Vertical farms have the vision, but do they have the energy?

Indoor farming could usher in a dramatic shift in the way humans grow food, taking the natural and unpredictable processes of traditional farming and transitioning them to a process as tightly run as a Broadway play.

The industry—also known as controlled-environment agriculture (CEA) is set to skyrocket in the next four years. In 2021, the global indoor-farming industry was valued at $79.3 billion, with the potential to climb to $155.6 billion by 2026, per Pitchbook.

Despite its growth, there are structural challenges the industry needs to overcome before CEA can hold a candle to traditional farms. Challenges include hiring an adequate number of technical experts, securing the funds to build out massive warehouses and greenhouses, and paying to install and operate the expensive slate of tech—from automation hardware and software, to sensors, to tens of thousands of LED lights—needed to monitor and maintain crops.

But perhaps the biggest challenge is energy consumption. Unlike traditional outdoor growing, which relies on the tried-and-true power of the sun, indoor farms are dependent on LED lighting. Energy costs can run high, threatening profitability, and using fossil-fuel powered electricity can undermine the potential environmental benefits of indoor farming. This is especially true for vertical farms in particular.

“A lot of these light companies are really making good strides with efficiency and driving down costs, which is a big component, probably the biggest component, of these companies becoming profitable,” Alex L. Frederick, senior emerging technology and venture capital analyst at Pitchbook, told Emerging Tech Brew.

“The cost from lighting has been the biggest kind of production cost over the past couple decades. It's still a very significant cost for indoor growing facilities, indoor growing operators, but it's coming down a lot,” he added.

Getting energized

Indoor farming is dependent on energy-intensive systems like LED lamps, HVAC air-conditioning systems to circulate and control the temperature, water-filtration systems to circulate and purify the water used to hydrate or mist plants, and, in some cases, a closed-loop system of fish habitation and waste management to gather nutrients from fish and turn them into fertilizer for plants.

Frederick said that in areas like the Middle East or Singapore, where ideal outdoor growing conditions or space are limited, “there's a huge value proposition there, that likely supersedes the energy costs to run it.”

According to the 2021 Global CEA Census Report, CEA farms can use up to 90%–95% less water than traditional farms, by emphasizing water conservation and reuse. About two-thirds (66%) of the indoor farms surveyed reached this threshold.

However, the report found that vertical farms have a significantly higher average energy use at 38.8 kWh per kg of produce compared to traditional greenhouses, which average 5.4 kWh per kg.

Some major vertical farms say they’re adjusting their power mix to be more sustainable and efficient.

New York-based Bowery Farming told us each of its growing operations runs on 100% renewable energy, including hydropower. Brooklyn-based Upward Farms’s new farm in Northeast Pennsylvania—which it claims will be the largest in the world when it opens in 2023—is expected to run on 100% renewable energy, the company said. And some growers, like Kentucky-based AppHarvest, use greenhouse techniques to supplement their power mix, only turning on LEDs when the sun doesn’t shine.

Even still, per the CEA Census, 41% of CEA firms in the US surveyed said they don't currently track data related to energy use. And, overall, 64% of respondents worldwide stated they don’t implement any “energy-efficiency strategies to minimize their energy consumption,” despite energy being the highest cost in indoor farming aside from labor, per the 2019 CEA Census.

Deane Falcone, chief scientific officer at Massachusetts-based indoor farming company Crop One, said that while relying on renewable energy is “ideal,” it can still be a challenge, given the intermittent availability of sources like solar and the industry’s need for 24/7 electricity.

“At the moment, the honest truth is, it would be difficult for standard photovoltaic solar power to power one of our large-scale industrial farms, we do plan to have supplemental power from solar panels,” Falcone said.

Last year, the US’ utility-scale electricity generation was derived from 61% fossil fuels, 19% nuclear power, and 20% renewables, per the EIA, though electricity sources vary widely by region.

Crop One declined to share its specific energy mix, but Falcone said it tracks its energy inputs from seed to packaging through proprietary software, resulting in a “continuous, albeit gradual, reduction in energy consumption per unit of crop biomass produced.”

Falcone told us that improvements in LED lighting have enabled—and will continue to enable—more energy-efficient growing cycles over time. The improvements have more or less followed a pattern known as Haitz’s law, which says that cost per lumen (which measures how much light you are getting from a bulb) decreases 10x every decade, while the amount of light generated increases by 20x.

“They do consume a lot of electricity. And so, that is something that everyone is tackling, including us. One of the ways in which we do it is to increase yield. If you increase the amount of crop product with a given amount of electricity, the more you increase the yield, the better that energy-efficiency equation becomes,” Falcone said.