A Weedy Situation: The Cannabis Industry Tests the Capacity of Overworked Utilities

Ken Silverstein

The cannabis sector is lighting up energy grids, but do utilities have the ability to handle this potentially profitable revenue generator?

The high from cannabis is giving way to a sobering new reality: The amount of energy it takes to cultivate the crop is forcing growers to become more energy efficient, while utilities are also working to handle the newfound demand.

Utilities are already facing the trials of accommodating intermittent wind and solar energies. Wind and solar made up about 60 percent of electricity added to the grid in 2016, and the two could top out at 30,000 MW in 2021. Much of that growth will be utility-scale plants, but the real power disruptions may come from onsite generation, where companies generate their power and deliver it via localized microgrids that will continue to eat into the revenue of utilities.

In the face of all of these well-known disrupters, the cannabis industry is poised to present utilities with unexpected good news: a possible reprieve, but one with strings attached.

Starved for Data

One objective of the cannabis sector and utilities alike is to understand the extent of the new sector's energy use and begin the process of gathering data. In fact, an online tool from the Resource Innovation Institute called the Cannabis PowerScore lets growers input their data and calculate the amount of energy they use. They can then compare their energy consumption to other growers. Doing so also gives utilities a better grasp of the added demand they will need to meet to accommodate the industry.

The cannabis sector has been power hungry for a few years now. In 2012, Evan Mills, a staff scientist at the Lawrence Berkeley National Laboratory, estimated that growing marijuana indoors—the ideal setting for such crops—made up as much as 1 percent of electricity use nationwide. That comes to $6 billion a year and amounts to 15 million tons of greenhouse gases.

The Northwest Power and Conservation Council, which strives to support environmentally friendly energy projects in the Columbia River Basin, forecasts that indoor developers of cannabis will consume a regional load of 180–300 MW on average by 2035. It is less than half that now.

"That amount of power is roughly equal to the annual electricity use of 126,000–204,000 Northwest homes," adds John Harrison, in a blog for the Northwest Council.

Marijuana demand is expected to grow, and it is now considered a $3.5 billion industry. About 30 jurisdictions across the country have legalized it for medical or recreational uses. Just about all of that is grown indoors—not just because it initially had to be out of sight, but also because those are the best conditions to cultivate the crop. As such, each operation requires as many as 12 hours of light a day, depending on the stage of the grow cycle, as well as constant heating, ventilation, and air conditioning. To that end, both producers and utilities alike seek accurate data to better understand the power disruptions the industry poses.

Consider that in 2015, Colorado's marijuana industry consumed 300 GWh of electricity. In Denver alone, that was more than 2 percent of the annual energy demand.

Befriending Utilities

A key reason why cannabis producers like to cultivate their crop indoors is because they can avoid using pesticides, which saves them money. But in order for them to cut the cost of indoor operations, Xcel Energy's Gabriel Romero tells the Guardian, they have to reduce their lighting expense, which currently makes up 80 percent of their electricity usage. The best way is to convert to LED lighting.

LEDs do have drawbacks, however. "Growers tell us that [the growing cycle] takes an extra four weeks with LEDs, and to them it's just not worth it from a financial standpoint," Romero says.

For their part, utilities now have a relatively new industry that is demanding electricity and increasing their revenues, all at a time when new technologies have cut into such energy usage. But those power companies recognize that they must still work with their newfound clients to control consumption and ensure they maintain adequate capacity to meet the new demand.


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