Ever wondered if your greenhouse control system is actually helping—or if it’s leaving you in the dark about your energy bills? I’ve been there, and that’s exactly what we dig into in this episode.

Joining me are Neda, CEO and co-founder of Microclimates, and Gretchen, Executive Director at the Greenhouse Lighting and Systems Engineering Consortium at Cornell, whose combined expertise covers everything from cutting-edge environmental controls to energy efficiency in controlled environment agriculture. Neda has an extensive background in developing technologies that empower growers with actionable data, while Gretchen brings years of research experience with leading universities and utility-backed initiatives in optimizing greenhouse lighting and automation.

This episode unpacks the real-world findings from the CalNEX Project—a first-of-its-kind scientific study focused on the impact of smart environmental monitoring and controls in California greenhouses. We compare “smart” and “smarter” systems, revealing surprising industry gaps in environmental data collection, misunderstood overhead costs, and how simple steps can lead to significant energy savings and business sustainability.

Beyond the results, we chat about practical steps for adopting automation without ripping out your current systems, new open-platform sensor trends, the reality (and future) of AI in controlled ag, and why a phased, data-driven approach will be key for small and large growers alike. If you’re daunted by all the talk of sensors, integration, or AI, consider this the guide to understanding what actually matters—and what you can do today.

Curious if you’re missing an easy win in your farm’s energy management, or want a reality check on all the AI hype? Tune in now and turn your environmental data into your biggest asset!

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Key Takeaways

00:00 Discussing the CalNEX Project findings

03:17 Smart Controls Project achievements

07:52 Improving greenhouse energy efficiency

10:34 Energy consumption misconceptions

12:57 Diverse systems in cannabis farming

19:10 Automating greenhouse light management

22:22 Operational impacts in construction projects

25:40 Consulting on greenhouse tech needs

27:50 Discussing phased approach for innovations

29:57 Phased approach to AI implementation

35:51 Parental influence on IT security

37:02 Adopting AI and Automation Tools

41:17 Starting with basic crop monitoring

43:32 Indoor farming control techniques

46:39 Year of retrofits and opportunities

49:46 Appreciating industry partnerships

Tweetable Quotes

"Our job is to complement what's already there. The projects Gretchen mentioned, every site had something different… Our job wasn't to go in and just say, rip everything out for this control study and start over because we want to collect the data. It was really to take a look at what do you currently have, how can we complement that with adding more environmental insight, environmental visibility to that operation, and is there a way that we can integrate what you currently have?"

"I'd say the biggest surprise and biggest lesson was that they didn't have enough environmental visibility. A lot of these operations had maybe one temperature humidity sensor hanging in the middle of the room representing the entire greenhouse or a section of the greenhouse. Your control system is only as good as the information it's taking in, like the input, right?"

"If you don't have the thousands of data points, if you can't summarize the trends, if you can't make any recommendations and alerts, and you can't generate those reports based on the thousand data points, how is this AI going to actually get to know you?... First of all, we have to step back and say, are operators actually collecting data? We already said early on in this conversation they are, but they don't have enough environmental visibility, which means they actually are not collecting enough data."

Resources Mentioned

Website - www.microclimates.com

YouTube - https://www.youtube.com/@Microclimates-Inc

Instagram - https://www.instagram.com/microclimates

Facebook - https://www.facebook.com/microclimates.inc

LinkedIn - https://www.linkedin.com/company/microclimates

LinkedIn - https://www.linkedin.com/in/gschimelpfenig/

Resource Innovation Institute - https://resourceinnovation.org/

Microclimates - https://microclimates.com/

Priva Control Systems - https://www.priva.com/

Ritter Greenhouse Automation - https://rittergreenhouse.com/

Connect With Us

VFP LinkedIn - https://www.linkedin.com/company/verticalfarmingpodcast

VFP Twitter - https://twitter.com/VerticalFarmPod

VFP Instagram - https://www.instagram.com/direct/inbox/

VFP Facebook - https://www.facebook.com/VerticalFarmPod

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2025 Precision Ag Report by iGrowNews

2025 Precision Ag Report

1

So Gretchen and Neta, no strangers to the Vertical Farming Podcast. Thank you

2

so much to both of you for joining. I know I've been in conversations

3

with Neta about an opportunity to come back on the show, and she mentioned some

4

work you guys were doing together. So just to kick things off, Neta, you want

5

to kind of talk through what prompted the desire to come back

6

on and share what you've been working on? Yeah, absolutely. Thanks again for having us

7

on the show. It's good to always chat with you again, Harry. It's always,

8

we love chatting with you because it's this organic conversation where you

9

really highlight what's going on in the industry. And what really prompted me to come

10

back and have a conversation was to shine some light

11

on a project that we worked with ERI. Gretchen

12

brought us into a project which was called the CalNEX Project, which was

13

really taking a look at the energy consumption that's being used in the

14

greenhouse on operations and really understanding

15

does adding more environmental monitoring and controls actually

16

make a difference from an energy usage perspective? This was

17

the first study, from what Gretchen described to me, that was really

18

being looked at from a very scientific perspective. And having had a science background,

19

we were really excited to be a part of this project, which is really looking

20

at things side by side, kind of what we call the smart room

21

versus a smarter room over a long time period. So really exciting to

22

be back on this show to talk to you guys about what the findings were

23

and what Gretchen's team and was able to learn from this project.

24

Thanks for that context. And Gretchen, I think what would be helpful for the viewers

25

is to kind of share how long you've been involved in horticultural lighting research

26

as some context leading into this collaboration. Yeah,

27

sure. So in 2021, I was on a team

28

that worked with one of the largest utilities in North America, Commonwealth

29

Edison, that serves like Chicago and a lot of areas in

30

Illinois. To explore what they called the opportunities in controlled environment

31

agriculture. And so at that time, I started this theme of looking into

32

and uncovering the benefits of LED lighting and automating those

33

systems. And not just the energy benefits. At that time, I was actually looking at

34

what the utilities call non-energy benefits. So I think that's what growers

35

often care about more, right? Is, yeah, energy savings, but also what

36

else? What happens to the plants? What happens to the the labor benefits and other

37

things like that. So then in 2023, I took on the part-time role of being

38

executive director of GLAZE, the Greenhouse Lighting and Systems

39

Engineering Consortium at Cornell University. And I got to collaborate with amazing

40

scientists, still get to collaborate with amazing scientists at Cornell

41

University, Rutgers University, and Rensselaer Polytechnic Institute.

