Category Archives: Infrastructure

Surry-Skiffes Transmission Line Inches Closer to Approval

The proposed 500 kv line would connect with the transmission infrastructure at the Surry Power Station, as seen in this photo of the Surry switchyard.

The proposed 500 kv line would connect with the transmission infrastructure at the Surry Power Station, as seen in this photo of the Surry switchyard.

The U.S. Army Corps of Engineers has not yet granted Dominion Virginia Power a permit to build a transmission line across a historic stretch of the James River, but it has rejected the argument advanced by foes who argued that electricity demand in the Virginia Peninsula could be met by other means.

“Additional analysis further demonstrates that there is a need for this project from both Dominion’s and the general public’s perspective,” Col. Jason E. Kelly wrote in a letter to the Advisory Council on Historic Preservation last week, reports the Daily Press. Kelly said the Corps review “found nothing to indicate that Dominion’s information regarding the practicability of the alternatives is flawed or incorrect.”

Preservationists and conservationists are distressed by the prospect of high-voltage transmission towers interrupting vistas of “Virginia’s founding river” from Jamestown and other locations in the state’s historic triangle.

Foes argue that there are alternatives to the proposed Surry-Skiffes Creek transmission line — they just cost more than Dominion wants to pay. The power company could install scrubbers at the coal-fired Yorktown Power Station, which Dominion is retiring to meet clean air goals, or convert the units to natural gas. They also say that demand-response tariffs and other energy-conservation measures could dampen demand, while a lower-capacity transmission line could run underneath the river at significantly less expense.

While the Corps appears to side with Dominion on this particular issue, it has not seemed to be in any hurry to issue a permit. Dominion claimed that it needed to commence construction of the transmission line last September to avoid rolling blackouts required to protect the integrity of the electric grid. Such incidents, Dominion has said, could occur dozens of times a year, depending largely upon weather conditions.

— JAB

SCC Approves Greensville Gas Plant

The Greensville power station will use technology similar to that used in Dominion's combined-cycle natural gas plant in Brunswick County, pictured here.

The Greensville power station will use technology similar to that used in Dominion’s combined-cycle natural gas plant in Brunswick County, pictured here.

by James A. Bacon

The State Corporation Commission (SCC) approved yesterday Dominion Virginia Power’s filing to build a $1.3 billion natural gas-powered power station in Greensville County. The power station will generate 1,588 megawatts of electricity, upping Dominion’s reliance on natural gas to 39% of its energy mix by 2020.

Construction, expected to begin later this year, is expected to be complete by 2019. The project will create roughly 1,0o0 construction jobs and 45 full-time positions, and it will generate $8 million a year in property taxes for Greensville County.

In approving the project, the SCC rejected the arguments of environmental groups that Dominion had failed to properly consider third-party alternatives for obtaining the electricity or alternatives such as energy efficiency, solar energy, a combined gas/solar hybrid facility or a portfolio approach. “The company’s choice of a natural gas facility appears prudent given the current natural gas market and forecasted gas prices,” stated the SCC in its final order.

Dominion said that customers will save $2.1 billion over the life of the power station through fuel savings compared to the project cost of purchasing electricity in the open market. Said Paul Koonce, CEO of Dominion Generation group: “This project will ultimately bring low cost, reliable energy to our customers … in addition to providing a major economic impact and good paying jobs for Southside Virginia.”

The Virginia Chapter of the Sierra Club, which opposed the filing, has not published a response on its website.

Bacon’s bottom line: To my mind, the most interesting question regarding the $1.3 billion investment is whether Dominion should be committing itself to a fixed, multi-decadal investment in an era in which the cost of solar energy continues to decline. Natural gas prices are incredibly low right now, and probably will continue to be for several years, but there are reasonable grounds for wondering if prices could rise sharply, as they have in the past, as a slew of proposed gas pipelines and gas liquefaction facilities start connecting the Marcellus and Utica gasfields to new markets, including those overseas.

Dominion is building a combined-cycle gas plant, which uses waste heat from the gas turbine to power a steam turbine, producing up to 50% more electricity from the same amount of fuel. With low gas prices, the economics are hard to beat at present. Assuming the Greensville plant runs most of the time, as it is designed to do, it will produce electricity far more cheaply than an industrial-scale solar facility, which generates no electricity when the sun goes down, and suffers diminished output in cloudy conditions.

