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OIL & GAS: The number of climate lawsuits filed globally against top fossil fuel companies has nearly tripled since 2015, with the majority coming from U.S. cities and states. (The Guardian)
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ELECTRIC VEHICLES:
CLEAN ENERGY:
WIND: Many East Coast states are relying on planned offshore wind projects to meet their renewable power goals, but recent GE Vernova blade failures worry some observers, like the fishing community, about the safety and reliability of the components. (New York Times)
COAL: Pittsburgh-area environmental justice activists say discussion around a federal plan to block the U.S. Steel-Nippon Steel merger ignores their concerns around coal-related air pollution. (EHN)
BIOFUELS: The fledgling sustainable aviation fuels industry faces high expectations and big questions as it gathers for a national summit in St. Paul this week. (Star Tribune)
CLEAN ENERGY: Michigan regulators have until Dec. 1 to recommend adjustments to the state’s clean energy standard to accommodate the Upper Peninsula region, where a sparser population and high energy costs add to the challenge of achieving 100% clean energy by 2040. (Grist/Interlochen Public Radio)
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BUILDINGS: An Indiana contractor is building a passive home and plans an environmental resilience training center on the same property. (Indiana Public Media)
BIOFUELS: The fledgling sustainable aviation fuels industry faces high expectations and big questions as it gathers for a national summit in St. Paul this week. (Star Tribune)
PIPELINES: Iowa Republican lawmakers suing state regulators over their approval of the Summit Carbon Solutions pipeline call the project an attack on landowners’ “God-given” Fifth Amendment rights. (Iowa Capital Dispatch)
CARBON CAPTURE: A new Kansas State study shows how natural fertilizer and no-till farming methods can improve soil health and sequester more carbon. (Kansas Reflector)
California policymakers are searching for ways to rein in the cost of expanding the state’s power grid, which is necessary to combat climate change. Experts warn they’re missing an opportunity that’s right in front of them — taking advantage of the growing number of clean energy technologies owned by utility customers.
California ended its legislative session last month unable to pass a proposed legislative package to address rising electricity rates for customers of Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric, which serve about three-quarters of the state’s residents.
Lawmakers also failed to pass several bills aimed at boosting the role battery-backed rooftop solar systems, electric vehicles, and electric heat pumps and water heaters can play in balancing the power that’s available on the grid.
Replacing fossil-fueled vehicles with EVs, and gas heating systems with heat pumps, will increase statewide electricity demand, requiring utilities to invest billions of dollars to upgrade their grids. But those same technologies can shift when they use power to avoid the handful of hours per year when demand spikes. That’s important, because the cost of building power grids is largely determined by the size of those spikes — and in turn is a core driver of California’s energy affordability crisis.
If the state can use distributed energy resources to shave a bit of demand from grid peaks, it stands to save big. One example: In an April report, consultancy Brattle Group projected that virtual power plants, which can shift when EVs and electric appliances draw from the grid or tap into customer solar and battery systems, could provide more than 15 percent of the state’s peak grid demand by 2035. That would amount to around $550 million per year in consumer savings.
About $500 million of that would flow directly to the customers who own the devices, which could help defray the cost of buying EVs and heat pumps, two technologies that need to be rapidly adopted to meet climate goals. But because tapping into those devices would cost less than making large-scale investments, utilities — and by extension all of their customers — would save about $50 million per year by 2035, Brattle found.
“California’s affordability challenges are years in the making and are worsened by climate-driven impacts like heat waves and wildfires,” said Edson Perez, who leads trade group Advanced Energy United’s legislative and political engagement in California. “However, there are critical steps we can take now: optimizing our existing grid, maximizing the cost-effectiveness of essential grid upgrades, and fully leveraging available technologies like distributed energy resources.”
But as it stands, California isn’t putting the full weight of policy support behind these types of distributed energy programs.
Pilot programs have petered out, seen their budgets clawed back, or have been outright canceled. The scale of demand-side resources operating in the state has actually declined over the past decade, even as the state’s grid stresses have increased. And efforts to create statewide targets for distributed energy — like those that helped spur California’s rooftop-solar and home-battery leadership — have failed to gain traction, including a proposed bill in the state’s just-concluded legislative session.
