Are Vertical Farms on the Rise? Part 2: Economic Feasibility

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Last week I talked about the rise of vertical indoor farming in London, Japan and Berlin. This week I want to address one of the hurdles to scaling this type of agricultural technology – the cost of artificial lighting needed to grow food indoors. I want to explore and present existing data on its economic feasibility.

One way to produce more food for the increasing number of chronically hungry people with a neutral or positive environmental impact is with vertical urban farming. Using some data from a 2014 Journal of Agricultural Studies article, we’ll look at the power and water costs versus the food yield in a simulated indoor vertical farm in Berlin.

The simulated vertical farm in Berlin is about the size of a city block (0.93 ha) with 37 floors for crop production, aquaculture and waste management. Light Emitting Diodes are the preferred way to power the vertical farm and can be adjusted based on various plant light requirements. The estimated yield average for the 10 crops planted is 516 more than traditional agriculture.

BerlinyieldThe vertical farm uses about 3.5 GWh of electricity per year, which costs roughly 5.3 euros in 2014. The average price for industrial power users in Germany in 2014 was 10.6 cents/kWh.  One power station of 0.5 MW generates more than enough energy to power the farm and a wind turbine of 80 m generates 2.5 MWh. For calculations on how much power a plant can produce, see the following Wikipedia article titled ‘Capacity factor.’

Another vertical farm case study – Vertical Harvest in Jackson Hole, Wyoming – is a 13,500 square foot hydroponic greenhouse projected to deliver 44,000 pounds of tomatoes, 20,000 pounds of lettuce, 44,000 pounds of herbs, 10,000 lbs of microgreens, 7,500 pounds of baby greens and 4,725 lbs of strawberries per year. The crop yield uses 1/10 of an acre to grow what would take 5 acres in traditional agriculture. The project is projected to use about 0.312 GWh of electricity per year. Using average commercial electricity rates of 8.24 cents/kWh in Wyoming, Vertical Harvest annual energy costs would be about $25,000 in 2016.

Another paper by Jeff Birkby and ATTRA Sustainable Agriculture suggests that improvements in LED technology could further reduce energy costs in vertical farming. Both papers present a great case for more vertical farming to meet food production needs in the future but also admit that lowering the energy costs would make it even more economical and scalable. So far the future is bright for vertical farms and LEDs for growing food indoors since there are many ways to optimize crop productivity and quality with minimal environmental impact.

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