The SCC found that Dominion had taken “serious and credible efforts to assess the cost and availability of third-party alternatives.” The company had issued an RFP and evaluated 5,000 megawatts of fully dispatchable, baseload or intermediate generation resources.

“We find that the Company’s RFP to be adequate for purposes of this proceeding,” states the SCC ruling. “Moreover, the Project was also compared to multiple unsolicited offers for solar, wind, landfill gas, and coal resources that were received outside of the RFP.”

Turning Sea Level Rise into a Competitive Economic Advantage

Routine flooding -- not just for Mississippi River towns anymore.

Recurrent flooding in Hampton Roads

by James A. Bacon

To hear Henry R. “Speaker” Pollard describe all the economic risks associated with rising sea levels in Hampton Roads — soaring insurance rates, higher financing costs, declining property values, disruption to business — one might be forgiven for wondering why any business would ever want to consider investing there. “It’s easy to get caught up in a gloom-and- doom perspective,” he says.

But Pollard draws a counter-intuitive conclusion: If business and government respond by moving up the learning curve on how to manage the risk, rising sea levels could provide a positive stimulus to the low-lying, flood-prone region. Speaking to an audience at the 2016 Resilient Virginia Conference, he said, “In the end Hampton Roads can achieve a competitive economic advantage compared to other coastal communities.”

Pollard’s optimism was echoed by other speakers at the conference, who described how Norfolk and Virginia Beach, among others, are grappling with the challenge of coping with sea levels that could rise two feet by 2100, if the historic rate prevails, or as much as eight feet, if more pessimistic global warming scenarios pan out.

Christine Morris, chief resilience officer for Norfolk, says her goal is to “marry the city to innovation.” By leading the way in devising positive responses to flooding and inundation, Norfolk can become a test bed for new technologies, solutions and urban designs. She foresees the city brokering knowledge, incubating new businesses and attracting companies that want to get in on the ground floor.

Rising sea levels pose several problems for Hampton Roads, some obvious and some less obvious, said Pollard, who is an environmental attorney with Williams Mullen. Inhabitants endure frequent road blockages during hard flooding, and the frequency of disruptions has increased markedly from decade to decade. Shoreline property owners are combating erosion, storm damage and sky-high insurance rates. Manufacturers worry about the ability of employees to make it to work during extreme-weather events and the ability to ship goods out of the region on a timely basis.

Less visible to the public, municipal and industrial water treatment facilities could find it more difficult to discharge treated wastewater when storm waters run high, said Pollard. Also the flooding of industrial property could flush out surface contamination and spread toxic pollutants. The retreat of wetlands could cause the loss of nursing grounds for fisheries.

Conceptually, there are three broad approaches to dealing with sea level rise: protect assets with hard infrastructure like walls and jetties; buffer the impact of storm surges with green infrastructure such as wetlands and oyster reefs; or retreat from the rising tide by limiting development and infrastructure.

“There is still a lot of uncertainty. We need to accept that — you never have perfect data,” said Pollard. Accordingly, there is no way to know which sea level scenario will occur. A slower pace of sea-level rise gives the region decades to prepare; a rapid rate calls out for more dramatic action.

Either way, he said, “there are opportunities out there.” He expects private lenders and insurers to play a major role in evaluating the risk. Companies devising successful approaches in Hampton Roads can apply their expertise in coastal communities around the world. He expects to see new real estate development strategies such as the re-purposing of industrial brownfields, and new financing strategies like public-private partnerships. Green infrastructure could give rise to new technologies, products and business opportunities.

Speaking from a planning perspective, Morris said she expects to see an evolution in the urban form to encourage denser development on the one hand and more “green and blue” — flood plains used for parks, ballfields and open space that suffer little loss in value when flooded. A key goal of Norfolk’s Coastal Resilience Strategy, she said, is to design “the coastal community of the future.”

Brian Batten, an engineering consultant to Virginia Beach, advocated matching capital investments to expected sea level rise over comparable time horizons — 1 1/2 feet of sea level rise over 20 to 40 years, and 3 feet over 50 to 80 years. Moody’s, the bond rating firm, is asking local governments how they are dealing with sea level rise. Sound planning can lead to superior bond ratings, he said, noting that Virginia Beach, which is thinking about these issues, had its AAA bond rating confirmed recently.

“If we do it well,” Pollard said, “we could come out better.”

