It wasn’t even five years ago that 1,000-watt high pressure sodium and T5 lights dominated the indoor cultivation scene. There were alternatives, such as LEDs, available at the time, but they were often lumped in the with all the other new tech that cost too much and just sounded too good to be true.
Like many indoor cultivators, Jacob Onat, the co-founder of No Mids in Seattle, was not going to be swayed by lofty promises made on convention floors. Growing cannabis is the only job he’s ever known and he knows exactly how to make a HPS grow room profitable.
“In the past, if anyone talked about LED, I would immediately shut it down,” Onat says. “What I had been doing was working for me. We were still profitable.”
But by 2020, many indoor growers, including Onat, had switched to LEDs and it is now the leading choice for propagation, veg and flowering according to a 2020 Cannabis Business Times study.
“We don’t have to convince anybody about LED vs. HPS anymore,” says Kathleen Sullivan Garman, a consultant for LED manufacturer and distributor Forever Green Indoors. “Back then that was our biggest challenge. Now, it’s more about which LED. They know it works, they know they want to do it.”
Longtime advocate of sustainable growing practices and co-founder of the Sustainable Cannabis Coalition Shawn Cooney has carefully watched the industry’s shift to LEDs. He describes the mass conversion of indoor growers to LEDs as an evolution. As the cost to manufacture and sell the technology slowly dropped, the early adopters of LED lights refined generations of genetics that proved its capabilities. Those factors combined with the proliferation of rebate programs offered by utility companies across the nation have made LEDs the go-to choice for indoor cultivation.
“The lights are better,” Cooney says. “It’s not an argument anymore.”
Onat didn’t have his change of heart until he met Kevin Sullivan, CEO of Forever Green Indoors. As the world was entering quarantine in 2020, Onat was planning No Mids’ expansion. The uncertainty of the pandemic forced his main investors for the expansion to back out and Onat revised his plans to optimize the company’s existing location instead.
“Kevin was telling us we can double our canopy within the same facility and we don’t need to find investors – all we have to do is switch to LED,” Onat says. “He was local and only a few minutes away and if we had a question, he could just drive down from Lake Union and help troubleshoot.”
Onat says it was Sullivan’s proximity and willingness to help that first made the offer compelling. But despite Sullivan’s recorded case studies, scientific data, countless videos and photos of LED instillations the company completed for other cannabis growers and an indoor farm in the heart of Seattle to help growers see the efficacy of LED lights firsthand, it was the rebates that finally pushed Onat to give LEDs a test run.
“We were still doing construction on the facility and it sounded like a lot of back and forth, but Kevin said they would comp us up front and get the rebate from Seattle City Light themselves,” Onat says. “It was a no-brainer.”
No Mids decided to do one room, a side-by-side comparison with one plant under his existing HPS setup and the another under the LED lights. Onat says he immediately saw a huge difference within two days.
“We saw inches of growth a day. We were seeing flexibility in plants that I had never seen,” he says. “It was really hard to achieve that with HPS, especially in veg.”
While Onat wasn’t all in, he was convinced enough to pick up 120 LED fixtures to convert a portion of his operation to LED. All that was needed was a quick snapshot of the company’s vitals –his canopy size, the kinds of lights he was currently running and the number of hours he was running them – to get started working with Seattle City Light on the rebate.
“No Mids did their installation in five phases and so we broke the rebate applications up to match each phase of installation,” Garman says.
“There was right around a $40,000 incentive over those five different phases,” says Len Kannapell the energy management analyst for Seattle City Light that worked with Garman on No Mids’ rebate. “We stretched it out to match what he could afford to do into five phases.”
Rebate programs are nearly universal for utility companies in the U.S., but they are all different as each utility company can decide who qualifies and to what extent they are going to incentivize businesses to convert to lower-wattage lights, Cooney says.
“Some utility companies have rebates based on the wattage saved, others may have just a total percentage of the cost, and some just have a fixed amount per fixture,” Cooney says, noting that energy providers want to help people switch. “It’s really all over the map.”
The rebate from Seattle City Light pays either 70% of the cost of the fixtures including tax or the amount that would be saved per kilowatt hour multiplied by the number of kilowatt hours the lights would use annually, whichever is the lower amount, Kannapell says. In No Mids’ case, the company’s lights would use 324,097 kilowatt hours annually and would save 15 cents per kilowatt hour, which totals $48,614.55, or a little more than 70% of LEDs, so Seattle City Light opted to pay for 70% of the fixtures, Kannapell says.
“That’s pretty good because the rates for these guys are right around 8 cents per kilowatt hour,” Kannapell says. “So they can be saving around $30,000 a year in electricity costs.”
Growers can expect a 30% reduction in power consumption by switching to LEDs, but it can be higher depending on the size, genetics “and I think you grow a little faster,” Cooney says.
According to Garman, some utility companies in legalized states take federal money for rebates that cannot go to cannabis businesses, but many of them will still have a rebate program built specifically for cannabis operators.
“Privately owned utility companies will have a lot more flexibility than publicly owned utilities companies will,” she says. “There’s a lot of state and federal funding they receive based on energy savings targets annually.”
Utilities providers are audited based on the energy usage and energy savings. Their annual audits for the state and federal government get them funding if they have saved a certain amount of energy every year, so they are pretty aggressive with these programs.
With indoor growers taking up so much energy from the grid, they are a huge target for utility companies that want to adjust their bottom lines. There’s a lot of paperwork involved to make sure no one is gaming the system and getting rebates they shouldn’t, but it’s not an adversarial relationship between them and the growers, Garman says.
“It’s a partnership, the utilities are highly motivated to give this money to the growers,” she says. “And at first, growers were suspicious of that because it sounded too good to be true. They didn’t understand why utilities were giving money to them, but it’s a win-win for everybody. The utilities get to log energy savings, reduce pressure on the grid, increase federal and state funding because of the energy savings and the growers get money toward their businesses, save money on their power bills, get new, superior lights and have the potential to expand their canopy.”
A Cooler Operation
Rebates are not limited to just lights, Cooney says they can be applied to other power-hungry equipment such as HVAC and dehumidification systems.
“Take some time and watch the meters to learn how much energy is going into your current lights, HVAC and dehumidification so you know what the actual saving might be,” Cooney says. “It can be verified by the utility company but you want to do it before, so you know. The HVAC could be a bigger saver than the lights.”
Heat is a serious concern for HPS growers. The lights burn so intensely that indoor facilities have to mount them five to eight feet above plants to precent damage, Garman explains. The heat generated by HPS bulbs would often be mitigated by additional air conditioning units, which only adds more strain on utility providers.
“LEDs were not only scientifically designed to have the right spectrum for plants, they don’t heat up. So you don’t have the extra expense for pulling the heat out of the room,” Garman says. “Plus, they can be closer to the plant. So, instead of having them on the ceiling and the plants on the floor, they can actually have two floors of plants on racks.”
Onat found that instead of looking for a bigger and more expensive facility, No Mids could simply double their existing canopy by mounting the flower beds onto racks and stacking them together.
“We cut our power by 20-30% and we increased production capacity by another 20%,” Onat says. “It’s worked out really well.”