42

And at that time, I was helping them complete this NYSERDA-funded

43

greenhouse lighting research. Which took a look at not just the beginning

44

of LED lighting adoption, but also the adoption of

45

dynamic lighting controls. And that's where we're going as I get to the

46

point of where I started to work with Netta. So in 2023,

47

you know, I had been running into Netta in the industry quite a bit, and

48

we collaborated a bit when I was at Resource Innovation Institute. But in

49

2023, now at Energy Resources Integration, I applied for funding

50

like we all try to do. We try to get some funding from someone else

51

to do something cool. So I applied for funding from a California utility program

52

called CalNEX. And what they do is they explore energy efficiency

53

technologies and vet them for inclusion in rebate

54

programs, right? So how can we get new tech to get money so

55

that growers can adopt it, so that any business can adopt it? So from

56

2023 to 2025, Neta and I collaborated on the Smart Controls

57

Project, where we explored how these dynamic

58

controls for lighting, climate control, as well as energy monitoring, like Netta mentioned,

59

really prove out the energy benefits so the utilities would give out rebates,

60

but also prove out the benefits for the businesses so that they would want to

61

do it too. So we completed 4 field demonstrations at 3 different

62

farms in California. And, you know, this year we're really running

63

around celebrating the results, which is that it proves that these

64

will beneficial and that utilities should provide rebates. And hopefully

65

the wave will just be beginning now of rebate programs

66

offering more for controls, and more research and education

67

about this will continue to see growers adopt it more. So that's my history for

68

the past 5 years in this field, and I really loved the past few years

69

being able to collaborate with NETA. Sounds like you guys had a— it's like a

70

match made in heaven in terms of what NETA's been working on Neda, what made

71

Microclimates a good fit to support this project with CalNext?

72

Yeah, I'd say the biggest thing was probably that we are

73

unique in the sense that we're not trying to replace any environmental

74

control system. Our job is to complement what's already

75

there. And the projects that— the locations that

76

Gretchen mentioned, every site had something different. One of them had

77

a Ritter control system, a very robust, great company. Another

78

one had a Priva. Another one didn't really have much

79

automation. So, our job wasn't to go in there and just say, rip everything out

80

for this control study and start over because we want to collect the

81

data. It was really to take a look at what do you currently have, how

82

can we complement that with adding more environmental insight,

83

environmental visibility to that operation, and is there a way that we can integrate

84

what you currently have? Will that control system allow you to integrate

85

And what does that look like? So it really just sort of demonstrated how additional

86

environmental monitoring and not ripping and replacing can really bring a lot

87

of value. And what did that experience teach you about what is

88

being collected now? Was there anything surprising when you went in?

89

Yeah, I'd say the biggest surprise wasn't necessarily that they

90

weren't collecting data because they were all collecting data. It was really

91

the biggest surprise and biggest lesson was that they didn't have enough environmental

92

visibility. So, what I mean by that is that a lot of these

93

operations had maybe one temperature humidity sensor hanging

94

in the middle of the room representing the entire greenhouse or a section of the

95

greenhouse. And your control system is only as

96

good as the information is taken in, like the input, right? So, it really shined

97

a light on the fact that they didn't have enough environmental

98

visibility. And the perfect example that I love referring to

99

is Floricultura, one of the sites.

100

Their crop is an orchid. So they're growing orchids, very

101

finicky plant, as we all know. Yeah, very finicky. But they really just didn't really

102

understand the environmental temperature, humidity

103

environment that the crop was actually experiencing at a root zone

104

level, below the root, above the crop, above

105

their screens. So that was really important. And we have a grower there

106

that's very data-driven, data-rich. He really

107

understands orchids. He's probably world-renowned for his understanding of orchids.

108

And having that insight was so valuable to him. And Gretchen

109

can talk a little bit more about what the outcome of that study was, but

110

that was a kind of aha moment that we had, was, yes, they're collecting

111

data, but they don't have enough crop environmental

112

visibility. And then the question that really came for us at the end was,

113

if they're not collecting enough data as it is, How's this world going

114

to prepare them for AI, which we can talk about later? But that really got

115

us thinking from an AI perspective as well. So yeah, she's teed that

116

up for you perfectly, Gretchen, the experience with that. And I'm also curious how you

117

pull in all these learnings that you have from all these other locations

118

you've been at, all this other research you've been doing on smart controls. And I'm

119

curious what your perspective was specifically with that company that Neda

120

mentioned. And then what comes to mind for me is like, Does the then grower

121

have to think about, oh, I need more sensors now to capture all these different

122

locations and all these different places? And I'm sure there's concerns there as well. Yeah,

123

I think the— I'll reiterate Neta's surprising moment as

124

well of realizing that the field demonstrations are

125

using pretty static controls or pretty basic

126

controls. So that presented an opportunity for us. I

127

think that in the floricultura example, They have a sophisticated

128

control system, but what they don't have is a lot of feedback loops

129

telling them what's happening at the grower level. The system knows, and it

130

adjusts the screens, and it might adjust the lighting, but they aren't perhaps getting

131

the info where they can find fault detection. Another site at the

132

lettuce greenhouse, the load shape of the lighting circuit looked pretty much the same

133

every day, even as the seasons were changing. And so my job as an engineer

134

when I'm validating a technology for a utility is, what's the

135

baseline? What would they do if we didn't affect anything, if we didn't

136

offer a rebate? And so for me, this helped us prove

137

that scheduling lighting with time clocks is an industry standard

138

practice. And so utility energy efficiency programs

139

could help growers save even more energy by using sensor-based controls. And

140

instead of just using schedules, they could use sensors to control their lights. With

141

floriculture, they're not using lights as much, but with lettuce, the lighting

142

was much more of an important thing. So with mushrooms, one of our other

143

field demonstrations, the humidity and the climate values were much

144

more important. So it's sometimes what we found was surprising

145

because it was like, there's a great energy savings opportunity. And then sometimes what we

