Indoor Vertical Farming in the Urban Nexus Context: Business Growth and Resource Savings
Abstract
:1. Introduction
1.1. The Danish Reality
1.2. Indoor Urban Vertical Farming
1.3. Food Waste and Management
2. Materials and Methods
- (a)
- Aarhus is the second largest city in Denmark, meaning that a business providing sufficient quantities of fresh fruits and vegetables to the consumers can be a sustainable case.
- (b)
- Aarhus is considered one of the major global hubs in the wind energy market. Indeed, Denmark is one of the most energy self-sufficient countries in the world with a rate of 94% and a 28% share of gross energy consumption deriving from renewable energy and waste [32]. Denmark is among the Nord Pool countries that exchange electricity with Swedish, Norwegian, German, and other power grids in an integrated grid.
- (c)
- The vegetables available in Aarhus supermarkets and grocery stores are of very high quality. Denmark has one of the highest organic market shares in the world. In fact, more than 11% of the Danes buy organic products, of which vegetables and fruits comprise 33% (€1.8 billion) [33]. Customers are familiar with high-quality products, and they are willing to pay more money to buy high-nutrient value and chemical-free products.
3. Basic Assumptions and Resource Analysis
3.1. Assumptions
- A semi-closed GH was chosen, as this would reduce costs compared to a closed GH. Semi-closed GHs have vents, which can be used to cool, dehumidify, and control pest infestation. Similarly, plants in IUVF facilities grow in a closed loop with horizontal layers (one above the other). This method cannot be applied in GHs, as lower plants will receive limited sunlight radiation due to shading. For this reason, 5000 LED lamps were installed in the IUVF facility at an assumed price of 1.4 €/W3 (approximately 15€/bulb) to simulate the solar radiation [37].
- Assuming that the IUVF facility used a closed-loop production system, the waste could be recycled and reused into useful resources, e.g., fertilizers or biofuels. In such systems, water is constantly circulating in closed loops, with wastewater recycled and reused through installing volcanic rock particles in pipes that, through pumping these rock particles, can extract nutrients and reuse them in the nutrient solution. Using this method, bio-waste can be used to create a plant nutrient solution. According to Adenaeuer (2014) [38], the estimated quantity of nutrients is equal to almost 50% of all the essential nutrients of the plants. Consequently, the estimated nutrient costs can be reduced up to 50%.
- To make it easier to compare the two farming techniques, it was assumed that both plant factories had a cultivation area of 675 m2. However, the IUVF facility had a smaller unit area of floor space (225 m2), since the crops are grown in multiple layers. Based upon real estate leasing standards in the Aarhus area, it was estimated that the rent of the IUVF facility was 31.5€/m2/year and 25.8€/m2/year for the GH.
- No safety measurements against fungi, different types of bacteria, pests, and diseases were assumed for the design of the building. However, necessary measures to prevent and combat diseases in the IUVF facility were needed, but this will be examined further in a future study.
- To achieve this result, we used the same environmental conditions in the cultivation area, including relative humidity, air temperature, and CO2. Dou et al. (2018) [39] recommend 14 mol/m2/day for a 16-hour photoperiod as the optimal daily light integral (DLI) for sweet basil [40]. In the GH facility, the artificial lighting was used only as a supplementary lighting and not as the main light source, which was solar radiation. However, adding artificial lighting would be necessary considering that the number of lighting hours in Denmark is very limited, specifically in winter.
- No calculations were performed on the structural condition of the building. Instead, several estimates were made based on previous literature studies on the building structure and the location of the structural materials of a vertical farm. IUVF facilities are completely isolated from the outdoor environment and have no window openings. For this reason, the ceiling and the walls surrounding them have a better thermal insulation compared to a GH facility. The R-value for both facilities was defined. The R-value expresses how well a building is insulated; the higher the R-value, the better the insulation. We assumed that the IUVF facility was installed in the interior space of a warehouse, and thus an R-value of 13 was used [41], while the GH had an R-value of 0.95, assuming that the coverage material was single-pane glass. It was assumed that the height of the building was the same throughout the building.
