Onsite Energy: A Secret Weapon for Cannabis Growers
Cannabis costs: higher than ever
The cannabis market in the US is projected to reach a value of $57 billion by 2030. Although there is a lot of money to be made, there are also plenty of costs for growers to deal with before their bud makes it to a bong. Energy costs alone result in indoor cannabis operations spending as much as $2,500 to produce a single kilogram (2.3 lbs) of marijuana. Plus, the combination of the amount of energy required, rising energy prices, and demand charges - not to mention the taxes on the cannabis itself - ends up amounting to even more.
All of this doesn’t even include an operation’s carbon footprint. Although the average cannabis farm’s carbon emissions vary greatly by location, even the lowest emissions in Southern California amount to 143 pounds of CO2 per ounce of Cannabis. By installing efficient onsite energy systems, like solar, storage, and Combined Heat and Power (CHP), growers can get a leg up on the increasingly competitive and energy intensive cannabis industry.
An uncertain future
As a blossoming industry, indoor cannabis cultivation faces a lot of uncertainty in future regulations, tariffs, and market trends. With California’s state tax already costing growers 30%, any additional federal tariffs could certainly drive some operations out of business. But, if (and when) the federal government legalizes cannabis, a 25% excise tax is likely to be leveraged on top of pre-existing state taxes. In California, that could raise effective tax rates to as much as 39%. In addition to a cannabis excise tax, the federal government could eventually follow many local governments in establishing a cannabis energy-use tax, like in Boulder County, Colorado. Boulder County mandates that growers use renewable energy, or pay a $2.16 charge per kilowatt-hour. These already-high costs are likely to become even more expensive, meaning hesitation to act on energy efficiency upgrades will cost growers now, and even more in the long run.
While the federal government continues to consider legalization, energy costs will continue to rise, burning through potential profits. Growers who act now and install onsite solar, storage, and CHP are sure to reduce operational costs and lock in a competitive edge in a market likely to see more regulation and tax exposure.
Onsite energy generation to the rescue
Indoor cannabis operations that have the opportunity to install onsite renewable energy stand to save a lot of money, and greatly reduce their carbon emissions. A cannabis farm is incredibly energy intensive, considering the number of lamps, heaters, and ventilation systems working to keep the plants happy and healthy. In fact, a cannabis operation growing 20-25 plants requires as much as 15 kWh of electricity per square foot every month. With 100,000 square foot operations becoming common across the country, that means some cannabis operations use as much electricity as 1,700 homes per month! These energy-consumption rates fluctuate with the plants’ growing phases, so that value can go even higher! By drawing electricity from a renewable source, like a solar array, growers can lock in their energy rates and avoid costly price increases. Plus, with an added storage system, you can reduce those demand charges that oftentimes make up more than half of your bill.
In addition to saving on the cost of energy itself, growers benefit from solar and storage by avoiding the need to purchase carbon credits in order to offset their operations’ emissions.
Promise recently published another blog about the various benefits of solar, storage, and CHP for cannabis growers, which you can read here.
Our holistic approach
Promise Energy understands that every farming operation has unique needs, especially when it comes to indoor operations. From heat lamps, to irrigation systems, to ventilation, energy consumption and efficiency plays a driving role in how much profit you turn every month. Promise’s holistic approach to energy is what differentiates us from the crowd, and you can count on our energy experts to custom-design a system to meet the unique energy needs of your indoor farm.
Ready to see how you can help support your business with energy upgrades? Contact Promise Energy at info@promiseenergy.com for a complementary evaluation.
At Promise Energy, we don’t believe that one size fits all. We pride ourselves in designing and installing customized energy solutions that provide the greatest long-term value and energy control for our customers.