From the Blog

The Power of Pot

20

APRIL, 2017

The legalization of marijuana has been increasing rapidly across the United States, and with that, it has increased demand for other products, such as Cheetos and surprisingly, electricity.

Many farmers prefer to grow indoors to maximize the growing seasons and yield, while some states that have legalized marijuana do not allow outdoor growing. In 2012, indoor growing costs piled up $6 billion in energy costs.  Besides the lighting needed to grow the plants, the indoor growers need AC and fans to keep rooms at 75 degrees, a dehumidifier to prevent mold, and a carbon dioxide injection system. These consume a lot of energy and run 24/7.

The California Public Service Commission completed a study in 2012 that showed indoor pot farms used 3% of the total electricity consumption in the state, which is equivalent to 1 million homes. They also estimate that amount to be 3-6% in 2017. Interestingly, this is more electricity consumed by the power-hungry data centers and server farm industry combined.

Can the utility infrastructure handle this increased demand?

Some utilities find it difficult to keep up. For example, in Portland, Oregon Pacific Power reported seven power outages directly attributable to cannabis production. In other areas utilities are doing all they can to meet the demand without having to build new expensive power plants. In Washington State, a local utility provided 70 pot growers with LED lights and other upgrades that saved more than 40 million kilowatt hours over two years. LED lights can increase some farmers yield by 30% and reduce their energy consumption by 45% when compared to a conventional bulb.

If the growth in the marijuana industry and the resulting electricity demand continues, the US may need the equivalent to 40-45 gigawatts of new power plants by 2030. By 2050, that need may be equivalent to 50-90 gigawatts of new power (this would also require thousands of miles of new transmission lines).

Some utilities are applying a fee or special tax to the industry for the demands they are putting on the electric system, but even with the massive energy costs and increased charges by utilities, the industry is still profitable. The production costs average $600 per pound of marijuana, but the wholesale value of the medical marijuana is $2,000 per pound, which is still a hefty profit. To summarize, there is a lot of power in the production of pot, and a lot of profit too.

 

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