"Gresham House and its net zero prospects are being redefined due to surging energy costs"

In the rapidly evolving world of sustainable agriculture, Gresham's UK vertical farming business is facing a challenge: higher electricity costs compared to similar ventures being built in the Middle East. The cost of electricity for vertical farming operations in the UK hovers around 25p per kWh, while Middle Eastern counterparts enjoy rates as low as 2p per kWh.

However, this challenge is not deterring Gresham House, a company committed to sustainable infrastructure. Peter Bachmann, the managing director of Gresham House's sustainable infrastructure division, has stated that high UK power prices are indeed affecting sustainable investment opportunities.

Despite the higher costs, Gresham is seeking alternative solutions to create a source of competitive advantage. The company is focusing on the installation of on-site solar, implementing efficiency measures, and leveraging AI tools to optimise growth conditions.

The higher costs in traditional farming are also a factor to consider. Fertiliser costs, energy costs, and labour costs are on the rise, making vertical farming an increasingly attractive option.

Vertical farming offers numerous environmental benefits as well. It produces up to 1,900 times less carbon than long-haul imported produce, uses 95% less water, 99% less land, no chemicals, and no pesticides. This makes it a more sustainable choice, not just in terms of costs, but also for the environment.

Moreover, the costs of underlying solar and wind generation are decreasing every year and are below the prices of gas- or nuclear-generated power. Solar and wind project costs tend to float around the energy price, making them attractive in almost any price environment.

Bachmann emphasises that renewable energy is often perceived as expensive but is actually very cheap compared to traditional power sources. He also points out that sustainable companies can help to change unsustainable industry practices and enhance returns, while offering superior products.

However, the path to sustainable agriculture is not without its challenges. Allocations to sustainable real assets are necessarily long-term investments, and a change of government could lead to a radical change in net zero policy. Gresham focuses on non-contentious sectors with cross-party support due to the risk of political change.

Bachmann also highlights the need to bring all costs and benefits of the energy transition into the open for people to decide. He believes that sustainable companies can change perceptions and demonstrate that impact can be created without detracting from returns.

In conclusion, while Gresham's UK vertical farming business faces higher electricity costs compared to its Middle Eastern counterparts, the company is leveraging the benefits of renewable energy, efficiency measures, and AI tools to optimise growth conditions and create a source of competitive advantage. The company's commitment to sustainability, coupled with the numerous environmental benefits of vertical farming, positions it well for the future of agriculture.