4 Tips for Working With Your Utility Company

Special Report - Special Report: State of the Lighting Market

Utilities are critical business partners, if you know how to work with them.

November 2, 2018

Despite historical tensions between cannabis cultivators and utilities, cultivation operators can benefit significantly by developing close working relationships with their power providers. As margins become squeezed by competitive pressures, wringing profit from your property often starts with cutting energy expenses.

Retrofitting cultivation facilities for energy efficiency can drive more than 50 percent savings on energy, and utilities often subsidize technology upgrades. These incentives can be worth hundreds of thousands of dollars. Yet, Cannabis Business Times recently found that 49 percent of growers using LED lights didn’t seek to understand incentive opportunities from their utilities, leaving money on the table.

On the flip side, a 2017 survey of 90 Washington and Oregon cannabis growers conducted by the Northwest Power and Conservation Council found that 32 percent of respondents want to work with their local utilities to make their operations more efficient. However, only 9 percent of respondents had been contacted by their utilities, indicating that it may be necessary for growers to initiate first contact.

Regardless of how you come together—once you do, consider these four tips to maximize the value of your utility relationship.

1. Understand your power needs and your utility’s capabilities before signing on a property. As you plan your operation, think carefully about the technology you’ll use (e.g., lighting type(s)) and size your HVAC systems accordingly to ensure you don’t overbuild. It’s possible your site doesn’t have the power capability you’ll need. If this is the case, you could be facing a mountain of unbudgeted expenses to cover upgraded utility infrastructure. It’s also possible that the utility’s hookup timeline won’t meet your start-up schedule. In areas of the country with busy construction markets, you may need to wait six months or more than a year to receive the electricity you need. (Note: In these cases, there are alternatives, such as co-gen, solar and batteries, that can make you operational and generating revenue sooner.)

2. In most cases, utilities want to sell you power and treat you equally. Energy Trust of Oregon works closely with its grower customers to model savings from a variety of technologies and also help them learn from the other growers’ experiences. That said, be aware that some utility companies or executives may have a bias against the cannabis industry or concerns about serving it because of federal issues. For example, Efficiency Maine is currently denying incentives to cannabis producers.

3. However, if you do pay into the utility system, you should receive the benefits that come with doing so. Meaning, if incentives are available to other rate-paying customers who are making energy-efficient choices, those incentives should also be available to you. Demand that you are treated like any other customer.

4. Invite your utility representatives to your facility and help them understand your business. Your utility partner may be willing to invest their own resources in exploring ways for you to use less energy and save money. For example, Amplified Farms partnered with its utility, Sacramento Municipal Utility District (SMUD), to test LEDs and found electricity savings.

The reality is that utilities are critical suppliers with which you need clear communications to protect your investments—if your power goes down, or if your environmental conditions aren’t ideal, your plants and profits will be impacted.

Non-profit services, such as Resource Innovation Institute, can help if you need assistance in maximizing your relationship with your utility.

Derek Smith is executive director of the Resource Innovation Institute (ResourceInnovation.org), a non-profit whose mission is to promote and quantify energy and water conservation in the cannabis industry.