146

found was more surprising of like, wow, there's a real big like information

147

gap here that Netta's system can help fill by just providing

148

things like trends. Because, you know, I'm used to commercial buildings

149

where you can go back, open up the computer log, see months of

150

trends, see what all the office building temperatures were in all the different

151

rooms. But some growers we found, all they knew from a

152

climate level was something that was at a very, like Netta said, one sensor

153

in one place. And then all they knew from an energy level was the utility

154

bill. For the whole greenhouse. So, Nada was helping us piece apart,

155

okay, well, this is actually how much is going to lighting, and this is what

156

the lighting's doing. This is how much is going to fans, and pumps, and all

157

the other stuff that sometimes is more energy-consuming for a different type of grower that

158

doesn't use lights. So, Nada, I imagine a lot of this information

159

you've been learning in your interactions with your clients, and the folks you've been

160

working with, and all the facilities you've been able to have access to. But, how

161

much of this was a learning for you, and because of this partnership, because of

162

the in-depth visibility you had to what was there already,

163

and maybe some preconceived notions about what people think growers are

164

measuring versus what's actually happening in these facilities? It was

165

quite a surprise. I think I had the vision. I assumed that

166

they were collecting a lot of data, and then we, I think, also made some

167

assumptions that they understood a little bit about their energy consumption, at least

168

maybe like— because we, we've heard this over and over and over again the past,

169

you know, 10 years— overhead costs are too high?

170

What happened to the company that just started and they spent millions and raised

171

millions, hundreds of million dollars to build this beautiful vertical farm? And why

172

did they go out of business? Over and over again, the theme that we have

173

heard is that overhead costs, overhead costs. And we know that 70%

174

of their energy consumption is related to their HVAC

175

systems and their lighting system. So I think I had made the assumption that they

176

must understand something about their energy consumption. And even the companies

177

that had a whole sustainability team. We started out with one of them that had

178

a whole sustainability team dedicated to it. They really cared

179

about this topic, and they knew all about it, but they really

180

weren't collecting energy data at a circuit level,

181

at, let's say, a pump level, at a lighting

182

level. So, it was an aha moment of they actually don't

183

have visibility into that data, into how much energy is

184

being used. And if you don't have that visibility, How are you going to make

185

small changes so that you can reduce that overhead cost? Is that

186

common, Gretchen, from what you've seen? Obviously, you've done a lot of this research a

187

lot. And I'm also curious if there's a difference between controls that

188

need to be monitored on the greenhouse side versus pure vertical

189

farms, and if you have enough data to kind of back that up.

190

Yeah, I appreciate you bringing up that there's maybe different baselines for

191

greenhouses and vertical farms. And if you check out the results of my study

192

with Netta, If you look at what we did was we created a tiered

193

hierarchy of control sophistication levels. So level 0 is

194

basic. Level 0 is manual. Level 1

195

is when you start to have some basic controls like a

196

timer. And then when you start going to level 2, that's when we start to

197

have some sorts of an automation system going on, but they're not

198

talking to each other. And then as you go up the levels, you start to

199

have actual system integration. And what we tried to do with the study was for

200

every system, lighting, HVAC, and irrigation, what

201

level are they? So we did surveys, we did interviews, site visits,

202

and field demonstrations. And when you take a look at the levels of

203

all of those systems, you can't say that there's a common level that

204

you see amongst all those systems across greenhouses and vertical

205

farms. We observed cannabis indoor farms that

206

In some cases had manual lighting controls, which boggled my mind, but that's what

207

they chose to do. And then we also had one of the most, what they

208

touted to be the most sophisticated, completely integrated, completely

209

like well-oiled machine-controlled cannabis farm. We went

210

to a huge cannabis greenhouse, which had very little lighting and

211

therefore did not need a ton of advanced lighting control, but had one of the

212

most sophisticated irrigation systems we'd ever seen, where they did

213

gravimetric weighing of their plants to see how much water was happening for

214

a sample plant that therefore then dictated how much water the rest of the crop

215

got. They also had sophisticated energy generation

216

systems, cogeneration systems, and absolutely knew a ton about their

217

energy. So that's cannabis, and that's just how you can see, like, you've got the

218

full spectrum there. It's hard to say what the baseline is. Some people

219

have said that when you've seen one greenhouse, you've seen one greenhouse. So in my

220

study, I've seen many, but can we say that my study

221

applies to everyone? No, it probably just applies to California. But the last thing

222

I'll say is that I do think that overall, greenhouses, if they're growing

223

a crop that has a lower profit margin, we generally saw have less advanced

224

controls. And if you have a crop like we've talked about with

225

orchids, there's more of a reason to have some more Cadillac-level

226

integrated system. But I think what we do see overall across all of

227

them was still generally a fairly low level of system

228

energy monitoring. So they've got an idea of how much they're paying

229

for their bills, but they— most of them all across the board

230

did not have the ability to say, yep, I've been spending $20,000 on lighting,

231

$40,000 on HVAC this month, and then in total my bill was

232

$80,000. So yeah, that's sort of the gist of it, is like

233

the study helped us put more dots on the map, but we still have more

234

studies that still need to keep proving that

235

there's a general trend for a particular crop. I

236

can't really say that yet. So with all this data that you now have

237

available, Neta, I'm curious how you think about approaching

238

partners to work with. Does this change your thinking about maybe doing an

239

audit first about seeing where they're at and what exactly they're measuring? Because

240

to Gretchen's point, they may think they've got a robust monitoring system,

241

and with the proper audit, you can almost pick out like where

242

There are gaps in how they're thinking about this. And then obviously one of the

243

questions is going to be, is microclimates going to compete with the systems

244

or is it going to work or is it going to complement them? So I'm

245

sure those are questions that come up as well. Yeah. So I think what you

246

mentioned about the audit, yeah, I completely agree. Gretchen's team and

247

Gretchen's expertise and ERI is the perfect company

248

that can help with those things. They could step in and take a look at

249

an operation and audit them and understand Where, you know, you can even— I

250

believe, Gretchen, if I'm not wrong, you guys can even audit their energy bills and

