Latest / Hydroponics Daily / UK Energy Shock: 94% Rise in Standing Charges Threatens Vertical Farms

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UK Energy Shock: 94% Rise in Standing Charges Threatens Vertical Farms · Hydroponics Daily

• 0:00
  Hello there and welcome back to
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  Hydroponics Daily, your go-to podcast for everything soilless cultivation.
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  I'm your host, Dr. Russell Sharp, the founder of Utreema Limited.
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  We manufacture fertilisers, biostimulants and organic biopesticides that are
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  used by massive growers and small growers.
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  And yesterday I did an episode for small growers, carnivorous plant growers,
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  bonsai growers, and today I'm going to do one for large growers.
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  And it's a topic I'm not an expert on, so I'm just going
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  to tell you some of the things I've read and let
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  you get in contact if you know more than me if my take
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  is wrong so this is a press release that comes
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  from the uk urban agritech organization and
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  they represent indoor farmers vertical farmers and they're talking about the
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  sector facing a multi-million pound annual energy cost surge in 2026 and this
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  could lead to widespread devastation and their words not mine They're sounding
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  the alarm and they're saying that could trigger widespread business failures,
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  reduce domestic production of obviously fresh produce, and drive up food prices
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  for millions of consumers. So what is it?
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  It's a 94% increase in electricity network standing charges from April 2026,
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  which is not the cost of electricity. It's the cost of just being connected to the grid.
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  So why is it happening and how much does it represent of a typical electricity
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  bill? for a vertical farm.
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  So the gripe is that there is an energy intensive industries exemption scheme
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  to these charges and they get about 90% discount on these standing charges.
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  But if you're in horticulture, vertical farming, you don't get this.
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  And the UK energy prices are one of the.
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  Bone of contention just not just because of vertical farming
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  but also industry in general you know
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  the cost of doing business in the uk is becoming very
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  very difficult because of these energy costs because of
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  the drive for net zero and what sort
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  of labor government are doing around there and sort of really
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  in action on energy prices so energy
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  electricity price for example sits at 56 pounds per
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  megawatt hour in the uk compared to down to
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  34 in many eu horticultural
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  nations such as holland and belgium so that
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  is a big difference and a big competitive advantage for
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  those companies that are exporting into the uk and the
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  uk urban agritech organization are saying that
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  this planned increase this 90 before
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  increase in the standing charges could add almost one million
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  pounds to the annual operating cost of vertical farm
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  because they require high capacity grid connections
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  and infrastructure for lightning lighting and
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  hvac systems and so i think
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  they're changing the system to be based on how much energy you can pull from
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  the system rather than how much you actually use so this could be an issue and
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  you know what i think they've got a point this is not asking them for a discount
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  on energy they're asking for parity with other industries high energy industries
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  for what is essentially being just connected to the grid i think that's fair
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  enough why should one industry get.
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  A discount and not another especially one that's growing crops
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  and food security i think this one needs
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  to be looked at long and hard by the people in the department for trade
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  and industry and energy and also defra in
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  someone's head needs to be knocked together for that now
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  they're saying it could be a million pounds for
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  a vertical farm but i can't
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  find the figures for that because you know
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  domestic tariffs for you know for a house
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  are about 53 pence per day but for businesses it
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  can be from 150 to like you know 500 pounds plus per year but it should still
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  only represent a tiny percentage of their actual overall energy bill so you
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  know i've run the figures put them through chat GBT,
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  and it's still coming like less than 1% of the total electricity costs.
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  But maybe that's, with the new changes, that's going to increase dramatically.
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  And of course, these vertical farms, they do recognise that,
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  you know, in the pressure release that they're operating on razor thin margins.
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  You know investors beware if you invest in
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  a company with razor thin margins then those margins can be
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  diluted degraded and you
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  haven't much got room to play with you have to have massive volume and you know
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  this is not silicon valley with massive margins this is this is high tech but
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  it's low margin lettuce you know one p per head of lettuce and it's been grown
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  for months and months and months that's the profit so in some sense i have i
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  have sympathy and in other cases.
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  You know if you are going to i don't have i have sympathy for the people operating
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  them and the people working in them and people who've put their hard work into
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  them but if it's someone who's just put some money into it and invested in it
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  got less sympathy is that bad i don't know if you've got a different opinion
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  let me know if you've got experience working in the vertical farming,
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  sector lots of our customers do lots we've got lots of customers in the vertical
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  sector so don't want to slag it off i think it's
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  it's an interesting one and it's not just the vertical farms that
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  are up in arms about this the greenhouse industry as well
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  are up in arms because they obviously use a lot of lights now
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  both sodium and led and the greenhouse
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  sectors are also not exempt from
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  these massive increases in electricity standing charges
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  so we've seen some really big companies
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  fail in hydroponics vertical farming greenhouse growing
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  in 2025 could this just
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  be the the first wave could there be
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  an even bigger wave in 2026 or with those
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  companies gone is there room for other companies to expand you know what do
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  they say invest when there's blood on the floor something like that but don't
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  catch a falling knife even a dead cat bounces there's all sorts of sayings about
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  when and when not to invest and it's very difficult but if you see an opportunity then let me know and.
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  Any exciting business opportunities in the vertical farming hydroponic
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  sector and you want anyone to partner with you on nutrition biostimulation
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  or just novel crop knowledge plant science in general then get into touch with
• 6:26
  you dreamer if you thought this was a good episode not too depressing then please
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  give us a written review on apple podcasts if you're not an apple don't worry
• 6:34
  because it doesn't help share the podcasts if you review anywhere else but do
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  click follow and make sure you don't miss an episode.
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  We've got about 10 episodes left in 2025 and then they will become less frequent as we move into 2026.
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  Probably put more time and effort into each one though.
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  Thank you very much for listening. Please check out utreema.co.uk and I'll see
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  you again tomorrow. Goodbye.