Category Archives: Economic development

The Virginia War On Fossil Fuels

by Steve Haner

First published in the Fredericksburg Free Lance-Star Feb. 26 then distributed by the Thomas Jefferson Institute for Public Policy.  

The lesson of the Texas grid collapse is not just about electricity. Imagine the week Texans would have had if once the power went out and stayed out, they had no gasoline, diesel, propane, or natural gas to fall back on. How much worse would their plight have been without natural gas heating homes and businesses, propane space heaters and grills, and gasoline or diesel-powered cars and trucks to get where they needed to go?

You might think it alarmist to imagine that, but it is not. An all-electric economy, with the electricity itself reliant on unreliable wind and solar generation, is exactly the future envisioned for Virginia and being put into place by Governor Ralph Northam and the majority in the General Assembly.

The 2020 Virginia Clean Economy Act already requires the retirement of coal and natural gas electricity generation in the state in less than 30 years. That’s what zero carbon means, although fortunately Virginia’s main electricity provider maintains a fleet of aging nuclear plants not mandated to close. Yet. Continue reading

What Texas’s Crisis Means for Virginia

by Peter Galuszka

The Texas freeze and ensuing energy disaster has clear lessons for Virginia as it sorts out its energy future.

Yet much of the media coverage in Virginia and certainly on Bacon’s Rebellion conveniently leaves out pertinent observations.

The statewide freeze in Texas completely fouled up the entire energy infrastructure as natural gas pipelines and oil wells stopped working, coal at generating plants iced over and wind turbines stopped working.

Making matters much worse, Texas opted not to have power links with other states. Its “free market” system of purchasing power meant utilities skimped on maintenance and adding weather-relative preventive measures such as making sure key generation components were weatherproof.

The result? Scores dead and millions without electricity. Here are more points worth considering in Virginia:

Climate Change is For Real

It is a shame that so much comment in Bacon’s Rebellion is propaganda from people who are or were paid, either directly or indirectly, by the fossil fuel industry. Thus, the blog diminishes the importance of dealing with climate change in a progressive way.  Continue reading

Reinventing Roanoke as Virginia’s Outdoor Capital

by James A. Bacon

The Roanoke Valley doesn’t have any natural amenities more special than those of other communities along Virginia’s magnificent Blue Ridge Mountains. What it does have, at a very propitious time when the COVID-19 epidemic is scrambling the traditional calculus of where businesses and individuals decide where to locate, is an organizational infrastructure to the promote assets it does have.

Founded as a Norfolk & Western railroad town in the late 1800s, the City of Roanoke has been traumatized by the loss of N&W industrial and headquarters facilities over the past two decades. Reinventing the economy hasn’t been easy. The dynamics of the Knowledge Economy have long favored large metropolitan areas with deep labor markets, and with a population of about 220,000, the Roanoke Valley (Roanoke City, Roanoke County, and Salem) lack critical mass. The main exceptions to the “urban agglomeration” trend were towns with research universities, such as Virginia Tech. But Tech, separated by a mountain range and 45 minutes travel time, was almost in another world.

The Roanoke Regional Partnership (RRP), the local economic development organization, recognized years ago that it needed to rebrand the region. What did the region have that other small metro areas did not? Among other assets, it has the Appalachian Trail, the Blue Ridge Parkway, and, nearby, Virginia’s second largest lake, Smith Mountain Lake.  “We’ve had these assets,” said Beth Doughty, RRP director. “We treated them like wallpaper instead of an economic sector.” But under Doughty’s leadership, that thinking changed. Continue reading

The Logic for Rural Broadband Subsidies

Source: “Bringing Broadband to America”

by James A. Bacon

Reputable estimates of the cost of making high-capacity Internet service universal across the United States run in the $80-billion to $85-billion range, but the society-wide benefits may be worth the outlay, argues Alexander Marré, a Baltimore-based regional economist with the Federal Reserve Bank of Richmond in a recent paper.

