Energy in 30: The future of controlled environment agriculture

Tune in to Energy in 30 hosted by Joan Collins and David Meisegeier. On our fourteenth episode, “The future of controlled environment agriculture,” hear from Derek Smith at the Resource Innovation Institute (RII), Jennifer Amann at the American Council for an Energy-Efficient Economy (ACEEE), and ICF’s Director of Energy Efficiency Cody Allen. Together, they discuss the growth of efficiency in controlled environment agriculture (CEA).

Topics in today’s episode include:

• How CEA can provide food security on a climate-constrained planet.
• Understanding the relationship between CEA and cannabis.
• The size and energy intensity of CEA facilities.
• The future of CEA and opportunities for new technology to emerge.
• Dealing with industry resistance and protecting intellectual property.

Full transcript below:

Joan: Hello and welcome to Energy in 30. We'll use the next 30 minutes to explore how utilities and the industry are reacting to forces that are shaping new offerings for customers to meet decarbonization goals.

David: If you're a utility manager, consultant, technology provider, or just curious about energy, we hope to push your thinking about the changes happening in the energy industry. With me, David Meisegeier.

Joan: And me, Joan Collins.

David: Well, hey Joan. So how are you today?

Joan: I'm doing good. How are you?

David: I am also doing well, and we have a lot to cover on today's episode.

Joan: Oh, we do, yeah.

David: So I propose we skip our usual banter and move right into it.

Joan: That sounds good, David. Let's do it.

David: Awesome. So today, we are discussing the growth of efficiency in controlled environment agriculture with Derek Smith, executive director of the Resource Innovation Institute (RII), Jennifer Amann at ACEEE (American Council for an Energy-Efficient Economy), and ICF’s Cody Allen. So let's get them introduced. And I'll kick things off with Derek Smith. So as I just said, Derek is the executive director and also a board member of RII, which is a not-for-profit public-private partnership whose mission is to empower farm resilience by advancing resource efficiency and greenhouse and indoor farming.

Joan: And I'm going to introduce Jennifer Amann and Cody Allen. Jennifer, who goes by Jen, is a senior fellow in ACEEE's buildings program. And in this role, she develops and supports strategic directions for the organization's work on energy efficiency and decarbonization of homes, commercial buildings, and indoor agriculture. Jen serves on the board of directors of the Attachments Energy Rating Council and Resource Innovation Institute.

And we also have joining us ICF’s Cody Allen, a director at ICF working in the areas of commercial and residential demand-side management. He's our resident subject matter expert in controlled environment agriculture, known as CEA, which we'll be using a lot today in our discussions, and traditional agriculture. And Cody has a Bachelor of Applied Science [degree] in agriculture business from ATU or Arkansas Tech University. So welcome, Derek, Jen, and Cody. We're so glad to have you on today.

Derek: Thank you.

Cody: Thank you.

Jennifer: Thanks so much.

Derek: Glad to be here.

A solution for food security on a climate-constrained planet

Cody: So why controlled environment agriculture? I know a lot of folks who are probably listening in don't know what controlled environment agriculture is or CEA. CEA is a technology-based approach to food production, and it takes place in a controlled environment such as a greenhouse or an indoor warehouse which has been converted to a grow facility to grow hemp or strawberries or what have you.

But why CEA? Why is it so important to the ag industry in general and also to utilities? One of those big reasons is that by 2050, food production has to increase to 60-70% to meet the world's population of 9.3 billion people.

And to do that, farms have to be more efficient with their resources, and the land mass and water resources we have are not increasing. They're decreasing. And so we need to use our resources within this industry. And efficiency and growth in this sector must take place to meet this need. And utilities can take advantage of this within their portfolios by addressing those controlled environments of agricultural operations. And CEA will continue to play a large role, I believe, in the ag industry. And it's a great industry and opportunity for utilities to incorporate into their DSM (demand-side management) programs. Derek, anything to add to that definition?

Derek: No, I think you covered it well. This is about food security on a climate-constrained planet. And humanity is beginning to look beyond only field farming to feed itself. And we've witnessed field farming being susceptible not just to climate risk, but also supply-chain disruptions over the past few years. And we see countries like the U.K. experiencing or observing that they are reliant on imports for their food for their people, and they observe that as a condition of war. And everything is vulnerable to energy systems in various ways for different energy systems as we look at the agricultural sector. So this is important. This is about integrating CEA into the landscape. This is not about supplanting or replacing field farming. We need field farming and regenerative forms of rebuilding soils. We also need our own food to look at ways to optimize production and increase harvests by integrating technologies and practices.

