Can Indoor Agriculture Help Feed a Growing World?

Posted to EPRI in the Utility Management Group
image credit: An indoor agriculture facility operated by AeroFarms. Photo courtesy of AeroFarms.
Frank Sharp's picture
Principal Technical Leader Electric Power Research Institute (EPRI)

Frank Sharp is a Principal Technical Leader at EPRI’s Knoxville facility and brings over 25 years of real world experience resolving unique technical issues to his work. As a part of EPRI’s work,...

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  • Jan 26, 2021

Penny McBride has a uniquely kaleidoscopic view of agriculture. As a kid, McBride grew up on the large Colorado farm and ranch that her grandfather started. Later, she worked as a chef at a restaurant in Jackson, Wyoming. After her time in the kitchen, McBride spent years launching Vertical Harvest, a three-story hydroponic indoor farm in Jackson. Hydroponic farming is a plant-growing method that uses materials such as coconut fiber and peat moss instead of soil. Today, Vertical Harvest provides 100,000 pounds of fresh tomatoes, lettuce, and other produce each year to local restaurants and grocery stores.

To McBride, 2020 has highlighted the inadequacies of America’s traditional systems for growing and transporting food as well as the important role indoor agriculture will need to play in the future. “With COVID, we’re really seeing the problems with our supply chains and that emphasizes the need for locally-grown produce,” said McBride, who is now chief operating officer at Delaware-based Second Chances Farm, an indoor farm that provides training, mentoring, and employment to people who were formerly incarcerated.

Even before COVID-related supply chain disruptions resulted in some empty grocery store shelves, there was ample evidence of the environmental and nutritional shortcomings of a food system that depends on transporting food long distances. An often-cited study by Iowa State University found that 30 types of conventional produce traveled an average of nearly 1,500 miles from farm to point of sale. During transportation, produce can lose significant portions of its vitamin content. For instance, research by the University of California at Davis found that vegetables lose 15-77% of their vitamin C within a week of harvest.


Many Potential Benefits of Indoor Agriculture

Indoor agriculture refers to the greenhouses, warehouses, converted or specially built shipping containers, and other indoor facilities that grow produce using a combination of electric lighting, HVAC equipment, building controls, automation, and, in some cases, artificial intelligence.

Indoor agriculture’s global growth is being driven by its numerous potential benefits. It eliminates fossil-fuel-powered farm equipment as well as the field runoff of fertilizer and pesticides that pollute rivers, streams, and oceans. It requires minimal to no soil, which is becoming increasingly important. The United Nations estimates that one-third of the world’s topsoil is degraded and the remainder could be rendered useless for agriculture within 60 years as a result of chemical-heavy farming, deforestation, and climate change.

Indoor agriculture also reduces the amount of water needed to produce crops. According to the Vertical Farming Institute, an industry trade group, vertical farms require up to 95% less water than traditional outdoor farms.

Crops grown indoors can also be largely insulated from droughts and other severe weather related to climate change. “With indoor agriculture, we are looking to create a perfect environment for a plant,” said Carl Sams, a professor of crop physiology at the University of Tennessee Institute of Agriculture. “A big advantage is you take away the risk of droughts and other natural events that may reduce food supply in the field.”

In many instances, indoor agriculture is significantly more productive than traditional farming. “Outdoor lettuce averages 26 weeks per crop, so that’s roughly 2 crops a year,” said Frank Sharp, a principal technical leader at EPRI who leads research on indoor agriculture and its implications for the electric power industry. “Some indoor lettuce can be produced in as little as six to eight weeks, which is a game changer.”

Time magazine recognized indoor farming company AeroFarms as one of its 100 Best Inventions of 2019, noting that its cultivation of greens is 390 times more productive per square foot compared to traditional agriculture.

Greater productivity with a much smaller environmental footprint is needed to feed a growing global population. “If we look at the United Nations’ forecasts, we are going to have another 2 billion mouths to feed by 2050 and we have already used about 80% of the arable farmland in the world,” said EPRI’s Sharp. “Indoor agriculture provides a way to use fewer resources to meet the growing demand.”


Despite Big Announcements and Investments, Challenges Remain

Allied Market Research projects that the global market for vertical farming will grow nearly 25% each year between 2019 and 2026, when it will be worth $12.77 billion. In the U.S., vertical farming startup Plenty Unlimited Inc. has attracted investment capital from the likes of Amazon CEO Jeff Bezos and former Google chairman Eric Schmidt. The company claims that its production volumes are 350 times greater per acre than field farming. It recently announced a deal to provide baby arugula, baby kale, and other produce to more than 430 Albertsons grocery stores in California and unveiled a partnership to grow strawberries year-round for the berry company Driscoll’s.

AeroFarms converted a nightclub and former steel mill in downtown Newark, New Jersey to produce greens and is building one of the world’s largest indoor farms in Danville, Virginia as well as a 90,000-square-foot R&D farm in Abu Dhabi in the United Arab Emirates.

Despite these promising signs, the indoor agriculture industry faces persistent hurdles, including the challenge of generating enough revenue to pay for the necessary infrastructure. It can be very power-intensive to maintain a stable, controlled growing environment 24/7. According to the market research firm IDTechEx, vertical farm operators often struggle with difficult tradeoffs between “the high start-up costs of automated, high-tech facilities and the high operating costs of more manual facilities with less advanced climate controls.”