Advocates say it’s time for the state to change that — especially since there’s an expiration date for capturing the value of DERs. Without policies to encourage utilities and customers to work together to realize the grid benefits of these technologies, utilities will simply build expensive, centralized infrastructure to meet rising electricity demand. Once that money is spent, potential savings can’t be realized, undermining the economic case for VPPs.
Unfortunately, utilities have clear incentives to discount the potential of VPPs as a money-saving tool, because they earn guaranteed rates of profit on capital investments like grid buildouts, but don’t for alternatives like VPPs. Plus, they’re held responsible for failing to keep pace with growing power demand — and are loath to rely on decentralized assets owned by customers in place of tried-and-true grid investments.
This utility reluctance may well explain why a roster of bills aimed at enlisting DERs to combat rising grid costs stalled in this year’s regular legislative session.
SB 1305 proposed requiring the California Public Utilities Commission to determine targets for utilities to “procure generation from cost-effective virtual power plants,” and then mandate that the utilities meet them.
Similar targets for rooftop solar and batteries have been valuable for boosting early-stage deployments in California, said Cliff Staton, head of government affairs and community relations at Renew Home, the company formed by the merger of Google Nest’s smart-thermostat energy-shifting service Nest Renew and California-based residential demand-response aggregator Ohmconnect.
“If you set the targets, you begin to provide the certainty to the industry that if you invest, there will be a return for your investment over time,” Staton said.
An early version of SB 1305 set hard percentage targets for VPP procurements by 2028 and by 2035. Those percentages were stripped from the bill later in the session, leaving the final targets up to CPUC discretion. The bill failed to clear a key legislative committee anyway.
Another bill that died in committee, AB 2891, would have expanded options for VPPs to capture the value of the peak load reductions they can provide. The legislation would have ordered the California Energy Commission to create methods for VPPs to reduce how much generation capacity each utility in the state must secure to meet peak grid demands in future years.
Only a handful of California’s community choice aggregators — the public entities that supply power to an increasing number of customers of the state’s major utilities — are using this approach today. But those CCAs have been able to start paying customers with solar and batteries for the value they can provide by reducing reliance on increasingly expensive contracts with centralized grid resources — mostly fossil-gas-fired power plants.
For more than a decade, state laws have called on the CPUC to create programs that reward customers for the energy and grid values provided by their solar panels, backup batteries, electric vehicles, and remote-controllable devices like smart thermostats and water heaters.
But these efforts have been plagued by an on-again, off-again approach from regulators and utilities. The California Energy Commission set a goal in 2023 of achieving 7 gigawatts of load flexibility from VPPs and other customer-owned resources by 2030; two of the CEC’s key contributions to that effort saw their budgets slashed this year.
Meanwhile, many of the programs launched by the CPUC over the past decade have stalled out due to overly complicated structures, or had their budgets reduced or canceled due to concerns over their cost-effectiveness.
The CPUC and the California Independent System Operator (CAISO), the entity responsible for managing California’s transmission grid and energy markets, argue that these programs have failed to perform as promised. Relying on them more would run the risk of eroding rather than improving grid reliability, they say.
But the companies engaging in these VPP programs — smart-thermostat providers like Renew Home and ecobee; solar and battery installers like sonnen, Sunrun, Sunnova, and Tesla; and demand-response providers like AutoGrid, CPower, Enel X, and Voltus — argue that overly complex and restrictive rules and compensation structures are to blame.
Adding to these challenges for would-be VPP providers is the declining value of rooftop solar. Major changes in California’s net-metering policies over the past two years have slashed the value of customer-owned solar systems, slowing the growth of the state’s leading rooftop solar market.
That’s a problem for VPP providers and advocates who see rooftop solar as an important way to help meet demand from households and businesses with EVs and heat pumps — and to charge up batteries with clean electricity that VPP programs can tap into later.
A host of bills were proposed to reset state policy to restore more value to customer-owned solar during this year’s legislative session. But only one — SB 1374, which restores compensation for schools that install solar — made it through.
