CHP technology can slash greenhouse energy costs by 90%

The economic success of modern hydroponic greenhouses is heavily dependent on how energy systems are designed and managed, according to a new study published in Energies.

The research, titled “A Greenhouse Profitability Model: The Effect of the Energy System”, introduces a transparent technoeconomic model that evaluates greenhouse profitability by integrating both cultivation and energy subsystems. The model provides practical guidance for investors, engineers, and policymakers, with special emphasis on the role of combined heat and power (CHP) technology.

How does energy shape greenhouse profitability?

According to the research, modern hydroponic greenhouses are highly energy-intensive, with energy costs representing around 35 percent of total operating expenses. This makes energy efficiency the single most critical factor influencing profitability.

In baseline scenarios, a greenhouse operating with a conventional boiler yields a return on investment (ROI) of about 12 percent. The introduction of CHP technology, however, pushes ROI to 14 percent, while the CHP unit itself achieves profitability levels of 24 percent. CHP systems deliver this boost by simultaneously generating electricity for sale to the grid and recovering heat to meet greenhouse thermal requirements.

The analysis also shows that CHP operation reduces greenhouse energy costs by over 90 percent, dramatically improving resilience against price volatility. In practice, this means that without integrated CHP, high-technology greenhouses struggle to achieve attractive payback periods, but with cogeneration in place, their long-term viability improves significantly.

What role do latitude and cultivation conditions play?

Geography emerges as a decisive factor in greenhouse profitability. The study finds that latitude strongly influences heating and cooling demands, which in turn affect ROI. Greenhouses in southern latitudes face lower heating requirements but higher cooling burdens, while northern sites experience the reverse.

A notable inflection point occurs at latitude 45 degrees, where operational modes shift. South of this line, greenhouses typically alternate between heating and periods of zero energy demand. Beyond it, year-round heating becomes essential, driving up costs and reducing overall returns. The study calculates optimal CHP sizing at 0.5 megawatts per hectare in southern Europe and up to 1.3 megawatts per hectare in northern climates, reflecting the growing thermal loads of colder regions.

Cultivation conditions also weigh heavily on profitability. Higher cultivation temperatures increase heating demand during winter but reduce cooling requirements in summer. Expanding the allowable cultivation temperature range can ease energy consumption and improve profitability, though it reduces the contribution of CHP systems. These dynamics underscore the complexity of managing greenhouse operations, where profitability depends not only on crop yields and market prices but also on how cultivation parameters interact with energy requirements.

Can greenhouses remain profitable under energy price volatility?

The study particularly highlights the role of energy markets in shaping greenhouse economics. It finds that CHP integration offers a buffer against fluctuating natural gas prices, provided the Spark Ratio, the ratio of electricity price to natural gas price, remains above 3. At this threshold, greenhouse operations become largely insulated from gas price volatility, ensuring stable profitability.

When the Spark Ratio drops below 3, however, CHP systems lose their economic advantage, and profitability declines sharply. Conversely, when electricity prices rise faster than gas costs, CHP-equipped greenhouses not only maintain their resilience but may even benefit from energy market disruptions. This confirms a widely held industry rule of thumb while adding analytical depth by demonstrating the mechanism through which CHP stabilizes ROI.

The research also sheds light on how energy price scenarios affect regional competitiveness. In markets where electricity commands higher prices, greenhouses with CHP integration become significantly more attractive to investors, while those in less favorable conditions may struggle to justify the capital-intensive infrastructure.

A transparent model for policy and investment

Unlike many existing technoeconomic models that require specialized software or proprietary datasets, this model is implemented in a simple spreadsheet environment. It relies on 25 core input parameters—ranging from latitude and cultivation area to equipment costs and energy prices, making it adaptable to diverse contexts.

By combining greenhouse process modeling, energy system analysis, and economic evaluation within a unified framework, the model provides a transparent decision-support tool. Policymakers can use it to assess the implications of energy policies, such as feed-in tariffs or Spark Ratio stabilization, while investors can apply it to preliminary feasibility studies before committing capital.

The research also aligns with European Union directives promoting efficient cogeneration, particularly the Energy Efficiency Directive and the Renewable Energy Directive. By identifying the conditions under which CHP integration secures profitability, the study supports policy efforts to incentivize sustainable agri-energy investments.

Looking ahead: Expanding applications

While the model currently focuses on CHP integration, its modular structure allows for future extensions. It could be adapted to include renewable options such as photovoltaics, geothermal, or biomass, supporting climate-neutral greenhouse strategies. Similarly, incorporating carbon dioxide fertilization from CHP exhaust gases could further improve yield estimates and ROI calculations.

The model also offers a foundation for evaluating profitability in vertical farming, where controlled environment systems face similar challenges around energy demand and market volatility. By providing a transparent, easy-to-use tool, the study opens new opportunities for sustainable innovation in agri-energy systems.