251

see if there was some mistakes on their bill. So there's a whole level

252

that ERI and Gretchen's, especially Gretchen's expertise, can really

253

step in and help operators right away without having to install

254

anything. They could just look at documents and papers and bills

255

and make sense of it. That's number one. Then number

256

2, what you mentioned, Harriet, is Competing or

257

complementing? Well, historically, I'd have to say that most

258

companies out there have been about replacing, right? We actually come in and

259

complement. We're not asking to rip and replace. The other thing that's

260

really important is that these energy monitoring systems have to be easy

261

to install. If they're not easy install and there's going to be a bunch

262

of wires everywhere, it's unlikely that the operators want to go through the

263

hassle. And that's where I think what we've done at Microclimates is really

264

try to simplify that process. where we bring in a computer with our

265

EnvOS, which is an environmental operating system, and these wireless

266

sensors for energy monitoring that just connect, hook to the

267

circuit level, and quickly begin to monitor your environment. And

268

then the operator also has the ability to put in their scheduled

269

pricing. So then automatically the dashboard will show you

270

how much energy did this pump use How much did it cost

271

me? And you have all these beautiful graphs that you can look at and make

272

sense of it. Then you start working with a company again like ERI

273

and Gretchen's team, and you say, okay, now that you've reviewed my

274

baseline bills and what I'm doing, and now that

275

I've added a few circuits, I have 3 months of

276

data, 4 months of data. Maybe you want to have 1 year of data depending

277

on your crop, maybe seasonality, who knows. Now,

278

Gretchen, what do you suggest I do with this information? And that's where they

279

come in and help you fine-tune your system slowly. And again,

280

it doesn't have to cost very much. It's not like we're spending hundreds of

281

thousands of dollars by any means. It's very reasonable

282

to get to that point and shave off 5% off your energy

283

bill, which makes a huge difference. Yeah, Gretchen, I see you

284

nodding your head. So what's usually the responses when you show them these studies?

285

And obviously, there's always pushback when you have to change systems that are

286

already in place. And I'm curious, what are some reasons you'd give a greenhouse

287

operator for reasons why they should switch to

288

daylight-responsive lighting controls, for example? Yeah, or

289

daylight-responsive lighting controls plus some more energy

290

monitoring. Exactly. I think that the things that both

291

Nada and I try to do is take one step at a time. So yes,

292

There's small steps to take, like doing a bill audit or doing

293

a quick audit of like, what do you even control? What do you even

294

measure? And then I would be able to share with Neta, okay, they

295

have this much information. And what we can do together is provide them with

296

more valuable information on top of what they already have. And

297

then also provide the right thing, whether that's

298

light, the right light, or the right humidity, or the right temperature. Right.

299

And then lastly, the thing that I care about, save energy. So get

300

more information, get the right target hit, and save

301

energy. Hopefully save money because everyone's energy costs are going

302

up. And so the payback period just gets better the more you implement

303

automation. So we found that sometimes growers didn't know how much light

304

they were actually receiving, right? So they can then tailor their

305

controls to meet production goals, influence plant quality

306

or adjust the amount of light they're doing because they were never actually meeting DLI

307

target, which is something we've found in quite a few greenhouses we've worked with.

308

Then they can use, you know, automation to either

309

do some sort of simple algorithm or use AI, which we might talk about a

310

little more, to decide how much light should I give at any given, you know,

311

15-minute interval. Should I add a little more light because power

312

costs are going to go up tomorrow? Do we have a production goal we haven't

313

met yet? So there's some things that people can start to do to provide light

314

when it's needed or provide, you know, turning it off when it's not needed. And

315

then lastly, you know, the pocketbook. I think that we haven't talked about the numbers

316

yet, but I've been really excited because my study has sort of stood

317

alone along with some academic studies that have been done by like University of Georgia

318

and Cornell University for a while, since like 2016. These

319

academic studies plus the CalNEX study have said automation

320

saves a good amount of energy. And usually that raises

321

eyebrows and suspicion because large numbers usually mean like, how can you really trust

322

that you're gonna save 50% of my lighting energy? That's

323

crazy. But it's not actually crazy. My study, as well as those

324

recently performed by other teams, so the ASHRAE

325

Standard 90.1 committee just this past month presented

326

a slide that showcased 42 to 62% energy savings

327

compared to time clock controls when you implement daylight responsive

328

controls. So if you're paying over 10 cents a kilowatt hour, which

329

many of us are, many of us even at our house are paying more than

330

10 cents a kilowatt hour, the payback can be as short as months.

331

And I heard someone in the ASHRAE committee say this

332

may be the quickest payback measure that we've ever added to

333

90.1. And so I really think that speaks to not just

334

the impact, the magnitude of this opportunity that

335

for the CEA industry, but overall for the whole buildings industry,

336

this is a very big opportunity in terms of energy savings. So that's what

337

I'd say to a greenhouse owner, but also I'd say to a vertical farmer as

338

well. I'd say, what do you currently not know? What do you want to

339

hit for your target? Do you know you're hitting that target? And then let's save

340

some energy. Even if you're indoors, you're probably able to dim your lights

341

in ways that you're not. You're probably able to modulate your fans, your pumps.

342

There's always those tweaks, the continuous improvement that Netta was talking about.

343

5% a year, that'll help you cushion yourself from utility

344

cost increases. And then if you go even more aggressively, you know, if you have

345

a dedicated energy management practice, you could be saving more like 15%, 20%

346

a year. Or you could go big with one thing and

347

over the years save 50% energy savings with larger construction projects.

348

So naturally, that begs the question, Gretchen, how come people aren't installing these

349

everywhere? And I'm excited to hear what Neta says

350

about this one as well. But like, the quick, simple payback does not tell

351

the full story of a construction project, right? Like, if it did, then you and

352

I would be doing improvements to our living spaces all the time

353

because the payback would be the reason we would just do it. But a good

354

reason, I spoke with a grower in the Mid-Atlantic region who still uses

355

high-pressure sodium lights and time clock controls, and they

356

explained that they know every reason under the sun why they should install new equipment,

357

but the disruption to production is just a challenge to orchestrate that they—

358

I'd say the number one reason is operational impacts during construction. The

359

second one I'd say is these systems are not yet industry standard practice because

360

they're not required by codes or published in standards. But as I mentioned,

361

ASHRAE adding 90.1 language to require daylight responsive

362

controls means that, that because it's the basis for codes and standards around

363

the world, anyone could point to that and say, okay, Minnesota

364

chooses to adopt this. Okay, you know, Maryland chooses to adopt

365

this, or even the city of Chicago chooses to adopt this.

