEDs are gaining market traction, they are still considered a premium piece of equipment. They can be up to four times the cost as an entry-level HPS, offering immense electric savings over time. For this reason, many utilities offer custom grants to CEA customers interested in purchasing LEDs — sometimes covering the price difference over HPS.
However, many utilities are increasingly cynical about HPS as the industry standard practice. Thus, utility grants to purchase these fixtures will be reduced and eventually fade away or be replaced by energy codes that require use of LEDs — without utility rebates.
TIP 5: Secure rebates ASAP if you are interested in upgrading to LEDs or building out a new facility. Although LED rebates will be decreasing, there will be an increase in other types of rebates such as DEHU units. Support widespread research on LED market saturation so utilities can validate suspicions about use.
Rising population and climate change are driving changes in farming and agriculture. With new technology and controls, we are now growing food, spices, and (of course) flowers and cannabis indoors.
However, energy certainty is required for success, and we all have a hand in ensuring that. The more we can prepare for the changing demands and needs for energy certainty, the better off we’ll be.
The author is the founder and CEO of Seinergy, an energy and rebate management consultancy that works directly with hundreds of cannabis and indoor crop producers. Gunn also consults with the Hawthorne Gardening Company on matters related to energy efficiency and sustainability policy.
