High Yield Energy Savings: How Cannabis Growers Are Using Demand Response to Cultivate Sustainability and Earn Incentives
The cannabis industry has experienced explosive and continued growth in recent years, with 2024 sales exceeding $30 billion. This rapid expansion, however, brings significant challenges — especially for growers aiming to scale operations while keeping costs down. Cannabis cultivation is notoriously energy-intensive, with indoor growing operations consuming substantial amounts of electricity for lighting, heating, ventilation and air conditioning (HVAC) systems. In fact, marijuana growing facilities can consume up to 10 times more energy per square foot than a typical office building. According to the Cannabis Energy Report, U.S. cultivation consumes an estimated 1.1 million megawatt hours (MWh) of power annually — enough electricity to support 92,500 homes for an entire year.
These energy intensive growing requirements also contribute to its carbon emissions footprint. To mitigate these impacts, many cultivators are capitalizing on the immense benefits of demand response (DR) programs, which offer a practical way to reduce energy usage, cut costs and decarbonize operations.
Demand Response 101
Demand response (DR) is an energy management strategy that encourages participants to reduce their energy usage during peak demand periods in exchange for incentives from utility providers. Importantly, DR programs do not require businesses to shut down fully during an energy reduction event. Instead, businesses can tailor their curtailment efforts, selecting when and where to reduce power consumption based on their operational needs. By participating in DR programs and lowering electricity use during peak use periods, growers can alleviate strain and contribute to a sustainable power grid, helping to reduce the risk of brownouts or blackouts that could jeopardize crops, especially during cold months.
DR helps prevent demand for electricity from exceeding supply, reduces the need for fossil-fuel-generated power and provides participants access to a host of cost-saving opportunities and financial rewards. For cannabis growers, this means strategically managing energy consumption during cultivation to align with grid demands while capitalizing on available incentives.
Benefits of Demand Response for Cannabis Growers
1. Cost Savings | Cultivators who enroll in DR programs can receive significant financial incentives by reducing energy consumption during peak periods. These incentives can offset electricity costs, which are a major expense in cannabis cultivation and only continue to increase. Growers may also receive rebates to improve their power infrastructure to be more compatible with DR. Savings from these programs can be reinvested in technology upgrades, expansion or other areas of the business. For example, growers might channel those funds into new LED lighting, saving on electricity and generating less heat compared to traditional lighting. Similarly, improved insulation and more efficient HVAC systems can also reduce energy needs, compounding the cost savings over time.
2. Grid Reliability | By adjusting power usage during peak demand times, cannabis cultivation facilities contribute to overall grid stability. This is particularly important in regions where energy supply can be strained during extreme weather conditions or periods of high consumption. Supporting the grid not only helps protect sensitive crops from power-related disruptions, but also improves reliability for surrounding communities.
3. Environmental Impact | DR programs enable growers to reduce their carbon footprint by strategically reducing energy consumption. For instance, lights can be set at 70% capacity rather than full power, lowering overall greenhouse gas (GHG) emissions by decreasing reliance on fossil fuel-based power, contributing to broader sustainability goals like decarbonization. This not only benefits the environment but also enhances the company’s reputation as an eco-conscious business.
Finding the Right Path Forward with a Trusted DR Provider
Cannabis growers interested in demand response enrollment should first find a trusted, innovative and experienced partner to support the organization’s transition. The right DR provider will provide much-needed expertise to find the most beneficial program customized to the company's unique operational needs, along with detailed guidance to seamlessly integrate DR strategies into operations. Some providers also offer tools to track and report avoided carbon emissions, a valuable asset for companies looking to meet sustainability goals or strengthen carbon reduction reporting. This ensures growers can maximize both economic and environmental benefits as they adopt more sustainable practices.
Reaping the Reward of Sustainability with the Power of Demand Response
Demand response programs offer cannabis growers a significant opportunity to scale operations effectively while reducing costs and minimizing environmental impact. By participating in DR programs, growers can achieve substantial savings on electrical bills, earn financial incentives to reinvest in their businesses and contribute to a greener, more sustainable future. Sustainability and profitability can indeed go hand in hand, especially in cannabis cultivation. By embracing DR programs, cannabis growers enhance their bottom line while advancing long-term environmental goals.
