A New Era of Agriculture: How Microgrids Are Powering Indoor Farms

Farms are headed indoors, and with the move to a more controlled climate, comes the surge in energy demand. Controlled Environment Agriculture (CEA) is growing rapidly and is expected to surge to $377.6 billion by 2032. CEA and indoor vertical farming are making food production more efficient and sustainable by bringing it closer to urban centers, eliminating the impact of seasonality, and reducing land use needs. As this transformation occurs, the farming industry will be ironing out hiccups, and one of the biggest hurdles facing these systems is energy. The solution to this emerging market lies in sustainable infrastructure, the microgrid.

The energy reality of indoor farms

Indoor farming is an emerging solution to environmental factors that are hard to control outdoors. Here are some comparative stats that help to make sense of the energy involved in controlling plant growth variables indoors. 

• Energy accounts for roughly 60% of operational costs for indoor farms, with lighting alone consuming about half of that. 
• Vertical farms require approximately 38.8 kWh to grow 1 kg of food, compared to 5.4 kWh in a traditional greenhouse.
• A big-box-sized facility can replicate the output of about 700 acres of farmland, with year-round growing and 10-day crop cycles.

Operational pain points for indoor farms

Indoor farms are built for control. They’re designed to optimize plant growth by mimicking the best parts of nature, without any of its unpredictability. This type of control comes at a cost, and that cost is energy.

Every square foot of a high-density indoor farm demands continuous power for its core systems. This includes high-output LED arrays tuned to specific wavelengths, climate-stabilizing HVAC systems that often run 24/7, and automated nutrient, water, and lighting software that must operate with precision. Add in dehumidifiers, air filtration, and closed-loop recycling for water and nutrients, and these facilities run more like data centers than traditional farms.

This takes power beyond a simple line item, but an operational cost that demands taking control. Even short power disruptions can trigger cascading effects, temperature spikes, stalled irrigation cycles, or failed lighting schedules that can kill or stunt crops in hours. In tightly controlled growing environments, downtime becomes detrimental, which means losses in yield, product quality, and revenue.

Traditional grid power alone doesn’t cut it anymore. For this new era of agriculture, reliability, cost, and control become the factors that make or break a business model. This is why so many indoor farms are taking the viability litmus test.

Microgrids are the strategic solution

Indoor farm operators are becoming more interested in microgrids since they’re localized, decentralized energy systems, and offer a strategic potential solution to their power challenges. A microgrid is essentially a “local energy grid with control capability” that can disconnect from the main utility grid and operate autonomously. In practical terms, a microgrid links on-site power generation (such as solar panels, wind turbines, or cogeneration units) with battery storage and smart controls, creating a self-contained network that can run an entire indoor farm, if needed. This setup directly addresses one of indoor agriculture’s greatest risks, the need for uninterruptible power.

The U.S. Department of Energy explains that a microgrid “provides backup for the grid in case of emergencies” and also “allows communities to be more energy independent and, in some cases, more environmentally friendly.” It can even “cut costs” by leveraging local energy resources that might be too small or intermittent for traditional grids. In the context of indoor farming, where even brief power losses can devastate a crop, this level of control over energy has the potential to be a key factor in a successful indoor farm business model.

What are key benefits of microgrids for indoor farming?

Resilience and reliability

Microgrids keep critical systems running during outages by islanding from the grid. They were first adopted for hospitals, data centers, and other infrastructure that need a guaranteed power supply, and indoor farms now benefit from the same reliability. If a storm or grid failure strikes, a farm’s microgrid can automatically kick in to power LEDs, pumps, and HVAC, preventing downtime. Even just a few hours without power in a vertical farm can cause crop damage or losses, an outcome that a properly designed microgrid can avert. Microgrids offer indoor growers an insurance policy against the unexpected, ensuring continuity of operations and protecting valuable produce.

Energy cost control and predictability

Energy typically represents a massive operating cost for indoor farms, 60% of total operating expenses, according to research involving USDA experts. Microgrids help tame these costs. By generating power on-site and using battery storage, an indoor farm can shave peak demand and avoid buying expensive peak-hour electricity from the grid. 

As Scale Microgrid’s representative noted, “A ‘lightbulb’ for us was that natural gas, if properly utilized, is a natural complement to solar and storage. It allows us to do things from a contractual and financial standpoint that makes these systems economically viable.”

