Vertical Farming: The future of agriculture despite high energy prices?

The hall glows pink—bright, penetrating, almost otherworldly. The humid air stands like a wall in the room. The scent of basil fills the air. Heads of lettuce and herbs glide slowly around on an undulating conveyor belt. Well hidden on the grounds of the Fraunhofer Institute for Molecular Biology and Applied Ecology in Aachen, OrbiPlant rotates here—a vertical farming facility, half greenhouse, half space station. Simon Vogel, head of the research project at the institute, stands next to the facility. "I can always work at eye level—the plants come to me," says Vogel, holding a lettuce leaf up to the light.

Vertical farming is considered a promising technology for the agriculture of the future – resource-efficient and weather-independent. Plants grow in stacked levels, either on shelves or directly on vertical walls. They are usually cultivated in enclosed halls, under artificial light, and without soil. Instead, nutrient solutions supply the plants with precise amounts of water and the right nutrients, such as nitrogen and phosphorus. This is efficient, space-saving, and possible almost anywhere.

What sounds like a promising solution for the food industry and the careful use of resources is, in reality, a construct that faces all sorts of challenges. How can vertical farming solve the problems of our lives?

The hall glows pink. LEDs with high red and blue components, tailored to the specific plant, ensure that the plants develop quickly and productively.

Source: Fraunhofer IME / Simon Vogel

The pressure on agriculture is growing worldwide. Climate change is causing unpredictable weather extremes such as droughts and floods, which reduce yields. At the same time, water scarcity is increasing, arable land is shrinking due to urbanization and soil erosion, and the global population continues to grow – especially in cities. Over 50 percent of the world's population already lives in urban areas; by 2050 , this number could rise to two-thirds. In light of these developments, the secure supply of fresh food is becoming an increasingly important focus.

Multi-level plant cultivation in controlled indoor environments offers promising approaches in this regard. This technology not only saves valuable cultivation area, but also makes harvesting largely independent of weather conditions, enabling multiple harvests per year. Furthermore, closed water cycles use up to 95 percent less water than conventional agriculture. Pesticides are also rarely used, as pests can be better controlled in closed systems.

Another advantage: Production can take place directly where it's needed—in cities, in supermarket backrooms, or even in desert regions. This reduces transportation costs and CO₂ emissions and enables supply with virtually no supply chain, as numerous studies have shown. In the future, this could enable cities with millions of people to be more self-sufficient in their supply of fresh food.

Vogel therefore sees few alternatives to vertical farming technology. In all possible scenarios, it is a building block for future food security. "We live on credit in Germany," says Vogel. Resource consumption is high, and at the same time, enormous amounts are wasted. In 2022, around 10.8 tons of food were thrown away in Germany – a huge additional burden on the environment. Germany imports a large portion of its food, despite having great potential for domestic production.

OrbiPlant moves the lettuce heads forward a few centimeters. This movement constantly realigns the plants, which promotes growth. Vertical farming is initially also an emergency technology to cushion supply bottlenecks and extreme events. But Vogel expects more: "As soon as it becomes profitable in terms of electricity prices, it will become exciting in Germany too." But that won't happen automatically. "Something like this lives and dies with the people involved," says Vogel. He is certain, however, that it will also work in Germany within the next five years.

Simon Vogel places new lettuce heads on the conveyor belt. The rotation stimulates the plants' growth.

Source: Fraunhofer IME / Christain Ahrens

According to Statista forecasts, the vertical farming market is expected to grow by around 20 percent annually. Ambitious projects are emerging around the world that demonstrate the potential for growth. In Singapore, for example, the government is investing heavily in the construction of vertical farms to largely secure its own supply of fresh food in the future.

In Kuwait, one of the world's largest vertical farming facilities has been built in the middle of the desert – lettuce now grows where there was previously only sand. Europe is also following suit: The first farms are located in Italy, and in Denmark, the company Nordic Harvest is already producing on a large scale. The message: It can work – even under extreme conditions.

In practice, however, many companies encounter significant hurdles. In Germany, a brief hype between 2013 and 2016, during which around half a dozen vertical farming startups were founded, was followed by noticeable disillusionment in recent years. Several startups that wanted to advance the promising technology failed to establish themselves in the market.

Hydrofarms GmbH is one of them: The Cologne-based company is on the verge of deregistration. Managing Director Timon Scholz takes a sober look at the failure: "The energy crisis during the Corona years deterred many investors." The company itself has also suffered from the sharp rise in energy costs – production in the Cologne hall has become barely viable.

In general, the high energy dependence is considered one of the biggest problems in vertical farming. Operating LED lighting, air conditioning, and ventilation consumes enormous amounts of electricity. While this allows for precise control of growth conditions, the business model quickly reaches its economic limits, especially in countries with high energy prices.

Vertical farming requires low-cost electricity. The expansion of renewable energy sources appears to be promising, as this could make more systems suitable for mass production.

Source: Fraunhofer IME / Marc Stift

The high initial investments for technology, buildings, and automation also make market entry significantly more difficult. Many startups fail due to the issue of scaling: The path from a small pilot project to commercial large-scale production is capital-intensive and associated with high risks. In Germany, the willingness to invest is currently rather muted. "The major pressure hasn't arrived in Germany yet—we're still too lucky with the weather for that," says Scholz. Despite increasing extreme weather conditions, agricultural yields in this country have not yet been so severely affected that cultivation would be fundamentally called into question.

Another obstacle is the low level of market acceptance so far. Many consumers are unwilling to pay higher prices for vertically grown products. Scholz and his team had hoped for a greater willingness to pay. But ultimately, price still decides. "We're competing with subsidized products and low labor costs from all over the world – that's incredibly difficult," says Scholz.

Vertical farming will not completely replace conventional agriculture, but rather complement it meaningfully. In certain product categories—such as leafy greens or herbs—vertical cultivation could take over the majority of production in the future. Other crops, such as apples, will continue to be grown traditionally in the fields, as not all foodstuffs are suitable for energy-intensive indoor cultivation. Apple trees require a lot of space and several years for the apples to ripen, making economical indoor production virtually impossible.

Despite all the hurdles, Scholz continues to believe in the technology's potential. He and his team are already in the starting blocks with a new business idea in the field of vertical farming. "We're now making the whole thing a little smaller," says Scholz with a smile. In the future, they want to develop compact production units such as small containers or mobile raised beds that are suitable for both private households and farms. This lowers the barriers to entry and makes the model significantly more economically attractive.

Simon Vogel gazes intently over the OrbiPlant conveyor belt, following its path with his head, from left to right. Then he stops, points upwards, and smiles contentedly: pea pods are climbing up the system at a height of about three meters. "We can utilize the entire plant here—it comes down cleanly and completely," he explains.

OrbiPlant rises approximately 3 meters in height. The entire plant can be effectively dismantled by the conveyor belt.

Source: Fraunhofer IME / Simon Vogel

Vertical farming was long considered unsuitable for growing staple foods like wheat or protein-rich crops – primarily due to their high nutrient requirements. While wheat is still being researched and optimized, the prospects for protein crops like peas are already looking significantly better. This opens up new possibilities.

For example, Veganz Group AG, a well-known brand and manufacturer of plant-based foods, has invested in OrbiPlant technology. The goal is to produce protein plants on an industrial scale in the future. A large-scale prototype facility is to be built on the grounds of the Fraunhofer Institute in Aachen to further advance development.

For Vogel, vertical farming is a social opportunity: "It's the liberalization of the agricultural market – everyone can participate." Cultivation can take place anywhere, even on a smaller scale. He and his team at the institute want to set a good example: "We don't throw anything away – we distribute the vegetables here in the building."