The R&D Tax Credit Aspects of LED Horticultural Lighting
Horticultural-LEDs
At
the 2017 Lightfair International Convention held in Philadelphia and
attended by thousands of people, one major theme was developing
technology and markets for LED horticultural lighting. LED
lighting is particularly conducive for plant growth, all while reducing
energy consumption and adapting the light to meet the needs of varying
crops. As a result, vertical farms sprout in unconventional locations,
such as warehouses and storage units. LED horticultural lighting brings
farms to the people, regardless of location, to meet a growing
population’s demand for healthy and natural food. Now, research and
development for new solutions in the Horticultural industry is
supported by large federal and state R&D tax incentives. Lighting
specifiers, lighting designers, and architects and engineers are now
eligible for the tax credits when designing LED horticultural lighting
systems.
The
Research & Development Tax Credit
Enacted in 1981, the federal Research and Development (R&D) Tax
Credit allows a credit of up to 13% of eligible spending for new and
improved products and processes. Qualified research must meet the
following four criteria:
- New or improved products, processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include employee wages, cost of
supplies, cost of testing, contract research expenses, and costs
associated with developing a patent. On December 18, 2015,
President Obama signed the bill making the R&D Tax Credit
permanent. Beginning in 2016, the R&D Tax Credit can be used to
offset Alternative Minimum tax and startup businesses can utilize the
credit against $250,000 per year in payroll taxes.
The
Benefits of LED Lighting in Farming
The American population is trading open land for the congested
atmosphere of urban life. Until now, farms could not follow the people to cities. However, with advanced
LED lighting solutions, farming can exist in unconventional locations,
such as dark warehouses or windowless storage spaces. Decreasing the
inherent distance
between farms and consumers will minimize loss in harvest, transport of
goods, and overall shelf life. Consumers will receive fresher products
more immediately, regardless of the time of year.
One benefit of indoor farming is that the farms can
continuously produce and yield crops year-round. Weather conditions are
no longer a deciding factor since LED lighting can be tempered to
immediately meet the growing demands of different vegetation. The farms
also use a fraction of the acreage required for traditional farms.
Although city spaces are hard to come by and expensive to purchase,
indoor farms can be moved to warehouses on the border of major cities,
while still being more beneficial to consumers than traditional farms
located on the other side of the country.
According to the 2014 WinterGreen Research "LED Grow
Light Market Shares, Strategies, and Forecast Worldwide" report, the
2013 market for LED horticultural lighting was $395 million. It is
projected that by 2020, the market will rise to $3.6 billion . This
growth rate is supported by various commercial and university efforts
that explore and promote LED Horticultural lighting in the US.
Urban
Produce LLC Brings Vertical Farming to California
Urban Produce is located in Irvine, California. It
specializes in growing wheatgrass, baby kale, and numerous other
organic greens. The plants are lined on shelves, and a computer program
is used to monitor how much water and LED light the differing crops
should receive. According to the Wall Street Journal, the company
patented the “high-density vertical growing system” with the intention
of decreasing fuel and shipping expenses. With the application of
monitored LED lighting and water distribution, Urban Produce grows
organic, healthy food with 80% less fertilizer than traditional farming
techniques.
Hubbell
Lighting Finds the Ideal Balance between Blue and Red LEDs
Hubbell Lighting is a large lighting manufacturer
that recently introduced a line of horticulture lighting products
called NutriLED. Hubbell identified the optimal combination of blue and
red LEDs. According to their research, blue LEDs are crucial for
vegetative growth in plants, and red LEDs provoke fruiting and
flowering. Because of this innovative and necessary discovery, the
NutriLED product can be used by anyone in the Horticultural market.
NutriLED can be scaled to meet any indoor farming
requirements. What makes it unique from most other lighting options is
that it can deliver a linear 60 degree beam spread, which is narrower
than typical high-power LEDs, according to LEDs Magazine1. This is
beneficial to the industry because now, farmers can place the lights
between rows so that vegetation on the lowest shelves can be reached as
easily via vertical illumination as vegetation on upper shelves.