- In terms of construction and equipment, it was assumed that the GH has a heating, cooling, and air-conditioning (HVAC) system that operates primarily with solar radiation for heating purposes and with heating natural gas in a semi-closed system and with natural ventilation for cooling and dehumidification purposes. The heating and cooling costs for the GH case very much depended on the latitude and external climate conditions of the facility, and because of the mean of natural gas we did not convert their energy loads using coefficient of performance. As an alternative, it was assumed that the conversion of natural gas to electricity has the same conversion efficiency as heating. For the GH facility, the CO2 level was assumed at 800ppm. For the case of the IUVF that is a closed system, we assumed a forced circulation system of heating, cooling, and air cooling. The interior climate in the IUVF had a limited interaction with the outdoor conditions, making easier and more efficient the energy use for heating, cooling, and lighting purposes. In order to calculate the energetic loads in IUVF, we converted them to electricity using their respective coefficients of performance sourcing from previous literature [42]. It was assumed that the CO2 use of the IUVF remains stable throughout the whole year, 1000ppm daily, to assure that plants have enough CO2 to transform into sugars through photosynthesis and continue their optimal growth. In order to define the total electricity demand of IUVF, we proceeded to energy calculation of heating, latent cooling, and sensible cooling. In addition, to control the humidity and cooling of the farm, ventilation fans powered by electricity were used.
- Finally, it was assumed that the wholesale price of basil was the same for both facilities (7.37 €/kg) and that the distance from the facilities to the consumers was the same. This was assumed due to the floating prices in the real estate; the closer a facility is to the city center, the higher the rental price per m2 [43]. IUVF facilities are located in and around city centers and can provide products that are fresher, more sustainable, and of higher quality. However, the rental price is much higher in urban cities, which is the reason the above assumption was established. Additionally, the number of harvests was different depending on the facilities and the yield per harvest (Table 1). Furthermore, it was assumed that the density of the plants was the same in both facilities.
- It was assumed that the IUVF facility consumes 50% less nutrients than the GH, as minerals are added to the irrigation water and supplied to the plants directly at their roots by the hydroponic system [29]. Since the IUVF facility is based on a closed-loop system, where nutrients are circulated, it is possible to design a circulatory system without nutrient waste in the production line.
3.2. Real Estate
3.3. Yield/Biomass Production