California’s new rooftop solar regime does reward customers for adding batteries to store surplus solar power during the day and discharge it in evenings, when the grid faces its greatest and most costly stresses.
But solar and battery advocacy groups argue that those rewards haven’t counterbalanced the broader erosion of rooftop solar values — and that the VPP opportunities that have emerged in the state can’t yet be trusted to make up the remaining difference.
“It’s important for customers to find value in the investment they’ve made, and to help the grid and lower cost for all consumers,” said Meghan Nutting, executive vice president of government and regulatory affairs at Sunnova. “One of the problems with VPP programs so far is that it’s really tough to talk about that value proposition up front because programs are so short, you can’t count on them, or the funding isn’t there.”
At the same time, California policies that encourage people to buy other distributed energy resources — namely EVs and heat pumps — are under threat from rising electricity rates, which are eroding the benefits of switching from fossil fuels.
A controversial policy enacted this year to reduce the per-kilowatt-hour rates paid by customers of the state’s big three utilities in exchange for higher fixed costs may or may not ease that pressure. But both opponents and supporters of the policy agree that shifting the balance of fixed and variable electricity costs does little to address the underlying problems.
Programs that enlist those exact same distributed energy resources to ease grid stresses have a much clearer value proposition, on the other hand.
About half of the electricity bills of customers of California’s three big utilities is made up of fixed costs like grid investments. A majority of those investments are tied to building a grid robust enough to supply power not just for average needs, but during the few hours per year when electricity use peaks.
Those peaks are getting bigger as California’s climate goals encourage more EVs and heat pumps to come online, and the costs of dealing with that have only just begun to be built into utilities’ broader grid investment plans. A series of studies ordered by the CPUC found that adding demand from EVs and heat pumps to the grid could increase ratepayer costs by more than $50 billion by 2035 — or, depending on the approach taken, costs could be contained to less than half of that over the same timespan.
One key variable in those distinct cost forecasts is whether EVs can be programmed or incentivized to avoid charging all at once and overwhelming the grid. “Smart charging” programs that encourage EV owners to shift when they charge their cars could save California ratepayers tens of billions of dollars over the coming decade.
With the right policies and technologies in place, big new grid demands like EVs could actually become valuable resources for energy in their own right. SB 59, a bill that passed in this year’s legislative session after failing to make it last year, orders state agencies to study the proper role for regulation that could require automakers to enable their EVs to support “vehicle-to-grid” charging — sending power from EV batteries back to homes, buildings, or the grid at large.
The challenge for utilities and regulators is finding the right mix of approaches that can allow them to take advantage of EVs, heat pumps, residential solar and batteries, and other distributed resources such that they avoid either overbuilding or underbuilding the grid, said Merrian Borgeson, policy director for California climate and energy at the environmental nonprofit Natural Resources Defense Council.
“We have to be really careful with any new investment — but we do need to make new investments,” she said. “If we pull back too far on energizing loads like electric homes or EV trucks, we miss out on getting those loads connected.”
GRID: Clean energy advocates and solar companies partner to draft model utility rules and legislation to help states deploy virtual power plants, which could reduce the cost of the clean energy transition by maximizing the benefits of solar, storage, and other distributed energy technologies. (Canary Media)
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POLITICS:
SOLAR: The Biden administration has been stuck playing “whac-a-mole” with Chinese solar companies, industry insiders say, as they deliberately overproduce components and shift manufacturing to other countries to avoid U.S. tariffs. (The Guardian)
CLIMATE: As G20 leaders meet today to discuss the global response to climate change, advocates say member countries, including the U.S., are ignoring their commitments to phase out fossil fuels. (The Guardian)
CLEAN ENERGY: A federal green bank aims to channel $500 million to community financial institutions to fund solar arrays, renewable energy apprenticeships, electrified public transit, and more in rural areas, with priority for projects in Appalachia. (Grist)
OIL & GAS: Experts say the lack of communication to neighboring residents about a fire at a large Louisiana refinery is an example of the embedded culture of secrecy around chemical plants and refineries in “Cancer Alley.” (Guardian)
COAL:
CLEAN ENERGY: A federal green bank aims to channel $500 million to more than 75 community financial institutions to fund solar arrays, renewable energy apprenticeships, electrified public transit, and more in rural areas, with priority for projects in Appalachia. (Grist)
OIL & GAS: Experts say the lack of communication to neighboring residents about a fire at a large Louisiana refinery is an example of the embedded culture of secrecy around chemical plants and refineries in “Cancer Alley.” (Guardian)
ELECTRIC VEHICLES:
PIPELINES: A panel of federal judges seems skeptical of a lawsuit by environmental groups to reverse regulators’ 2023 approval of two pipelines to supply a liquified natural gas terminal in Louisiana. (Courthouse News Service)
STORAGE: Texas ranks just behind California for development of grid-scale battery systems, with 4,832 MW deployed in total. (Reuters)
GRID:
HYDROGEN: A West Virginia economic development board approves a forgivable $10 million loan for a hydrogen project. (Charleston Gazette-Mail)
UTILITIES:
CLIMATE:
This article was originally published by the Michigan Advance.