Making NIT More Productive, More Resilient

NIT

Norfolk International Terminal (NIT)

by James A. Bacon

For the millions of Virginians living above the fall line, the struggle that Hampton Roads has with rising sea levels and increasing flooding may seem remote and far away. Why should we care? After all, does anybody in Hampton Roads give a hoot about our problems?

Kit Chope, vice president of sustainability for the Virginia Port Authority, gave a pretty darn good reason this morning for why Virginians across the Commonwealth should take an interest in the region’s increasing vulnerability to storm surges and flooding: Anything that disrupts port operations disrupts the economy of the state. Some 530,000 jobs and 10% of the state’s gross domestic product are tied to port activities, he said.

“What affects the port affects the state,” said Chope in a panel discussion of the 2016 Resilient Virginia Conference, during which a major theme was the long-term threat that sea level rise and flooding poses to Hampton Roads.

Upstream Virginia has gotten the message. Included in the $2 billion bond package approved by the General Assembly in the 2016 session is $350 million to upgrade cargo-handling cranes at Norfolk International Terminal (NIT). The capital investment has been billed primarily as a response to growing cargo traffic and the need to expand capacity. But there’s more to it than that, said Chope. Modernization also will provide more protection from hurricane storm surges that could inundate the facility and knock it out of operation.

The Port of New York and New Jersey, the third largest port in the country, got a taste of what could go wrong during superstorm Sandy. A nine-foot storm surge inundated the portsm washing hazmat materials and other debris into the water channels and rendering electrical power unreliable. Flooded terminals closed for a week, leading to the diversion of 25,000 shipping containers and 58 vessels (some to Hampton Roads). Another 15,000 containers were lost, along with 9,000 automobiles and 4,500 trucks and vehicles.

The ports of Virginia, the nation’s fifth largest port complex, are determined to avoid a similar capacity, Chope said.

Thanks to the bond package, new electricity-powered, rail-mounted gantries will replace the existing diesel-powered straddle cranes. The investment will make possible a 50% increase in the number of containers to be loaded and unloaded. Getting less attention is the fact that the Virginia Port Authority is studying how to protect the terminal from disruption. “Where are we most at risk? Where are our critical nodes? What are the potential points of failure?”

For example, electric vaults at ground level will be elevated above projected storm surge levels. Buildings will be hardened to protect IT systems used to track cargo and communicate with shippers. “Data is king,” Chope said. It must be protected.

The VPA’s resilience efforts have been internally focused mostly, but the port relies upon utilities, especially electricity, and is inextricably tied to the network of railroads, highways and local roads that link the terminals to major markets. If local roads flood, as they are prone to do in the City of Norfolk, that could hinder trucks driving in and out with containers. Everything is interconnected. “What’s good for the city is good for the port,” he said. “What’s good for the port is good for the state.”

Why Is Virginia a “Dark State” for Solar Power?

PPAs
by Erik Curren

Around America, there’s a boom in solar energy. More solar power generation was installed in 2015 than ever before and 2016 could be even better, doubling in U.S. solar capacity. Although solar still provides less than one percent of America’s total electricity, it’s the fastest growing source of new energy since shale gas.

The benefits of solar are clear, from energy independence and greenhouse gas reduction to money savings and job creation to attracting high-tech industries.

But Virginia, which ranks a pitiful #30 for installed solar capacity, far behind neighboring states, including Tennessee at #18, Maryland at #13 and North Carolina at an impressive #3, is not seeing these benefits.

The state consistently ranks near the top in desirable industries from software and cybersecurity to higher education and even wine, yet the Old Dominion ranks in the bottom half of US states for solar power. Why?

It’s not lack of sunshine. If southern sunshine were required for solar power to thrive, then New Jersey, New York and uber-Yankee Massachusetts would never have made it to the list of the top ten solar states.

Nor does Virginia lack demand for clean electricity, especially from one of the state’s most promising high tech industries, the data centers of northern Virginia that host 70% of the world’s Internet traffic. Apple, Google, Facebook and other companies have committed to get 50% or more of the power for their server farms from renewables. In Virginia last year, Amazon.com commissioned what will be the largest solar array in the state, an 80-megawatt plant to be located on the Eastern Shore, to provide itself with clean power.

Finally, while Virginia’s average rates for grid electricity are certainly among the nation’s lowest, southeastern states that have utility power rates comparable to ours have much more solar than we do, including both North Carolina and Tennessee, as well as Georgia (ranked 11th).