Equally important, microgrid deployments often come with long-term power agreements. Through an “Energy-as-a-Service” model, the farm can lock in a fixed electricity rate for 10–20 years, shielding it from utility price volatility. If we can provide a fixed energy price over a long period of time it provides energy certainty and less risk around the cost of energy,” explains one microgrid provider, highlighting how price stability makes financial planning easier for farm operators and investors. This predictability in energy costs strengthens indoor farms’ business models, improving their return on investment over the long run.

Sustainability and lower carbon emissions

Microgrids make it feasible to power indoor farms with clean energy, dramatically shrinking their carbon footprint. By integrating renewables (like solar arrays and wind turbines) on-site, a microgrid can supply a significant share of the farm’s electricity with zero-carbon power. For instance, coupling a vertical farm with on-site solar drastically reduces the site’s carbon footprint.

Real-time energy management

Unlike a simple rooftop solar setup, a microgrid comes with an intelligent control system that actively manages energy flows. Advanced software (such as Schneider Electric’s EcoStruxure Microgrid Advisor used in many indoor farm projects) uses predictive algorithms to orchestrate when to draw from batteries, when to ramp up generation, and when to draw from or export to the utility grid. This real-time optimization means the farm is always using the most cost-efficient or available power source, minute by minute. 

During normal operations, the microgrid controller might draw cheap power from the grid or store excess solar power in batteries. During expensive peak periods, it can switch to battery power or on-site generation to avoid peak demand charges. It can even participate in demand response or ancillary service markets, selling frequency regulation or reserve capacity back to the grid, turning the farm’s energy system into a potential revenue stream rather than just a cost center. Microgrids maximize efficiency and turn energy management into a competitive advantage for indoor farms.

Faster deployment and grid independence

Building a large indoor farm in an urban area often runs into a practical hurdle, which is that the local grid might not have enough capacity to meet the farm’s hefty power demand, which can reach several megawatts, rivaling data centers. Microgrids offer a way around this bottleneck by installing on-site generation and storage. Indoor farms can obtain the needed power capacity without waiting for the utility. For farm developers and investors, this means fewer delays and a more controllable infrastructure rollout, which can help to de-risk new projects.

Lessons learned

Real-world microgrid deployments on indoor farming have resulted in some learning lessons that benefit facility developers, investors, and energy solution providers, adopting best practices moving forward.

Engage experienced energy partners early in the designing process

Indoor farm developers should involve microgrid experts from day one. Early collaboration ensures the power system is properly sized and resilient, preventing costly retrofits and delays. The right energy partner will support equipment selection and facility setup to reduce energy demand and focus on efficiency before adopting a large-scale system that might not need as much power. An energy partner working in the facility’s best interest will reduce energy demand as much as possible with you and then size the system you’ll need. What you don’t want to do is engage an energy partner after you’ve already committed to equipment and set up that may have a higher energy demand than necessary.

Adopt modular, standardized microgrid designs for scalability

By using a repeatable, plug-and-play architecture, energy teams can deploy microgrids faster and scale them up as farms expand. Standardized designs minimize custom engineering and simplify installation, allowing new generation or storage units to be added in phases as needed. This approach accelerates deployment and makes future upgrades easier across multiple farm sites.

Embrace turnkey microgrid-as-a-service models

In this model, a third party finances, builds, and operates the on-site microgrid, selling power to the indoor farm. This arrangement spares farm operators the up-front costs and technical burdens, and they can focus on crop production while the energy partner manages power supply and maintenance. Long-term service contracts also lock in energy pricing, providing certainty for business planning and reducing cost risk for investors.

Leverage smart, data-driven controls

Advanced microgrids now integrate cloud-based energy management platforms that continuously optimize operations. Predictive analytics can forecast demand and renewable output, allowing the microgrid to balance energy sources and preemptively respond to changing conditions intelligently. These data-driven controls improve efficiency, reduce downtime risk, and give farm operators and energy partners real-time visibility into system performance.

Keep designs simple and replicable

Favor proven, off-the-shelf components and standard configurations to make microgrids easy to reproduce across the CEA sector. Avoiding unnecessary customization reduces engineering overhead and improves reliability. In practice, one indoor farm operator is reusing the microgrid blueprint from its initial site in a second facility three times larger, proving that simple, standardized designs scale effectively.

“Hence, the primary value proposition of microgrids is their ability to island and provide resiliency to communities as well as to the grid.”  — National Renewable Energy Laboratory