More than a year after 5 Lakes Energy released a report detailing more than $7.8 billion in federal investments available to fuel Michigan’s transition to clean energy, the consulting firm is taking stock of the state’s energy economy following the passage of multiple laws based on Gov. Gretchen Whitmer’s climate plan.
In November, the Democratic-led Michigan Legislature voted through a host of policies including goals for transitioning the state to 100% clean energy by 2040 and increasing the state’s energy waster reduction standards and efforts intended to streamline the permitting process by allowing the Michigan Public Service Commission (MPSC) to approve large scale renewable energy projects provided they meet state requirements.
“The future of our energy sector — and a significant part of our economy — lies in clean energy. This report highlights how investments in clean energy fuels robust job growth across the U.S. energy sector, with Michigan playing a key role,” state Sen. Sue Shink (D-Northfield Twp.) said in a statement.
“Our historic Clean Energy Future legislation has positioned Michigan as a national leader in the fight against climate change, reducing household utility cost and safeguarding our air, water and public health, while creating good-paying jobs for people. This report proves that prioritizing clean energy isn’t just good for the environment — it’s also a powerful boost for our economy and American workers,” said Shink, who was a lead sponsor of one of the bills in the clean energy package.
By examining the interactions between the Inflation Reduction Act and Michigan’s suite of clean energy legislation, the report estimates Michigan families will save an average of $297 a year on their energy bill by 2030 and $713 a year by 2040 compared to if these policies were not enacted, saving Michiganders more than was predicted in the previous report.
Additionally, Michigan will bring in $15.6 billion in investments from the Inflation Reduction Act by 2030 and $30.7 billion by 2040. The state will also shrink its greenhouse gas emissions by at least 65% over the next six years, down 88% by 2040.
Michigan is also projected to save $7.3 billion by 2030 in avoided public health costs — such as deaths, hospitalizations and lost school and work days — with savings across the state totaling $27.8 billion by 2040.
The report also broke down the economic impact of these policies on a more local level, breaking the state into 10 regions and examining the projected growth of jobs and the gross domestic product of those regions.
Alongside breaking down the economic impacts by region, the report also polled and interviewed 20 members of the Michigan Energy Innovation Business Council, a trade organization focused on supporting innovative energy technology.
In the survey, 75% of companies indicated they were hiring or understaffed, with 90% indicating they would need to hire or they would be understaffed in the next three years.
To further support Michigan’s clean energy, the report shares policy recommendations including additional state policies advancing the growth of clean energy and decarbonizing the state’s building and transportation sectors in line with Whitmer’s MI Healthy Climate Plan, continued investment into clean energy projects and monitoring and evaluation to ensure energy goals are met.
The report also advises lawmakers to enact a new policy on conducting cumulative impact assessments to determine the effects of retiring existing energy assets and building new projects, to ensure communities of color and low income communities and communities with a history of disinvestment can reap the benefits of clean energy.
Additionally, it recommends taking steps to reduce the amount households spend on their energy bills by ensuring that cost reductions for energy utilities translate into savings for customers.