There are multiple benefits, Marré contends. Broadband has positive effects for business-location decisions and employment growth in rural areas, research data shows (although effects can be stronger in rural areas that are closer to metropolitan areas than more remote regions). Broadband also enables rural consumers to choose from a wider array of goods and services, potentially saving more than $1,000 per household. High-speed Internet also can improve the efficiency of rural labor markets. It can improve access to healthcare via telemedicine and distance learning. And, as a desirable amenity, it can boosts home values.

The  low density of businesses and households makes deployment of broadband infrastructure costlier than in metropolitan areas, and for-profit telecom companies can’t justify the low return on investment. But if the social benefits are as extensive as Marré contends, rural communities have a different cost-benefit calculus. His article explores several alternatives for bringing broadband to rural communities, including a Shenandoah Telecommunications (Shentel) projectin Virginia. Continue reading

And They SWaM and They SWaM

By Dick Hall-Sizemore

Governor Northam is moving to increase the amount of business that goes to companies owned by women or minorities.

A little background would help put the pending legislation into perspective. There have long been programs at the federal, state, and local levels that serve to give some preferences to small businesses, as well as to businesses owned by women and minorities. These programs have generally been upheld by the courts. Indeed, one of the leading cases in this area arose out of a suit brought in Virginia—City of Richmond v. J.A. Croson Company, 488 U.S. 469 (1989). The case law surrounding this issue is fairly complicated.  A summary can be found here in the recent diversity report commissioned by the Department of Small Business and Supplier Diversity (DSBSD). A more detailed analysis can be found here in an earlier report. Continue reading

The Political Economy of Solar Farms

by James A. Bacon

I have consistently supported the expansion of solar energy in Virginia, at least up to a point where it doesn’t compromise the reliability of the electric grid. When up-front capital costs and fuel costs are taken into account, solar is the lowest cost source of electricity in Virginia. Furthermore, as a supporter of property rights, I believe that rural landowners should be free to contract with developers to build solar farms on parcels that might otherwise lie fallow or go underutilized. Building solar farms potentially could put hundreds of millions of dollars in the pockets of rural landowners.

But I understand why people in rural Virginia get up in arms when big solar developers want to blanket thousands of acres with solar panels. I don’t necessarily agree with their proposed remedies, but I do understand.

Virginia’s urban/rural divide is becoming more pronounced than ever. That divide is most visible in voting results and electoral maps that show a vast geographic expanse of “red” Virginia compared to concentrated, highly populated clusters in “blue” Virginia. Views differ on a wide range of issues from gun rights and abortion to taxes and climate change. Continue reading

DePaul Hospital’s Closing Presents a Unique Opportunity for Hampton Roads

De Paul Medical Center Jan. 29, 2021. Photo Credit: James C. Sherlock

by James C. Sherlock

Not too long ago, before the decline of the malls and COVID, the healthcare community coined what they called the Nordstrom Rule.

The meaning was that if you wished to optimize profits in your healthcare business, build it close to a Nordstrom. The theory was that Nordstrom had already done the market research to identify concentrations of wealthy customers.

I wrote yesterday about the Sisters of Charity and Bon Secours, Catholic charities both. The Sisters were not in it to serve wealthy patients. They purposely located their hospitals among the poor. So 19th and 20th century of them.

Sentara, a more sophisticated public charity, avoids locations close to the poor.

In 1991, Sentara purchased the Humana Bayside Hospital in Virginia Beach, renaming it Sentara Bayside Hospital. That cleansed Virginia Beach of a competitor. But Bayside served Virginia Beach’s largest concentration of economically disadvantaged minorities. So Sentara closed it at the first opportunity.

The Virginia Department of Health brokered the closing of Bayside in 2008 under the cover of the Certificate of Public Need (COPN) process that fatally wounded DePaul, allowing Sentara to relocate the Bayside beds to the new Sentara Princess Anne, far from the minority citizens of Bayside.

The closest hospital for many residents served by Bayside was then, you guessed it, DePaul. No longer. Continue reading

The Virginia City Boondoggle

The Virginia City hybrid energy center. Credit: David Hoffman, Flickr

By Peter Galuszka

Back in 2007, Dominion Energy was touting its new hybrid generating plant near St. Paul in Southwest Virginia as the wave of the future because it would burn coal and wood using advanced fluidized bed technologies.

