California Regulators Worry They’re Not Prepared for Energy-Use Surge From Legal Marijuana Growing

by added on 2 March 2017, Comments Off on California Regulators Worry They’re Not Prepared for Energy-Use Surge From Legal Marijuana Growing , posted in Grid Edge, Regulation & Policy, Utilities, News,

With the passage of California’s Proposition 64 in November, recreational use of marijuana in the state is now legal. So does that mean new pot-growing farms, which often use power-hungry lights and cooling systems inside sprawling warehouses, will start plugging into the power grid and boost electricity use all over the state?

At this point, it’s not entirely clear how the passage of Prop 64 will change weed farming energy use in California. It is clear that the marijuana industry is severely lacking in important data, best practices, transparency, research and education surrounding energy use, according to a group of marijuana growers, utility executives and industry advocates that convened for a workshop organized by the California Public Utilities Commission this week.   

“Data is incredibly difficult to track down,” said Alex Cooley, co-founder of Solstice, a commercial cannabis producer based in Seattle. Washington state legalized recreational use of marijuana in 2012.

While “most growers care about the environment, the behavior of most growers is in opposition to being stewards for the environment,” said Cooley. That’s largely because of a lack of understanding and education about energy and utilities, as well as a lack of finances for energy-efficiency technology that don’t have an ultra quick return on investment, Cooley explained.

However, as more states make recreational cannabis legal and California adjusts to its new legal status, growers and utilities will need much more information about the energy consumption habits and needs of the industry in order to make sure energy growth is sustainable and efficient. We want to know “what steps we should take to make California’s cannabis industry the greenest in the country,” said Michael Picker, president of the California Public Utilities Commission in opening remarks on Tuesday afternoon.

In addition to California’s desire to embrace clean energy and lower carbon emissions, the state just wants to be able to accurately forecast the energy growth of the industry in order to prepare itself. Some utilities in other states have faced blackouts and blown transformers in regions where too many indoor farms have overloaded the grid.

The black hole of information partly has to do with the illicit nature of the industry, which has been illegal in the U.S., and most states, for decades. The U.S. federal government still considers use of recreational marijuana illegal, and recently the Trump administration indicated that it would increase enforcement of those federal laws.

That type of federal uncertainty will continue to have a dampening effect on growers’ willingness to be transparent and forthcoming with data about energy use. But if big states aggressively try to share data and best practices, it could go a long way to coaxing growers into the light.

The lack of data and best practices has also stemmed from the large variability in pot-growing farms. In California, residents can grow up to 6 plants for personal use. On the other hand, big industrial growers often use huge facilities that can spread across tens of thousands of square feet. The needs and energy use of the DIY grower are far different than those of the industrial grower.

Location can also lead to major variability in the energy use of weed farmers. In states like Colorado and Washington, which were two of the first to legalize marijuana use for recreational purposes, the weather can be cold or cloudy for much of the year. That has led many of the pot growers to build their farms indoors, protecting their crops from the climate.

But in a state like California, which has ample sunlight and a more temperate climate, more pot farmers can grow outdoors or in greenhouses that allow for the use of sunlight. Outdoor pot farms consume much less energy than do their indoor counterparts. The latest available data suggests that 60 percent of licensed facilities in Washington are indoors, less than 10 percent are greenhouses, and the remainder are outdoor farms, said Cooley.

Some state’s utilities offer energy efficiency rebate programs for indoor pot farmers to invest in energy-efficiency tech, like switching out CFLs or halide lights for LEDs, or having smart meters installed to track energy use. Solstice has worked with Seattle City Light to gain a rebate for using 100 LEDs, which has slashed its energy consumption in half.

But many pot farmers aren’t aware they can get rebates for investing in energy-efficiency tech. “Education and rebates are key to energy reduction,” said Cooley, who added that utilities should create rebate and energy data sheets and display them in places where farmers will see them, like local farming shops.

Puget Sound Energy, a utility with over a million customers in Washington, has carried out 70 energy-efficiency projects with marijuana growers, almost all with lighting upgrades, said Dave Montgomery, an energy management engineer that consults with the utility. But he reports that he often still encounters "growers that have no idea they can get incentives,” he said, estimating that Puget Sound Energy has about 500 permitted growers in its footprint, 200 of which are active.

While Solstice is using LEDs, it doesn’t yet use them for the part of the farm that illuminates the cannabis during the flowering phase (when the plants grow buds that can be dried and smoked). The grower wants higher-intensity lights to increase the yield during this phase in as short a time frame as possible.

Such nuances show how utilities and energy-efficiency vendors also need to be knowledgeable about the specific needs of the marijuana industry.

It often times just comes down to money. When pot farmers are first starting out in the business, many times it can be hard to justify using energy-efficiency technology that requires any upfront investment, even if the grower is aware of the tech. “Cost has been the main, if not the only, consideration. They’re eager to begin production and business as fast as possible,” said Adam White, an energy efficiency engineer with Xcel Energy.

Growers won’t be interested in anything longer than a three-year payback, said White. Cooley said when he was starting out in the business even a two-year return on investment seemed “insane.”

“New growers are cash-poor and aren’t going to invest in energy efficiency,” said Cooley.

Adding to the confusion and lack of data, different states have been affected differently by the legalization of recreational marijuana. Montgomery said that in Washington, the utilities didn’t see a sharp spike in demand due to the legalization of recreational weed. Instead, energy use grew more steadily and consistently over a two-year period.

However, Colorado faced a different situation. After the first year that recreational marijuana was legalized in Colorado, the electricity consumption of the city of Denver jumped by about 1.2 percent. Half of that was estimated to have come from indoor cannabis cultivation, said Jacob Policzer, president of The Cannabis Conservancy.

In 2014, 2 percent of Denver’s electricity use went to indoor pot farmers, said Policzer. But Policzer noted that energy rates in Colorado are relatively cheap, compared to other states, so reducing electricity consumption isn’t as much of a priority for some growers.

Many of the lessons learned by Colorado, Washington and Oregon from legalizing recreational marijuana might not be all that applicable to California’s situation, the panelists at the CPUC workshop argued. The Executive Director of the California Growers Association, Hezekiah Allen, said “California is very unique...there’s a very low likelihood that we’ll see increased energy demand in California.”

Instead of growing production, Allen sees California scaling down production. The industry has been around for decades, said Allen, but it’s been overproducing. The state has 50,000 existing growers, but probably only 10,000 to 15,000 of those will succeed, said Allen.

The Program Director of Americans for Safe Access, Kristin Nevedal, said that California is in a unique position to expand its use of outdoor pot farms in California, which use far less energy to grow plants, now that the crop is legal for recreational use. California also has high electricity rates, significantly cutting into the margins of indoor pot farming in the state.

What the panelists did agree on is that there needs to be much more information collected, shared and used to make informed policy decisions. State governments should also invest in research on key topics pertaining to pot farms and energy use.

One of the most well-known research papers on the topic came from scientist Evan Mills of Lawrence Berkeley National Laboratory, published in Energy Policy. Mills estimates the energy use of the indoor marijuana industry, both legal and illegal, represents 1 percent of the electricity consumption in the U.S., equating to $6 billion each year.

The report was published in early 2012, using data from previous years. That was the same year that the first states started legalizing recreational marijuana. Much has changed in the last five years.

Interested in learning more about the future of California's energy transition? Come to GTM's California's Distributed Energy Future summit in San Francisco on March 8-9. Join Greentech Media for actionable conversations on the future of electricity in one of the nation's most innovative states.

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