In its final recommendation the report calls on the state to develop workforce training programs in support of the clean energy sector, placing a focus on ensuring opportunities for those transitioning away from traditional energy industries like those based in fossil fuels.
When it comes to transitioning from fossil fuels to clean energy, rural electric cooperatives often get stuck in neutral.
These small, member-owned utilities provide power to more than 40 million Americans in rural areas and suburbs that aren’t served by investor-owned or municipal utilities, according to the National Rural Electric Cooperative Association. Many face unique financial, cultural and political barriers that have made it hard to move beyond coal and gas.
But for the past five years, environmentalists have been quietly working with co-op leaders to change that status quo, E&E News reports. A series of meetings between the two camps has helped many find common ground in the clean energy transition, like when Colorado environmentalists and Tri-State Generation and Transmission agreed that the coal-heavy co-op should seek federal funding to move past fossil fuels.
And now, that request is a success. Tri-State is one of 16 co-ops getting a piece of $7.3 billion from the Biden administration to help them purchase clean power or build it themselves. The Inflation Reduction Act funding is expected to unlock enough clean electricity to power an estimated 5 million rural households.
Another winning bidder comes from Ohio, where Buckeye Power will deploy renewables and energy storage as coal generation shuts down.
Read all the details about how a co-op/environmentalist collaboration turned into federal funding in this Energy News Network report from the archives.
🎓 Fossil fuels hit the books: A peer-reviewed study documents how oil and gas companies have “embedded” themselves at colleges and universities through donations, sponsored scholarships, and seats on governing boards, with researchers concluding academic integrity is “at risk.” (Floodlight, The Guardian)
☀️ Supercharging U.S. solar: The anticipated launch of Hanwha Qcells’ end-to-end solar factory in Georgia is expected to supercharge the U.S. solar supply chain, which has already quadrupled in the two years since the passage of a federal climate package. (Canary Media)
🔌 Politically charged: Unionized workers at an Ohio electric vehicle battery manufacturing plant lament the partisan divide over EVs, noting that the industry has helped preserve good-paying jobs. (Inside Climate News)
🏭 LNG fight continues: Gulf Coast residents and environmental groups turn to federal courts to try to block a wave of liquified natural gas export facilities they say haven’t been adequately vetted for their potential impacts on environmental justice, greenhouse gas emissions, fisheries and more. (Floodlight)
🛢️ Oil taps the climate law: Oil and gas producers plan to take advantage of a tax credit in the landmark federal climate package to inject carbon dioxide to squeeze more oil from the ground, but critics warn about a lack of federal oversight and uncertainty about the practice’s effectiveness. (E&E News)
🏠 Passive housing, aggressive efficiency: Some affordable housing developers embrace Passive House building standards that make homes highly energy-efficient with only slightly higher upfront costs. (Energy News Network)
🌬️ Wind’s PR nightmare: Vineyard Wind’s broken turbine blade, misinformation campaigns and a lack of forthrightness from offshore wind developers is causing a “public relations nightmare” for the industry. (Rhode Island Current)
🇺🇲 Plus, some politics
GRID: The federal Bureau of Land Management greenlights the controversial 350-mile Greenlink West transmission project and advances another proposed line; both are expected to expedite solar development in Nevada. (Nevada Independent)
ALSO: Experts urge California regulators and lawmakers to craft policies aimed at better leveraging distributed energy resources, including electric vehicles, rooftop solar and residential battery systems, to reduce power costs. (Canary Media)
SOLAR: The federal Bureau of Land Management approves the 700 MW Libra solar-plus-battery storage project in western Nevada and seeks public input on the proposed Bonanza solar array in the southern part of the state. (news release)
POLLUTION: Colorado advocates criticize the U.S. EPA for backing off on ordering state regulators to obtain corporate polluters’ records and make them public. (Colorado Sun)
OIL & GAS: A government watchdog agency calls on the U.S. Interior Department to tighten oversight of federal land oil and gas royalty payments. (Oil & Gas Journal)
UTILITIES:
BATTERIES:
NUCLEAR: A Bill Gates-backed company hopes to spark a U.S. nuclear plant building boom with construction of its proposed advanced reactor in a Wyoming coal community. (Laramie Boomerang)