LumiGrow
Extends the Growing Season in the Horticultural Industry
LumiGrow is a company that specifically creates LED
lighting for indoor farming efforts. For 10 years, it is one of the
leading companies working with commercial and research Horticultural
facilities across America, including the Patterson Greenhouses in
Broadway, North Carolina. The Patterson Greenhouse extended the growing
season for tomatoes, especially in warmer regions of America with
lighting and technology from LumiGrow.
The lighting system works in conjunction with the
smartPAR Wireless Control System, available on smart phones and
computers, so that users can create lighting schedules based on
individual vegetation requirements, time zones, light intensity,
red-to-blue light ratio, and energy consumption. According to previous
research by R&D Tax Savers, the Internet of Things has the
potential to help farmers monitor variables and manage quality levels
and resource usage. Wireless networks, such as the one that LumiGrow
pairs with, facilitates automation and computerization to “more finely
manage and reduce the use of resources and labor .”
LumiGrow discovered that with blue LED lighting,
plants flowered 3 days earlier . With red LED lighting, the plants
developed thicker stocks and more vegetative growth. Because of
customization in lighting and spectrum, a farm owner can control
variables such as infrastructure costs and crop quality without
compromising on energy, heat, or crops.
The US Department of Agriculture’s Agriculture
Research Service partnered with LumiGrow to procure a light plan that
would improve greenhouse light quality and decrease the high levels of
heat resulting from HPS (High Pressure Sodium) fixtures. LumiGrow
experts explained that the adjustable spectral control they implemented
“provided an adaptable lighting strategy for USDA greenhouses growing
multiple crops” and that “flowering onset and timing were important
factors for seed production,” which could be directly controlled via
manual changes to light intensity and spectrum. 4
Philips
Lighting Creates the “Light Recipe”
Philips Lighting has been developing Horticulture LED solutions called
GreenPower to condition any type of crop to grow, regardless of
external factors. They have been successful implementing their “Light
Recipe” around the world, which is sustainable for everything from
vegetable production to cut flowers. The Light Recipe is intended to produce 20 to 25
harvests per year.
Similarly to LumiGrow, Philips suggests ways to
control the spectrum, light level, uniformity, position, how to deal
with varying climate conditions, and the benefits resulting from such
energy saving techniques. Philips proved the benefits, including, but
not limited to, increased production, shortening of growth cycles,
better space utility, enhanced plant quality, energy savings, higher
rooting survival rates, and other benefits in plant growth .
Philips has taken its Horticulture LED solutions to
commercial farms, including Green Sense in the Midwest. By working with
Green Sense, a new research center was developed for Philips
researchers to study specific light-growth recipes that will decrease
the amount of time for plants to grow in year-round indoor farms.
$1
million Investments in Vertical Farming Collaboration with University
of Arizona
On Earth Day, 2017, Civic Farms LLC signed an
agreement with the University of Arizona to conduct vertical farming
with artificial light in UA’s Biosphere 2 complex. According to WSJ,
they developed new cameras, sensors, and smart phone technology to
monitor plant growth in the dome2. Over $1 million will be invested in
their efforts, which includes employing student researchers for the
next 5 years. CEO and co-founder of Civic Farms, Paul Hardej,
exhibited his excitement for this agreement as he said, “A vertical
farm can be 20 to 100 times more productive. The overall direction globally is indoors” .
The university is using the
facility to experiment how to control variables conducive to optimal
plant growth. An UA professor in agricultural-biosystems engineering,
Murat Kacira, is investigating how to control light wavelengths
temperature, humidity, and the percentage of oxygen and carbon dioxide
made available to different types of plants with Civic Farms. 9
Philips
Lighting and Colorado State University Collaborate in Leading a LED
Horticultural Lighting Summit
In January, 2017, Philips Lighting and Colorado
State University hosted a summit about existing efforts in LED lighting
research. Summit attendees could view the CSU Horticulture Research
Center and their efforts in growing plants under LEDs. This center uses
Philips products, including LED Horticulture lighting, Flowering Lamp,
and Interlighting.
