Brief

California's largest utility offers farm rates, efficiency programs to marijuana growers

Dive Brief:

  • Just months after California voters elected to legalize recreational marijuana use, the state's largest utility has said it will offer agricultural rates and energy efficiency programs to permitted commercial growers for whom 70% or more of their metered use is farming-related.
  • Pacific Gas & Electric will offer the programs and rates to both outdoor and indoor growers, but it will not apply to individual residential customers who can also legally grow the plant.
  • With cannabis now fully legal in the state, California regulators are wary they may face a wave of new energy demand they are not fully prepared to meet, meaning efficiency programs could be critical for both grid reliability and the profits of farmers, who must contend with high rates and demand charges. 

Dive Insight:

Marijuana is a particularly energy-intensive crop, and power bills commonly add up to more than $1 million for commercial growers, making them prime candidates for energy efficiency and demand-side management programs.

But the product remains illegal under federal law, and utilities have been cautious in targeting growers for their programs. While some municipal utilities have put growers on time-of-use rates, most utilities have continued to view marijuana farmers as any other customer. 

The sheer scale of the industry's expected power demand in California may be changing that. PG&E's decision to offer agricultural rates and efficiency programs for growers could give cover for similar actions at other power providers. 

The Press Democrat reports Sonoma Clean Power is already planning similar rates and programs, and will expand the offering into Mendocino County this summer.

"Cannabis is a legal crop in our state, like almonds and tomatoes. Agricultural growers now will be eligible for the same rate and energy efficiency programs as farmers of other crops," Deborah Affonsa, PG&E vice president of customer service, said in a statement.

PG&E said customers can apply for the agricultural energy rates if they have received a permit for cultivation from their local jurisdiction and is most of their energy demand is dedicated to end uses like pumping water for agricultural irrigation "or other uses that involve agricultural production for sale which do not change the form of the product."

Power demand for lighting makes up a large chunk of the cost to produce marijuana, and so access to cheaper rates and more efficiency offerings could be a boon for growers.

"We've met with representatives of the emerging legal cannabis industry and listened to their needs," said Affonsa. "Now that cannabis is in California's future, our next step is to work with these new agricultural customers and make this industry as energy efficient as possible."

Traditionally, indoor growers use high-intensity sodium floodlights, which require cooling and can push electricity costs to between 13% and 30% of the final price. With high efficiency LED lighting, those costs can be reduced down to 7%.

But efficiency is expected to do more than lower the price of the drug. Energy demand for the cannabis industry is a major concern, particularly on the West Coast where the trade regulated and legal.

Power use data from the marijuana industry is not as complete as other sectors, but a 2012 study by a Lawrence Berkeley National Laboratory researcher pegged marijuana power consumption at 1% of national electricity use, or $6 billion annually — a number that's almost certainly increased as states legalized recreational use. 

​In 2014, a report by the Northwest Power and Conservation Council estimated marijuana operations could grow Washington electricity demand between 60 MW and 160 MW over the next 20 years. Regional demand, including producers in Idaho, Montana, Oregon and Washington, could reach almost 250 MW by 2035.

In 2015, Utility Dive reported that Pacific Power experienced 7 localized outages due to demand overloads attributed to marijuana grow operations. 

Last week, California power regulators held a workshop on enhancing efficiency in the marijuana industry. Greentech Media reports stakeholders focused on enhancing outreach and education efforts to make growers aware of utility offerings.  

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Filed Under: Efficiency & Demand Response Corporate News