MINING: The federal Bureau of Land Management will begin notifying tribal nations when mineral exploration work is proposed for federal lands and preemptively identify and address potential conflicts. (news release)
BIOFUELS: A Hawaii petroleum company proposes a biofuel production facility at the site of its oil refinery in Oahu. (Honolulu Star-Advertiser, subscription)
COMMENTARY:
ELECTRIC VEHICLES: Unionized workers at an Ohio electric vehicle battery manufacturing plant lament the partisan divide over EVs, noting that the industry has helped preserve good-paying jobs. (Inside Climate News)
ALSO:
PIPELINES:
UTILITIES: Four years since the first arrests were made in the Ohio power plant bailout scandal, the federal government has yet to charge any FirstEnergy executives for their role in the alleged bribery scheme. (Cleveland.com, subscription)
NUCLEAR: Total subsidies for supporting the restart of a Michigan nuclear plant reach $2.4 billion as pushback from anti-nuclear activists intensifies. (Bridge)
GRID:
CLEAN ENERGY: State and federal legislation and incentives have helped make Michigan a national leader in clean energy projects and job creation, according to a new report from clean energy analysts. (Metro Times)
SOLAR: Concerned rural landowners in southeastern Nebraska want local officials to adopt zoning regulations for commercial solar development as a company pursues a 100 MW project there. (News Channel Nebraska)
CLIMATE: The second annual Chicago Climate Tech Week returns next week with various events focused on clean energy innovations that are expected to draw about 3,000 people. (Chicago Sun-Times)
Correction: David Porter, vice president of electrification and sustainable energy strategy at EPRI, spoke generally about the challenges and opportunities of constructing data centers and coordinating with utilities. He did not speak specifically about the Southwest Virginia project.
Will Payne and Will Clear are all too aware of the skeptics.
But those doubters only fuel the duo’s vision for Southwest Virginia. The former Virginia state energy office bureaucrats turned private-sector consultants have an ambitious plan to repurpose land and backfill local taxes in communities left behind by the coal industry’s decline, and also pioneer new models for powering data centers with local clean energy.
Data Center Ridge is one piece of a nonprofit venture — Energy DELTA Lab — designed to transform 65,000 mostly contiguous acres of minelands where coal was king for decades into test sites that advance energy innovation. The project has the backing of Republican Gov. Glenn Youngkin, who announced an agreement last November establishing a framework for developing the land.
“If I had a dollar for every time somebody asked why we’re wasting our time on this, I wouldn’t have to work,” Clear, a former chief deputy director with the state Department of Energy. “This isn’t a pipedream. What people need to understand is how long a project like this takes.”
The first phase involves persuading tech companies to build solar-powered data centers on up to 2,000 acres of the now-defunct Bullitt Mine in Wise County. The facilities would be able to tap into underground mine water to help cool their servers. Eventually, they say, other energy sources such as wind turbines, pumped hydro storage, or small nuclear reactors could be added across the larger property.
“This is a big idea and we need someone who can share that vision,” said Payne, managing partner of Coalfield Strategies LLC. “We need developers who believe in ramped-up clean energy.”
Glenn Davis, director of the Virginia Department of Energy, said a couple of key factors are driving the state’s interest in the lab. Many data center companies are exclusively seeking sites where they can access 100% clean energy, and new clean power generation could cushion the grid impact from the state’s booming data center sector.
“Southwest Virginia was the energy capital of the East Coast and I believe it will be again,” Davis said in an interview. “There’s a power void that needs to be filled and solar is part of that.”
DELTA, shorthand for Discovery, Education, Learning & Technology Accelerator Lab, is just one enterprise Davis is tracking as he coordinates Youngkin’s all-of-the-above Energy Plan.
Last fall, Youngkin said the intent is to attract private and public dollars to flesh out a portfolio that also draws wind, hydrogen, large-scale batteries, pumped-storage hydropower and eventually, perhaps, small modular nuclear reactors when and if that nascent technology matures. Any carbon-cutting realized by lab energy projects wouldn’t count toward Virginia’s landmark Clean Economy Act because the faraway area is served by a Lexington-based power company, Kentucky Utilities. The VCEA requires only the state’s largest investor-owned generators — Dominion Energy and Appalachian Power — to achieve a carbon-free grid by 2045 and 2050, respectively.
