Kontrol Energy sees opportunity in power hungry cannabis farms
Kontrol Energy Corp. (CSE: KNR) CEO, Paul Ghezzi, has long had his eye on Canada’s red-hot cannabis industry. The need for energy efficiency in massive cannabis farms lends perfectly to the Toronto based company’s business model.
Take data centers. Kontrol Energy performs two major functions for these customers. One is in the company’s top-down assessment of energy efficiency. Sprawling data centers guzzle energy, and Kontrol Energy figures out how to withdraw power from the grid at optimal times, recycle heat and insulate huge building effectively. Two, it provides data centers with mission critical systems, or back-up energy sources in the event of a failure.
The cannabis industry needs exactly that. Growing weed in massive greenhouses is one of the most power hungry industries out there, demanding 24-hour indoor lighting rigs, heating, ventilation and air-conditioning systems at multiple grow sites.
With Canadian Senate’s approval last month of the legalization for recreational use of cannabis, industry executives are beginning to shift their attention to wooing the investment community to the task of building the lowest cost plants possible to thrive in a conventional commoditized supply and demand environment.
“There hasn’t been any focus on that (on optimizing energy use),” Paul Ghezzi, CEO of Kontrol Energy told InvestorIntel. “There will be a huge drive towards efficiency in the next six months.”
Like data centers, cannabis plants operate on a 24 hour cycle, so constant energy supply is mission critical to avoid negative effects on the crop. Outages, like in data centers, could be financially disastrous. It takes approximately 2,000 kilowatt hours to produce a pound of cannabis, roughly the same amount of power that an average home uses over a three month period.
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Cannabis farmers pay out about 20% of their total costs in the form of electricity, Ron Flax, a sustainability examiner, said in a recent interview with The Guardian newspaper.
For sure, this component will be higher for some than for others. Quebecois companies pay less for energy, given the abundance of hydroelectric power that translates into lower electricity prices than the Canadian average. But Ontario is on the other end of the spectrum, paying higher costs. Licensed cannabis growers, as it stands, are expected to pull 1% of the province’s electricity grid, of about 300 megawatts of power.
It’s a great time to be wading in. North America’s cannabis industry is expected to grow from US$9.2 billion in 2017 to US$47.3 billion within a decade. Spending on legal cannabis worldwide is expected to hit US$57 billion by 2027, according to ArcView Market Research.
Ghezzi confirmed several cannabis companies contacted him following a July 4 press release stating the company’s intentions to get into the cannabis industry. Kontrol Energy designs and fits energy systems for commercial buildings, utilities and manufacturers using Internet of Things, Software-as-a-Service (SaaS) Service analytics and Blockchain technology.
Kontrol said it aims to provide three integrated solutions for the cannabis industry: real-time energy analytics for energy optimization and mission critical support, emission and air quality compliance and distributed energy infrastructure, using energy modules to bring supply closer to the demand.
Cannabis growing is also major emitter of greenhouse gases (CO2). With municipalities and provincial governments increasingly conscious of compliance with international standards, measuring air emissions is another area of Kontrol’s expertise.
According to Ghezzi, some US$60 billion of energy generated in buildings in North America is wasted. Buildings also account for 40% of greenhouse gases emissions in North America. The industry for implementing energy emissions systems is growing at about 10% a year, he said.
Big, industrial buildings are in Kontrol Energy’s area of specialty and cannabis farms are as big as they come. Canopy Growth’s cannabis farm will house 300,000 plants in a facility spanning 275,000 square meters. As a recent CBC article pointed out, that’s the equivalent of 176 NHL-sized hockey rinks.
“As cannabis moves to become a global commodity the ability to source lower costs of energy with real-time analytics and management will become increasingly important,” Ghezzi said.
Matt Craze has covered commodity markets for more than 20 years, working as a researcher at CRU International, and for over 10 years as a ... <Read more about Matt Craze>