366

But it's happening in California at the state level right now. So I think that

367

if you're a California grower, This is the most important thing to know is that

368

it's not industry standard practice now, but by 2028, you're going to probably

369

be— January of 2029— required to do it. And then

370

lastly, upfront cost, right? Even if you get paid back, even

371

if you get a rebate, you've got to pay for materials, labor, commissioning,

372

training. And that's just a little bit too much for a lot of businesses to

373

tackle right now, especially during uncertain economic times. And,

374

you know, Henry from Agritecture posted, just today on LinkedIn about

375

how, you know, things are consolidating. So those

376

who are going to do these projects are going to be the, probably the larger,

377

more historically established companies. Yeah, that trough seems

378

to be a bit deeper than people originally thought. Yeah. Anything

379

to add on that? Gretchen covered it all. Like, I'm in complete agreement

380

that it is. First of all, you know, she mentioned California and oftentimes we do

381

see that states follow California. So that's something to say. I think it's

382

going to happen over time. More and more states are going to adapt what California

383

does and you see Historically, we've seen that in every industry, including the food industry

384

that I was in prior to this. So, I think that will happen. I do

385

think that interruption is really hard for them, and they just don't have the manpower.

386

Everyone's limited right now. You know, you don't have the manpower to make those changes,

387

and interruption to their day-to-day operation is a challenging

388

one for them. But we need to make this accessible too. I think that if

389

we can make it small and accessible and you start one room at a time,

390

it's possible to get there. It's just that you don't have to overhaul the

391

entire operation. You can start with one room and say, I changed

392

the lights in this room, or, I applied DLI in

393

this one room. What was the impact of that over the next 5

394

months? How did that compare to my last 5 months? And if that works, then

395

you slowly transition the change. Yeah, and I think it's important, and

396

maybe you can talk to this a little bit more, Neda, about this ability for

397

growers to understand that they don't have to rip and replace, as you say. And

398

I think they appreciate having the freedom to choose a mix and match

399

if that fits their needs in terms of sensors and tech. So how

400

does this help you think about how to approach established growers

401

who are set in their systems like the example Gretchen outlined?

402

Yeah, every greenhouse is different, right? Every greenhouse has different

403

needs. No one manufacturer makes the best sensors on the

404

market. We know that the technology

405

changes. So, I'd say it's, you know, our philosophy

406

has been you don't need to rip and replace, you can complement. So,

407

it's really coming in as a consultant and understanding from that

408

operator, what is it that you have today? Where are your

409

blind spots? Where do you want to go in the future? And

410

how can we complement what you currently have? So, in other words, let's say

411

back to DLI, let's say that You want to save

412

some energy on your lighting, but you don't have

413

DLI. You're worried about the expense and all the

414

wires that are gonna run around with all these different PAR sensors. How can

415

we address that? And the way we've addressed that is, what if you get a

416

PAR sensor that we can convert to a LoRaWAN wireless

417

so you can move your PAR sensor around? Now you don't have a bunch of

418

wires. Now you have flexibility to move the sensors around. Right. What

419

if you use wireless sensors for temperature, humidity? We actually have a

420

facility right now in Virginia that's doing some study on their blind spots. You can

421

actually deploy some wireless sensors to get to know those blind spots,

422

and you can still take that information, feed into your control system. Whether the

423

2 control systems, their existing control systems that we're not ripping and replacing, can

424

be integrated with microclimates is a different story. But if they can be

425

integrated, then the 2 systems can talk to one another. So really, it's

426

about giving them the freedom to choose what's right

427

for their operation. So I'm a strong believer that, you

428

know, growers shouldn't— they should really own their own

429

strategy, and they shouldn't have any limitations because of the vendor's

430

limitations. And I think it's really, really important that they have the freedom to

431

choose. That's helpful for that context. Thank you. So Gretchen, you did

432

touch on AI, and I'll give you both a chance to talk on it and

433

seeing what's coming up. But based on, you know, what you've seen in your experience

434

with this research, And obviously following the trends of what's happening on the AI

435

front, where do you see the biggest disruptions happening, or what should growers

436

be preparing for? Well, I want to reiterate what Neta said about a phased

437

approach. So no matter what happens next, whether there's this

438

great new innovation like a brain that will tell your control system

439

exactly what to do because it knows the weather for the past 50 years and

440

it's predicting the weather for the next 20 months, And that

441

would be awesome, but that's like also probably going to be like buying a very

442

expensive thing for a while. And so a phased approach, no matter what, will probably

443

be the best. And I think what, you know, the microclimate systems offer

444

is literal like card by card. So you can decide how much

445

equipment do you want to monitor and control with the system versus

446

letting your existing system continue to control some things and monitor some things.

447

And For example, with AI, if you want to first implement

448

a simple daylight responsive control algorithm and say,

449

turn the lights off when the PPFD gets too high, all right, just don't

450

overlight. Then you take a look at the crop, you say, that looks good. All

451

right, let's try now a DLI target, which is just based off of the target

452

you think I'm gonna reach at the end of the day. That doesn't require AI.

453

It could, but it doesn't need to. Folks from Cornell have been writing those algorithms

454

since the '90s. And those are just intelligent algorithms. But

455

AI, I think taking more of the agency

456

of making decisions might be where we start to see it happen, where it's like,

457

all right, the AI's gonna start to tweak your DLI targets day

458

by day because it's decided what you need. And we've allowed

459

that to happen with other things like screen operation. We've decided that, you

460

know, the control systems know what's best for the screens as they read

461

the climate. Responses, like what the temperature is and the humidity is, and they open

462

and close. So I do think that we'll start to see that integrated more and

463

more as we let the growers spend their time

464

doing the more human-valuable tasks. We've started to see the value of human

465

labor compared with AI labor, and that's where I think we'll start to see the

466

balance in the vertical farm and the greenhouses. What's important for AI to do because

467

it's cheaper, and what's important for the grower to do because it's much more expensive.

468

And Neda, what are you seeing from your side? First, I want to completely agree

469

with what Gretchen said, that phased approach, right? I love working

470

with Gretchen because we both have this mentality of things

471

don't happen overnight. It's a phased approach, and you want to make it

472

so it's accessible to the operator and it's scalable

473

so they can slowly work their way there. So from an AI perspective, I

474

think that AI is actually going to be very different than what

475

most people expected right now. A lot of people are thinking of AI as this

476

autonomous growing or yield prediction.

