For the last decade, utility services providers nationwide have provided grants and financial incentives for growers to use energy-efficient LED lighting. These incentives have usually covered 50-70% of the cost of replacing older high-intensity discharge grow lights with more efficient LEDs, but extractors and processors have been left out of the loop. Luckily, due to recent changes, processors can now secure these valuable grants. As a testament, a member-owned electricity cooperative headquartered in Westminster, Colorado, recently paid for 80% of over $300,000 in extraction equipment, and this case study describes how.
For context, cannabis grows are currently estimated to consume 1% of all the electricity used in the United States, and by 2025 they are projected to eat up 3% of all the power nationally. This is a huge number considering the short time state-legalized cannabis markets have existed, and that adult-use cannabis is legal in only about half of the country. Keep in mind, this statistic doesn’t even include extraction labs using energy-hungry thermal utilities, which can consume more power than a grow operation, often surprising public utility district officials.
In simple terms, these energy efficiency grants tend to pay a flat rate for the amount of power saved using more efficient fixtures. This ranges between 5-35 cents per kilowatt saved annually, and most grants max out at 70-80% of the total equipment cost. Many PUDs offer incentives for both new equipment and retrofitting existing equipment, with some grants even paying for wiring. The PUDs often contract with regional cooperatives or other agencies to process incentive funding, and you can have more than a half-dozen agencies in one state, which can be confusing. These grants are available to both residential and commercial customers who adopt a range of products, from high-efficiency lighting to heat pumps.
For example, LED lights use about 40% less power than standard HID lights, according to a 2017 report from the U.S. Department of Energy. To calculate the incentive, start by multiplying how many kilowatts the inefficient light consumes per hour by the hours it’s used per year; then do the same math on a more efficient light and compare the difference. Multiply the difference by the kilowatt-incentive rate, and you have the total grant amount. The value of the grant can be a significant benefit for cannabis companies, and it doesn’t even include the tens — or in some cases, hundreds — of thousands of dollars a business can save year in electricity alone.
However, it’s critical for businesses and applicants to pay close attention to the details.
“It’s important applicants take time to understand the rules of a particular program, since there are a few different ones they may qualify for, and they need to follow those rules to the letter,” said Peter Rusin, the electrification manager for Tri-State Generation and Transmission Association, a generation and transmission cooperative with 42 member-owners in four states, including Colorado. Tri-State facilitated the incentive grant noted in this case study through its local member, the San Luis Valley Rural Electric Cooperative, based in Monte Vista, Colorado.
“Applying as early as possible is important too, since funding is limited,” Rusin added.
Extraction equipment’s biggest hurdles to getting these same efficiency grants have been their complexity and some good old-fashioned familiarity bias, both in the customer’s mind and the PUD’s. Extractors can get functionally fixated into using older extraction systems that require massive heating and chilling systems at every stage. At the same time, PUDs have been conditioned to think they can only offer the cannabis industry LED grants. Both have a lot to learn about new extraction technology.
Processors typically “cryo-chill” in the extraction stage down as low as minus-60 degrees Celsius when using ethanol or hydrocarbon solvents to decrease contaminants. If they use ethanol, which even CO2 extractors use in dewaxing, they have to heat that same batch of oil to do bulk solvent recovery, often getting hotter than 75 degrees Celsius. Then they re-chill the batch to minus-60 degrees to freeze out fats. Then they heat it back up to 75 degrees to finish or polish the last solvent out of the oil. Finally, the extractor distills the crude oil using both heating and chilling at the same time in a column. All this back and forth eats up massive amounts of expensive energy, not to mention high heat degrades cannabinoids and obliterates valuable terpenes.
The laws of thermodynamics dictate you are not just paying for the power needed to get that batch of oil down to minus-60 or up to 75. You are paying for the delta — the 115-degree difference between the two. It’s like a light fixture needing as much power to generate darkness as it does for light. Moreover, this happens in a liquid state that requires more than four times more power to heat or cool than air, and requires a phase change for solvent recovery from liquid to gas, which is the most energy intensive process of all.
Where grow lights have just one function, processing equipment like an X-Spiral Membrane System can perform three functions in a single unit, all with different savings rates. The cross-flow membrane unit runs at 0 degrees for dewaxing, and 25 degrees Celsius for solvent recovery, which is only a 25-degree delta and much closer to ambient temperatures. It also does not require a phase change for solvent recovery, delivering the most substantial savings. As an additional benefit, this technology allows labs to turn off the extractor chillers and run “hot” extraction with room temperature solvent, which piles on even more energy savings. This is where the math gets much more complicated, and why the PUD needed some help doing the calculations directly from the equipment manufacturer.
Using the example of the grant mentioned earlier, the Colorado Power Cooperative facilitated funding a membrane system that performed these three different processing functions: bulk solvent recovery, dewaxing and decoloring, plus turning off the extraction chillers. The combined savings of all four functions was more than 90%, and when the PUD saw how large the combined savings would be, officials raised their 50% cap to 80%. We are now applying this same grant formula to a range of new, high-efficiency extractors that use 80% less power than traditional extractors use, and a new hydrocarbon membrane.
The most important part of this case study cannot be understated: While a $231,000 grant was certainly attractive, the biggest value came from using $450,000 less electricity a year, every year, all while dramatically lowering labor and space requirements. Moreover, since no high heat is used, it makes a higher quality product. Naturally, one has to use more energy-efficient equipment to get a grant.
Finally, know that time is of the essence with these efficiency grants. Many programs get funded annually or semi-annually, and most run out of funding quickly. It can also take four to six weeks just to do the application and another 30 to 60 days for a reply, so this doesn’t happen overnight, but it’s well worth the effort.