'Don't ask, don't tell': How utilities are powering the marijuana industry
Marijuana—legal or otherwise—requires a lot of power to produce. And in the Pacific Northwest, utilities are now facing the complicated task of efficiently meeting that demand while navigating a set of opposing laws.
Just how much power the marijuana industry uses is tough to judge, and estimating future demand is even trickier. The recreational market is just getting started in Washington, where legal sales began this summer. Since July 8, the state is reporting just shy of $24 million in sales—and the pace seems to be accelerating. Sales in July averaged about $146,450 per day and so far in October have reached almost $400,000 each day.
How does that translate into power demand forecasts?
A report by the Northwest Power and Conservation Council estimated marijuana operations could grow the state's electricity demand between 60 MW and 160 MW over the next 20 years. Regional demand—from producers in Idaho, Montana, Oregon and Washington—could reach almost 250 MW by 2035, the report found.
Legal pot production was identified as one of three major categories of load growth in the region, alongside data centers and electric vehicles.
"Hundreds of producers have now been licensed to grow and process cannabis. Those producers using indoor growing facilities place a significant load on the electrical system to provide lighting, HVAC and other required services for the plants," the report noted.
A complicated spot for utilities
All that raises the question of efficiency. With demand reduction and emissions goals taking on such importance, one would think utilities would focus on serving a new demand sector as efficiently as possible. But it's not that simple.
"There are some hurdles that are preventing utilities from addressing the demand issues," said Bryan Jungers, a research analyst at Manifest Mind, an advisory firm that focuses on sustainability and clean technologies.
Jungers said utilities are wary of working with marijuana growers because the plant is still a Schedule I controlled substance at the federal level. The tension between the state and federal laws has been well documented with regard to retailers and consumers, but it filters down to some unusual industries.
"There are definitely some concerns, and I've had these concerns expressed to me directly ... that [utility employees] can't work with marijuana growers directly because they fear there is going to be some repercussion at the federal level," Jungers said.
The NPCC report estimated an indoor grow module accommodating four plants would draw as much power as 29 refrigerators. But the uneasy legal status of pot means utilities are wary of offering efficiency programs that could help curb demand.
"Efficiency gains are possible," Junger said. But thus far utilities just don't want to ask too many question. "They're still supplying the power but it's sort of a 'don't ask, don't tell' approach."
The industry takes a cautious tone
Puget Sound Energy issued a statement saying it "has a duty and obligation to serve customers under Washington state law. If there’s a legal business in our service territory that needs our services, we welcome them as a customer."
The utility said it is confident it can serve its base of more than 1.1 million customers, but added that "saving energy is important."
"Much like we do for other companies that meet eligibility and participation requirements, PSE offers grants for our business customers to install money-saving LED lighting systems instead of using less efficient traditional lighting, along with access to other energy efficiency programs," the statement continued.
There have been media reports that Avista Utilities issued a rebate to a marijuana producer related to energy efficient lighting. Spokeswoman Debbie Simock, however, said the report was incorrect and the utility has not issued any rebate, "but as a regulated utility, we always have to be prepared to meet the energy needs of our customers," she told Utility Dive.
Further complicating the issue, the Bonneville Power Administration supplies power to the region and is a federal nonprofit. Can it supply power to operations running afoul of federal law? So far BPA has not really tackled the topic, and issued a statement saying "we’re still exploring issues related to supplying power and other services to our customers serving marijuana grow operations."
"This is a big issue," Jungers said, "because BPA not only supplies electricity for much of Washington and Oregon, but they also run a lot of the demand side management programs for the utilities, co-ops, munis and even investor owned utilities in that region. So in Washington and Oregon that's a real sticking point. BPA is not going to run a commercial cannabis demand side management program when they have no jurisdiction to do that based on federal law."
The potential impacts of legalized marijuana are significant to the utility industry. California has by far the largest cannabis market, where medical sales alone are $1 billion annually, Jungers said. If the state decided to regulate recreational use, that number could reach more than $3 billion.
"If and when California moves to recreational legalization, they're really going to have to move quickly to curb power consumption from growing and also improve outdoor growing conditions," he said.
Growing outdoors would seem like a logical answer, but operations moved indoors for a variety of reasons—and their hazy legal status was just one. Though the operations take a lot of power for lighting and cooling, indoor growing allows cycles to be optimized and replicated exactly. Those precise conditions allow marijuana growers to deliver consistent crops with maximum potency.
"Hopefully, eventually, utilities will be able to offer effective demand management programs and offer those to grow customers so that will help incentivize reduction," Jungers said.
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