477

And yes, we're going to get there, but I think we're going to get there

478

slowly. And what Gretchen touched on is maybe making those

479

slight modifications in operation, right? To make those slight

480

modifications to your DLI or your HVAC systems,

481

AI needs to have the ability to Yeah. If

482

you don't have the data today and you're not collecting thousands of data

483

points, if you're not talking to an AI and actually

484

getting this— I think of the AI today as an assistant

485

that you hire that eventually is going to become your consultant or

486

it's going to do the work for you. It's either going to advise you, it's

487

going to do the work for you on your behalf, right? But if you don't

488

have the thousands of data points, if you can't summarize the trends, if you can't

489

make any recommendations and alerts, and you can't generate those reports based on the thousand

490

data points, how is this AI How am I going to actually get to know

491

you? So first of all, we have to step back and say, are operators actually

492

collecting data? We already said early on in this conversation they are,

493

but they don't have enough environmental visibility, which means they actually are not collecting enough

494

data, number one. Number 2, is the data coming together in

495

one place, or are these all different silos and the data is just

496

disparate and all over the place? Are you able to pull the data into one

497

place? You should be able to. So that's number 2, is that you don't want

498

your AI to be working inside of those. You want your AI to step back

499

and look at your entire operation and make decisions for you. Number

500

3, can your AI agent talk to other AI

501

agents? Some can, some can't. So you need to have an AI agent

502

that can speak to other AI agents. And then number 4, I'd say, which is

503

the long run, is can your AI with your environmental

504

automation now be able to talk to, let's say, your ERP systems?

505

And that's where we kind of move towards this yield prediction

506

and autonomous growing is when we really first have

507

thousands of data points. We understand it. The AI has

508

conversations with you. I mean, all of us are using chat now, right? A year

509

ago when we were using chat, we didn't trust it. And

510

now our chat or Claude, whoever you're using, knows

511

more about you, the way you look at things, the way your

512

operation operates. Yeah. And now it can advise you. But none of this

513

stuff can happen overnight. It happens very slowly. And you need

514

to be able to trust that AI to make decisions on your behalf. So maybe

515

at first, it's an AI that's going to come back to you and tell you,

516

hey, I suggest you make this change to your DLI. But you have to have

517

a set of eyes and say, I trust you, I don't trust you. Or, I'm

518

just going to do a simulation. I'm just going to do it in an R&D

519

room and see if this works. So when we talk AI, I think everyone gets

520

really excited. And we get really excited as a software company. Of course, we get

521

really excited. We step back and say there's a reality of

522

how it's going to progress, in my opinion, which is more of an environmental automation

523

AI that's going to help you versus the yield

524

predictions. And if you, again, you don't have your data house in order, you

525

don't have your data, you don't have enough data, or you don't have the data

526

coming together, how is the AI ever going to scan thousands of data

527

points to make decisions for you? Yeah, and that's my marketing brain is always on,

528

as you know, Neta. So it speaks to like this idea of like, Auditing

529

or having an audit saying, how data ready are you? How data rich are you?

530

Something along those lines. Because when you talk about these thousands of data points, and

531

I'm sure Gretchen can speak to this, like, you probably have some folks run

532

the gamut of just like, oh yeah, I totally get what you say, or like

533

eyes wide open, like, I'm barely measuring one thing here. The

534

thought of measuring thousands is just overwhelming. So just one quick

535

follow-up for Neda is just with the influx of like awareness

536

around AI, Claude connectors. You know, I myself am like deep in like Claude code.

537

And so every— if you follow X enough, there's always like Claude for this, Claude

538

for that. So are you thinking as a company about making connectors,

539

MCPs? You know, not to get too geeky here, but like stuff that can plug

540

into Claude easily for folks that are already dabbling? Because I imagine a lot

541

of these, you know, smaller shops are seeing how they can do more with less,

542

and then naturally they're leaning into AI. I myself like I've had it build spreadsheets

543

for me. I've had it connect to my CRM and populate it automatically.

544

It's my first go-to now. This thing that I used to do manually,

545

can I automate it? So I'm literally got Claude in a second window, a second

546

monitor, always seeing how I can put it to work. And I'm curious how

547

you think about that. Yeah, 100%. I mean, at the core,

548

you know this about us, Ari, is that we are an integration company. We're

549

an open company. core, the philosophy of Microclimates

550

has always been about not living in silos. So absolutely,

551

we are definitely looking at ways of— and we're already working on some

552

things on AI— is how do you get it to work with your existing AI,

553

your large language models, and then how much information can be

554

shared back and forth. And there's also the security aspect that always has to be

555

considered. So that's what our technology team is really focusing on, is the security aspect

556

and how do you keep that information especially now that you're sharing all of a

557

sudden environmental data, right? We've always believed that you

558

own your data. We don't own your data, which is why we're an edge company.

559

Your data is on-site, on-premise, not in cloud. You own your data.

560

So we gotta be really thinking hard also about the security aspect of it. And

561

that's what our technology team is focusing on. And it sounds like, Gretchen, when it

562

comes to security, that's something that's probably near and dear to a lot of growers.

563

Well, yeah, and it's near and dear to my heart. My mother is, Actually, like

564

one of the kind of mavens of IT security from the '80s. So,

565

she worked for a defense contractor in DC. She raised me to not give

566

out my data on the internet, not talk to strangers, you know, all that sort

567

of stuff where it was like, security is paramount, like operational

568

security for business. When we worked with one of the field demonstrations, Neta, I

569

think it came up that one of the IT teams was like, whoa, whoa, whoa,

570

you're gonna have a gateway and you're gonna be needing to connect to the internet?

571

Like, we've got issues with that. And so, I mean, even just that sort of

572

stuff, even 3 or 4 years ago, now it's funny for me to think that

573

we have companies that are almost divulging so much to

574

companies that aren't even their company. So I might recommend

575

continuing to be cautious with that phased approach, as well as considering making

576

enterprise AIs that are owned and managed by your enterprise, and

577

perhaps not sharing everything with external AIs if you

578

are able to avoid that. I know that there are potentially with like

579

microclimates, there's going to be ways for you to have AI recommendations that

580

are essentially always guaranteed to not be being used

581

to train other growers, for example. I think that was another concern that comes up,

582

and I want to make sure that continues to be something, you know, credible companies

583

do. So a grower I respect once said, I expanded one

584

acre at a time. And I think that person is still in business

585

and will probably be a good guide to think of as we all adopt more

586

automation and adopt more AI. I think everyone should explore their options and

587

find tech that allows for integration of existing systems, whether that's existing

588

hardware, existing enterprise software, existing AI

589

agents. It should be easy to install and it should have a low

590

subscription cost, which I think is something we haven't talked a lot about. But whether

591

it's AI or whether it's a suite of monitoring and controls

592

tools, those all have a cost, ongoing cost these days. It's

593

rare that you find something that you buy it and it's yours now. So I

594

think that the controls market is competitive though, so there's a lot of price points.

