Stretching the day for tiny marijuana plants at a Lafayette greenhouse long after night falls makes for a hefty electric bill.
Even with big investments in a computer system to control heat, light and humidity, and in more-efficient light bulbs and fans, RiNo Supply Co. general manager Brian Matthews says 85 percent of the energy costs at the greenhouse are in lighting.
“We are always looking to be more efficient,” he said.
Cannabis cultivators, who keep the grow lights on for 18 hours straight every day, are being pressured into efficiency by market forces and, in some states (notably, Colorado, California and Massachusetts), encouraged by government policies that promote sustainability and try to reduce marijuana-related greenhouse gas emissions.
In the past four years, the wholesale price for a pound of marijuana has plummeted to about $800 from as much as $4,400. “This has really squeezed margins,” Matthews said. “If you aren’t efficient, you aren’t in business anymore.”
At the same time, Boulder County and the cities of Denver and Boulder — which collectively account for about 350 grow operations — have initiated programs to promote energy efficiency in an industry they see as a new challenge to their sustainability and climate-change goals.
“You in Colorado are bellwethers for everything,” said Derek Smith, executive director of the Portland, Ore.-based Resource Innovation Institute, a nonprofit that promotes efficiency and sustainability in the cannabis industry.
Industry trying to tamp down marijuana’s appetite for power
In 2017 in Colorado, the industry consumed 201,000 megawatt-hours of electricity, and that is projected to grow by 28 percent to 257,400 MWh in 2022, according to a study by New Frontier Data, a cannabis-market analyst.
The 300 grow facilities in Denver now account for 4 percent of the city’s total electricity demand, according to city data.
Boulder and Denver have each set ambitious goals to reduce their carbon emissions 80 percent by 2050, while Boulder County has set a 90 percent reduction target. But the burgeoning marijuana industry poses an obstacle. Colorado still gets most of its electricity from coal-fired plants, which makes cannabis grown here the most carbon intensive in the country. Colorado marijuana grown indoors is more than four times as carbon intensive as that grown in California and five times more carbon intensive than Oregon marijuana, according to New Frontier.
As more states authorize the regulated sale of medical and recreational marijuana, New Frontier forecasts industry electricity demand growing 162 percent between 2017 and 2022 to 2.8 million MWh, roughly enough to power about 250,000 homes for a year.
It is increasingly important for the industry to control energy use, Smith said, but in this nascent business, which is rooted in illicit garage and bedroom grow operations, there isn’t yet a lot of guidance.
“The reality is nobody knows the most efficient way to do this,” Smith said. “We won’t know that until we capture enough data.”
Still, there is work underway to identify the most efficient ways to grow. Denver holds an annual Cannabis Sustainability Symposium and has developed a guide to best practices, ranging from lighting to water efficiency.
“There is a strong interest in the industry in being sustainable,” said Emily Backus, sustainability adviser for the Denver Department of Public Health and Environment.
Boulder County meets quarterly with growers on efficiency issues and encourages them to apply for the business-energy rebates available from Xcel Energy.
The county and the city of Boulder also require growers to offset their energy consumption with local renewable energy or pay 2.16 cents per KWh used into an Energy Impact Offset Fund.
A key use of those funds — the county has collected about $350,000 — is to encourage energy efficiency in cultivation operations. The county has distributed “e-gauges” so that cultivators can keep track of their energy use, said Brad Smith, Boulder County’s sustainability outreach specialist.
“It isn’t like any other business that can call up its bank and get a loan”
In some quarters, however, widespread adoption of energy efficiency remains a tough sell. Access to capital is a big issue, Backus said. “It is an all-cash business, and it isn’t like any other business that can call up its bank and get a loan,” she said.
Some cultivators are “uncomfortable making an investment that pays back in five or six years when they don’t know if they’ll be in business in six years,” Backus said.
The barriers to longer-term investments, such as adding solar panels, are even higher, Boulder County’s Brad Smith said.
“There are split incentives because they usually don’t own the buildings, and the timelines for paybacks can be 12 years,” he said. “A lot of these cultivators are only looking ahead a year or two because the market is so crazy.”
Still, lower wholesale prices and the growing consolidation of the industry makes energy efficiency inevitable, according to Beau Whitney, a New Frontier senior economist.
“Due to its underground nature, people grew this in garages, warehouses, bedrooms — not the most highly efficient way,” Whitney said. “So, as it gets out into the light, there are more ‘best practices’ being shared, more advanced growing techniques.”
“If we project forward, people are going to scale up,” he said. “Almost a quarter of licenses in California are controlled by 10 different groups. So, you are seeing consolidation in the market, and there will be scale and efficiencies.”
