Alternative Energy & Fuels

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The Commonwealth of Virginia

30 Jun, 2010

By: Robert McDonnell

Since its discovery 400 years ago, the Commonwealth of Virginia continues to pioneer innovation, launching contemporary programs that bolster economic development approaches for the 21st century.

Just ask Forbes.com, which for four consecutive years has ranked Virginia the “Best State for Business.” The ranking examined all 50 states’ business costs, economic climate, growth prospects, labor, quality of life and regulatory environment.

Virginia also took top billing as CNBC’s “Top State for Business” in 2007 and 2009, and was labeled “America’s Most Business-Friendly State,” by Pollina Corporate Real Estate, Inc. in 2007 and 2009. Add to the trophy case such accolades as a second-place “Best State to Start a Business” ranking by U.S. News and World Report, and Site Selection magazine’s 2010 Competitiveness Award, and decision-makers soon recognize that Virginia possesses all the qualities they are seeking.

Virginia’s leadership position can be attributed to a variety of factors, including a pro-business environment that offers lower operating costs, a stable 6 percent corporate income tax that hasn’t increased since 1972, property tax exemptions and one of the lowest combined state/local/use taxes at 5 percent.

In addition to its pro-business environment, Virginia offers an exceptional infrastructure, strong education system, dynamic workforce, and strategic location—all of which provide a solid foundation for growth and make the commonwealth a great place for enterprise.

As a right-to-work state, the commonwealth has the second lowest unionization rate in the country and one of the lowest unionization rates in the private sector at 2.50 percent. On average, more than 18,000 military personnel separate from the armed services in Virginia annually, adding a skilled, disciplined supply of potential recruits to the state’s labor supply. One of the highest concentrations of doctoral scientists and engineers in the nation are employed in Virginia, and more than 500,000 students are enrolled in more than 90 in-state institutions of higher education.

Innovation and productivity cannot happen without education and a strong work ethic. Virginia ranks among the top 10 states best positioned for robust growth and innovation over the next decade, in terms of being knowledge-based, globalized, entrepreneurial, IT-driven and innovation-based, according to the "2008 State New Economy Index” published by the Information Technology and Innovation Foundation and the Ewing Marion Kauffman Foundation.

In addition to customized recruiting and training services through a partnership between the Virginia Department of Business Assistance and the Virginia Community College System, Virginia businesses have access to a wealth of knowledge capital thanks to a strong partnership with the many internationally recognized research and development (R&D) facilities in the commonwealth. Federally funded R&D facilities, such as NASA Langley and Jefferson Labs, coupled with the research from Virginia universities, provide Virginia businesses access to leading researchers and cutting-edge technology.

A Prime Location for Data Centers
Virginia currently enjoys national and international acclaim in the areas of IT systems development, software development, data center operations, and telecommunications.

Virginia’s close proximity to Washington, D.C., has helped forge Virginia’s technology industry dominance. It is also why CSC and SAIC recently moved their headquarters to Virginia. In fact, every major federal government civilian and defense contractor has a substantial presence in Virginia.

Every state university has established significant IT research centers and other assets to focus on the training of students and the delivery of research to industry, and 14 federally funded research and development centers, the Department of Homeland Security (DHS) and the Department of Defense (DoD) play a dynamic and vital role in Virginia.

Basic infrastructure assets for the IT sector are also a strong attribute for Virginia: more than half of the world’s daily Internet traffic flows through the commonwealth; communications infrastructure has the capacity, security and quality to meet industry needs; and Virginia has the 8th lowest electricity cost in the nation with multiple energy providers that can guarantee abundant, quality power. Virginia also offers one of the nation’s most competitive sales and use tax exemptions, which includes servers, routers, chillers, generators and enabling software—critical equipment used in data centers. No other state has this combination of assets.

Finally, more than 24,900 doctoral scientists and engineers reside in Virginia, more than any other state in the Southeast and the 10th highest concentration in the nation. Each year, Virginia’s colleges and universities award more than 12,000 business and 2,500 computer science-related degrees. More than 425,000 students are enrolled in more than 100 institutions of higher learning in Virginia in any given year. It is believed that more security-cleared people live in Virginia than any other state, and every year more than 15,000 highly trained military personnel separate from the military and enter Virginia’s workforce. This translates into a highly desirable workforce for data center companies.

The Commonwealth offers an abundant supply of potable and reclaimed water, diverse fuel sources, including nuclear, wind, hydro, gas and coal, and 130 pre-qualified sites.

Virginia: Energy Capital of the East Coast
Virginia’s coastal location, knowledgeable workforce, and high concentration of energy research at federal labs, universities and private industry make the commonwealth an ideal location for green innovation.

Public policy support from the top down never hurts, either. In fact, earlier this year President Obama announced that Virginia will be the first East Coast state to explore for and produce energy offshore, bringing Virginia closer to its goal of becoming the "energy capital of the East Coast."

Virginia has a unique, competitive, balanced portfolio of public- and private-sector assets in four main energy sectors: a nuclear business cluster composed of global leaders including AREVA, Babcock & Wilcox, and Northrop Grumman Shipbuilding; significant coal resources and the headquarters for the third largest coal producer in America (Alpha Natural Resources); a geographic position as one of the most compelling locations for development of offshore wind as a generation source (and as the center of all of the supply chain components) for the eastern seaboard; and significant biomass resources across southern and western Virginia that are being leveraged by a $100 million commitment from the Virginia Tobacco Commission for commercializing new energy products and services. Virginia’s Department of Mines, Minerals & Energy has administered nearly $70 million in federal DOE grants, principally in support of consumer-driven projects.

In addition to a strong incentives program that transcends industries, the commonwealth offers a number of incentives tailored to meet the needs of the energy industry. Virginia has a Solar Manufacturing Incentive Grant Program that offers up to $4.5 million per year to encourage the production of photovoltaic panels in Virginia. There is also a Biofuels Production Incentive Grant Program at 12.5 cents per gallon for advanced biofuels and 10 cents per gallon for standard.

More recently, Virginia Governor Bob McDonnell signed into law a number of green energy bills passed by the Virginia General Assembly, including legislation to provide a $500 tax credit for each green job created in the commonwealth; a measure establishing the Universities Clean Energy Development and Economic Stimulus Foundation; the creation of the Virginia Offshore Wind Development Authority; and legislation rewarding investor-owned electric utilities for using wind energy. The Governor also signed legislation to authorize investor-owned natural gas utilities to petition the State Corporation Commission to implement a separate rider that will permit recovery of costs associated with eligible infrastructure replacement projects; to add improvement of infrastructure such as refueling stations to the Alternative Fuels Revolving Fund; and to give localities the authority to, in order to secure loans for acquisition and installation of clean energy improvements, place liens equal in value to the loan against any property where such clean energy systems are being installed.

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