595

I'm excited to see that we continue to maybe use those levels of sophistication

596

to help people find the thing that's like right for them. But for me,

597

I personally don't use AI yet. I am maybe going to be swept

598

along in the wave eventually, but as an energy person, for me, I just

599

don't find it something I want to use yet. But I want to support whatever

600

systems people use, whether they're an industrial, ag, or commercial business. Because

601

it's not like, Annette, like you've said, it's not up to me to decide how

602

someone chooses to grow or how to choose to use their data. So as

603

we get close to wrapping up the conversation, Gretchen, I'm curious, when you

604

have conversations with companies in the space who are dipping their toe

605

in the sensor space or trying to revamp legacy systems

606

or hearing these conversations about AI and daylight control sensors, and, you know, a lot

607

of it can start to be overwhelming. So for folks looking to get a

608

start or get a foothold here, what do you usually recommend? Well, I

609

recommend finding free training. There's a ton of amazing free training

610

available from almost a decade or more now of free

611

webinars, short courses by Glaze, the Advanced CEA

612

team, the Indoor Ag Science Cafe. You don't have to

613

go in blind and get sold something by, you know, someone at a

614

trade show. You should get to know people, build relationships, and find out

615

like what's been proven in growers like you. So for example,

616

I've got a grower in California who's trying out root zone heating,

617

and they grow strawberries, and that's not terribly common yet with strawberries.

618

And so I think a key piece for, you know, persuading that grower

619

to try it out was getting utility rebate support,

620

showing them some academic studies, and making them feel like

621

they can continue to talk to other growers who do it. So those would

622

be some of the things I say about building trust. I think that the market,

623

ultimately, people need time. Sometimes my projects take years

624

to come to fruition because there's other things that are going on, like a pest

625

management thing or a delivery distribution thing and

626

trying to get new uptake agreements. So I see

627

things in like long years, much like construction. You just have to kind

628

of not see it as something that's going to turn around in the next 6

629

8 weeks or something. So, Nada, what do you think? 100%.

630

I think it's built over time. It's a progression. It doesn't happen

631

quickly. Yeah, continuous improvement, like kaizen. You know,

632

I think the growers that stand the test of time don't adopt

633

big rocket ships and then go to the moon. Most folks

634

are still on the ground, and someone called it a 7-day farmer.

635

I liked that phrase where it's like they are— that is what they're doing. And

636

that's what they're invested in. And it's like potentially this work, this

637

automation, this environmental visibility that is

638

amongst their priorities, but it's neither urgent nor the top importance.

639

So that's why we have to take our time to find when does it become

640

important. Oh, data centers caused your utility rates to go up by

641

25% and, you know, demand charges have gone up too. Now it's probably

642

the time to do an audit and improve lighting. So to that,

643

Neda, how do you think about conversations with new prospects and

644

people new to understanding this, new to understanding if this is even something that they

645

need? How do you usually start those conversations given everything we've talked about

646

today? New to understanding if they need environmental monitoring or controls in

647

general? Yeah. Oh yeah, I'd say if you're a new operator

648

and you're starting out and you have a greenhouse operation or you have a vertical

649

farm, whatever it may be, at bare, bare, bare minimum, we always say you need

650

to have some monitoring information. Right? You've got to have— you got to

651

understand what your crops are actually feeling and what they're experiencing.

652

And if you have one sensor in a greenhouse, it's just

653

not enough data point. So I'd say to a new operator, I'd

654

say at bare minimum, start monitoring. You don't necessarily need to jump from monitoring

655

all the way to automation, right? The automation is like the ideal place, and then

656

AI automation and algorithms are the next best place that you want to be

657

at. But You can do a lot of this work with just having monitoring and

658

setting timers. You know, we've seen operations that work fine,

659

and they run for a time period at that level,

660

but then they do need to move up to more of a control where you

661

have inputs and outputs. So, you have inputs coming from data, from your sensors

662

that are going to force the output so that your system becomes smarter and

663

smarter over time. So, I don't think that you necessarily need to go and purchase

664

I don't believe, I truly do not believe that you need to start an operation

665

and invest in a $200,000 climate control system. I don't believe

666

that. I think that you can start off with a few thousand dollars and just

667

start monitoring, and then set your controls and automation, scale your

668

operation, go one zone at a time. You don't need to just all of a

669

sudden spend $200,000 and every single zone is fully automated. You

670

can start slow because at the end of the day, you're going to run out

671

of money and you're going to be out of business. So, it's not a good

672

way of running a business. Well, like that other grower, he used the first

673

acre to pay for the next acre. So it's like if you do it all

674

at once, you've essentially taken all that capital

675

out of what could be sort of like a green revolving fund where I'm like,

676

great, I improved zone 1. Now zone 1 is costing me less money to operate.

677

I now have some savings to apply to zone 2 because becoming a

678

multinational grower wasn't done millions of acres at a

679

time. Yeah, that approach of going 1 acre at a time, Gretchen, is interesting.

680

How should growers think about that? Do they need a dedicated R&D

681

space for these sorts of tests? Can they do it with a sectioned-off area

682

of their existing growing space? I'm curious logistically how that would work out.

