Sometimes it takes a fire to spark change in an industry. That’s particularly true of California’s energy sector. In 2018, the state was ravaged by 21 wildfires. Of those, 17 were started by equipment owned and maintained by Pacific Gas and Electric (PG&E).
PG&E, California’s largest energy provider, filed for bankruptcy protection this year. Not only will this incur a rate increase for customers, it also puts the company into a position to control how and when power will be delivered.
This stumble may provide an opening for alternative energy providers. The California Energy Commission estimates that 32 percent of the state’s power came from renewable sources in 2018. That number could grow as more cannabis companies decide to leave the grid behind and seek alternative power sources.
Some companies, like Baker Energy Team (BET), have stepped up to meet the demand. The company’s founder, former Major League Baseball player and manager Dusty Baker, has stepped into the batter’s box and created a cutting-edge business model that meets all the demands of the exploding cannabis industry.
Because the cannabis industry is growing so fast, BET teamed up with Nine Point Strategies to address the sector’s energy needs and assist in strengthening and protecting their customer’s core business. With Nine Point, they are able to identify the industry’s insurance and employment hurdles and resolve them.
Nine Point is a specialty insurance service which offers OSHA training, emergency action plan development, and hazard communication planning to ensure that when the next disaster strikes, Baker and their clients are prepared.
By helping their clients to develop a strong risk management portfolio, they’re protecting all of their client’s assets: their businesses, products, and employees.
Insuring cannabis businesses can be a challenge. Nine Point’s Chief Operating Officer Ryan Headley and Director of Programs Jesse Parenti shared their insights on insuring the nascent industry. “Despite the reputation of this business in some circles, it is actually very civilized and very professional,” noted Headley.
“The cannabis market represents more than ten percent of our business and is growing five times faster than any other sector. It is expected to account for 20 percent of our revenue by the end of the year,” Parenti shared.
Dusty knows how to build winning teams and he has done it again by creating an energy business model that customizes a microgrid system for high energy users with no out of pocket expense, at least a 10 percent annual savings from current energy costs, and no maintenance costs for the life of the agreement.
This is why BET hooked up with the SALT Energy Group. Dusty has known SALT’s President Rob Babcock since his days with the Chicago Cubs.
The pending energy delivery issues and future rate increases are the main reason BET enhanced its model to focus on the high-energy users. Very simply, the BET/SALT model designs, owns, operates, and maintains the customer’s energy system for a fixed period of time, with no energy worries to the customer.
As to the cannabis space, BET just submitted a proposal to one of the largest operators in California. Compared to their old rates, BET will be able to save them a minimum of $260,000 annually with no money out of pocket.
If, for some reason, the system is not working, the customer picks up the phone, calls BET, and the issue is resolved at no cost to the customer. BET can also eliminate the developer’s energy line item expense in new construction.
We wanted to learn more about how the Baker Energy Team is turning the customer’s energy into an asset. More so, how are they are providing renewable energy solutions for power-hungry cannabis operations? To find out, we spoke with BET’s President Dusty Baker.
Dusty Baker: My microgrid vision goes back 12 years when I built my family home in the Sacramento area. I took the values my dad taught me about Mother Nature and not only applied them to my daily life and the construction of my home, but five years later created the Baker Energy Team.
Right after the Reds, I started my solar company. Like with my home, I always envisioned getting individual families off the grid, followed by the high-energy users, with the overall goal of eliminating our fossil fuel usage and improving our carbon footprint.
DB: By customizing the customer’s microgrid, they are no longer dependent on their local provider. It’s their own system, right there in their own location of operation.
The customer never needs to worry about a power line going down 10 miles down the road or the energy provider unilaterally shutting down the power again.
How can a high-energy user operate without power 3-7 days? The answer is not for very long and that loss of revenue can cripple many companies.
BET/SALT customizes the energy system to the customer’s current and future energy requirements. Ultimately, we’ll look at the project and we’ll look at the footprint. As a rule of thumb, one megawatt of power needs five acres of land. Sometimes you just don’t have that amount of land to do a solar farm, so what we do is a cogeneration system and also utilize the rooftops for as much solar as we can.
DB: Well, cannabis falls in with our data center and cold storage customers, because the cannabis operations also use a lot of energy in a small footprint. We not only bring our custom microgrid model, but also years of experience and expertise, which is very beneficial to these industry pioneers because they require much more than what the traditional power providers are offering them.
As a true advantage to any business, our Energy Service Agreements (ESAs) allow the customers to customize their ESA to be competitive in the current market, but also the option to “bank” their energy savings and trigger the energy savings in a couple years, when controlled fixed costs becomes more valuable, which would allow them to be much more competitive in the future market.
Everybody’s trying to find their own niche in these unchartered waters; the growers are always trying to be different. We give the competitive edge with the new found energy savings, which allow them to be different by putting the savings back into their business. This goes from the smaller guys to the larger guys. We recently received two ESAs that are in excess of a million square feet, with both having $70M-$80M energy systems and generating over $10M in savings at both locations.
DB: We have no issue on the upside, but right now because of the high demand for our services, we are focused on systems that are 500 kilowatts and above.
And, the requests are across the board. We presented to a Southern California town that, if you look at the grid, can’t provide any more power. They have all these potential growers, all these business owners that want to go there and set up shop and pay their taxes, but [their local provider] cannot deliver the power.
So we’re working with this town to get them temporary power, then they will buy the temporary power and become their own utility provider.
We are very aware of the smaller companies that are barely making a living, too. If the local energy providers are awarded their rate increase, we are ready to assist no matter how small their energy demands may be.
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