This story was originally published on Civil Eats.

By now, the images of shelves full of perfect greens in hulking warehouses, stacked floor to ceiling in sterile environs and illuminated by high-powered LED lights, have become familiar. Food futurists and industry leaders say these high-tech vertical farming operations are the future of agriculture — able to operate anywhere, virtually invincible against pests, pathogens, and poor weather, and producing local, fresh, high-quality, lower-carbon food year-round.

That future seemed one step closer to reality last year when San Francisco-based indoor farming startup Plenty, which grows a variety of salad and leafy greens hydroponically (without soil) and uses artificial lighting in facilities in three locations, announced that it had raised a whopping $200 million in funding from the SoftBank Vision Fund, whose investors include Amazon founder Jeff Bezos.

Flush with cash, Plenty quickly opened a 100,000-square-foot indoor farm outside Seattle that promised to produce 4.5 million pounds of greens annually—and testing some varieties not yet grown for the masses at scale, such as strawberries and tomatoes, at its research and development farm in Wyoming. To Plenty’s leadership and many observers, the cash influx signaled the economic promise of growing food indoors without sunlight and with less soil and water than field farming.

“My reaction [to the $200 million round] was both that of validation, excitement,” said Matt Barnard, Plenty’s co-founder and CEO, over a manner of farming he says yields 350 times the produce per acre on one percent of the water used by dirt farming. “Now we must move with speed and efficiency if we’re to accomplish our mission of bringing people worldwide an experience that’s healthier for them and the planet.”

Not everyone is in agreement.

“My first thought was, ‘we could build a lot of greenhouses for $200 million,’” recalls Neil Mattson, a professor of plant science at Cornell and one of the country’s leading academic voices on indoor agriculture, who’s found that high-tech greenhouses that harness sunlight are more cost- and carbon-friendly than vertical farms that use artificial light.

Most vertical farmers are only hoping to claim a percentage of the conventional produce market, not replace it. To these founders and their investors, the market for lettuce and greens, especially — grown primarily in California and Arizona and shipped worldwide — is ripe for disruption. E. coli outbreaks like the one that hit Arizona-grown romaine lettuceearlier this year, killing a handful of people and sickening hundreds, only further their case.

But behind futurists’ fervent predictions about indoor agriculture, claims about product quality, and sexy technology lies a reality known by industry insiders but too often missing from media coverage: The future success of this nascent industry is still very much an open question.

The astronomical capital costs associated with starting a large hydroponic farm (compared to field and greenhouse farming), its reliance on investor capital and yet-to-be-developed technology, and challenges around energy efficiency and environmental impact make vertical farming anything but a sure bet. And even if vertical farms do scale, there’s no clear sense of whether brand-loyal consumers, en masse, will make the switch from field-grown produce to foods grown indoors.

Walking into any supermarket will reveal a small mountain of salad greens, carrying a price tag of between $9 and $12 per pound. They may be locally grown or organic, which will add $0.50 or $1 to the price tag. Meanwhile, a 4.5-ounce carton of Massachusetts-based FreshBox Farms’ spring mix—grown in the company’s hydroponic farm in Massachusetts—costs $3.99 for a 4-ounce box, or $15.96 per pound. Or kale: the conventional variety will run you $1.33 per pound at Walmart; organic kale costs around $4.99 per pound at Whole Foods; and vertically farmed kale grown at Newark, New Jersey-based AeroFarms will cost you a whopping $14.18 per pound.

That dramatic price gap is due to the millions of dollars currently needed to build one large indoor vertical farm — and that price is not going to drop until the industry scales up. Agritecture Consulting, whose clients include current and prospective indoor farms, estimates that a 30,000-square-foot vertical farm growing leafy greens and herbs in the tri-state area around New York City requires nearly $4 million in startup capital—not including labor.They should know: In 2016, Agritecture built farm.one in Manhattan’s TriBeCa neighborhood, which supplies hydroponic greens and edible flowers to a number of the city’s top restaurants. Chefs have been quick to catch onto the value of consistent, year-round, locally grown produce.

In 2016, AeroFarms, now considered an industry leader, spent $30 million on its flagship aeroponic farm in Newark. The majority of these costs lie in the equipment needed to grow greens without soil or sunlight—heating and cooling systems, ventilation, shading, environmental controls, and lights.

