Budding marijuana sector brings big load growth, efficiency challenges for utilities
For the utility industry, the expanding legalization of marijuana represents a unique opportunity to create load and demand management assets out of whole cloth. Demand for pot clearly exists, and meeting that demand requires a lot of energy.
While some growers today are more concerned about securing enough power for their operations than saving money, they also want help with their energy usage. Utilities have been incorporating marijuana operations into existing efficiency programs, but the industry’s unique needs call for more specific attention from power companies.
As the cannabis industry grows, optimizing energy use and lowering expenses will play a growing role in running a successful business. One particular challenge today is the absence of good information on current energy use.
Lack of hard data
Marijuana is big business.
The drug is legal, either for medical or recreational users, in almost 30 states and the District of Columbia. Eight states and the District have legalized recreational use, in some places setting off new industries.
To put the industry’s energy needs in perspective, the Northwest Power & Conservation Council (NPCC) forecast a regional load for Idaho, Montana, Oregon and Washington of between 180 MW and 300 MW for indoor grow operations by 2035. Indoor cannabis production is on a short list of “emerging markets” where NPCC wants to collect more data — along with data centers and rooftop solar.
But a major problem facing the cannabis industry right now is a lack of hard data regarding its energy use.
It’s only in recent years that growers have been legal — before that, plants were either outdoors or owners were trying to hide their energy consumption. Today, legal growers are often forced indoors by local regulations.
Derek Smith, executive director of Resource Innovation Institute, is trying to tackle the data issue. The cannabis and conservation firm (possibly a first) has developed a Cannabis Power Score which attempts to give growers a rough idea of where their energy use stands and how efficient it is. But the real purpose is data collection.
“We’ve been encouraging utilities to fund a national baseline study with regional variations for two-plus years, but it is not being done,” Smith told Utility Dive. “We hope they will, but in the meantime, we created this cannabis power score tool to at least begin the process of collecting much better data across states, climate and growing zones.”
The tool asks growers for a wide range of information, including inputs from their utility bill, production cycles, lighting and HVAC equipment, and sales. In return, growers get a score that rates their energy use relative to similar growers, and an estimate of kWh used to produce a gram or pound of marijuana.
All of this information is necessary, Smith said, “so we can at least begin to make projections and estimates of what is the real energy impact of the energy industry, particularly as it’s evolving and policies and regulations are coming into place.”
Smart energy solutions move ahead
Efficient lighting options are increasing and improving for marijuana growers, but the overall proliferation is still small, Smith said. Growers using LED lighting are maybe 1% to 2% nationally, he estimated.
But because of pot’s curious and changing legal status, that small percentage can look very different on the ground.
Take Adam Maher, senior vice president of CleanSpark, a microgrid developer. He is working with Green Dragon, a cannabis company in North Hollywood, Calif., on a system to lower the cooperative’s electric bills by cutting demand charges. His customers have typically upgraded their lighting long ago, but he can testify to the data problem. An analysis of Green Dragon’s power bill showed a demand spike that occurred under a specific scenario, “but we don’t know what that is,” Maher told Utility Dive.
Green Dragon’s building is not equipped with advanced metering, meaning more data must be collected before the system can be optimized. An initial phase of the project will install solar, storage and advanced controls — three things Maher knows will lower the company’s bills. From there, armed with better data after putting the system online, the microgrid could be expanded or optimized.
Maher says his customers’ biggest issue tends to be getting access to enough power. They aren’t necessarily worried about saving money so much as increasing how much they are growing.
“Growers have invested a ton of money into the buildings they’re leasing — their real pressure point is they couldn’t get enough power” from the L.A. Department of Water and Power,” Maher said. According to the municipal utility, the real issue is on the inside of the growers’ facilities. But they, too, say there aren’t much data.
“Growers have only started to self-identify,” LADWP representative Christina Holland told Utility Dive in an email. The utility does not know how many growers are on its system, how much demand they produce or how many have advanced metering. But in instances where growers want more power than they can access, Holland said these issues tend to be with the customer-side equipment.