683

It's easier for indoor farmers to do things like that, I think, because they often

684

will have specific control zones that are already very well

685

separated, have different equipment serving it. Greenhouses often will have to put

686

up makeshift barriers if they want to set up a lighting zone of control that

687

Like Cornell creates these, you know, T's where

688

they have 4 different lighting treatments happening in one zone that might normally have

689

one treatment. And then you might see that in a commercial area as well, that

690

they start trying something out and have to build up makeshift walls. But with huge

691

greenhouses, that's not going to be possible. So I think

692

that's why a larger greenhouse would try it out on a smaller one first, and

693

then, for example, implement root zone heating or implement energy monitoring

694

at whole facility. But even if a grower doesn't have an acre, it's like one

695

zone at a time, I think, is where it comes to every size grower. One

696

room at a time. We do that at home, right? We don't renovate our whole

697

house at once. Generally, that would be extraordinarily disruptive and we'd have no money to

698

go on vacation or do anything else that's nice. So yeah, I think we

699

should take it as we all want to continuously improve so that

700

we are resilient and sustainable. And that doesn't just mean that we feel good about

701

the environment. It means that we're here to do business next year. So yeah,

702

I love what Aneta said about what the plants are feeling because— I love

703

that too. I was like, wow, that's a really good phrase. They're living organisms,

704

you know, they're living things. And they can't talk, right? So

705

these systems, they get insight that allows us to not

706

just save money but to actually have like real, like you

707

said, like almost organic impacts. They can't talk and you

708

can add sensors to get them to talk for you. So you can have

709

leaf temperature. That's how I think of a plant talking back to me, right? Is

710

if I can't— if you can't talk, I love that what you said, Gretchen. If

711

a plant can't talk, can you have a leaf temperature sensor

712

that is going to talk on behalf of the plant and let you know,

713

this is what I'm feeling? And then can you take that information and

714

feed into HVAC system because the humidity is too high in the room? And can

715

you reduce that by 3%? And then it will talk back and say,

716

I'm feeling better because I am in the threshold that I like to be in.

717

Yeah, they will get to the point where the AI is actually speaking for the

718

plants. I think about those experiments when I was in grade school. They would play

719

classical music for one set of plants and heavy metal for the others, and the

720

classical music plants would do better. So is anyone doing tests with music

721

in greenhouses? I can't speak for that, but I bet you a lot of the

722

researchers that I work with talk to their plants because they have shown that does

723

result in better outcomes. For sure. I will admit that I do.

724

I will admit that I have a banana tree in my yard right now, and

725

for the first time in Seattle, it's actually flowered 3 different flowers.

726

Thank you. And we're not supposed to grow bananas in Seattle, but I have been

727

talking to my banana tree. I'm sure it's helping.

728

So Gretchen, I'll go with you first and then Neta, just closing thoughts on this

729

conversation, where we are, or maybe some thoughts about the kind of the space as

730

a whole. We did mention Henry posting, you know, status of

731

what's happening in CEA. So I'm curious your 2 cents on what you see

732

from your perspective. Well, at the beginning of the year, I predicted a year of

733

retrofits, and I think that is what we see

734

happening and consolidation. And that doesn't necessarily mean,

735

you know, rocky situation for everyone. Ultimately, for Neta

736

and I, it means that we can work with people to, like, I think in

737

Henry's post, he said like a fairly well-built greenhouse is a very, very valuable

738

asset always, regardless of what happened to the company that owned it. So,

739

you know, times may change and the owners may shift, but we're there to help

740

that greenhouse become better. And so I think that is going to be an opportunity

741

we continue to do more as the vertical farms as well. How

742

can we get more monitoring and help that overhead costs go down so that whoever

743

takes that asset is going to have overall an asset that

744

is very profitable? And I also, for the rest of the

745

year, I see For my point, I'm going to be at GreenTech Philly. I'll be

746

doing a talk on the opportunities that are being presented by new

747

energy regulations and how that might allow for growers

748

to start exchanging energy with, you know, unique type of buildings like data

749

centers and others. So that could be a cool talk. And overall,

750

I would hope to share soon the results of the NYSERDA research that all the

751

glaze researchers worked on for the past 10 years. So that's going to be pretty

752

exciting. Those are kind of the 2 things for the rest of my year. Okay.

753

Thank you. Nada, what's on your radar? Yeah, it's, you know,

754

Gretchen mentioned the beginning of the year, her prediction. I'd say for the past

755

2 years, our prediction has been that we're going to— integration is going to be

756

the buzzword, and we're beginning to see more and more of that. Certainly, it

757

was a buzzword at Indoor@Con, and there was a panelist

758

discussion with our CTO that was involved that talked about what does it mean to

759

be integrated, Why is that so important? So, I think integration is going to

760

be the ongoing theme for a long time ahead. It's just

761

necessary. So, I think that's going to continue happening, and it's already happening for us.

762

We're going to go down that path even further. We're beginning to see more and

763

more companies that have the more legacy control systems changing

764

their models even and opening up their APIs and making it a lot more accessible

765

for companies to integrate with them. So, I think that thing is going to

766

continue. The other prediction that we've had for the past couple of years, and we're

767

just now starting to get there, is that these LoRaWAN wireless

768

sensors are going to take off in this industry. They've taken off in

769

other industries, but in this industry, it's sort of been, we've had some systems, you

770

know, you've got the Aranet systems, the Arroyo system, you've had other systems in the

771

market, but it's really gonna be about these open platforms

772

that the customer has freedom of choice. And we're hearing this over and over from

773

customers, and they get really excited when they take a look at our website and

774

we have 10 different sensors you can choose from, temperature humidity

775

sensors. You don't have to— you can pick and choose from 10 different vendors, 10

776

different manufacturers. So I think that theme is also going to continue,

777

that there's an excitement for these customers and operators to have

778

the ability to pick and choose what's best for their operation

779

and change vendors if they need to because a new

780

product has hit the market. So we've done a lot of integrations this year. It's

781

been really exciting, new integrations this year. Well, I appreciate that

782

feedback from you both because it seems like you both have a finger on the

783

pulse in your respective spaces about what's happening, where things are headed, because you're on

784

the ground and you're doing the work, working with growers. And I love to see

785

these types of partnerships, and I'm sure there's a lot more happening. So if there's

786

others that I'm not aware of and you need to bring them to my attention,

787

we'll get them on the show as well. But, you know, to see you guys

788

working together is really exciting because you're both bringing your respective

789

specialties and strengths, and it's so It feels like a 1 1 3

790

result here. So I appreciate the work both of you are doing for this space.

791

So Gretchen, best place for folks to connect with you if they want to learn

792

more? I'm on LinkedIn, Gretchen Schimmelfennig, and

793

other social media. I have other lives.

794

And Neta? Same here, on LinkedIn. And you can always go to microclimates.com

795

and schedule a meeting with me directly. Okay. We'll make sure all those links are

796

in the show notes. Thank you both again for an engaging conversation. Thank you. Thanks

797

so much, Ari.