New Report: Marijuana Cultivation Is A Fast Growing, Power-Hungry Business; Just Ask Xcel and National Grid

Electricity use by marijuana growers in Texas and elsewhere is generally unknown, but likely higher than many think — and as more states legalize pot it’s becoming more apparent what a huge power drain cannabis growing, packaging and distributing can mean. A report says only about 25% of such electricity consumption is from legal operations, and power use for illegal growing should be taken into consideration

 

November 20, 2018

 

What industry is responsible for one of the largest increases in electricity usage over the past few years?

Why, the marijuana growing business, of course — and electricity producers are starting to work with this new industry to smooth out power usage problems.

Growing pot indoors under a controlled environment takes lots of electricity because of the need for strong lighting, ventilation systems and pumps — it takes about 2,000 kWh to grow a pound of cannabis to be sold on commercial markets, more than a month, maybe two months worth of electricity needed to power the average home.

Legal cannabis cultivation in the U.S. consumes more than a million megawatt hours of electricity annually; enough to power 92,500 homes for a year, according to a new report.

It’s hard to know how much electricity in Texas is consumed by pot growers, packagers and distributors because it’s illegal, but it’s been estimated that 3% of California’s power was used in marijuana processing even before it was legalized in the Golden State.

And while there’s little chance of Texas going the way of California in this and many other ways, the opposition to pot is weakening in the Lone Star State, with the opening of dispensaries selling a kind of cannabis oil for those with a form of epilepsy, demand is likely higher than many think for illicit-pot power.

In 2015, more than half a dozen localized outages in Washington state, where pot use is legal, were attributed to marijuana hothouse-related power demand overloads.

Earlier this year, Colorado Public Radio estimated that 4% of the electricity used in the city of Denver — where pot smoking is legal and widely available — goes to marijuana cultivation and sale.

And now that several states besides Colorado have okayed the sale of marijuana, both medicinal and legalized, the industry is doing big business using professional greenhouses, with varied electricity use for each variety of cannabis.

The opening of the industry is spawning service companies dedicated to reducing electricity and water use in the growing process, but as they build markets companies are finding that increasing power costs are cutting into the bottom line.

A report from Washington DC analytics company New Frontier Data predicts a 162% increase in marijuana cultivation electricity use projected out from 2017 up to 2022.

Now utilities like California’s Sacramento Municipal Utility District (SMUD) are cultivating customers by giving them special attention to help them cut back on usage and become more efficient.

SMUD even has a “strategic account manager, cannabis operations” named Matt McGregor, who told Marijuana Business Daily (MBD) that, “In May of 2017, I started devoting 100% of my time to the cannabis operations coming into our territory, knowing that all those companies were going to fill one portfolio of commercial account management.”

Still, a number of utilities obtain some of their power from federal sources such as the TVA and shy away from working with marijuana growers and packagers because of concerns about interference by federal officials, who consider pot to be illegal, at least at the national level.

Most notable among those cooperating with growers, however, is Xcel Energy.

“We work with marijuana companies because they are legal operating entities in the state of Colorado,” Xcel spokesman Mark Stutz told MBD.

“We are regulated at the state level, and to deny services would be in violation of state law.”

Working with the industry is important, though, because of increasing demand on the electrical grid by  electric cars and buses, while inefficient or outdated power plants are shutting down.

And with the legalization of cannabis in Massachusetts, the utility, National Grid, is looking to lead the way by treating growers as agricultural clients where new ways to streamline production, including the use of less-power-intensive LED lighting and efficient HVAC systems can reduce energy use and thereby reduce the load on the system.

And while the stereotype of marijuana smokers is of environmentally conscious political liberals, some of the cultivators are dedicated capitalists — and they consider saving money and electricity a top priority.

One aspect the New Frontier report emphasizes may bring some consternation to environmentalists, though: Legal cannabis cultivation generated an estimated 472 thousand tons of electricity-related carbon in 2017, a number expected to increase considerably as the legal markets expand over the next five years.

The report also notes, rather ominously, that only about 25% of all cannabis electricity consumption is from legal operations, but illicit operations are still a factor in forecasting electricity demand.