The cannabis industry has experienced explosive and continued growth in recent years, with 2024 sales projected to exceed a staggering $31 billion. But rapid expansion brings significant challenges, especially for growers aiming to scale operations while keeping costs down.
Cannabis cultivation is notoriously energy-intensive, with indoor growing operations consuming substantial amounts of electricity for lighting, heating, ventilation, and air conditioning (HVAC) systems. In fact, cultivation facilities can consume up to ten times more energy per square foot than a typical office building. According to a paper published in February by energy researcher Evan Mills, legal and illegal growers together use about 1 percent of all American energy — more than cryptocurrency mining or all other crops combined. The figure is expected to grow to 3 percent by 2035.
Utility-rigorous growing requirements significantly contribute to carbon emissions, negatively impacting the environment and public perception of the industry. To mitigate the impacts, cultivators have begun capitalizing on the benefits of demand-response programs, which offer a practical way to reduce energy use, cut costs, and decarbonize operations.
Demand response (DR) is an energy-management strategy that encourages participants to reduce their energy usage during peak demand periods in exchange for incentives from utility providers. Importantly, DR programs do not require businesses to shut down fully during an energy-reduction event. Instead, businesses can tailor their curtailment efforts, selecting when and where to reduce power consumption based on their operational needs. By participating in DR programs and lowering electricity use during peak utilization periods, growers can alleviate strain and contribute to a sustainable power grid, reducing the risk of brownouts or blackouts that potentially could ruin crops, especially during cold months.
DR helps to prevent the demand for electricity from exceeding supply, reduces the need for fossil-fuel-generated power, and provides participants access to a host of cost-saving opportunities and financial rewards. For cultivators, this means strategically managing energy consumption during cultivation to align with grid demands while capitalizing on incentives.
Benefits of DR
Cost savings
Cultivators who enroll in DR programs can receive financial gains by simply reducing energy consumption during peak periods. Incentives can offset electricity costs significantly, and energy is a major expense in cultivation. Growers may also receive grants to improve their power infrastructure to be more compatible with DR. Savings from these programs can be reinvested in technology upgrades, expansion, or other areas of the business.
Grid reliability
By adjusting power usage during peak demand times, cultivation facilities contribute to overall grid stability. Supporting grid reliability not only helps prevent blackouts and brownouts that could jeopardize crops but also benefits the entire community by ensuring a reliable power supply for all users.
Environmental impact
DR programs enable growers to reduce their carbon footprint by strategically reducing energy consumption. For instance, lights can be set at 70-percent capacity rather than full power, lowering overall greenhouse gas emissions by decreasing reliance on fossil-fuel-based power and contributing to broader sustainability goals like decarbonization. This not only benefits the environment but also enhances the company’s reputation as an eco-conscious business. Some DR programs even allow business owners to track the exact amount of carbon emissions their participation has prevented.
Impact on growers
Demand-response programs offer growers a significant opportunity to scale operations effectively while reducing costs and minimizing environmental impact. In addition, growers can achieve substantial savings on electric bills, earn financial incentives, and contribute to a greener, more sustainable future.
Sustainability and profitability can go hand in hand, especially in agriculture. By embracing DR programs, growers can enhance their bottom line and support the broader goal of environmental stewardship.
As Enersponse’s chief business development officer, Rachel Permut relies on more than two decades of experience in business strategy, mergers and acquisitions, and product development. Previously, she led the development of new customer offerings in microgrids and e-mobility at ENGIE North America and oversaw channel sales for ENGIE Storage. enersponse.com
