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Geothermal energy in the context of the ever growing cannabis market

Commercial cannabis greenhouse operation, Denver/ Colorado, U.S. (source: Cannabis Tours, creative commons)
Alexander Richter 3 May 2020

While controversial, it is undeniable that the cannabis market is a tremendously large market and continues to grow. With the high energy cost for heating greenhouses used to produce cannabis, geothermal is seen as key element to help bring down energy costs and green up production.

The day of April 20th marks the “Marijuana Holiday”, the annual celebration of marijuana indulgence, with large groups of people congregating in public parks, nations capitals, and private venues alike, so an article by JRG Energy shared last month by our friends at Geo Energy Marketing.

The current COVID pandemic will undoubtedly change the tradition this year, but don’t be surprised if a common scent arises from your neighbour’s patio today. Partakers and non-smokers alike recognize April 20th or 4/20 as a national holiday for cannabis culture, but few actually know how the date got chosen. The history is rather subjective but one of the most credible stories traces 4/20 to Marin County, California. In 1971, five students at San Rafael High School would meet at 4:20 p.m. by the campus’ statue of chemist Louis Pasteur to “appreciate science”.

Regardless of your view on the controversial subject or the pursuing culture that surrounds it, one fact cannot be ignored. The cannabis industry is the fastest-growing ag industry in the US and other countries across the globe, showing no signs of slowing. The global cannabis market is thought to be over USD$340 billion today. With national acceptance, decriminalisation and profitable companies all increasing exponentially, we are seeing more countries capitalising on this industry. Since 2005, over 25 countries have either decriminalised or legalised cannabis cultivation and practice.

Too Good to Be True?

It almost sounds too good to be true… well, it is. Like every major industry, the cannabis industry has its fair share of challenges and problems. The biggest, from a technical perspective, being energy consumption. The confounding truth is that the business of growing cannabis is anything but green.

Energy Consumption

The billion-dollar industry is proportionally one of the most energy-intensive in the world, frequently demanding an array of 24-hour high-energy lighting, heating, ventilation, and air-conditioning (HVAC) systems, and fans at multiple growing sites. Back in 2016, after the state of Oregon legalized recreational marijuana, Pacific Power in Portland recorded seven blackouts that the company traced to marijuana production. Roughly 45% of Denver, Colorado’s increase in energy demand or “load growth” is directly linked to electricity that goes to power cannabis growth. The electricity consumption of cannabis grow houses is staggering when compared to the average business, restaurant or residential unit. According to the Northwest Power and Conservation Council (NPCC), indoor commercial cannabis production can consume 2,000 to 3,000-kilowatt hours (kWh) of energy per pound of product; resulting in electricity costs representing ~20-40% of the total cost of cannabis production.

As the cannabis industry grows, solutions to the energy problem are rapidly becoming the distinguishing difference between successful companies and those struggling to make ends meet. Many options have been proposed and are currently being implemented into grow operations worldwide, with Renewable Energy considered to be the best solution moving forward.

Renewable Energy Alternatives

Most companies making the effort to implement green energy seem to divert directly to solar without considering other alternatives. Photovoltaic (PV) systems undoubtedly have a use in the industry. However, they are also proving to be an efficient solution considering the low solar irradiance in geographic locations of the major grow operations worldwide (Canada, Pacific Northwest USA and parts of Northern Europe). “The most efficient use of solar is direct, photosynthesis,” says Bill Hummond of Breeze Trees Farms in Washington State. Simply put, areas that have adequate sun for efficient PV systems are, or should be, utilising outdoor operations or greenhouses for growing to optimise sun usage.

Another significant downfall of PV systems is the lack of 24hr generation, when the sun goes does, growers are left to rely on battery storage or back to the grid for electricity. Furthermore, solar is season dependent, with panels producing 40-60% less energy during winter months, a time when heating is most critical and ironically, power prices are at a premium. Because indoor cannabis cultivation energy use is so high, roughly 10 times that of a typical office building, even covering an entire growing facility roof with solar panels would likely offset no more than 20 percent of total electricity consumption. All things considered, solar PV systems may help the energy problem Cannabis growers face, but it is far from an absolute solution and other combinations of renewable energy should be considered.

Consider Geothermal

One renewable energy source that has enormous potential benefits to the industry is Geothermal. Geothermal, in layman terms, is the process of utilising thermal energy from the earth. This could be as simple as heating or cooling a house or as complex as generating electricity through high-temperature steam. Geothermal energy is not dependent on weather conditions and has high capacity factors; hence it can play a crucial role in the cannabis energy transformation, especially in heating applications. Geothermal energy in the cannabis industry can be used to maintain constant temperatures of greenhouses, heat soil in outdoor operations or be used for high-temperature drying. Geothermal systems typically require a small amount of infrastructure, but once commissioned, present significant cost savings to companies by enabling growing environments suitable for increased annual yields in locations where natural conditions would be challenging while minimising electricity costs.

Geothermal systems have been successfully implemented in many other ag industries around the world. Examples such as greenhouse heating in New Zealand, geothermal drying of coffee beans in Central America, or soil heating for carrots in Iceland all demonstrate significant cost savings to farmers with simple processes that could be emulated in the cannabis industry.

It is no secret that the initial cost of a geothermal setup wouldn’t be inexpensive. Growers will have to invest in surface and sub-surface equipment to transfer and utilise the energy. The bigger the indoor grow room the more equipment will be needed and consequently, the overall CAPEX of the project increases. The equipment cost of a geothermal system to maintain temperatures in a medium-sized room is going to be within the tens of thousands of dollars. However, considering the low operating costs, collective benefits and efficient payback period of less than one year in most cases, both small and large cannabis companies alike should not be overlooking this advantageous resource.

The cannabis industry will continue to grow (no pun intended) in countries throughout the world, consuming significant amounts of energy along the way. While leaders in this progressive industry capitalise on decreasing their effective energy consumption costs to increase profits, they should be considering all options moving forward to optimise their renewable energy usage. Geothermal is often not the first renewable energy considered, but with its baseload capacity (24/7 access), small footprint, and benefits to agronomic processes– it is an ideal asset to the commercial cannabis industry and should be a consideration for small and large companies alike.

Sources and Additional Reading:

Source: JRG Energy Consultants via Geo Energy Marketing