Cannabis industry drives growing electricity demand, expected to soar with increased legalization
Energize Weekly, October 31, 2018
The legal cannabis industry in the U.S. is becoming a big energy consumer, using 1.1 million megawatts-hours a year—enough to power 92,500 homes— with consumption projected to grow by 162 percent between 2017 and 2002, according to a study by New Frontier Data.
“As more states transition from illicit markets to legal medical markets or fully legal markets (medical and adult-use), demand for legal cannabis will continue to increase,” the report said. “The increase will further fuel demand for energy needed to produce the products.”
In 2017, about 25 percent of the energy demand came from the legal cannabis trade and 75 percent from the illicit trade for a total of 4.1 million megawatt-hours. A total of 16.4 million pounds of marijuana both legal and illicit were produced that year.
The market for legal cannabis is estimated at $9.8 billion in 2018, increasing to $23 billion by 2025. “Such growth has increased the size and complexity of the supply chain and the energy usage rate, and dramatically expanded the industry’s carbon footprint,” the report said.
What is driving the electricity demand is the move by cultivators to greenhouses and grow houses from outdoor fields. New Frontier calculated that it takes more than 18 times as much electricity to produce a gram of cannabis indoors than outdoors.
“Energy use is prevalent throughout most cultivation operations, from lighting to temperature control to dehumidification,” the report said. “However, the intensity of energy use varies widely based on cultivation methodology and operational efficiency.”
Lighting is a critical energy driver, as the lights are 70 times more energy intensive than those in a commercial office building. The lights also create heat that combines with water released from the plants creating humidity that requires dehumidifiers.
The New Frontier report calculated that on a kilowatt-hour (kWh) basis, data centers consumed 70 billion kWh a year. Cannabis cultivation 4.1 billion kWh a year, which was more than double the 1.7 billion kWh consumed by the Starbucks Corp.
The impact of this soaring electricity demand has been pronounced in some communities. Colorado and Washington were the first two states to legalize recreational marijuana. Denver saw its electricity demand shoot up with the cannabis industry accounting for 4 percent of the city’s overall electric capacity.
The city of Arcata, Calif., proposed restrictions on cannabis businesses as residential consumers were facing higher electric bills. The influx of cannabis businesses was suspected of causing a spike in consumption and resultant higher residential energy prices.
Local governments are now taking steps to deal with the cannabis industry’s energy demands, the report said. In Sonoma County, Calif., a preoperational requirement is that a grow business stipulates that its power sources are 100 percent renewable or purchase carbon offsets. Legal cannabis cultivation generated an estimated 472,000 tons of electricity-related carbon emissions in 2017.
“The City of Denver has held a Cannabis Sustainability Work Group for a number of years to address issues including energy consumption,” the report said. “The group has produced a peer- reviewed Cannabis Environmental Best Management Practices Guide. This multidisciplinary, collaborative approach is a good model for other jurisdictions to follow, and offers a template for larger valuable efforts such as multijurisdictional exchanges.”