All of these costs add up to a hefty electricity bill: According to models compiled for Civil Eats by Agritecture, a 30,000-square-foot vertical farm in metro New York City should budget upwards of $216,000 annually for lighting and power, and another $120,000 on HVAC systems; costs will vary region to region depending on what each state charges for electricity.

Energy and equipment costs are, by far, the largest drivers of expenses that can bring the price of operating a vertical farm close to $27 per square foot. By contrast, Agritecture’s models show that the cost to run a 100,000-square-foot smart greenhouse is roughly a third as expensive, thanks to the use of natural sunlight and more advanced automation.

Vertical farms’ energy usage carries a significant carbon footprint. While vertical farm companies promise more-sustainable produce by growing it closer to consumers and using renewable energy to power their operations, the industry still has a long row to hoe.

Industry leaders acknowledge the energy challenges in the short term, yet tout continually improving lighting technology that has brought down costs. But Mattson, whose Cornell team studies the way plants respond to different lighting, predicts a plateau coming for improvements to LED technology.

“The best LEDs are 40 percent more energy efficient than in 2014,” Mattson says. “There continue to be improvements; however, those improvements will start to slow down over time. There’s only a finite amount of light you can generate at a given wavelength, and in 2022, I’m not expecting new lights to be 40 percent more efficient than the current lights now.”

FreshBox Farms began shipping greens from its 40,000-square-foot hydroponic facility in Millis, Massachusetts, in 2015. The warehouse farm, located 30 miles outside of Boston, runs on a combination of renewable energy and non-renewables, and CFO Dave Vosburg admits his company is “not doing any better” than field-grown greens when it comes to carbon usage.

When it eventually expands outside of Massachusetts, Vosberg says that by introducing a cogeneration system—technology that recycles otherwise wasted heat into new energy—FreshBox Farms will eventually keep costs and carbon emissions down in expensive markets like Connecticut, where commercial users pay an average of more than 14 cents per kilowatt-hour. But Vosburg says the company’s priority is to use contextually appropriate renewable energy sources to power the farms, such as wind energy in the Midwest, hydro in the Northwest, and solar in the Southwest.

“Yes, it sounds crazy to take the sun and turn it into electricity and turn that electricity back into light. It sounds ridiculous, but that’s what we’ll be doing,” Vosburg says. “It’ll be really efficient and clean and create a better product, and it won’t have the same carbon impact that we’re having today.”

And energy isn’t even a vertical farm’s top ongoing expense. The companies Civil Eats spoke to say labor is actually their largest budget item. Vertical farms typically pay workers higher, more metropolitan pay rates than both dirt farms—many of which rely heavily on migrant labor—and the more automated smart greenhouses. The fast-food chain Wendy’s announced in June that it plans to source vine-ripened tomatoes exclusively from greenhouse farms by early 2019.

Moreover, no matter how automated the indoor growing system is, vertical farmers are discovering the constant need for a human eye—or several—on the process. In fact, some estimate that if indoor agriculture continues to grow at the pace it has in recent years, vertical farms will have to hire 100,000 workers over the next decade.

That continued growth is not a given, however. Because of the high cost to launch, operate, and scale up a vertical farming operation, the industry is highly leveraged, with each new farm requiring tens of millions of dollars in investor capital before it can grow a single plant. Between 2016 and 2017, investments in vertical farming skyrocketed 653 percent, from $36 million to $271 million. The lion’s share of that investment went to Plenty, but Newark-based AeroFarms has raised $80 million in recent years and New Jersey’s Bowery Farming added another $27 million.

Just last week, Manhattan-based BrightFarms announced it had raised $55 million. Shoppers can now find produce grown indoors by more than 23 large vertical farms in more than 20 supermarket chains in nearly every major metropolitan area in the country, according to Agritecture.

While industry leaders say scaling offers the best hope for profitability in this business, many vertical farms have encountered problems when they began planning to add additional production facilities. Before Atlanta-based PodPonics closed its doors in 2016, executives from the five-year-old hydroponic farm startup met with executives from supermarket chain Kroger.

Kroger indicated that it was ready to purchase 25 million pounds of produce from PodPonics annually if it would build the facilities to support that kind of production, founder Matt Liotta told a crowd at the 2017 Aglanta Conference. According to Liotta, who said PodPonics had lowered the cost to produce a pound of lettuce to $1.36, Whole Foods and Fresh Market also expressed interest in bringing PodPonics greens into their stores nationally.

