The power grid is under more strain than it's been in decades, and cultivation operators are paying the consequences in each utility bill. Data centers, electrification of the energy system, and inflation are some of the biggest drivers of climbing power costs, but electricity rates have been going up consistently for years. Couple growing power demand with an increasingly volatile geopolitical scene and an aging grid that demands expensive upkeep, and you get energy prices that show no sign of dropping anytime soon.
Cultivators can't control the forces exerting cost pressures on the grid, and most operators are beholden to their local utility to keep their business running. But the good news is that growers have more control over the three major factors that affect their total energy spend: how much power their facility consumes, when they consume it, and the rates they pay for it.
The fact is that most operations, even ones that consider themselves efficient, have real money sitting in demand charges, oversized dehumidification, and cultivation systems that aren’t calibrated.
Here are 10 places cultivation operators can start to rein in their electricity costs, roughly ordered from fastest payback to longer-term investment.
1. Audit your utility bill and rate schedule.
Before touching any equipment, ask a trusted energy advisor to question every line of your monthly electric bill. Do you understand all the utility charges, rates and fees? Do you understand how your demand charges affect your monthly costs? Would you benefit from another rate class if you were able to shift when and how much power you use?
If your state allows for competitive energy supply contracting, have you asked an energy broker to shop around your energy supply around?
Answering these questions usually costs little and potentially can lead you to thousands of dollars in hidden savings. A professional utility bill auditor can assist with finding many billing errors, and an energy advisor should be willing to answer all of the above questions for you. Even retailers and other non-cultivation businesses can benefit from savings by auditing their utility bills and rate schedules.
2. Get serious about demand charge management.
Demand charges are based on your highest 15-minute spike. In other words, your demand charge is set according to the one 15-minute period during a billing cycle when you use the most electricity. Staggering equipment startup, especially lighting, across your grow facility can meaningfully lower your peak demand without affecting the total photons emitted. Non-cannabis power customers have been successfully experimenting with demand charges for years, but sophisticated cannabis cultivators are getting into the act as well. Those who can reduce their demand even incrementally can lower their energy costs by hundreds of thousands of dollars each year, depending on the size of the grow.
3. Game out different electricity rates.
If your utility offers time-of-use pricing, you may find bill savings by shifting your photoperiod away from peak power demand hours (the hours when overall consumer demand for electricity is highest). Growers who are willing to run their lights in the middle of the night will see the biggest savings, but shifting load back even just a few hours may cost nothing to implement and can save thousands of dollars each month.
4. Right-size and commission your HVAC and dehumidification.
HVAC and dehumidification are one of the biggest and most overlooked energy loads in an indoor facility. When building out a new facility, you don’t need to overly complicate the grow operation with fancy and expensive technology, but don’t cut corners, either. A well-designed and simple system will outperform a poorly designed, high-tech one every day. Making sure your HVAC equipment is properly sized also is crucial; oversized units are more expensive and consume more energy than necessary, causing costs to be overly high. For existing facilities, prioritize proper equipment maintenance on a regular basis. As with environmental controls (see #6 below), improperly functioning equipment reduces efficiency and often requires more energy to function.
5. Move to LED but understand the implications to your environment.
If you're still running high-intensity discharge (HID) fixtures, switching to light-emitting diode (LED) fixtures is one of the single biggest efficiency levers available. Consider what lighting recipe your plants need to optimize output, and choose the most efficacious fixtures to get you there. Bear in mind that you may likely need to increase your mechanical dehumidification capacity to account for cooler-running LEDs, which could cut into your overall energy savings.
RELATED: Flipping the Switch to LED Grow Lights: Adjustments and Refinements
6. Recommission your environmental controls.
Many facility managers underestimate just how easy it is for environmental controls to get out of whack. Sensors get dirty and become less sensitive/accurate. Setpoints get manually overridden and are never fixed. Air stops flowing the way you want, creating pockets of weaker airflow or dreaded dead zones. Auditing controls on a regular basis is essential, and if it’s been a year or two since you examined, tested, cleaned/fine-tuned and possibly replaced them, you will almost always turn up savings that don't require any capital spend at all.
7. Look at heat recovery between zones.
Cultivation facilities generate a lot of waste heat, and in most cases, that heat is just being rejected outside instead of being put to use somewhere else in the building. Heat recovery between zones can reduce the total mechanical load you're paying to run.
8. Evaluate on-site generation and storage.
On-site energy generation and storage systems aren’t right for every facility, but for operations in high-demand-charge territory or dealing with real grid reliability issues, on-site generation with solar panels or natural gas turbines, coupled with battery storage, can change the economics substantially. In high-cost states like California and those in the Northeast, such equipment is heavily rebated and can be paid back in less than five years. If you are committed to your site for the long term and suffer from high power costs and sporadic reliability, it will be worth a serious look to see if on-site power infrastructure is a good fit for your business.
9. Don't leave incentive money on the table.
Utility and state efficiency programs will often cover a significant share of the cost for exactly the upgrades listed above, from lighting retrofits to HVAC-D. While some programs have been pulled back, utility incentives are still often the difference between a project that pencils out and one that doesn't. Sadly, many operators routinely fail to incorporate them into their equipment procurement plans. While some vendors handle simple incentives for their customers, cultivators should make a point of understanding their incentive opportunities and pursue every dollar available to them. By using these programs, you will often spend less capital to obtain better, more efficient equipment, while lowering your overall energy costs in the future.
10. Treat energy management as a core part of your standard operation procedures (SOPs).
Change is a constant: Equipment gets dirty and fails slowly, electricity rates change, and facilities change their footprints all the time. The operations that stay ahead of rising electricity costs are the ones that revisit their energy performance regularly, not the ones that upgraded equipment or signed a power contract five years ago and called it done.
The Bottom Line
The grid isn't getting less strained, and electricity prices aren't heading back to where they were. That's the reality every cultivator is operating in now, regardless of what the driving factors are in any given month. The facilities that come out ahead won't be the ones that get lucky on rates. They'll be the ones that know exactly where their electricity goes and have already cut what they don't need. Start with the bill audit. It's usually free, and it will yield valuable insights for your next moves.
Sam Milton is the founder of Climate Resources Group, an energy advisory firm working with indoor cultivators to deliver utility bill audits, power procurement, and energy efficiency incentives. He has a 95% incentive approval rate and has helped clients capture over $5 million in energy savings and incentives to date.
