Marijuana power demands threaten to overwhelm system

By Jennifer Oldham 

DENVER — The $3.5 billion U.S. marijuana market is emerging as one of the nation's most power-hungry industries, with the 24-hour demands of thousands of indoor growing sites taxing electricity grids and unraveling hard-earned gains in energy conservation.
Without design standards or efficient equipment, the growing facilities in the 23 states where marijuana is legal are responsible for greenhouse-gas emissions almost equal to those of every car, home and business in New Hampshire. While reams of regulations cover such things as tracking individual plants, package labeling and advertising, they lack requirements to reduce energy waste.

Some operations have blown out transformers, resulting in fires. Others rely on pollution-belching diesel generators to avoid hooking into the grid. And demand could intensify in 2017 if advocates succeed in legalizing the drug for recreational use in several states, including California and Nevada. State regulators are grappling with how to address the growth, said Pennsylvania Public Utility Commissioner Pam Witmer.

"We are at the edge of this," Witmer said. "We are looking all across the country for examples and best practices."

The corporatization of what was once off-the-grid agriculture is taxing electrical systems as the nation prepares to comply with the Paris climate agreement and the Environmental Protection Agency tries to reduce greenhouse gases from coal-fired power plants, considered the single largest domestic source of emissions that contribute to global warming.

"Consumers seeking a green lifestyle are likely unaware that their cannabis use could cancel out their otherwise low-carbon footprint," Evan Mills, an energy analyst for California's Lawrence Livermore National Laboratory, wrote in an email. Indoor growing in 2012 racked up at least $6 billion a year in energy costs, compared with $1 billion for pharmaceutical companies, Mills found in a study he did independent of the research institution. Some larger facilities use as much as $1 million worth of power a month.

ArcView, an Oakland research firm, estimates the retail and wholesale marijuana market will reach $4.4 billion in 2016.

Cultivation operations are waiting for new infrastructure to bring them power. With the marijuana industry just coming out of the shadows, utilities are without data to forecast electrical needs.

"We don't have aggregated energy audits from hundreds of grow operations that show us an energy footprint," said John Morris, director of policy and regulatory affairs at CLEAResult, an Austin, Texas-based consultancy that works with growers and utilities. "We have utilities in the Northwest putting in new transformer substations to meet the load. Producers are having to go out and build infrastructure."

In Colorado, more than 1,234 licensed grow facilities account for almost half of new demand for power. In 2014, two years after residents voted to legalize marijuana for recreational use, growing sites consumed as much power as 35,000 households.

In California, indoor production consumed 9 percent of household electricity in the nation's oldest legal medical marijuana market, the amount used in 1 million homes, Mills found.

In a Denver warehouse this month, growers wore sunglasses as they checked on 150 top-heavy flowering marijuana plants. The four-foot-tall bushes were flourishing under dozens of 1,000-watt bulbs.

"All these things consume too much power," said Paul Isenbergh, a commercial real estate broker and co-owner of the 3,100-square-foot medical-marijuana operation called Sense of Healing. "The air conditioning, the lighting, the fans, the scrubber, the humidifier."

The atmosphere is calibrated to mimic outdoor conditions to allow growers to reap multiple harvests a year. The intense heat from the lights requires air conditioning and fans to keep grow rooms at 75 degrees, a dehumidifier to prevent mold and a carbon-dioxide injection system. The electricity costs up to $5,000 a month.

Electricity represents as much as 50 percent of an operator's overhead, yet profits far outweigh costs, with a pound of medical marijuana selling for about $2,500 on the wholesale market, Isenbergh said. His costs to raise the weed from clippings are only $600 a pound.

In Arcata, in the marijuana-growing hotbed of Humboldt County, officials are banking $300,000 a year from an "excessive energy use tax" that went into effect in October 2013. Voters approved the tax in 2012 after police and fire departments spent as much as 20 percent of their time responding to calls at growing operations.

The City Council placed the measure on the ballot after finding 10 percent, or 663, of Arcata's households were being used for large-scale marijuana cultivation, according to the Pacific Gas and Electric Company.

Many were receiving subsidized rates based on low reported income, said Mayor Michael Winkler.

"Instead of having our electricity use going down, we had roughly a 30 percent increase in electricity use in five years prior to the tax," he said. "We were not meeting our sustainability goals as a result. Now we are."