3.4. Mobility and Dynamics in OPEX and CAPEX
3.5. Resource Use Efficiency
3.6. CAPEX and OPEX
4. Cash Flow Analysis: Scenarios Proposed
5. Results
6. Discussion
7. Conclusions
Author Contributions
Funding
Conflicts of Interest
References
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GH | IUVF | Unit | Citation | |
---|---|---|---|---|
Real estate | ||||
Lease | 25.76 | 31.5 | €/m2 | [48] |
Width of building | 18.3 | 15 | m | |
Length of building | 91.5 | 15 | m | |
Height of building | 4.6 | 7.5 | m | |
Growing space | 675 | 675 | m2 | |
Grow levels | 1 | 6 | ||
Growth-unit size | 1.5 | 1.5 | m2 | |
Labor | ||||
Laborers/10,000 kg yield | 0.18 | 0.18 | person | [49] |
Hourly cost of labor | 43.5 | 43.5 | €/h | [47] |
Electricity | ||||
Electricity cost (500–2000 MWh) | 0.18823 | 0.18823 | €/kWh | [50] |
Electricity cost (20,000–70,000) | 0.10086 | 0.10086 | €/kWh | [50] |
Internal electricity distribution capital cost | 0.45 | 0.45 | €/W | [51] |
Electricity demand charge | 13 | 13 | €/kW | [52] |
Utility electricity distribution capital cost | 0.30 | 0.30 | €/W | [51] |
Plants: Basil | ||||
Harvest/year | 5 | 10 | [53] | |
Yield/harvest | 2 | 5 | kg/m2 | [54,55] |
Wholesale price | 7.37 | 7.37 | €/kg | [56] |
LED price | 1.48 | 1.48 | € | |
LED efficacy: photosynthetic photon efficacy (PPE) | 4.8 | 4.8 | μmol/J | [57] |
Heating and cooling | ||||
Ventilation system | 0.986 | 0.986 | €/W | [51] |
Heating system capital cost | 0.0208 | 0.0208 | €/W | [51] |
Electricity (kWh) | ||||||||
---|---|---|---|---|---|---|---|---|
Tout (°C) | Tin (°C) | DLI (mol/m2/d) | NG Heat (m3) | Ventilation | LED Lighting | A/C Cooling | Total Electricity | |
Jan | 0.0 | 18.3 | 25.2 | 4738 | 8 | 24,517 | 0 | 24,524 |
Feb | 1.0 | 18.3 | 28.8 | 3136 | 7 | 14,991 | 0 | 14,998 |
Mar | 3.0 | 18.3 | 32 | 3037 | 8 | 7237 | 0 | 7245 |
April | 6.0 | 21.1 | 31.5 | 2139 | 13 | 0 | 0 | 13 |
May | 12.0 | 21.1 | 27 | 1330 | 13 | 0 | 0 | 13 |
June | 15.0 | 21.1 | 22.5 | 0 | 13 | 0 | 2769 | 2781 |
July | 17.0 | 21.1 | 19.8 | 0 | 91 | 0 | 2794 | 2886 |
Aug | 17.0 | 21.1 | 15.3 | 0 | 91 | 0 | 3573 | 3665 |
Sep | 14.0 | 21.1 | 12.6 | 386 | 88 | 4913 | 0 | 5002 |
Oct | 10.0 | 18.3 | 14.4 | 1717 | 21 | 11,557 | 0 | 11,578 |
Nov | 5.0 | 18.3 | 17.7 | 3081 | 20 | 21,636 | 0 | 21,656 |
Dec | 2.0 | 18.3 | 21.6 | 3782 | 21 | 28,837 | 0 | 28,858 |
Total | 23,345 | 396 | 113,686 | 9136 | 123,218 |
Electricity (kWh) | ||||||||
---|---|---|---|---|---|---|---|---|
Tout (°C) | Tin (°C) | DLI (mol/m2/d) | NG Heat (m3) | Ventilation | LED Lighting | A/C Cooling | Total Electricity | |
Jan | 0.0 | 18.3 | 0 | 3823 | 4 | 59,076 | 0 | 59,081 |
Feb | 1.0 | 18.3 | 0 | 4830 | 4 | 53,359 | 0 | 53,363 |
March | 3.0 | 18.3 | 0 | 3296 | 4 | 59,076 | 0 | 59,081 |
April | 6.0 | 21.1 | 0 | 3442 | 4 | 57,171 | 0 | 57,175 |
May | 12.0 | 21.1 | 0 | 2638 | 4 | 59,076 | 0 | 59,081 |
June | 15.0 | 21.1 | 0 | 1942 | 4 | 57,171 | 2041 | 59,261 |
