Press Release

New Research: States Can Boost Sustainable Indoor Agriculture with Energy-Saving Policies

May 8, 2023

Washington, DC—With a rising share of U.S. crops grown in greenhouses and indoor farms, policymakers can encourage energy and water efficiency efforts in those facilities to support sustainable agriculture, according to new research. Two reports from the American Council for an Energy-Efficient Economy (ACEEE) and the Resource Innovation Institute (RII) recommend policy measures to encourage efficiency, cut costs, and reduce climate pollution while accommodating growth in the controlled environment agriculture sector.

Controlled environment agriculture (CEA) is indoor farming which can optimize crop growth for multiple harvests throughout the year, reduce disease and pest damage, and minimize the use of water and fertilizer. ACEEE’s and RII’s briefs on CEA efficiency and building energy codes make policy recommendations to support CEA efficiency through utility rate design, building codes for CEA facilities, offsetting capital costs of efficiency technologies, and providing resources for energy and water benchmarking.

“It is the early days of controlled environment agriculture, and with substantial growth ahead in the sector, we see a foundational opportunity to advance efficient and sustainable farming,” said Jennifer Amann, senior fellow in ACEEE’s buildings program and a co-author of the reports. “Policymakers can work with producers to craft energy and water efficiency incentives that can lower production costs and consumer prices while reducing pollution from the agriculture industry.”

CEA facilities often have unique energy needs, but few jurisdictions have CEA-specific utility rates. According to the CEA efficiency brief, utilities and regulators could design CEA rate structures—particularly for greenhouses—that consider factors like the frequency with which a facility operates at peak demand. Allowing CEA facilities to qualify for lower rates during times of lower demand could improve energy affordability by encouraging CEA operators to shift electricity consumption to periods of lower demand or to institute efficiency measures to reduce electricity use during peaks in demand. 

“Controlled environment agriculture enhances food security and nutrition. Growing facilities can be located in urban areas and other places not suitable for traditional agriculture, eliminating food deserts and creating economic development opportunities in communities while protecting against supply chain disruptions,” said Derek Smith, executive director of the Resource Innovation Institute, and a co-author of the briefs. “It is critical to establish energy and water efficiency policies to support controlled environment agriculture, which will require deep engagement between the sector and policymakers.”

Many water efficiency measures for CEA, such as water recirculation technologies, have high capital costs. Allowing CEA facilities to be eligible for state water quality financing programs and enacting federal or state investment tax credits to offset the capital costs of CEA water efficiency technologies could help CEA operators reduce water use.

Energy needs of CEA facilities differ significantly from most commercial buildings because of factors like electric loads from lighting used for plant growth, dehumidification requirements, and unique HVAC needs. The research found that some energy codes address the unique needs of the CEA sector, with initial steps focused on cannabis growing facilities, but more recently expanding to cover other CEA facilities as well. With crops like lettuce, tomatoes, cucumbers, strawberries, and flowers increasingly grown in CEA facilities, building energy codes should consider energy needs that may vary across a wide range of crops. As the sector grows, adding CEA-specific provisions to model energy codes that are adopted by states and localities could provide clarity and avoid a patchwork of provisions across the country.

The codes and standards brief also recommends more engagement between the CEA sector, other building code stakeholders, and policymakers to help advance building codes that accommodate the unique needs of the CEA sector.

CEA facilities often lack resources to collect benchmarking data on energy and water use, which they need to be able to implement energy and water efficiency measures. The efficiency policy brief recommends that policymakers identify additional resources to enable stakeholders to better understand how to improve efficiency in CEA operations.

The U.S. Department of Agriculture awarded a grant to ACEEE and RII to explore how to improve energy and water efficiency in the CEA sector. To inform the two reports, ACEEE and RII convened a series of workshops with CEA growers as well as state energy and agriculture officials to identify CEA resource challenges and to formulate policy solutions.

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Agriculture and Rural Communities Water-Energy Nexus Building Policies and Codes Energy Efficiency Strategies and Upgrades Energy Data Sets and Resources

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