Market Characterization of Indoor Agriculture (Non-Cannabis)

This report outlines the findings of a market characterization study for Controlled Environment Agriculture (CEA) in Southern California. The report findings are based on a combination of literature review and stakeholder interviews. This study was commissioned by Southern California Edison (SCE) to investigate a potential offering within its energy efficiency (EE) incentive programs. Interviews were conducted with various stakeholders from Investor Own Utilities (IOU), growers, associations, and vendors to document the current industry practices and existing market barriers in adopting EE techniques in Southern California. By understanding how and why industry stakeholders make decisions, the existing barriers are more distinctly defined, and solutions developed. The intent of this report is to assess the market to determine savings potential, how utility intervention strategies can help achieve that potential, and recommend a course of action. The scope of this study involved the following components: Interviews with industry stakeholders: growers, IOUs, vendors, and associations. Analyses of industry norms, energy savings potentials, greenhouse gas reduction (GHG), and energy reduction potentials Recommendations of proposed incentive design Proposed next steps for increasing ICA participation in Utility Incentive Programs   The worldwide CEA industry has seen rapid growth over the past decade. Drivers such as extreme weather conditions, droughts, and fires have created an expansive and thriving market. Consumer demand for high quality, organically grown, and continuously available produce have further accelerated the advancement of indoor agriculture. The progression has been predominantly in European and Asian countries, although some Eastern U.S. states have seen new CEA facilities established in recent years. While California still has a strong traditional outdoor agriculture infrastructure, it is expected that CEA will expand there as well from greenhouses to fully indoor facilities. With this advancement of the industry on a global scale, growing techniques and technologies have improved and will continue to evolve with the market. Stakeholder interviews identified a consistent market barrier of capital constraints when considering EE technologies. Traditional farming has a large advantage over CEA facilities in being far less energy intensive. While CEA facilities have lower water consumption, the additional cost from HVAC and lighting reduce their margins; thus, making investments challenging to their operations. This complexity also brings significant opportunity for energy savings. The challenge of balancing systems within a controlled environment opens the door for developing new technologies and holistic solutions to reduce energy consumption while improving quality and increasing yields. Stakeholders also shared their perspective on potential solutions such as streamlining the incentive process, providing education and training to growers and tailoring incentives for the ICA market. This report summarizes the state of the industry, interview results, future outlook, and recommended next steps.