Black market grows predicted to dominate energy use
New Frontier estimates that the national legal cannabis market will more than double in 2025, to $23 billion, but illicit sales still will make up 60 percent of the market and consume 75 percent of the energy used to grow marijuana.
“The more efficient we can make the regulated market, the more it can outcompete the illicit market,” said Resource Innovation’s Derek Smith said. “So, governments who want to reduce crime and preserve tax revenues should promote efficient cultivation.”
What makes marijuana use so much energy?
The energy demands start with lights that make a grow operations 70 times more energy intensive than a commercial office building. On average, lighting is about 38 percent of the energy demand, according to Denver’s environmental health department.
Heating and cooling are also keys since grow operations try to stay in the range of 65-75 degrees Fahrenheit year-round. The lights also add to the heat on the plants, creating more transpiration and adding to the humidity. Heating, cooling and dehumidifying account for about 51 percent of a grow operation’s electricity demand.
RiNo Supply, which provides medical-marijuana products to its 700-patient subscriber base, has been experimenting with energy-saving strategies for several years at its sprawling, six-greenhouse complex in Lafayette, where the cannabis growing area covers 25,000 square feet.
For cooling, one end of the greenhouse is covered by an evaporative cooler — a giant swamp cooler — while at the other end, huge fans along the wall pull the cool air across the 150-foot-long greenhouses. Heating is handled with 16 natural-gas burners, although RiNo Supply is looking into switching to a radiant-heating system using a single natural-gas boiler.
Lighting is RiNo Supply’s largest energy demand, with lights on 18 hours a day in the vegetative cycle and 12 hours a day during the flowering stage. As a greenhouse operation, the company gets some of its light naturally. Nevertheless, over the past few years, the company has experimented with different types of electric lights.
Matthews said they tried an early version of light-emitting diodes, or LEDs, but the bulbs reduced yield. Matthews settled on double-end bulbs (think light bulbs with a socket on each end), which are more efficient and brighter, but burn cooler than standard bulbs.
Industry working to connect growers with cost-saving resources
The biggest investment RiNo Supply has made is in Argus, a computerized system that controls the heat, humidity and lighting, measuring the amount of light in the greenhouse and turning on electric bulbs as needed. “Automation is the key to sustainability,” Matthews said.
Between Argus and the double-end bulbs, Matthews said the greenhouse complex’s Xcel Energy electricity bill has dropped 30 to 40 percent to about $20,000 a month.
The Resource Innovation Institute has created a tool it calls the Cannabis Power Score, which enables cultivators to plug in information about their operations and energy bills, and measure themselves against comparable facilities. RiNo Supply posts a 96 percent score, Matthews said. About 200 grow facilities have used the Power Score.
Argus cost $150,000 to install, and Matthews said RiNo Supply didn’t realize it was eligible for Xcel and county rebates. The company now is replacing 16 fans that recirculate air in the greenhouses with eight more-efficient units. On that $20,000 investment, RiNo Supply is receiving $8,000 in rebates from Xcel and the county. Matthews said the fans will pay for themselves in a year.
Xcel has 26 energy-efficiency programs for businesses ranging from building “tuneups” to subsidies for installing energy-management systems, some of which might be relevant to grow operations, a company spokesman said. There are rebates for installing efficient lighting and cooling systems.
While RiNo Supply’s experience with LED bulbs was disappointing, LED is becoming the cutting edge for the industry, although, by Innovation Resource’s Derek Smith’s estimate, only 10 percent of grow operations nationally use them.
When The Clinic, a Denver-based cultivator and retailer, replaced 72 single-end lights in its grow facility with 72 LEDs, it cut electricity use in half and shaved $1,400 from its utility bill, according to the Denver environmental health department.
“It was a big investment,” said Doug Ewer, The Clinic’s manager. “LED lights are not cheap, but it is an investment that will pay for itself.”
Like most cannabis facilities in Colorado, The Clinic’s grow is in a warehouse, which is almost twice as energy intensive as a greenhouse, according to New Frontier data.
When Karing Kind, a cultivator and retailer of recreational marijuana in North Boulder, did a complete renovation of its 2,500-square-foot warehouse operation in 2014, it not only put in state-of-the-art lighting, it added zoned heating and cooling, exterior-wall insulation and all new electrical components.
The upgrades have enabled Karing Kind to quadruple cultivation while cutting its $5,000-a-month energy bill by $1,500, owner Dylan Donaldson said. “It was a two-year project and close to a $2 million investment. We had to make sure that the investment made a good return on itself.”
Karing Kind was able to commit to such a large project because it bought the building housing the grow operation, Donaldson said. “We want to be here the next 10, 20, 30 years.”