Executive Perspective: Why Investing in Energy Efficiency Can Pay Off in the Long Term

Greenhouse structures get all the glamour in this industry, but the equipment in the structure does much of the hard work. No one knows that better than Jim Rearden, CEO of BioTherm Solutions, a climate solutions company he helped found in 1980. Rearden says growers who don’t invest in their equipment run the risk of falling behind the rest of the industry, and future regulatory changes will likely require even more investment in the years to come.

Greenhouse Grower (GG): What are your thoughts on the market this year?

Jim Rearden (JR): I think it’s a pretty soft year in terms of numbers. And I think that with the cost basis of all the raw goods being higher, grower profitability is not as high. Growers are clearly not working as much on expansion, but there are plenty of renovations.

This is a cyclical industry. There are years when it’s just Katie, bar the door; someone is always building. Right now, you talk to the greenhouse manufacturers, and no one’s building anything. The good news about our company is that we’re scalable. We do everything from someone’s 500-square-foot hobby spot or prop location spot up to 20 acres of big infrastructure, and there’s a lot of stuff in between.

We also participate in the cannabis market, but that varies in volume every year, so we try to keep it suppressed a little bit. We try not to get lured in too deeply because we know a lot of companies that put all their effort into that market and they’re gone now. We’ve learned to keep it consistent. The horticulture market is going to be a forever market.

We’re focusing on helping growers with return-on-investment calculations, and we have something we call our Energy Assessment Process (EAP), which is a free energy audit we perform to give growers a sense of their energy use efficiency. There is so much older infrastructure out there where growers have 25-year-old heaters or boilers, so we’re helping them evaluate whether a job is a retrofit or new construction.

GG: What’s the difference between growers who handle heating smarter than the growers who don’t?

JR: The growers who manage this part of their operation well are the ones getting business acumen and actually growing into regional or even super-regional operations. We’re never going to change the grower who’s got a bunch of hoops, and he just doesn’t want to change. We’re never going to talk him into condensing boilers and everything we offer because he’s afraid to get the permit for the gutter-connected house and deal with a permanent structure.

The key for us is understanding who each grower we talk to really is because we’re not going to change their business ethos. But we do like to find the growers who send their kids off to business school or who are planning for succession issues.

We still love the growers who have the family shop that’s never going to get beyond its little spot in the Midwest, and we try to enlighten them about managing this part of their business through education, but that’s hard to do. So many of them just aren’t interested in a different way. That’s why we do so much education. And when we can help a grower see the benefit of a longer-term strategy, that’s satisfying for us.

I ask the question all the time: are you a buyer or are you an investor? Because you’re about to spend a lot of money. Why don’t you spend a little bit more and aim to have the best option? We’re working with one larger grower now who can be difficult to get into because they don’t like spending money. But we did our EAP process with them and presented the results to the up-and-coming management, who is a businessman. Once we started showing him all these metrics about their facilities, the lights went on, and he got very interested. They realized that not investing means being left behind.

Ultimately, we’re educators. The only way to be in business now is to be an educator first. Some people will take you up on it; some people won’t. But I think we’ve polished our approach, and we try to make things simple to understand.

GG: How will greenhouse heating look different five years from now?

JR: Well, the entire country follows California, so expect more regulation on emissions. If we burn fossil fuels, they have to be burned very cleanly. So, there will be a push for equipment that does the best job of eliminating the pollutants.

There’s also emphasis across the country on decarbonization, which means getting completely off fossil fuels. As a result, we’re going to see a lot more heat pumps running on electricity, which is going to require heating systems to be able to work with them. Currently, the technology for most in-house heating requires pretty high water temperatures to put the energy out there. We’re seeing a lot more growers deciding they want to be able to pivot in the future to heat pumps, which don’t make sense right now due to their cost. But, at some point, they’ll be compelled to do it. So, we’re designing systems that are set up for that migration path by using really low water temperatures, which requires a lot more infrastructure inside, a lot more surface area. But you can successfully heat a greenhouse with 130-degree water, which you can get from alternative fuels like solar, thermal, and heat pumps. That’s probably going to be one of the biggest changes you’ll see. You’ll probably also see less forced air.

GG: If you could give growers one piece of advice for 2027, what would you tell them to do? What would be your recommendation for them?

JR: Know your costs. Know your unit costs. Know your input costs. And track the changes in those costs. Also, be aware of the growers across the pond in areas like Holland where their utility costs are generally 8 to 10 times of ours and what their solutions are, because that will happen here.

So, yeah, know all of your costs, and don’t just look at your labor. You can’t forget about energy costs because it’s the second-highest annual cost for most growers, and there are pragmatic solutions that can drop those numbers 20% to 30%. Yes, these solutions take investment money, which isn’t cheap right now compared to what it was, but the economics still make sense if you’re an investor.

Executive Perspectives is an editorial series in which Greenhouse Grower visits with leaders from across the industry to learn the challenges they see facing growers from their respective part of the business and their recommendations to help growers succeed. This interview has been edited for style, length, and clarity.

Bob West is the Chief Content Officer at Meister Media Worldwide, the publisher of Greenhouse Grower. He can be reached at 440-602-9129 or [email protected].