David: So that's helpful background context of why CEA. What is RII's role in this?

Derek: Yeah, so we bring together governments, utilities, and industry players, both producers and the vendors that are building the facilities, designing, constructing, and providing equipment, all to coordinate education, training, and performance validation services. We have a membership base that includes a lot of industry players, and then we work very closely with various governments. Right now, we're partnering with the U.S. Department of Agriculture (USDA) to establish benchmarks on energy and water use. We are absent of data on these issues, and so we're just beginning to understand ranges of performance, but we need a lot more data. So we're focused on building tools and resources to help the industry scale and help governments, utilities, and others plug into these tools and resources to expand knowledge and best practices and drive efficiency at scale going forward.

David: That's cool. And Jen, I know you sit on the board of RII, but you’re also working for ACEEE. How do you see ACEEE’s role in CEA?

Jennifer: Yeah, so one of the things that is interesting about this industry is we see, in addition to these big global forces that Derek was talking about that are driving interest in CEA, there’s also an increasing market demand. So we see people increasingly interested in procuring their food locally, getting the benefits of fresh produce that can otherwise be difficult to get at different times of the year—particularly delicate things like berries and tomatoes. So as we know that this market will grow, we see a big opportunity for energy efficiency. As the market grows, we know that for these businesses to thrive, and also fit into the communities where they're growing, we need to be able to manage their energy use.

Energy is an Achilles heel for a lot of these growers. Being a major input, it takes a lot of energy to create the fantastic climate conditions that we can experience out in nature to grow crops. And so really helping the growers learn to manage those energy needs and understanding how we can improve the delivery of these products most efficiently fits right into ACEEE's wheelhouse. And I think it's a great opportunity for us to educate policymakers and work closely with researchers to better understand how energy is used, how other resources are used in the industry, and what opportunities we can cultivate together to reduce the energy impact.

Understanding the relationship between CEA and cannabis

Joan: It's so great to hear about this kind of overarching agriculture because I think many people think the C in CEA stands for cannabis, and it is very associated. So I don't know, is that something, maybe we could discuss; why that's so aligned and that perception is tied to CEA?

Derek: Yeah, ironically, cannabis went into buildings as a function of laws; to keep the product out of people's hands—prohibition. So cannabis producers, in many ways, helped jumpstart the technology and the understanding of how to grow plants in closed environments. And obviously, there's an interesting relationship with their utility providers as they were doing that in an unregulated, illicit market. And as cannabis has flourished in a regulated market, it has created challenges for utility providers trying to respond to all the growth in that sector. Meanwhile, the CEA industry has been studied by multiple federal agencies, including NASA, to see how to grow plants in space. And so there's all of this research and development going on, and technology has been brought to these markets. And really, the cannabis industry has helped commercialize a lot of these technologies that are now really taking off at scale to grow produce.

The size and energy intensity of CEA facilities

David: What kind of size are we talking about for these facilities? How meaningful is it from a utility perspective?

Derek: There's a range of sizes from craft greenhouses to growing craft crops, right? So you could say culinary mushrooms would be one example. And you could have mom-and-pop operations, and you can have multi-acre, scaled-up operations. And then, of course, in a vertical farm, you can have very large warehouses growing with racks going 20 plus to the ceiling, right? So in terms of energy intensity, the industry is somewhere in the neighborhood of hospitals, so it's not quite as energy-intensive as data centers. Although cannabis operations, because of the light intensity needs of the plant, can be more energy intensive and closer to data center comparisons.

David: Are you looking at 24/7 load in a truly indoor environment?

Derek: Cody, do you want to take that?

Cody: Yeah, it could be. It just depends on how the business is structured and how they frame their operations. So they can certainly build a facility. And for those, regarding size comparison, almost everyone is familiar with Walmart, right? A Walmart Supercenter—some of those operations are as big or bigger than those depending on your location. And so they can be very, very large. But yes, the load can be 24/7 depending on how they structure their facility and their different stages and light conditions. And that's the beauty of CEA, right? You control that environment fully or can, so you can replicate the sun whenever you want to and provide the nutrients when needed. And so it just really depends on each operation. But I would say predominantly, most aren't. They're going to be typical daytime operations due to the workforce in the area that they're in dictating what they do there.

