Some U.S. growers are being proactive and installing their own power-generating systems to reduce their energy costs and to ensure they have electricity and heat when they need it.
The COVID-19 pandemic and conflict in Ukraine have had a major impact on commercial greenhouse growers in Western Europe. Even before Russia invaded Ukraine in February 2022, growers in Europe were paying more for electricity and natural gas. For European growers energy costs have gotten so high that some are reducing their number of crop rotations while others have had to go so far as having to declare bankruptcy.
The Confederation of Netherlands Industry and Employers, known as VNO-NCW, is the largest employers’ organization in the Netherlands, representing more than 185,000 companies. VNO-NCW recently conducted a survey along with the entrepreneur organization MKB-Nederland, to determine what impact high energy prices are having on about 20 energy-intensive industry sectors including the controlled environment agriculture industry.
About 34 percent of the survey respondents expect their electricity bill this year will be three to eight times higher than in 2021. About 37 percent will pay two to three times more.
For 29 percent of the entrepreneurs surveyed, natural gas prices are two to three times higher than in 2021. Another 27 percent are paying three to eight times more for natural gas.
The majority (84 percent) of companies said they are unable to pass along the rising energy costs to their customers. Reasons include not wanting to price themselves out of the market, dealing with long-term contracts or facing client-imposed prices.
A major concern for 65 percent of the companies surveyed is they have a variable or expiring contract which will cause them to face significantly higher energy prices. Only 10 percent indicated they have a long-term contract that will shield them from rising energy costs.
Steven van Schilfgaarde, CEO at the Dutch flower auction Royal FloraHolland, released a video addressing the impact higher energy prices are having on the European flower industry.
“Many growers already know that at the current price, the cost of production will be much higher than the current yields,” van Schilfgaarde said. “Royal FloraHolland is receiving cancellations from growers who have therefore decided to stop their business. Others are choosing to skip a crop this winter. And, unfortunately, there are also reports of bankruptcies.”
Jan Janssen, who operates over 6½ acres of greenhouse cucumber production in the Netherlands, told Glastuinbouw Nederland that he is only producing one crop this year, down from three during the previous years. He has been operating his company for five years.
“It went well for the first few years,” Janssen said. “But last year energy prices skyrocketed. I already pay about 10 times as much–in energy–as I did a year ago. As a result, it has become too expensive to heat the greenhouse for the cultivation of cucumbers.”
Making a case for CHP
Although the energy situation may not be as dire in the United States, both controlled environment growers and field growers are dealing with rising energy costs. Some growers are looking for innovative ways to reduce their cost of electricity and natural gas, including the use of combined heat and power (CHP).
The U.S. Department of Energy defines CHP, also known as cogeneration, as “the concurrent production of electricity or mechanical power and useful thermal energy (heating and/or cooling) from a single source of energy.” While there are some controlled environment growers in the United States who are using CHP systems to power their facilities, the number pales in comparison to the use of these systems by CEA growers in the Netherlands.
Tom Bourgeois, director of U.S. DOE New York-New Jersey Combined Heat & Power Technical Assistance Partnership and deputy director of Pace Energy and Climate Center at Pace University, said the Dutch CEA industry is well aware of the benefits offered by CHP systems.
“Dutch growers are operating greenhouses with nearly 4,000 megawatts (MW) of CHP systems,” Bourgeois said. “In 2020 the Dutch greenhouse industry used natural-gas-fired CHP to generate 10.3 billion kilowatt-hours (kWh). By implementing CHP systems in their greenhouses, Dutch growers have reduced total CO2 emissions by approximately 1.76 million tons.”
The Pace Center in White Plains, N.Y., is one of 10 DOE CHP Technical Assistance Partnership centers across the United States that is interested in looking at the feasibility of incorporating CHP technology into the CEA industry. There are CHP centers across the country including at Penn State University, North Carolina State University, Washington State University and UMass-Amherst.
“Ironically, rising energy costs are both a threat and an opportunity,” Bourgeois said. “The CEA industry like other sectors is seeing a huge run-up in energy prices, which is a very important aspect of doing business. The CEA industry is going to be particularly vulnerable to those input prices.
“The CHP centers cover the whole country and several of them have been receiving inquiries from controlled environment growers within their territories. The reason the centers are starting to focus on greenhouses is the combined heat and power or cogeneration at these high tech operations is well understood. CHP can be done because it has been done by Dutch controlled environment growers. The Netherlands, which is smaller than New York State, has 4 gigawatts of natural gas cogeneration in its greenhouses. Compare that to New York State which has 5 gigawatts of CHP across all its industries.”
Potential value stream
Bourgeois said DOE officials see the potential benefits of combining controlled environment food production with incorporating CHP systems.
“There is a real opportunity to combine food resiliency, locally-grown food, with energy and power resiliency using CHP,” he said. “This is a topic that DOE has a lot of interest in. There is a real potential of operating high tech greenhouses with on-site power in a way that is environmentally friendly, as carbon-free as possible, but also serving as a grid asset.
“Energy-use restrictions and climate change will have an increasing impact on controlled environment growers. Over time there is going to be a substitution away from fossil-fuel-powered heating and cooling to renewable-based technologies. In the interim, CEA has the opportunity to address energy, water and environment impact issues. By using CHP systems the Dutch CEA industry has been able to significantly reduce greenhouse gas emissions. Dutch growers are still using natural gas because they are using it so efficiently. They are taking the exhaust CO2 generated by CHP systems and recirculating it back into their greenhouses to supplement their plants. In some instances, they are going a step further to create a food grade CO2 product, which is in short supply in many markets.”
Bourgeois said high tech greenhouses equipped with CHP systems have the potential to become a revenue stream for growers.
“Many high tech greenhouses are heavily monitored and controlled, including the lighting and HVAC systems,” he said. “Often times there is thermal storage where there is heat energy that comes from the equipment that could be put into heat storage. There is the potential to develop state or federal programs where growers could get paid, right now they’re not, for providing an important service.
“As the proportion of renewable energy grows ever greater, grid operators will need to rely upon distributed and dispatchable, emissions-free resources (DEFR’s).”
Bourgeois said the Ontario Independent Electric System Operator (IESO) is developing a program, Long-Term RFP and Expedited Process (LT1 RFP).
“This means money could be made by growers in both the food and ornamental plant markets and in the grid support power market as well,” he said. “Growers and grower associations should be in a dialogue with grid operators, utilities and state regulatory authorities. This will help to ensure their operational capabilities are understood and that regulatory structures and market frameworks are consistent with the full range of energy, environmental and economic benefits that a properly designed, configured and operated growing facility can offer.”
For more: Tom Bourgeois, Pace Energy and Climate Center, tbourgeois@law.pace.edu; https://energy.pace.edu/.
David Kuack is freelance technical writer in Fort Worth, Texas dkuack@gmail.com.
