Advocates see lost opportunities as Virginia lags behind its neighbors in clean energy production

When the nonprofit Environmental Entrepreneurs (E2) began tracking where financial incentives from the Inflation Control Act were spurring growth in clean energy production and job creation across the country, Zach Amittay thought Virginia would rank first in the Southeast.

So he was surprised to see the state consistently lag behind South Carolina, North Carolina and Georgia since E2 began its post-IRA study in August 2022.

“Overall, Virginia pales in comparison to its neighbors, especially those further south,” said Amittay, an E2 supporter from the Southeast. “This is something of an irony, considering how Virginia’s clean energy policy framework is driving demand for solar and electric vehicles, battery storage and offshore wind.”

Data compiled by E2 shows that as of April, companies had announced at least 305 large clean energy projects in 40 states and Puerto Rico. These projects involve the creation of more than 105,400 jobs and capital investments of more than $123 billion.

Of those 305 projects, only four – two for offshore wind, one for hydrogen and one for grid modernization – have connections in Virginia.

Meanwhile, Georgia attracted 27 projects, South Carolina 24 and North Carolina 19.

“North Carolina, South Carolina and Georgia are doing everything they can to attract businesses,” Amittay said. “They are generating a full-court press by recruiting, offering state incentives and reducing tax liabilities. It shows they realize this is the future of the economy and they want to be part of it.”

E2, a national, nonpartisan group of investors, business leaders and professionals, has launched its research project to bring greater transparency to the IRA allocation process.

“For the average layman, this is unfathomable,” Amittay said. “We found that we could dedicate staff time to aggregating information and making it more accessible.”

He noted that Virginia has many success stories but needs to step up efforts to encourage more producers to join the renewable energy supply chain. Deploying solar panels and wind turbines is only half of the clean energy equation.

“When it comes to attracting investment, the state loses by doing the opposite and, it seems, pushing it out.”

Christian Martinez, a spokesman for Republican Gov. Glenn Youngkin, disputed that claim.

He pointed out that the administration’s 2022 Comprehensive Energy Plan underscores Virginia’s commitment to being a leading business location while recognizing energy as a key productivity driver.

Without providing details, Martinez noted that Youngkin “looks forward to sharing details on several economic development opportunities… when they are ready.”

Rejecting an EV battery factory set the wrong tone

While state leaders cannot control the whims of companies, Amittay and other clean energy advocates directly blame Youngkin for rejecting Ford Motor Co.’s proposal. of late 2022 regarding the construction of a factory producing batteries for electric vehicles on an industrial area in Pittsylvania County on the North Carolina Border River.

Youngkin said at the time that the automaker’s decision to work with the Chinese company posed too many safety risks.

“Virginians should be wary of Chinese Communist meddling in Virginia’s economy,” he said in his January 2023 State of the Commonwealth address, directing lawmakers to “send me a bill prohibiting dangerous foreign entities with ties to the CCP from purchasing Virginia farmland.”

Youngkin’s concerns about China’s influence in the country could have been allayed so that Virginia’s chance to build a battery plant wouldn’t go up in smoke, Amittay said.

“He was trying to build a national brand at the time because he had bigger political ambitions,” he said of Youngkin’s presidential aspirations.

In February 2023, Ford announced that a battery plant would be built in Marshall, Michigan.

Amittay said the loss not only hurt Virginia, but also sent a signal to companies that the state may be wary of incentivizing clean energy innovation.

Martinez said Youngkin’s fears “that the Chinese Communist Party was going to dominate the world at the expense of the United States” were confirmed when Ford announced last November that he was scaling back his plans for Michigan.

However, Ford explained that it is reducing production capacity and employment expectations at Marshall – from 2,500 to 1,700 jobs – due to rising labor costs and consumer reluctance to switch to electric vehicles.

IRA is a magnet for hydrogen, wind and network modernization

At the heart of the Inflation Reduction Act is a massive package that allocates $369 billion over 10 years for clean energy innovation through tax credits, rebates and other incentives. Many of his programs are aimed at increasing jobs in the country’s manufacturing sector as the country moves away from fossil fuels.

The latter is a signal to U.S. and international companies, Amittay said, that the United States is serious about reducing emissions of heat-trapping gases that cause climate change.

So far, according to the E2 database, the IRA promise has convinced four companies: Hitachi Energy, Fugro, Lyon Shipyard and Topsoe, to expand operations or put down roots in Virginia.

The latest entrant is Topsoe, a Danish company focused on emission reduction technology.