“This was our wildest dream,” Liotta said. “Then we realized how much capital that was going to require, how many people we were going to have to hire. Every retailer told us the same thing: ‘We will buy it if you will build it.’ We realized we were incapable of building everything that they wanted.”

In early 2016, researchers from the University of Illinois-Urbana set out to determine whether consumers would spring for produce grown indoors. They asked a panel of 117 participants a series of questions about their perceptions of and willingness to pay for lettuce grown in fields, greenhouses, and in vertical farms. While vertical farming ranked fairly high in terms of produce quality and safety, the tech-heavy production method was rated less “natural” than both field farming and greenhouse and ranked last in participants’ willingness to purchase it.

For the vertical agriculture industry to eat into the profits of field-grown products—a roughly $140 billion industry—Agritecture Consulting founder and managing director Henry Gordon-Smith says it will first need to prove consumers are demanding produce grown indoors. He points out that because of a lack of demand, many vertical farming operations are not yet at full production year-round—despite touting the 12-month growing season as a main benefit of the industry.

His sense is that indoor farms that have achieved the sales to produce continually—such as Gotham Greens has with its New York City greenhouses, for example—have a customer base that’s responding to strong “local” branding rather than the technology behind the food. That may include vertical farms selling their produce using the USDA Certified Organic label, which the National Organic Board reaffirmed in January, much to the dismay of many organic dirt farmers.

“I think the automation and economics are all improving,” Gordon-Smith says, adding that the question of “whether consumers are going to pay more or whether the products coming out of vertical farms are going to align with their values” is still an open question.

But while many of the East Coast vertical farms built their business models around replacing greens being shipped cross-country from California and Arizona, Matt Barnard of Plenty hopes to add to the global population consuming fresh produce. A 2015 report found that where USDA guidelines suggest each of us in the U.S. should eat up to three cups of vegetables daily, current U.S. production is only providing enough for 1.7 cups per person. Barnard extends that supply gap to the rest of the world, especially the Middle East and Asia, where a lack of water and high pollution have hampered agriculture.

“We believe the industry will be five times larger when there is supply to meet the demand,” Barnard says. “With the field unable to deliver consistent supply, new forms of agricultural capacity like Plenty must be added to the global food system.”

But as vertical farming companies like Plenty go city by city attempting to dominate local markets, it may be that small farmers get hurt the most. Barnard drew the ire of Washington State dirt farmers last year when he told GeekWire that Plenty expanded to Seattle, in part, because it was the West Coast’s “best example of a large community of people who really don’t have much access to any fresh fruits and vegetables grown locally.”Not so, according to Sofia Gidlund, Farm Programs Manager at Tilth Alliance, which advocates for and supports local agriculture systems in Greater Seattle.

“We work with many hardworking local farmers who supply Seattle with high-quality, delicious, and nutritious food while caring deeply for our land. These farmers use sustainable farming practices, nurse the soil, create beautiful open green space and provide wildlife habitat,” says Gidlund, who adds that she does not speak for all area farmers on the issue of vertical farming. “Many consumers in Seattle choose to support local farmers, both urban or rural, because of this deep connection to the land. Providing that support is a point of pride for many Seattleites.”

Peer-reviewed research into the business of vertical farming has been sparse, partly because the industry is so new. That’s set to change, however, when Mattson and a team of researchers at Cornell University finish a comprehensive study into the viability of this approach.

A three-year, $2.4 million research grant, which is funded by the National Science Foundation and kicked off in January, will compare the vertical farming industry to field agriculture in a slew of categories, including energy, carbon, and water footprints, profitability, workforce development, and scalability. The study will include one of the first nutritional analyses of food grown indoors, as well as comparing the price-per-pound to deliver strawberries, lettuce, and tomatoes grown vertically and outdoors to five U.S. metropolitan areas: New York City, Chicago, Seattle, Los Angeles, and Atlanta.

A 2016 study conducted by a few of Mattson’s colleagues at Cornell found that the energy consumption and carbon footprint associated with a vertical farm (the study calls it a “plant factory”) is significantly higher than that of a greenhouse. Vertical farming leaders counter that they use significantly less water than field farms, are more space-efficient, and do not produce emissions from trucking produce across the country. Mattson says these factors were not considered in Cornell’s previous research but will be included in the current grant.

“[Vertical farming] is not a fad,” says Mattson, who wants to use data to help the industry become more sustainable over time. “I’m not sure to what degree it’s going to scale up, but this is happening. So we need to understand the economic and environmental implications— both the good and the bad.”