Korean investors pitch power plant as electricity source for cannabis

ADELANTO — City officials have seemed reluctant to publicly wade into conversations over whether existing power is indeed sufficient to meet the demand of the growing marijuana industry.

Ten months ago, Mayor Rich Kerr assured that the Council had “the power well in hand,” even as then-Planning Director Gabriel Elliott revealed that Southern California Edison had expressed an inability to handle the high volume of inquiries from applicants here.

At about the same time, commercial cannabis entrepreneurs were being told by the energy provider that infrastructure was lacking to meet the expected influx of operators. Kerr had said the city met at least 10 times with Edison by then, but outside of behind-the-scenes efforts, the major hurdle has seemed more like a logistical afterthought.

Spencer Vodnoy, Co-Founder and CEO of Critical Mind Inc., a marijuana cultivation business in Adelanto. (Irfan Khan / Los Angeles Times)

In its first formal admission of electricity concerns, the city is entertaining a 20-megawatt natural gas power plant being proposed by Korean developers who planned to visit the city Sunday.

The plant would be located on 5 acres near Violet and El Privelegio roads on vacant territory about 1.5 miles west of the immigration detention facility.

It would generate enough electricity to power four hospitals and 10,000 homes, according to Scott Collins, president of The Collins Group, who is working with the city and investors to bring the project to fruition.

It would have the potential to later grow to 90 megawatts within the same 5-acre lot, Collins added.

“We can have it up and running in six to eight months,” he told the Council on Wednesday, “and supply enough electricity to start out with your cannabis industry and other businesses in the area.”

The plant is also being cast as a boon to the paramount industry by city staff who, in a report accompanying the proposal, articulated the power shortfall within Adelanto’s roughly 3,000 acres of land where cannabis cultivation is permitted.

“Most of the cultivation zone does not have access to utilities such as electricity, a significant need for cannabis cultivation,” the staff report said. “New infrastructure for distributing power in this zone will require at least a year to construct, and adequate supply for cultivation is not guaranteed.”

So as licenses for cultivation and manufacturing get dished out, most of those activities can’t actually get started, which could prove to be a costly dilemma for existing investors.

Don’t miss our reviews of strains, vape oils and other cannabis products.

“I look at it on a much broader thing,” Kerr said Wednesday, suggesting a plant could draw down electrical prices, “not just that it’s going to provide power for factories, cannabis — anything else like that … but for the citizens also …”

City staff said the plant would initially only support local industrial and cultivation activities, but could provide additional energy for sale to other entities at a later time.

Kerr also inquired about the number of employees such a plant could require. Collins said between 20 and 30, with a big chunk pledged to be hired from Adelanto.

“We intend on being good corporate citizens in your city. That’s first and foremost,” Collins said. “I’ve been here for a year now working on this, I don’t intend on trying to screw anybody over. I’m looking at actually providing a service to the city and the residents.”

The Council’s decision to submit a letter of intent should be viewed only as a good-faith expression of interest to the public and to investors, officials said, and it doesn’t bind the city financially in any way.

The project would need to receive environmental clearances, including from the local air quality district, before the developer DBFOM Projects Inc. could return with a site plan and draft agreement, according to Charles Rangel, the city’s development director.

Collins said investors would fund the entire project from start to finish, including all aspects in the company name’s acronym: design, build, finance, operate and maintain.

The company only registered in late January with the California Secretary of State, records show, and Collins said the investors were from a group similar to CalPERS, the pension system, in Korea.

Hyundai would reportedly design the plant, he said, and ship over parts to the U.S. in 40-foot containers where it would be constructed. Mitsubishi is expected to supply the motors that will generate the electricity.

Collins suggested the business model had proven successful in the Middle East and elsewhere.

“Well, that sounds pretty exciting,” Councilman John “Bug” Woodard said near the conclusion of a short presentation. “Answered all my questions.”

To subscribe to The Cannifornian’s email newsletter, click here.