High-profile bankruptcies illustrate these challenges. For example, high power and labor costs led to the closure of PodPonics and FarmedHere, In a summary of its research, IDTechEx reported that very few vertical farming companies are profitable.

“All the technology and automation has a high cost, and the price of a head of lettuce is only going to get you so much,” said McBride.

Not all crops are profitable to grow indoors. Vertical farms tend to grow lettuce, greens, strawberries, and herbs for high-end restaurants and grocery stores. Container farms focus on crops that can be grown efficiently in small spaces—including greens and herbs—and are sold to nearby restaurants or at farmers markets.

Large greenhouses cultivate a wider but still limited range of produce that includes tomatoes and peppers along with the greens and herbs that other indoor growers produce. Greenhouses tend to be more competitive with conventional agriculture because they don’t need as much artificial light, lowering costs. “Successful indoor crop production really only works for high-value crops and crops that have a short shelf life,” said EPRI’s Sharp. “Can you grow corn and wheat indoors? Absolutely. But you shouldn’t do it because the money just isn’t there.”    

McBride expects indoor farming companies to investigate the financial viability of crops that aren’t targeted to upscale restaurants and grocery stores. “Maybe it’s medicinal plants besides cannabis,” she said. “Maybe it’s more high-value produce aside from microgreens. We need to grow more things that more people need.”

While there is considerable focus today on building large indoor farming facilities that take advantage of economies of scale, the future of the industry may include a mix of big and small operations—similar to outdoor farming.

“I expect that we are going to find places where smaller farms can serve food deserts and underserved communities,” said the University of Tennessee’s Sams, who sees the role of academia as providing research and training to improve the supply of affordable, nutritious food to as many people as possible. “Instead of making dollars of profit per unit, maybe you’re making cents of profit but selling enough units to make money. To do that, smaller farms that don’t have economies of scale will need to be as energy efficient as possible and optimize lighting and plant fertility.”


Implications for Utilities

The expected growth of the indoor agriculture industry could result in new industrial-scale loads that are large enough to have impacts on grid operations and planning. Indoor farms can have very large growing areas, requiring a great deal of electricity to power lighting, HVAC systems, monitoring systems, and other end uses. For example, Appharvest recently opened a 2.76 million-square-foot greenhouse.

For a sense of just how much electricity may be needed, consider a 2017 study by the German Aerospace Center and the Association for Vertical Farming, which conceptualized an optimized vertical farming facility with a 54,000-square-foot growing area for leafy greens. The authors found that total annual electricity demand would be about 17,300 megawatt-hours, with lighting alone accounting for about 12,100 megawatt-hours. For context, a small auto assembly plant consumes about 78,000 megawatt-hours per year, according to the U.S. Environmental Protection Agency.

In some cases, an indoor farm’s load can be shifted in ways that benefit the grid. For example, greenhouses augment natural sunlight with artificial lighting (particularly when sunlight is not available), offering some flexibility around when artificial lights are turned on and off to support utility load-shifting programs. The degree of flexibility may vary by season. In contrast, vertical farms that rely exclusively on artificial lighting may have much less load-shifting flexibility.

Utilities can engage with companies that are considering locating new indoor farms in their service territories. “They can provide rebates on lighting and other farm equipment and also encourage farms to operate during off-peak hours by offering special electricity rates,” said Sharp. “Because labor is the highest cost at an indoor farm—electricity is the second highest—incentives to encourage off-peak operation have to be significant enough to offset the higher labor costs of having people work during non-traditional hours.”

A utility also can benefit from indoor farms in its service area because they use much less water than traditional field agriculture. “Utilities are a resource manager for the community and also are large water consumers,” said Sharp. “Indoor agriculture provides another way for utilities to be a good steward of a community’s resources.”


EPRI Research to Support Indoor Farming

EPRI is deploying numerous 320 square-foot container farms around the country in collaboration with utilities such as the Exelon, Tri State, American Electric Power (AEP), New York Power Authority (NYPA), Seminole Electric, Missouri River Energy Services (MRES), Great River Energy (GRE), Los Angeles Department of Water and Power (LADWP), and Tennessee Valley Authority (TVA). Several other utilities are currently considering deploying container farms.

As these sites become fully operational in 2021 and beyond, EPRI will monitor their energy and water consumption. The data is expected to yield insights on how various operational models impact performance, how outdoor weather conditions impact resource consumption, and how facilities can affect grid operations and support sustainability. Preliminary findings are expected by this summer.

Project results can help indoor agriculture companies, utilities, economic development agencies, and other stakeholders better understand ideal siting conditions and grid infrastructure upgrades that may be needed. “We are also looking at how these facilities can potentially lead to educational and employment opportunities and benefit communities,” said Sharp.

For instance, South Dakota State University has partnered with Missouri River Energy Services so that the indoor farm can be used for educational purposes and the produce can be distributed to the Children’s Museum of South Dakota. Similarly, University of Tennessee professors and students are cultivating crops in the TVA container, and the vegetables are donated to a local food bank. A food bank is operating the NYPA farm in Buffalo, New York.

“Each utility is interested in examining similar issues of broad significance—such as the efficient use of energy and water and long-term sustainability,” said Sharp. “At the same time, they are focusing on questions specific to their service areas, such as grid impacts, community impacts, and educational opportunities.” said Sharp. 


Founded in 1972, EPRI is the world's preeminent independent, non-profit energy research and development organization, with offices around the world.

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