But for eight months this year, the 624-megawatt Virginia City Hybrid Energy Center operated at only 20% and has never reached more than 65% capacity since going online in 2012.

Now, the utility must face the fact that it may close the plant, according to a new report by the non-profit Institute for Energy Economics and Financial Analysis. Dominion has said it intends to keep the plant open.

If it closes, it would affect 153 full-time jobs and 400 additional ones. Localities would lose from $6 million to $8.5 million in taxes.

The Institute undertook its research at the request of Appalachian Voices, an environmental group. It is based on testimony provided to the State Corporation Commission by Atty. Gen. Mark Herring that ratepayers would have to shell out $472 million more than the plant is worth over the next 10 years. Continue reading

WTJU Podcast on State’s Economy

By Peter Galuszka

This may be familiar turf for some readers, but here is a podcast I worked on with WTJU, the radio station of the University of Virginia. It gives a larger overview of the changes that data centers are making in the state’s economy and what that might mean in the future.

This elaborates on a Style Weekly story I posted here a few weeks ago.

Early this year, WTJU started preparing a series of podcasts under the “Bold Dominion” banner that explores how politics, economics and culture are changing in the Old Dominion. I think they have had 25 episodes up until now and I have participated in some of them. I also do a weekly Q&A on state politics.

Here’s the most recent podcast:

https://bolddominion.org/episodes/what-does-a-burgeoning-tech-industry-mean-for-virginia

Bacon Bits: Good News for a Change

More wind turbines off the Mid-Atlantic coast. Electricity from the Kitty Hawk Offshore Wind project 27 miles off the coast of Corolla, N.C., construction of which could begin as soon as 2024, will be funneled into the electric grid via a substation in Virginia Beach’s Sandbridge community. Roughly 600 jobs will be generated within the Hampton Roads statistical area, which includes part of North Carolina. The project is expected to generate 2,500 megawatts of electricity eventually, enough to power 700,000 homes, reports Virginia Business. From Sandbridge a combination of underground and overhead cables will make the electricity available for resale by developer Avangrid Inc., to Dominion Energy, Duke Energy, Appalachian Power, and others.

No aggressive enforcement of COVID curfew. Chesterfield County police will not enforce Governor Ralph Northam’s midnight-to-5 p.m. COVID-19 curfew by stopping motorists who are otherwise driving lawfully. “The law requires officers to have reasonable suspicion to stop a driver,” wrote Police Chief Colonel Jeffery S. Katz on Facebook. “There are completely lawful reasons for people to be out and about during these times and therefore mere operation of a motor vehicle does not remotely meet the legal burden necessary to justify a lawful stop.” Responding to queries from The Virginia Star, Henrico County police and the Hanover County sheriffs department confirmed that they, too, require reasonable suspicion for conducting traffic stops.

Satellite broadband for Southwest Virginia. Wise County Public Schools will be the first school district in Virginia to use the Starlink satellite internet constellation founded by Elon Musk. The entrepreneur, better known for his Tesla electric vehicles, touts Starlink as delivering broadband to “locations where access has been unreliable, expensive, or completely unavailable.” Continue reading

Vacation Homes as Virginia Rural Resource

Vacation-home share of housing, 2018. Credit: StatChat blog

by James A. Bacon

Virginia has more than 88,000 vacation homes, about 2.5% of all homes in the Commonwealth, according to the University of Virginia’s Demographics Research Group. These “seasonally vacant homes” intended mainly for recreational use are overwhelmingly located in amenity-rich rural locales along the Chesapeake Bay, the Blue Ridge and Allegheny Mountains, or man-made lakes.

Moreover, reports StatChat, the vacation share of housing has increased since 2018 in most jurisdictions — more than 7.5 percent in some cases.