At the summit, various research findings were
highlighted as an effort to expand existing knowledge and use of LED
Horticultural lighting. Some of the findings are listed below:
North
Carolina State University:
At the summit, researchers from NCSU presented their findings about how
LED lighting can be used as an alternative to chemical PGRs, Plant
Growth Regulators. Their research pertains specifically to plug
production, which involves small-sized seedlings grown in trays. They
indicate that plants receiving LED lighting appeared to be more compact
than plants receiving PGR treatment. They conclude that “LEDs can be a
potential alternative to chemical PGRs.” 11
Raker
& Sons: Paul Karlovich
from Raker & Sons expanded the research conducted by NCSU to
improve rooting and growth of ornamental plugs with LED lighting in
Michigan. He indicates a 5% improvement in rooting of Maverick Red
geraniums and a 30% improvement for tuberous begonias11. Karlovich’s
research is continuous, and he estimates that he will further improve
the growing conditions by optimizing on controlling temperatures, light
quantity and quality, and humidity.
Utah State University:
Professor Bruce Bugbee critically analyzed situations that would make
adoption of LED lighting more suitable. He identified three factors as
the most crucial for LED consideration. These include maintenance
costs, spectral impacts on plant shape and size, and time to recover
from the initial investment and adoption of LED lighting. He compares
LEDs to HPS (High Pressure Sodium) growth lights, with the intention of
helping Horticultural farmers make the right decision when investing in
lighting.
Rensselaer
Polytechnic Institute and Cornell University: Research conducted by RPI and Cornell
address issues that ought to be resolved when integrating LED lighting
into indoor farms. The growers must be cognizant of the increased
likelihood that fungus will grow indoors when there is no exposure to
UV light. The circadian rhythm of plants is also not measured. Despite
these challenges, further research and development in Horticultural LED
lighting should present some solutions.
Purdue
University brings LED Lighting to Plant Growth in Space
Purdue has explored new avenues of research in
Horticultural LED lighting, thus presenting the idea that eventually we
can move plant growth to outer space. Their recent finding of a balance
between red and blue LEDs, a 95-to-5 ratio, furthers efforts to develop
crop-growth modules in space. 90% less electrical power is used in this
version of targeted LED lighting, in comparison to traditional
lighting. Furthermore, targeted LED lighting has 50% less energy
consumption than full-coverage LED lighting.
Professor of Horticulture and researcher Cary
Mitchell found that, “Instead of the minimum 4-foot separation we had
between conventional lamps and lettuce, we could get LEDs as close as 4
centimeters away from the leaves .” In so doing, Mitchell identified
that they could reduce light costs and conserve energy in these
controlled environments. This will be beneficial in promoting LED
Horticultural lighting on Earth but also in future space exploration.
MIT
Explores Engineering, Big Data, and Network Connectivity in City
Farming
MIT began its CityFARM research project in 2013 to
facilitate indoor farming in urban settings. The effort estimates that
it will decrease water consumption by 98%, eliminate chemical
fertilizers and pesticides from the process, and diminish the amount of
energy used by fourfold . Their research has been successful in making
crops grow three to four times faster than the norm, on a 30-day cycle.
They intend to further investigation in indoor agriculture, especially
by collaborating with Detroit to expand on vertical farming in the
city. They speculate that the harvests can be sold in the city, but
also given to local food shelters .
Conclusion
LED lighting has the most impact on Horticulture in urban farms. As the
US population continues to grow, availability of fresh and healthy
produce is becoming more of a challenge. Shipping vegetables from one
side of the country to the other increases costs and risks associated
with traditional farming. On the other hand, LED Horticultural lighting
can bring farms to the people, regardless of urban or rural setting.
Vertical farming in unconventional spaces has recently become popular
amongst commercial and university research efforts. It is only a matter
of time before traditional farming methods are replaced by advanced
indoor farming techniques that incorporate customized LED lighting and
technical control over variables that traditionally impact the success
of plant growth and production.