Jennifer: But I think Cody raises an interesting point because of the warehouse operations in particular. Even with light deprivation technologies and things for greenhouses, you can manage when it's daylight and when it's not in these facilities. And that leads to some interesting potential opportunities for load shifting and addressing demand issues, particularly in places with severe demand constraints or other issues on the grid.

Cody: Yeah, definitely.

David: That's brilliant. Never thought of that. Joan, you were trying to get something in.

Opportunities for new technology to emerge

Joan: Technology is such a key center to this. And I was curious, are facilities taking advantage of technologies already there, or is this creating the opportunity for new technologies to emerge?

Cody: It's a little of both. We see a mix. We see some that are very basic, and well, I say basic, each CEA facility is advanced when you look at it from the outside in. But as far as using AI and controls and systems to make decisions and automate those pieces, not all operations use those technologies. So there's an opportunity there. Many cool things are going on with research around sensors and how those sensors dictate decisions from an AI perspective on fertigation to harvest and a number of things. So it's interesting.

The industry is advancing and innovating very rapidly. There are a lot of technologies out there that don't have much of a benchmark to them from a utility perspective to be able to look at those technologies and bring them into an energy efficiency portfolio and offer it as a measure offering, which is a gap really in the industry. This is where RII comes in, and ACEEE as well. And there's a big gap there, and I'm thrilled that RII is part of that process, amending that gap. So that evaluators, utilities, and consultants can use that information to make informed decisions in evaluating and crafting program offerings to their CEA customer base.

David: Go ahead, Jen.

Jennifer: Yeah, I was going to say one of the things that I think has been fascinating for me working on this is we're taking a lot of the technologies that have been used in buildings, but we need entirely different ways to measure their performance and to measure their efficiency as we're using them as process loads for plant growth rather than basic comfort loads for humans. And so that's been a big part of the kind of infrastructure of the industry—e.g., what are the right metrics, how do we measure those metrics, what kind of efficiency improvements can we expect to see?—interesting questions as we look at HVAC and dehumidification systems that are, rather than promoting a general environment for the building occupants, much more about particular microclimates around each plant. So there are a whole host of challenges, but most of the technologies are there, and it's a matter of refining, improving, and customizing them for the unique occupants of these buildings.

Derek: Yeah, and I would add that it's important to think about these facilities more like an industrial operation than a commercial building. It's important to understand energy use per square foot for various reasons. It's more important to think about productivity, right? How many pounds of product is being produced per unit of resource consumed? So with those KPIs or key performance indicators, we can benchmark operations using our benchmarking platform, PowerScore. You could say it's like the ENERGY STAR portfolio manager equivalent for this type of building. And we help producers understand how they're performing, how they compare to a national data set, and how they can improve their efficiency. And then, with the aggregated anonymized data, we never share producer data. We can help governments and utilities understand energy-use profiles, which technologies and practices they can help promote and provide incentives to advance further efficiency.

Through this data-driven approach, which we're proud to be working with USDA, ACEEE, and ICF on, we're finding that water savings claims made by industry players can be validated. So we've heard for years these reports that CEA can be 90 percent more efficient in its water use than field farming. And those reports were based on one model from one region. And, of course, climate zones and many different variables are important to consider when applying a model across the country. But what we're doing now is validating through actual data from real facilities who trust that we're just trying to help the industry and the stakeholders around the industry better understand what's going on here.

So we're excited to publish an energy and water benchmarking report on the CEA sector for the USDA this summer. And we're just wrapping up that analysis right now. So that's just the tip of the spear and what we're beginning to find in terms of benefits and impacts of resources used here.

Dealing with industry resistance and protecting intellectual property

David: You said yield is very important, and that makes perfect sense. I imagine there's some resistance in the industry toward efficiency from a fear that it could impact yield. Is there a big role for RII in helping to educate how efficiency can be had without negatively impacting yield?

Derek: Yeah, that's the whole thing. We have to speak the language of the producer, right? They want increased yield at a lower cost. That's the way they'll hit their mark. And Cody's right, a key thing about CEA is you can tune the equipment to the outcomes that you want. So if you want to have the best, most nutritious product, or you want to have the greenest leaves of lettuce, you can actually tune your equipment to that. And so you're making trade-offs between productivity, quality, and efficiency. And we recognize we're one piece of that puzzle, but we're a very, very important piece of that puzzle. And we're thrilled to partner with the industry to figure out that sweet spot to accomplish all those objectives.

