How Vertical Farmers Can Reduce Energy Costs with Smart Controls
May 21, 2025 
Assortment of mushrooms from Fungaia Farms. | Photo: ERI
California feeds North America year-round with high-quality fruits, vegetables, and fungi. While California’s temperate climate can be ideal for field farming of many crops, the state also has the largest CEA vegetable industry in the U.S., exporting produce to every state and many countries. In an effort to improve profits in an increasingly competitive landscape, California’s CEA food producers are experimenting with smart sensing and controls.
In 2023, the electric utilities Southern California Edison, Pacific Gas & Electric, and San Diego Gas & Electric funded a research study involving field demonstrations with energy monitoring in indoor farms and greenhouses. The “Smart Controls for Data-Driven Indoor Agriculture Field Evaluation” analyzes automated, integrated, and intelligent hardware and software in commercial CEA operations to uncover ways to save energy with lighting, HVAC, and irrigation control systems. Clean energy consulting firm Energy Resources Integration (ERI) is leading the research team with CalNEXT, a statewide electric emerging technology program, and Microclimates, a technology and software supplier, for the field demonstrations.
Reducing Energy Costs Tops Priority List
The market value of California’s vegetables and herbs grown in CEA facilities rose by 42% between 2017 and 2022, according to USDA data. Over 700 California CEA operators grew $826 million in wholesale produce (vegetables and herbs, tomatoes, fruits and berries, and mushrooms) in greenhouses or vertical farms in 2022.
As vertical farmers increase production, resource inputs like energy, water, and fertilizer often increase in kind and eat into profit margins. Resilient businesses are always looking for ways to reduce energy use without making big purchases. Growers globally report that 2025 will be the year of energy efficiency investment. Remote monitoring and control will be a favored tool for businesses to reduce operating costs. In the 2024 Global CEA Census (see page TK), it’s reported that “energy efficiency ranked as the number-one priority for technology investment across all regions.” Remote monitoring and control ranked second, technology integration ranked third, and data analytics and reporting ranked fourth.
Installing smart automation and energy monitoring systems is an energy efficient investment vertical farm operators can make in 2025 that combines the top four priorities for CEA growers.
Mushroom Magic
One of the ERI study’s field demonstrations is under way at Fungaia Farms, a small vertical mushroom farm in Eureka, Calif. In December 2024, ERI installed Microclimates software, pairing it with lighting and HVAC controllers, energy monitoring hardware, temperature and humidity sensors, and cameras to observe the indoor farm’s operations and analyze energy use over a six-month period to observe multiple harvest cycles. The new system reports energy consumption from lights, fans, heaters, humidifiers, and laboratory appliances to the cloud in real time. Data is ready for viewing online from any location. Fungaia Farms team members can see alerts on the online platform and with LED indicator lights in the facility itself.
Levon Durr, owner of Fungaia Farms in Eureka, Calif. | Photo: ERI
Mushrooms need stable climate conditions for inoculation and fruiting. Before the Microclimates system was implemented at Fungaia Farms, operations were managed primarily through manual adjustments with limited sensors, relying heavily on visual checks. While the company’s leadership was already aware of the negative impacts of CO2 levels over 1,000 parts per million (ppm)–including mushroom mutations, improper cap formation, and unsellable crops–the real-time data provided by the smart controls has been invaluable with alerts for readings above high CO2 limits.
All Growers Can Optimize
The benefits of climate and energy monitoring, data, alerts, and integration can be realized by CEA growers of all crops. The value proposition may differ across different markets, but the power of integrated controls and monitoring hardware and software can help growers of all sizes.
For example, many vertical farmers do not measure energy use at the system level. Smart automation technology like energy and climate sensors offers a clear view of real-time conditions and circuit-level energy use. With minimal investment, any grower can move beyond a limited number of sensors to a system that delivers deep insights for every zone so anyone on the team can manage energy at the system level.
In the first phase of this study, the research team identified nine automation strategies that can reduce electricity consumed by lighting, HVAC, and irrigation systems in greenhouses and indoor farms. Six of those are particularly relevant for vertical farms:
- Dimming controls for horticultural lights
- Spectral tuning for horticultural lights
- Variable-speed fan controls
- HVAC setpoint optimization
- Variable-speed pump controls
- Sensor-based irrigation controls.
The research team is validating the energy savings of these strategies with Fungaia and two other CEA operations in California and will be sharing the results in a public-facing report at the end of 2025. To access the report when it is published, visit https://etcc-ca.com/reports/smart-controls-data-driven-indoor-agriculture-field-evaluation.