July | 17.0 | 21.1 | 0 | 263 | 29 | 59,076 | 1950 | 61,055 |
Aug | 17.0 | 21.1 | 0 | 298 | 29 | 59,076 | 3273 | 62,378 |
Sep | 14.0 | 21.1 | 0 | 29 | 28 | 57,171 | 0 | 57,199 |
Oct | 10.0 | 18.3 | 0 | 706 | 4 | 59,076 | 0 | 59,081 |
Nov | 5.0 | 18.3 | 0 | 1862 | 4 | 57,171 | 0 | 57,175 |
Dec | 2.0 | 18.3 | 0 | 3096 | 4 | 59,076 | 0 | 59,081 |
Total | 26,225 | 125 | 695,576 | 7265 | 702,966 |
GH | IUVF | |||
---|---|---|---|---|
Cost (€) per Grow Unit | Total in % | Cost (€) per Grow Unit | Total in % | |
Lights | 180.87 | 21.08% | 370.55 | 43.19% |
Integral connection of lights, etc. | 51.67 | 6.02% | 105.87 | 12.34% |
Electric distribution of electricity | 36.20 | 4.22% | 74.14 | 8.64% |
Grow unit rack | 112.94 | 13.16% | 112.94 | 13.16% |
Hydroponics | 98.15 | 11.44% | 98.15 | 11.44% |
Ventilation fan system | 5.91 | 0.69% | 5.97 | 0.70% |
NG heat system | 0.24 | 0.03% | 0.08 | 0.01% |
Others | 90.34 | 10.53% | 90.34 | 10.53% |
Total CAPEX | 216,123 | 321,763 |
GH | IUVF | |||
---|---|---|---|---|
Annual Cost (€) | Total in % | Annual Cost (€) | Total in % | |
Real estate lease | 43,058 | 28.4% | 7087 | 4.7% |
Lights electricity | 13,443 | 8.9% | 49,290 | 32.6% |
Ventilation electricity | 35 | 0.2% | 520 | 0.3% |
Electricity demand charge | 6050 | 4% | 13,897 | 9.2% |
Heating cost (NG) | 26,603 | 17.6% | 15,805 | 10.4% |
Water | 1677 | 1.1% | 882 | 0.6% |
Nutrients | 1149 | 0.8% | 574 | 0.4% |
Seeds | 7031 | 4.6% | 7031 | 4.6% |
Package | 556 | 0.4% | 2511 | 1.7% |
Labor | 53,200 | 35.1% | 53,200 | 35.1% |
Total OPEX | 152,802 | 150,800 |
VERTICAL FARMING | SCE_1 | SCE_2 | SCE_3 | SCE_4 | SCE_5 |
---|---|---|---|---|---|
Equity/loan/(subsidy) (price) | 50-50 | 40-50-10 | 50-50-5.37 | 20-50-30-8.37 | 50-50-6.37 |
20-year cumulative gross profit (€) | 6,418,265 | 6,418,265 | 4,676,538 | 7,289,128 | 5,547,401 |
20-year cumulative OPEX (€) | 3,977,610 | 3,977,610 | 3,977,610 | 3,977,610 | 3,977,610 |
Sweet basil (price/kg) | 7.37 | 7.37 | 5.37 | 8.37 | 6.37 |
Project cost (€) | 321,764 | 321,764 | 321,764 | 321,764 | 321,764 |
Subsidy/alternative funding | 0% | 10% | 0% | 0% | 0% |
Loan | 50% | 50% | 50% | 50% | 50% |
Equity | 50% | 40% | 50% | 50% | 50% |
Interest rate | 6.50% | 5.80% | 6.50% | 6.50% | 6.50% |
NPV (€) | 911,317 | 966,881 | 168,570 | 1,275,569 | 547,065 |
Project IRR (%) | 34.74% | 45.25% | 0.38% | 52.24% | 17.96% |
Period payback (years) | 4 | 4 | 21 | 3 | 6 |
VERTICAL FARMING | SCE_6 | SCE_7 | SCE_8 | SCE_9 |
---|---|---|---|---|
Equity/loan/(subsidy) (price) | 25-75 | 50-40-10 | 20-50-30 | 70-30-5.37 |
20-year cumulative gross profit (€) | 6,418,265 | 6,418,265 | 6,418,265 | 4,676,538 |
20-year cumulative OPEX (€) | 3,977,610 | 3,977,610 | 3,977,610 | 3,977,610 |
Sweet basil (price/kg) | 7.37 | 7.37 | 7.37 | 5.37 |
Project cost (€) | 321,764 | 321,764 | 321,764 | 321,764 |
Subsidy/alternative funding | 0% | 10% | 30% | 0% |
