LEDs Winning Over Indoor Farming Industry
Ellen Proper | Bloomberg
About 350 kilometers west of Moscow, in a farming region too cold to grow produce for more than a few months a year, greenhouses stretching into the horizon are being equipped with something of a revolution.
The 122,000 light-emitting diodes to be supplied by Philips Lighting NV are the latest sign that a trend, which has already swept through markets ranging from homes to cars and street lamps, is now winning over the pickiest of lighting connoisseurs: farmers.
The installation, spanning over 25 hectares, or about 40 soccer fields, will be used to grow tomatoes and cucumbers all year round, defying the long, dark winters of the Russian capital. The fact that LEDs were chosen over the high-pressure sodium lighting traditionally use in hothouses is a symbolic win for the technology, which has rapidly replaced incandescent bulbs worldwide amid government efforts to promote energy efficiency. Yet, the relatively high installation cost, and uncertainty about returns has meant a slower uptake by indoor growers.
“When LEDs made their debut, they simply weren’t good enough from a performance point of view, and were also too expensive,” Udo van Slooten, who heads the horticultural business at Philips Lighting, said in an interview. “That has changed.”
Or has it? Debate has raged among horticulturists about whether the light spectrum offered by LEDs is what’s needed to grow plants, and whether the relatively high costs to install the lighting can be recouped through crop yields and lower running costs. Despite efforts by LED manufacturers, some aren’t completely convinced.
“One big disadvantage is that it’s still very expensive, and there is still a lack of knowledge about how to use it in all situations,” said Nico van Ruiten, chairman of a Dutch greenhouse industry group called LTO Glaskracht Nederland. Artificial lighting “is only used as additional support in the winter months to safeguard production and quality, as cucumbers and tomatoes grow best under sunlight.”
For Philips Lighting, the Eindhoven, Netherlands-based manufacturer spun off from Royal Philips NV a year ago, and German rival Osram Licht AG, sales to farmers remain relatively small, albeit with potential to rise. The overall market for so-called grow lights is expected to increase by 12 percent a year through 2022, reaching an estimated value of $5 billion by 2020, according to researcher MarketsandMarkets.
LED lights can reduce energy costs in greenhouses by 50 percent compared to conventional lighting, according to Philips Lighting. The technology for year-round growing also allows horticulturists to have more control over crop production and better calculate yields, the company says. The lighting maker, working alongside partners Agrolux and LLC ST Solutions, didn’t disclose financial details for the project in Lyudinovo, Russia.
Greenhouses powered by LEDs are being installed around the world in locations as disparate as World War II bomb shelters in London and former nightclubs in New Jersey. AeroFarms LLC, a U.S. company promoting what it calls fully controlled agriculture, runs a 70,000 square-foot vertical farm inside a former steel mill in Newark.
The warehouse can produce as much as 2 million pounds of greens per year, making it the largest indoor farm in the world based on annual capacity. In Japan, General Electric Co. helped turn a former Sony Corp. semiconductor factory into an indoor lettuce farm. In the Netherlands, LEDs aren’t widely used in greenhouses for crops like tomatoes and cucumbers.
“LED could mean an improvement in the future, but today it’s not economically viable,” Van Ruiten said. “We don’t have all the knowledge yet. Progress in research is needed and also a cheaper availability of those lamps.”
Philips Lighting got 61 percent of its overall sales from LEDs in the first quarter. In the horticultural sector, most of its revenue still comes from conventional lighting even though the conversion rate is picking up, according to Van Slooten.
Competitor Osram has invested in products for the retail segment of the market; for people hoping to grow a handful of plants in their kitchen. It acquired a stake in Munich-based startup Agrilution, which is building a home appliance that waters and lights plants automatically, controlled by a smartphone app.
Still, the main target market for horticultural lights will be the big industrial growers, according to Aldo Kamper, head of Osram’s Opto Semiconductors division.
“This is something big, for big agriculture,” he said in an interview. “For professional growth houses, this is the most efficient way to grow plants, and it’s going to win out.”
The return on investment is the main reason the technology hasn’t taken off on a very large scale, Kamper said. Upgrading to LEDs is costly and doesn’t provide the efficiencies needed to justify the expense within a reasonable time.
“There is a lot of excitement for horticultural LEDs,” he said. “Of course, we are in competition with sunlight, which is free.”
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