Indoor growers are looking to cut spiraling electricity consumption with custom-built microgrids in U.S. states where cannabis cultivation is legal.

The firms are considering solar, co-generation and battery systems as ways to cut the cost of energy, which is the second-biggest overhead for many growers, said Duncan Campbell, vice president of project development at Scale Microgrid Solutions, which targets the sector.

Legal cannabis cultivation in the U.S. consumes an estimated 1.1 terawatt-hours of electricity a year, according to the 2018 Cannabis Energy Report, published by Scale Microgrid Solutions along with New Frontier Data and the Resource Innovation Institute.

That’s enough to power the whole of Newark, New Jersey or Anaheim, California, the report states.

Electricity demand from indoor and greenhouse-based growers is causing a significant uptick in energy use and carbon emissions across states where cannabis has been legalized, said Campbell. Growing facilities “are essentially data centers for plants,” he said.

The city of Arcata, California proposed restrictions on cannabis growers after residential consumers faced rising electricity bills, the Scale Microgrid Solutions report notes.

In Denver, meanwhile, cannabis growing was found to be responsible for 4 percent of total electricity consumption, putting the city on the verge of missing its energy reduction goals.

The Scale Microgrid Solutions report, based on responses from 81 cultivators and thought to be the most extensive of its kind, said legal cannabis growing electricity consumption is forecast to increase 162 percent between 2017 and 2022.

Legal and illicit production is thought to have used 4.1 terawatt-hours of electricity in 2017, almost equal to the output of the Hoover Dam.

Electricity use is highest under indoor growing conditions, said Campbell, but could also be high in greenhouses. Many growers have been willing to pay the cost because indoor and greenhouse cultivation offers better quality and higher yields than outdoor farming, he said.

In nascent legal cannabis markets, electricity costs might not be a concern because of the high value of crops. However, Campbell said, maturing legal cannabis markets are typically seeing increased competition between growers and deep cuts in the price of produce.

This is making growers more aware of the need to save electricity costs, he said. The simplest means to achieve this is by swapping traditional high-pressure sodium lighting for LEDs.

LEDs not only consume less energy than high-pressure sodium lights, but also release less heat into growing rooms, cutting the amount of electricity used for ventilation and cooling.

Growers can also potentially save energy by using fresh air for cooling and heating, although in practice many cultivators are wary of doing this because of the risk of introducing pathogens into growing areas, said Campbell.

A third option is to offset energy use through solar self-consumption, he said.

Because cannabis cultivation energy use is so high — roughly 10 times that of a typical office building, according to a study last year — even covering an entire growing facility roof with solar panels would likely offset no more than 20 percent of total electricity consumption.

Campbell said this level could be increased by combining solar with battery storage and co-generation plants in a microgrid.

Although such microgrids could potentially cover all of a grower’s electricity needs, in practice it would usually make more financial sense to aim for around 65 percent, he said. Funding a microgrid installation is a problem for most growers, however.

Even industrial-scale cultivators are unlikely to have the $3 million or more that it would cost to install a microgrid. And banks are hesitant to lend money to businesses that are operating outside of federal law.

To overcome this problem, Scale Microgrid Solutions is working with niche investors to offer microgrids with a full finance package. So far, all the potential customers are looking to use finance, Campbell said.

Scale Microgrid Solutions is due to announce its first cannabis microgrid project this month, he said.

If the market takes off, he said, it could potentially serve as a template for other indoor cultivation industries where funding is easier but the margins are thinner, creating a greater need to cut energy costs.

“Cannabis might sell on the wholesale market for $700, $800 a pound,” said Campbell. “But kale sells for, what, a couple of dollars a pound? That industry is going to experience the same issues.”

How will indoor farming of cannabis and produce shape the grid? Listen to our episode of The Interchange to understand the energy profile of these facilities.