Cody: And the seed industry, in general, is afraid of sharing their IP, right? And that's why there's a big gap in the overall data available to make assumptions regarding water use. And so it's important from a program perspective to ensure that that intellectual property is protected, that it’s never shared. Just like Derek mentioned in their PowerScore platform. It's important to make that known and ensure it is for the greater good. And this will benefit the industry as a whole and help that industry grow and help utilities help with resource conservation from a carbon perspective or a firm's or KBH’s perspective. And so that's something that we run into quite a bit, which is customers who want to participate in the program being worried or concerned that an IP will get out or shared, and they won’t have that competitive edge to whatever crop they're currently growing.

The future of CEA and room for growth

Joan: Well, we could certainly hear the passion and the belief of the promise from the three of you. So I'm going to ask you to close out here. If you could do one thing to change the industry, with no limits, what would you do? And let's start with Jen.

Jennifer: Wow. So that's a big question. Right now, I'm excited about the new recognition that we're seeing about the importance of CEA and its growing importance by USDA, DOE, and others at the federal level. This is bringing in new resources and opportunities for research development and deployment that'll support more knowledge creation and expand the ability to do technical assistance for growers. Particularly for the smaller farmers that USDA often is focused on, this will give them a real opportunity to expand their operations with new crops and cultivation methods. And that can help them weather some of the upcoming challenges that face conventional farmers given climate change and even localized shifts in weather. That's increasing and speeding up that involvement and is something we'd like to see in the industry.

Derek: I would add, and we've already made a point of needing more data, that we need to break the data down to climate zones, crops, and types of buildings and technology. And we're thrilled to have a platform that can be invested in, so it's ready for a lot more scale to handle that type of data analysis. But setting data aside for a second, which is not a set-aside, I'm excited about being ready for efficiency and decarbonization. And I'll give one example that we're getting a lot of traction on developing a workforce training initiative. With USDA support, we've developed a strategy to bring a credentialing program to the market for design and construction professionals building these facilities. So you could say this is the lead AP analog for the CEA class of buildings. And so the utility sector also is ready for this. And that's exciting. Jen mentioned that governments are getting ready, right? So let's all pull together to create this future of efficient and productive CEA. We're excited to launch a utility working group on CEA efficiency and decarbonization later.

David: Awesome.

Derek: This year, yeah. And we'll get behind the meter. We'll examine demand response, grid flexibility, CHP integration, and other issues. And we like to encourage any of your listeners to please reach out to us at RII. And just want to give one more shout-out to ICF for its leadership on seeing the opportunity here in this sector.

David: Yeah, well, thank you.

Joan: We'll make sure to put a link in the notes. And Cody, do you want to wrap it up with your wish?

Cody: So yeah, mine involves the consumer. If more people knew where their food comes from and how it's grown, then they would care more. And by caring more, it will increase the industry's ability to, or force the industry to be more efficient, care about the quality of that production of that produce or food, and push the industry to do better. And there are just so many people. I'm passionate about agriculture, obviously. I grew up on a farm, but in talking with school-age kids, there are so many people that don't understand where their food comes from or the resources involved in producing that food. And so my big change is for folks to understand where that comes from.

David: That's awesome. Well, thank you, Derek, Jen, and Cody. This has been a fascinating conversation. The one thing that struck me the most, and I'm still in awe because I never thought about it before, is when Jen said you could time the operations for load management because not all these facilities are 24/7 operations. And it's flooring me to think about how the industry could work with utilities. But from buying locally to hearing about this credentialing program that's kicking off for designing facilities, and the working group, it sounds like we're at the right time and moment to integrate CEA into utility programs. So fascinating to learn more about this. Thank you all again. I really enjoyed this conversation.

Derek: Thank you very much.

Cody: Yeah, thanks for having us.

Jennifer: Thanks for the opportunity.

Joan: Me too. And with so many projections showing market growth over the next 10 years, this is perfect timing. This is what we love about this podcast: talking with leading experts like yourselves who are nudging, pushing, and providing access. We’re just so appreciative. And for all of you listening, if you enjoyed this, please like, share, and subscribe to our podcast. Here’s to our next Energy in 30.