Bacon’s Rebellion has argued that Virginia’s rural counties should position themselves as destinations for retirement and vacation housing as an economic development strategy. Retirement and rental properties boost the tax base and create service jobs in localities where employment opportunities are otherwise scarce. Continue reading

Reminder: Virginia Imports 31% of Its Electricity

Credit: U.S. Energy Information Administration

On a percentage basis, Virginia is the fourth largest electricity importer in the United States, following California, Ohio and Massachusetts, according to data published this week by the U.S. Energy Information Administration. On a net basis, the Old Dominion imports 31% of its electricity from other states.

Why does that matter? That’s economic activity, along with local multiplier effects, that we’re shipping outside the state.

Environmentalists argue that if Virginia moves to a 100% renewable electric grid, most of that electricity will be produced in the form of solar farms and wind turbines located within the state, paying leases to landowners, generating taxes for state and local governments, and supporting Virginia jobs. I think there’s something to that argument. While the 100% renewable grid will cost Virginians billions in higher electric rates and create challenges for maintaining reliability, the repatriation of energy-related economic activity to Virginia would be a silver lining. 

— JAB 

High Housing Costs and Virginia’s Brain Drain

Hasta la vista!

Between 2010 and 2018 Virginia’s population grew by more than half a million residents, ranking 9th in the nation, due to strong natural increase (births over deaths) and steady international immigration. But the Old Dominion was only one of two states in the top 10 — the other was California — to experience negative net domestic migration, reports Lisa Sturtevant, chief economist for the Virginia Realtor’s Association in the Realtors’ blog.

Nearby southeastern states have shown strong domestic in-migration. What’s Virginia’s problem?

According to Sturtevant, the state’s biggest challenge is recruiting and retaining young workers. In continuation of a decade-long trend, about 6,00 more 25- to 34-year-olds moved out of Virginia in 2018 than moved in 2017 and 2018. These young people aren’t fleeing economically deprived rural areas. They’re leaving the high-cost areas, particularly Northern Virginia.

Says Sturtevant: “Even though professional opportunities are attractive and wages are high, home prices have gotten so high that it is increasingly challenging for young adults to buy homes. Many have been moving to places where jobs are still good but the cost of living is lower and it is easier to buy a home.”

— JAB

The Lies in “Hillbilly Elegy”

By Peter Galuszka

A 2016 memoir by J.D. Vance, a former Ohio resident, drew praise from conservatives for its laud of self-reliance and disciple and criticism from others for its long string of debunked clichés about people from the Central Appalachians.

The book, Hillbilly Elegy: A Memoir of a Family and Culture in Crisis,” was held up as being a great explainer as to why so many in the White lower classes voted for Trump.

Vance exalts the strength of self-discipline, family values and hard work. He complains that when he worked as a store clerk he resented it when people on welfare had cell phones but Vance couldn’t afford one. He ended up going to Yale Law School.

Vance also spends a lot of time complaining about his dysfunctional family including a nasty grandmother, a mother constantly stoned on alcohol and opioids and lots of divorce – in other words the “social rot” of the hillbilly lifestyle he so disdains.

His tie to Appalachia is a bit thin. He grew up in a suburb of Cincinnati but spent summers in Jackson in the mountains of East Kentucky.

Now director and child actor Ron Howard has made a feel-good movie from the book that stars Glenn Close and Amy Adams. It is getting lousy reviews. Continue reading

Behind Dominion’s Shift to Renewables

Image credit: Style Weekly

By Peter Galuszka

Ever wonder why Dominion Energy found religion and announced a major shift to renewable energy?

The answer is that modern, high technology businesses want it and the Richmond-based utility wants to respond to their desires.

This one of the themes in this recent cover story I did for Style Weekly that explores how Dominion’s major shift in direction is part of several dynamics that are pushing solar wind and other renewables instead of keeping on with fossil fuel.

Here’s the reporting in a nutshell:

  • Virginia’s economy is being driven more by data centers, giant box-like warehouses loaded with servers that can handle tremendous amounts of data. Northern Virginia, the incubator of the Internet, already handles about 70% to 80% of the global Net traffic and has a mature and still growing network of data centers.
  • The Northern Virginia experience is shifting downstate. Henrico County now has a partially construction data center run by social media giant Facebook. Centers have been announced or are being planned in Southside and Southwest Virginia.

Continue reading