That doesn’t bother Youngkin, Davis said.
“What’s driving the governor’s interest is jobs, businesses and an improved quality of life,” said Davis, appointed as an agency head in April 2023. “We’re excited because the opportunity for growth there is larger than any other in the state.”
Dallas-based Energy Transfer owns the acreage, roughly 101 square miles. The lab is coordinating site development with Wise County officials and the landowner. Some of the acreage is still being mined for metallurgical coal, the type used for steelmaking and other industries. However, much of the property, including inactive Bullitt Mine, is being reclaimed.
On paper, the dozen or so projects on the drawing board, including Data Center Ridge, could generate 1,600-plus jobs, add 1 GW of new power and induce $8.25 billion in private investments, Payne said. First, however, they have to move beyond the conversation stage.
Payne and Clear, DELTA’s chief advisers, are counting on their matchmaking skills to revive a region often depicted as down on its heels.
Clear grew up in Smyth County, east of Wise County. Payne recently moved to Washington County on the Virginia-Tennessee border. The Richmond native left a position as chief deputy at the state energy department in 2019 to direct InvestSWVA, an incubator invented to diversify the region’s economy and curb carbon emissions. Appalachian Grains was one of their previous energy-related joint ventures.
Tax revenues from data centers are the boost local governments need to fill the coal gap, they say.
“Plain and simple, public safety, education, health care, municipal services and other core government sources are at risk of falling off a cliff if we do nothing,” said Clear. “We’re trying to solve this crisis.”
Josh Levi, president of the Loudoun County-based Data Center Coalition, said Southwest Virginia shouldn’t be dismissed as too inaccessible or mountainous for data center development.
Recently, the burgeoning industry began expanding into off-the-beaten path “tertiary markets,” he said. For instance, he pointed to a deal Amazon Web Service announced this year to spend $10 billion on two data center complexes in Mississippi.
It was only a few years ago that the industry reached into secondary markets such as Columbus, Ohio, and San Antonio, Texas, after initially concentrating its investments primarily in Silicon Valley, New York-New Jersey, Dallas, Chicago, Northern Virginia, Atlanta and Phoenix.
In Virginia alone, there’s a southward shift as more data centers pop up around Fredericksburg and Richmond.
“What they’re doing is credible,” Levi said about Payne and Clear. “My understanding is that they have seen levels of interest from data center developers. Whether the opportunities they’re leveraging lines up with the business needs of data centers remains an open question.”
For instance, he said, Southwest Virginia might be the right fit for backing up federal data but less so for applications such as live-streaming video or trading stocks.
Loudoun County and surrounding Northern Virginia are home to almost 300 data centers, the biggest concentration of such campuses in the world. It’s the crossroads for roughly 70% of global internet traffic.
Prolific construction of the mega-buildings that make cloud computing possible — combined with the accompanying need for transmission lines for electricity and water for cooling — have caused an uproar among community activists alarmed about their impact on local infrastructure and the environment.
Such large-scale growth prompted a tongue-in-cheek comment from Democratic state Sen. Danica Roem about exporting data centers from Prince William, the county she represents, to Tazewell County, just east of the proposed Data Center Ridge.
In an interview with the Energy News Network, Roem said she would only support siting data centers in Southwest Virginia if the projects have widespread community buy-in, are powered with renewable energy and are built on reclaimed coal mines that don’t require clearcutting of forests, which serve as carbon dioxide sinks. Utility customers shouldn’t be saddled with paying for the expensive buildout of transmission infrastructure, she added.
“I don’t want to simply shift the problems we’re having here to Southwest Virginia and create problems for the residents there,” Roem said. “If they’re building data centers there, are they going to stop digging in my district?”
Roem has joined other legislators introducing bills aimed at reining in data center growth and controlling the resources the buildings require. For instance, compared to a typical office building, the U.S. Energy Department estimates one data center needs 50 times more electricity.