In mid-April, it announced plans to spend $400 million on a plant in Chesterfield County, south of Richmond, that will produce specialized solid oxide electrolyzer cells needed to produce green hydrogen. It would employ 150 people.

Although Topsoe has begun the permitting and design process, company spokesman Gabriel Martinez said no timeline has been set yet.

“The final investment decision will depend on market demand and regulatory changes,” he said, adding that the green hydrogen will be produced by Topsoe customers rather than on-site in Virginia.

If built, Topsoe’s largest U.S. investment would be eligible for IRA incentives of up to $136 million, Gabriel Martinez said.

Another European company, Fugro, is in the process of adding staff to its US Offshore Wind Center of Expertise in Norfolk. The Dutch geographic data company first came to Virginia in 2007, when it was hired to help expand the Craney Island Marine Terminal in nearby Portsmouth, operated by the state Port Authority.

A few years later, Fugro began focusing on offshore wind as opportunities for the industry emerged in coastal Virginia and beyond, said Peter Tattersfield, who leads wind business development in the Americas.

Dominion Energy is on the verge of breaking ground on a 176-turbine offshore wind farm located 27 miles off the coast of Virginia Beach. At peak capacity it will generate 2.6 gigawatts of power.

Fugro uses specialized equipment such as buoys, sensors and robots to collect information about water currents, wind speeds, wave heights and soil types to create detailed maps of the ocean floor and surrounding marine environment. Scientists also study the habitats of marine mammals and fish.

“Wind power developers need to know what they are building their turbines on and where they should be installing the cables,” Tattersfield said. “We’re basically building a model of the Earth so they can have confidence in their designs.”

Fugro will continue to add specialist jobs to keep pace with the Biden administration’s goal of 30 gigawatts of offshore wind by 2030, he said. The company is not compatible with receiving money directly from your IRA account. Instead, the business will grow as more wind developers take advantage of generous IRA incentives.

“Our industry is still in its infancy, but we are strategically located in Virginia,” Tattersfield said. “A wind energy developer is like a general contractor who has every incentive to build a house. If he succeeds, all subcontractors will also be included in this success.”

As a result, last fall, Norfolk-based Lyon Shipyard announced it would spend $8.5 million to expand its capacity to provide a range of services to commercial and offshore wind farm vessels. A ship repair company that has operated on the Elizabeth River since 1928 plans to create 134 jobs.

Meanwhile, Hitachi Energy is investing $37 million to expand its 26,000-square-foot power transformer building in Halifax County to support the production of larger transformers designed specifically for the utility and renewable energy markets.

Transformers are a key element of network resilience as they stabilize voltage to ensure efficient and reliable power flow.

Steve McKinney, head of Hitachi’s transformers business in North America, said he expects the addition to the existing 607,000-square-foot plant in South Boston to be operational by the end of 2025. Hitachi will employ 165 workers, up from 165 workers currently. 450.

McKinney said there is a “strong possibility” that Hitachi will use IRA incentives to offset equipment costs, but he did not yet know the dollar amount.

The investment in Virginia is just a small slice of the $1.5 billion Hitachi is pumping into its manufacturing capacity around the world as demand for electricity surges with the development of everything from data centers to electric vehicles.

“A large part of the power grid was built decades ago and it’s time to modernize,” he said. “Who would have thought five years ago that we would be having this conversation about the level of clean energy investments provided by IRAs?”

Can Virginia catch up?

“We are still early days, but this will be transformational for the United States,” Amittay said of IRA injections. “It’s complicated because there are a lot of technical details, multiple agencies involved, and some funding programs haven’t been implemented yet.”

Despite these hurdles across the country, Kim Jemaine, director of Advanced Energy United in Virginia, isn’t sure Youngkin has the will or resources to catch up with other states in the Southeast.

Her organization represents companies that want to accelerate the transition to clean energy.

She said the governor spent too much time undermining Virginia’s Clean Economy Act and promoting distant energy sources such as small modular nuclear reactors.

“By touting an all-of-the-above policy, it misses out on research, development and production opportunities in other investment spaces,” Jemaine said. “What about batteries and long-term storage? There is a lot of untapped potential there.”

He also worries that initial excitement about turning the Hampton Roads region into an offshore wind hub has waned since Youngkin took office in 2022. That political landscape means it’s easier for existing companies to expand than new ones.

Amittay agreed that with so much to catch up on, waiting was not an option.

“We all know the best time to plant a tree was 30 years ago, but the next best time is today. It’s time for Virginia to think about how she can plant some trees.”

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