Loan | 75% | 40% | 50% | 30% |
Equity | 25% | 50% | 20% | 70% |
Interest rate | 6.25% | 5.90% | 4.40% | 6.70% |
NPV (€) | 857,409 | 988,363 | 1,095,480 | 226,049 |
Project IRR (%) | 63.34% | 37.49% | 97.55% | 0.04% |
Period payback (years) | 3 | 4 | 2 | 21 |
GREENHOUSE | SCE_1 | SCE_2 | SCE_3 | SCE_4 | SCE_5 | SCE_6 |
---|---|---|---|---|---|---|
Equity/loan/(subsidy) (price) | 50-50 | 40-50-10 | 50-50-5.37 | 20-50-30-8.37 | 50-50-6.37 | 25-75 |
20-year cumulative gross profit (€) | 3,209,132 | 3,209,132 | 2,338,269 | 3,644,564 | 2,773,701 | 3,209,132 |
20-year cumulative OPEX (€) | 3,907,011 | 3,907,011 | 3,902,743 | 3,909,146 | 3,904,877 | 3,907,011 |
Sweet basil (price/kg) | 7.37 | 7.37 | 7.37 | 7.37 | 7.37 | 7.37 |
Project cost (€) | 216,127 | 216,127 | 216,127 | 216,127 | 216,127 | 216,127 |
Subsidy/alternative funding | 0% | 10% | 0% | 0% | 0% | 0% |
Loan | 50% | 50% | 50% | 50% | 50% | 75% |
Equity | 50% | 40% | 50% | 50% | 50% | 25% |
Interest rate | 6.50% | 5.80% | 6.50% | 6.50% | 6.50% | 6.25% |
NPV (€) | −475,965 | −503,174 | −928,760 | −249,568 | −702,363 | −538,813 |
Project IRR | ||||||
Period payback (years) | NEVER | NEVER | NEVER | NEVER | NEVER | NEVER |
GREENHOUSE | SCE_7 | SCE_8 | SCE_9 | SCE_10 | SCE_11 | SCE_12 | SCE_13 |
---|---|---|---|---|---|---|---|
Equity/loan/(subsidy) (price) | 50-40-10 | 20-50-30 | 50-50-11.37 | 70-30-5.37 | 50-50-9.37 | 50-50-10.37 | 20-50-30-11.37 |
20-year cumulative gross profit (€) | 3,209,132 | 3,209,132 | 4,950,860 | 2,338,269 | 4,079,996 | 4,515,428 | 4,950,860 |
20-year cumulative OPEX (€) | 3,907,011 | 3,907,011 | 3,915,549 | 3,902,743 | 3,911,280 | 3,913,414 | 3,915,549 |
Sweet basil (price/kg) | 7.37 | 7.37 | 7.37 | 7.37 | 7.37 | 7.37 | 7.37 |
Project cost (€) | 216,127 | 216,127 | 216,127 | 216,127 | 216,127 | 216,127 | 216,127 |
Subsidy/alternative funding | 10% | 30% | 0% | 0% | 0% | 0% | 30% |
Loan | 40% | 50% | 50% | 30% | 50% | 50% | 50% |
Equity | 50% | 20% | 50% | 70% | 50% | 50% | 20% |
Interest rate | 5.90% | 4.40% | 6.50% | 6.70% | 6.50% | 6.50% | 4.40% |
NPV (€) | −477,426 | −565,282 | 359,468 | −871,795 | −26,754 | 172,630 | 430,861 |
Project IRR | 17.42% | −12.11% | 4.64% | 50.22% | |||
Period payback (years) | NEVER | NEVER | 7 | NEVER | NEVER | 15 | 3 |
© 2020 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
Share and Cite
Avgoustaki, D.D.; Xydis, G. Indoor Vertical Farming in the Urban Nexus Context: Business Growth and Resource Savings. Sustainability 2020, 12, 1965. https://doi.org/10.3390/su12051965
Avgoustaki DD, Xydis G. Indoor Vertical Farming in the Urban Nexus Context: Business Growth and Resource Savings. Sustainability. 2020; 12(5):1965. https://doi.org/10.3390/su12051965
Chicago/Turabian StyleAvgoustaki, Dafni Despoina, and George Xydis. 2020. "Indoor Vertical Farming in the Urban Nexus Context: Business Growth and Resource Savings" Sustainability 12, no. 5: 1965. https://doi.org/10.3390/su12051965