None of these traditional explanations makes sense for a relatively wealthy state like Virginia (ranked 12th nationwide for gross state product) to fall into the bottom half of U.S. states for solar, in the company of much poorer states such as Arkansas, Alabama and Mississippi.

The obvious difference between Virginia and comparable states with much more solar? Public policy.

Given the 50% decrease in the cost of solar panels over the last five years, solar power no longer needs taxpayer subsidies to flourish. What solar does need is a market free of restrictions that do not serve the public interest and only serve to protect utility market share from competition.

“Solar can certainly compete in a level playing field with other energy forms, and already we are offering solar electricity at less than the cost of grid electricity for our schools, universities, churches and hospitals in Virginia, without any grants or state subsidies,” says Anthony Smith, CEO of the largest solar developer headquartered in the state, Staunton-based Secure Futures. (Full disclosure: I am a former employee of Secure Futures. The company has been a client of my marketing agency, but not for two  years).

“At the same time,” says Smith, “it’s very hard to compete with regulated electric power companies that get a guaranteed 10% return on investment paid by rate-payers for every dollar they spend on polluting energy sources and lobbyists, and virtually every activity in between.” Continue reading

Buena Vista: the Canary in Virginia’s Fiscal Coal Mine

dead_canaryby James A. Bacon

The City of Buena Vista, which defaulted in 2014 on a $9.2 million bond issue to pay for a golf course that was supposed to spur growth in the city, has received some good news. It will be allowed to keep its city hall. For now. The office building, along with the police station and the golf course itself, stands as collateral on the debt.

Although ACA Financial Guaranty Corp., the bond insurer, still could take possession of city buildings, reports the Roanoke Times, it will not do so any time soon. “ACA is not currently interested in pursuing the option of foreclosing on the deeds of trust securing the bonds,” an attorney for the insurer wrote to the Buena Vista city manager.

The long-running controversy has harmed the ability of Buena Vista, a city of 6,500 in the Shenandoah Valley, to access credit markets. The Virginia Resources Authority recently rejected a request by the city for a loan to upgrade its public water system.

Maybe someone needs to call in Marc Edwards, the Virginia Tech professor who documented the lead poisoning in the water system of Flint, Mich., to make sure Buena Vista’s water is OK. I say that only partly tongue in cheek. The overlooked part of the Flint tragedy is the decades of fiscal mismanagement preceding the city’s takeover by state authorities that allowed the water system to deteriorate.

In Virginia, there is very much the idea that “it could never happen here.” But, in fact, it could, and Buena Vista is a case study. There are many other fiscally challenged cities, towns and counties in Virginia, where the old tobacco-textiles-furniture-and-coal economy has suffered comparable devastation to the Michigan automobile economy. Who knows what kind of hail-mary “investments” other local governments have pursued in desperate bids to revitalize local economies? Who knows the extent to which localities have deferred maintenance on their municipal water systems?

Buena Vista is so small that its plight has escaped the notice of the usual hand wringers, and I haven’t heard of any requests for bail-outs (although that’s not to say Buena Vista hasn’t been quietly looking for help.) At the national level, Puerto Rico is bordering on insolvency, and the entire state of Illinois is close behind. You can be assured that both will ask for help at some point to relieve them from the consequences of their bad decisions and dysfunctional political cultures.

Inevitably, Americans will face cruel choices — either bail out reckless and improvident governments or let their innocent citizens face more Flint-like calamities — and most likely Virginia will, too. To be sure, the Old Dominion’s finances are sounder than those of most states, but they aren’t as sound as we think, and not every jurisdiction has a AAA bond rating like Fairfax County, Henrico County of the City of Virginia Beach.

Time for Richmond and Hampton Roads to Join Forces?

Tom Frantz. Photo credit: Virginia Business

Tom Frantz. Photo credit: Virginia Business

by James A. Bacon

Virginia’s economic growth ground to a standstill in 2014 and lagged the nation in 2015. Recognizing that metropolitan regions are the growth engines of the early 21st century economy, civic boosters are looking to spur growth and development at the regional level — but that picture doesn’t look much prettier. The Brookings Institution’s Metro Monitor Report ranked the Richmond region 59th nationally in an index of economic growth and prosperity indicators between 2009 and 2014, while Hampton Roads rated 97th. (Metropolitan Washington ranked 71st.)

