How solar subsidies can curb cannabis growth energy demands

As the world experiences an upswing in the demand for cannabis, it’s clear that this growth spurt brings more questions than answers. Surprisingly, the primary issue isn’t the carbon emissions from the industry, it’s the way this crop is grown by large-scale entrepreneurs.

From high-powered lighting to efficient heating systems, growing it indoors comes with a significant need for electricity. Back in 2012, it was estimated that 1% of the country’s electricity was used for raising cannabis. Fast forward to today, and the numbers remain startling.

According to the National Power and Conservation Council (NPCC), it takes up to 2,000 to 3,000 kWh to produce just one pound of cannabis indoors. Thankfully, the federal government is incentivizing an alternative to relying on the electrical grid for cannabis production: Adopting solar power.

Cannabis sector offsets high electricity costs with solar

With more states legalizing medical and recreational marijuana, it’s safe to say the industry is booming. Just the recreational side is set to hit $37 billion in sales by 2026.

This means more people stepping into the game and, ultimately, straining electrical grids all over the country, given the immense power the indoor growth takes.

Cultivators spend about $6 billion on energy each year. This is roughly equivalent to what the federal government consumes to power all its facilities. For this reason, many forward-thinking growers are switching to solar power to offset those insane electricity bills.

But there’s another crucial side to this story. Government initiatives, incentives and regulations are playing a significant role in driving the adoption of solar power within the cannabis industry, namely the provisions included in the Inflation Reduction Act. These policies encourage homeowners, businesses, including cultivators, and other entities with power demands to go solar, making it a win-win for the cannabis industry and the environment.

When running a cannabis business in a competitive landscape, it’s best to stay ahead of evolving laws and regulations.

The U.S. government is playing an active role in governing energy consumption and reducing the industry’s carbon footprint. In California, entities like San Diego Gas & ElectricSouthern California Edison, and Pacific Gas & Electric are acknowledging the strain on their grids caused by indoor cannabis cultivation.

This also elevates the risks. As a result, governments are compelled to revise their policies for the sector. These changes in policies aim to reduce energy consumption and promote sustainability. For example, they’re increasing electricity tariffs, contributing to energy offset funds and even making renewable energy resources a compulsory investment.

With the IRA, anybody installing solar in the United States, including cannabis businesses, is eligible for a 30% tax credit against a project’s total cost or an ongoing credit for the project’s production. There are additional provisions that tack onto these investment and product tax credits to increase the subsidies available to solar installations. For example, a project using domestically produced solar equipment can be eligible for an additional 10% bonus adder.

These base credits were extended to the end of 2032. This is one of the biggest financial incentives that helps reduce upfront installation costs, making solar projects more viable for cannabis businesses.

The most compelling reason for cannabis cultivators to go solar is the cost savings. However, government incentives play an equally pivotal role in the process. Federally, there are more incentives to install solar in the United States than there have ever been. Then at state levels, there are individual programs to fund solar adoption.

Several states have elected to offer feed-in tariffs, which are fixed payments for each kilowatt-hour produced by solar, ensuring long-term financial benefits to businesses using the renewable energy source. Then there is net metering which credits solar system owners for the extra power arrays feed back to the grid, cutting their energy costs significantly.

It incentivizes solar adoption, which makes the energy grid more resilient and distributed among different power sources. It’s a win-win for businesses, especially cannabis growers, as it trims their energy expenses down.

However, there are concerns we’re seeing following the recent implementation of NEM  3.0 in California. Under NEM 3.0, the value of net metering credits drops by about 75%. As a result, the state’s solar market is taking a hit.

California is the most popular state for cannabis cultivation by a large margin and that carries a significant energy load. The reduced credits and added fees for solar setups are making it less tempting for people to invest in solar power when the state is trying to reach a renewable portfolio standard (RPS) of generating 50% of its electricity by 2030.

Most states have RPS goals, which means a certain percentage of a state’s energy should come from renewable sources. This policy sets clear goals for cannabis businesses. It also facilitates clean energy investment and boosts solar panel adoption, all while stabilizing the market.

Making the cannabis industry green

Amidst the fierce competition in the cannabis sector, embracing solar energy isn’t just about cutting costs. It’s also a smart strategy for the long run, helping you double up on your cannabis production without an environmental guilt trip.

This way, you’re not just going green but setting yourself up for a thriving future in the industry.

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