By Amy Storey
Controlling the climate is a top concern for indoor farmers, both in controllability and operating costs. It should be, since climate is largely responsible for crop health and avoiding crop losses.
HVAC (Heating, Ventilation, and Air Conditioning) systems are the best way to maintain ideal growing conditions to help optimize yield and minimize loss.
But sadly, HVAC costs are often underestimated due to lack of understanding or oversight. Farmers think they can piece a system together themselves or draw simple quotes from online catalogues or home improvement stores. In reality, HVAC is a complex system that has to be fitted to each farm’s needs, each farmer’s desires, and the constraints of the situation.
When farmers underestimate HVAC, they get themselves into a bind with investors and limit the production of the farm in the long run.
The majority of this underestimation comes from the myth that farmers can choose cheaper options without a significant impact on operating cost.
Surveys conducted by Dr. Nadia Sabeh, Founder of Doctor Greenhouse, show that most farmers budget 50% of their energy and maintenance (i.e. OpEx) costs for HVAC, but only budget 5-10% of their equipment costs (CapEx) on HVAC. This is a flawed assumption.
In reality, farmers who invest in a properly sized HVAC system on the front end can reduce the ongoing costs of operating their farm. This ends up being a worthwhile investment for any indoor farmer, whether growing in a greenhouse, warehouse, or container farm.
Take Farmer Hank. Hank planned $6,000 for his HVAC equipment in his farm and presented that estimate to investors. After spending a few hours online and on the phone getting quotes, however, CapEx started to cast a bigger shadow. All the numbers he got from manufacturers and contractors landed around $50,000. And Hank had only budgeted one-tenth of that cost!
That budget of $6,000 had already been presented to and approved by Hank’s investors. Now what?
Luckily, Hank had a mentor to help him find the resources and info he needed to find a middle ground between HVAC needs and investor expectations. Working with a consultant, Hank estimated a second option: a fitted, higher-quality HVAC system that would cost in $12,000.
This type of oversight can get farmers like Hank into trouble. To avoid Hank’s situation, plan realistically for HVAC, and don’t be afraid to get help from an engineer or contractor!
The great HVAC mistake: low CapEx is better.
Hank didn’t understand that to lower OpEx, he needed a correctly sized HVAC system that would seamlessly handle the heating, cooling, and humidity for his farm. That meant raising CapEx. Although this meant a few thousand dollars more on the front end, it would start saving him money after three years.
For instance, let’s compare two scenarios. In Scenario A, Hank gets an off-the-shelf HVAC system that isn’t quite sized right for his operation and which costs him $6,000. In Scenario B, Hank spends money to get a professionally sized HVAC system which costs him $12,000.
At first glance, the OpEx (energy costs and maintenance) for the off-the-shelf system (A) isn’t that much higher…
- A) Off-the-Shelf = $4000/yr
- B) Right-Sized = $3500/yr
That’s only a 12.5% difference. Hank’s thinking, “not bad for saving $6K!”
Then, Hank starts thinking about the bump in revenue that Scenario B could get him. Improved temperature and relative humidity control means higher yields, more weight, and fewer crop losses. With Scenario B, Hank could get a 20% increase in saleable product and a 10% decrease in crop losses.
On top of better yield, Hank can steer crops towards higher quality, better chemical profile, and a more predictable (consistent!) product. Hank’s produce is looking better and better to his markets, which can count on him for volume and quality.
After all this, Hank’s price premium has increased 20%, earning him an additional $1,200 per year.
It takes Hank 3 years to make up the additional $6,000 he spent on a sized HVAC system.
While Scenario B was more difficult to arrange with investors, it ended up being much more economical in the end. Hank was able to use the numbers projected by his consultant to convince his investors that a quality HVAC system would be better for both his farm and their investment.
Want to benefit from Scenario B? Register for the webinar and figure out how much of your CapEx you should budget to HVAC.
In this webinar, Dr. Nadia Sabeh from Doctor Greenhouse will explain and dispel other HVAC myths, like:
- HVAC can be accomplished with an A/C unit from Home Depot.
- I can build this without an engineer or contractor.
- HVAC is just a heater and cooler.
- HVAC makes my location and climate irrelevant.
- HVAC functions the same regardless of facility type.
Farmers can skip Hank’s confusion by preparing for HVAC with a professional.
Dr. Nadia Sabeh is a owner of Dr. Greenhouse and a mechanical-agricultural engineer with nearly twenty years of experience designing HVAC systems with farmers. Her expertise in plant environment relationships, including the effects of light, temperature, humidity, and nutrient levels on plant responses allows her to identify the right HVAC solution for growing lettuce, tomatoes, strawberries, cannabis, and even alternative proteins.
CTA: Webinar registration