David Porter, vice president of electrification and sustainable energy strategy for the Palo Alto, Calif.-based Electric Power Research Institute, said there are numerous challenges and opportunities when it comes to coordinating data centers’ power needs with utilities.
“These data centers could be a really neat idea if they can work around a lot of potential hurdles,” Porter said. High on his checklist of potential limiting factors are access to a reliable electric grid connection, battery storage to fill gaps and “major league” fiber optic cable for communications.
He emphasized that even a modest number of data centers can’t rely on renewable energy 24/7. Backup power, typically provided by diesel-powered generators, is needed to keep the centers operating when the wind isn’t blowing and the sun isn’t shining.
As well, he said, even larger data centers in the gigawatt range generate far fewer jobs than a manufacturing center.
Payne and Clear said they are far from naïve about the difficulty of solving grid and broadband issues, which they know will take years, not months, to remedy, and that the jobs will be impactful in a region where the average annual income is $42,000.
“In Southwest Virginia, we’ve seen plenty of manufacturers pick up and leave, and that wouldn’t be the case with wind turbines and data centers.”
Their models show that one 36 MW data center, considered to be a mid-size project, would generate about 50 jobs paying $134,300 a year. In an ideal scenario, the size of Data Center Ridge would eventually expand more than 25-fold to 1,000 MW.
DELTA Lab recently collaborated with a local industrial facilities authority to offer a financial incentive for data center developers, Clear noted. It translates to Wise, Lee, Scott and Dickenson counties and the city of Norton offering a tax rate on data center equipment of 24 cents per $100 of assessed value. By far, it’s the lowest such rate in the state.
“The more persuasive argument for data centers here is about sustainability for local governments and their citizens,” Clear said. “This creates a new trajectory for tax collections for the next 50 years.”
The sites they’re eyeing for data centers are atop an estimated 6 billion to 10 billion gallons of underground 55-degree mine water, which offers a less-costly method for cooling the hot air generated by hundreds of servers.
It’s not an aquifer. Over the years, rainwater has been filtered by the limestone and sandstone as it trickled through fissures and cracks and landed in cavities created as coal deposits were removed. The pools of water are as deep as 1,000 feet below the surface.
Four years before ushering in DELTA Lab, Payne and Clear had procured a state grant to study the water supply. Since then, they have been collaborating with engineers to devise a closed-loop water system that could chill the centers and eventually pump the water back underground to be reused after the Earth removes the heat it absorbed.
Drilling of test wells by a geotechnical company is scheduled to begin this fall. That exploration is funded by the federal government and managed by the U.S. Department of Energy.
In the meantime, a looming challenge is securing the flow of electricity to and from Data Center Ridge. Even if on-site solar arrays with backup battery storage are the initial power source, the project needs to have sufficient substations, transmission lines and other infrastructure to tie into the grid. That way, excess electricity can be shipped out and “imported” electrons can fill any deficits.
Payne and Clear are talking with Kentucky Utilities — which does business in Wise and four other Virginia counties as Old Dominion Power — about upgrading and adding infrastructure. That analysis is part of a larger effort spearheaded by county officials to meet long-term energy demand in Southwest Virginia.
One plus, Clear said, is that siting the buildout of substations and transmission lines will be less difficult on property with one landowner. However, he also knows investor-owned utilities often aren’t keen on asking ratepayers to fund infrastructure built to serve one distant customer.
Davis said his agency would likely pursue federal Energy Department money to construct transmission infrastructure.
Data Center Ridge has the potential to boost the utility’s renewable energy portfolio, which is 1% of a generation energy mix that is heavy on coal, 84%, and natural gas, 15%.
Although every component of their blueprint presents a separate set of obstacles, the entrepreneurs say outsiders’ perception of Appalachia is the chief hindrance.
“Even after making our case since 2019, dispelling myths about the region is our first challenge in getting developers down here,” Payne said. “They think everybody is on meth and lives in shanties.”
They persist to prove their doubters wrong.
“Everything is teed up here to be executed,” Clear said. “It’s getting that first domino to drop that’s really important.”
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