Tom Frantz, chairman emeritus of the Williams Mullen law firm, thinks one way to restore economic vitality would be to merge the Richmond and Hampton Roads regions into a mega-region by applying for the status of a Combined Statistical Area (CSA), an official designation of the U.S. Office Planning and Budget.

Such a merger would create an entity of 3 million inhabitants, enough to rank 17th largest in the United States. That, says Frantz in the Virginia Business cover story this month, would put Richmond and Hampton Roads into the running for more business investment. “You are sitting in a boardroom in Hong Kong, Paris, or London, and you want to expand to the States. You can’t look at everything in the States, so you’re going to look at the top 20, 25 MSAs.”

Frantz is tapping into a body of analysis that observes that growth and innovation are concentrating disproportionately in the world’s mega-regions. The eastern half of the U.S. has four such mega-regions, or clusters of MSAs: the Northeast, the Great Lakes, the Piedmont (Atlanta-Charlotte), and Florida. Richmond resides on the far outer fringe of the Northeastern mega-region, while Hampton Roads is not connected at all. Combining Richmond and Hampton Roads into a mini-mega, so to speak, would be prelude to the longer-term strategy of aligning with the Northeastern mega-region.

“What we can’t afford is for us to be two isolated islands in the middle of this highly connected economic juggernaut,” says Frantz. “We’re not talking about combining fire departments, school systems or any of that. We’re talking about marketing ourselves to the world as a larger, more diverse region that has many more assets.”

The idea is being seriously discussed by civically engaged business leaders in both metros, but Frantz acknowledges that the mega-region idea will take years to take hold. He hopes the next generation of leaders will run with it. “The same old ways we’ve done things will not work,” he says. “We need to think boldly, positively, and figure out how to combine our strengths so we can succeed in the new economy.”

Bacon’s bottom line: Count me in the “Yeah, maybe…” camp. My philosophy is that it’s always worthwhile to question established ways of thinking. I also agree that metropolitan regions are the primary units of economic growth, and it that makes sense to think in regional terms. But I question whether stitching Richmond and Hampton Roads into a mega-region is worth the effort. Regardless of what gloss the U.S. Office of Planning and Budget puts on it, the two metros are distinct labor markets linked tenuously by Interstate 64, which suffers periodically from horrendous congestion. I cannot imagine that corporations looking to locate in a million-plus-worker labor market will be persuaded to consider either Richmond (670,000 workforce) or Hampton Roads (827,000 workforce) just because of a CSA designation.

I’m also concerned about the impact of a Richmond-Hampton Roads vision on land use. I worry that such a strategy would lead to the filling in of the relatively empty space between eastern Richmond and Williamsburg, perpetuating the building of dysfunctional, low-density suburbs instead of encouraging the densification of both urban regions. Such an eventuality would carry tremendous costs and would overwhelm I-64 with local traffic, ruining it as an interstate highway, just as Northern Virginia growth ruined Interstate 95.

I’m more inclined to the view of Eugene Trani, former Virginia Commonwealth University president and founder of the Richmond’s Future think tank, also quoted in the article, that it makes sense to build ties through initiatives likely to yield a more immediate payoff. Trani sees potential for cooperation in the field of logistics, which he has already identified as a winner for the Richmond region. Working together, the two regions would combine Hampton Roads’ world-class port, Richmond’s net of interstate highways, and the human capital supplied by the Fort Lee Logistics Readiness Center, among other assets.

Another area ripe for collaboration could be the so-called “Eds and Meds” corridor anchored by Charlottesville and Norfolk, and running through Richmond. Promoting collaboration between major universities and medical facilities could develop centers of research and clinical excellence capable of attracting R&D dollars and medical tourism. Building institutional ties in logistics and Eds-and-Meds could lay the groundwork for a more formal regional merger in the far future.

A Richmond-Hampton Roads partnership definitely makes sense for Hampton Roads, which sits in a geographic cul de sac with no meaningful links to any other metro. But it’s a different story for Richmond, which also looks north to metro Washington. A top regional priority for Richmond is creating higher-speed train service that would promote business ties to Northern Virginia. Given the scarcity of resources for multi-billion-dollar transportation mega-projects, Richmond’s civic leaders might be forced to choose improving I-64 to Hampton Roads on the one hand and improving Amtrak service to Washington and the rest of the Northeastern megalopolis on the other.

But every grand vision has obstacles. That’s no excuse for laying down and doing nothing. Frantz’s idea is worth exploring.