Energy's Vital Role in Economic Development and Reshaping Cities

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ENERGY INSIGHTS

Energy's Vital Role in Economic Development and Reshaping Cities

4/21/2016

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By Dr. Louis J. Hutchinson, III, Vice President and Chief Revenue Officer, WGL Holdings & Washington Gas

 

After months of economic downfall and an unemployment rate approaching 10 percent, finding a road to economic recovery and future development was top of mind in 2009.

In response, the White House released the Recovery and Reinvestment Act with a notable section on “clean energy transformation,” which many believed would help usher in a new, more positive economy at all levels. Increased renewable energy investments meant improving the national and municipal economies while protecting the environment and enhancing our national security.

But did the investment work? Have our cities and communities seen the positive impact of renewable energy investments?

Many U.S. cities continue to grapple with significant economic, security and environmental challenges even though we are not in dire economic straits anymore. They face staggering deficits, and many compete with one another for public and private investments, much like the private sector competing for profits.

Too many city leaders are forgetting the foundational element of the 2009 Recovery Act while they perfect their city’s competitive edge. Energy, more than almost any other industry, has the power to reshape cities, states, regions and our nation, and to drive essential economic development.

It’s hard to dispute that a city is primed for success if growth industries, or companies that have the potential to employ a significant number of people, move in. Hence the frequent ad campaigns and incentives to make cities and towns more appealing.

But, for companies, nothing is more appealing than the promise of a better bottom line. Cities and states with strategic energy systems in place can provide companies with just that – greater control over their energy spend and the promise of less profits being funneled into energy expenditures.

In 2015 the Business Energy Advisor noted that “energy represents almost 20 percent of total expenditures for a typical office building.” That already incredible number fluctuates, of course, as the price of energy resources oscillate, leaving companies with both energy expenses and risk as they struggle to predict what energy markets could bring next.

However, if a city is equipped with infrastructure, such as both natural gas and distributed generation solutions, a diversity of energy resources can be offered to companies, making the ebb in the availability of one energy resource less consequential to a company’s bottom line. Cities with eco-districts that contain both solar generation and a natural gas foundation will be able to assure a lowered risk and greater control over energy consumption to companies considering a move.

 

Millennial migration: Seeking “green”

Companies aren’t the only markers of economic success in cities, though. It’s when millennials arrive in droves that a city can truly claim its competitive edge. And what is it that millennials seek? Sustainability and resilience.

A 2015 Business Insider article on millennials relayed a startling fact: As a group, millennials are willing to pay a premium for sustainable products and to be a part of sustainable experiences. As cities struggle to compete with one another, sustainability and renewable energy availability are key components.

Dozens of annual lists pit U.S. cities against one another to determine which ones are the most “green,” with the insinuation that the greener the better for millennials. Sustainability created through the implementation of distributed generation (solar) and wind systems has the potential to drive economic development and to pique the interest of millennials looking to move to the most environmentally-friendly areas, even if it means they have to pay a premium.

 

The need for an established energy infrastructure

A recent iteration of a “Best Cities” list came from the Huffington Post in 2015. Titled “The Top Ten Greenest Cities in America,” the article surprised many with their runner-up and third-place winners: Washington, D.C. and Arlington, Virginia, respectively. While many would assume that cities across California would receive an award for being the “greenest,” there is a reason why our nation’s capital and its neighbor, Virginia, are upping the energy ante – security, reliability and resilience.

Having a reliable and resilient energy infrastructure is critical to the economic success of a state or city, particularly in current times of national security challenges. For residents of a city to feel safe, there has to be an established energy infrastructure in place that can both consistently supply energy and that operate independent of a vulnerable and aging national energy infrastructure. That is why in some of our nation’s most rapidly growing urban areas, there are eco-districts taking shape – eco-districts that are planned to incorporate a diverse range of energy resources and distributed generation systems that can keep communities up and running, even in a state of emergency.

For D.C. and Virginia these energy infrastructure updates are critical. With a continuous foundational element of natural gas infrastructure and distribution supporting sustainable energy solutions, these cities are meeting the green needs of millennials (and the mandates set forth by the federal government), while developing innovative infrastructure that government entities can rely upon.

 

The solution to meeting energy needs

Now that we’ve established the drivers behind the economic development of cities – industry investments, millennial interest, job availability and a feeling of security – the question becomes: How can a city possibly meet all of those energy needs and find success? How can cities merge the millennial demand for sustainability, the nation’s need for security and the business world’s want for lowered risk, lesser cost and increased reliability?

At WGL, we’ve answered these questions through the development of our proprietary energy offering – Distributed Impact™. Distributed Impact™, energy systems that are being implemented across eco-districts in the Eastern U.S., helps organizations navigate fluctuating energy markets, efficiently plan their energy spend, consistently stay connected in times of crisis and even increase sustainability and reduce greenhouse gas emissions.

A combination of distributed generation (the production of energy at or near the site of consumption) and distributed energy (a diversity of energy resources), Distributed Impact™ considers traditional energy like natural gas, power or hydro-electricity, as well as renewable resources like solar, wind or geo-thermal. Creating a system capable of managing and integrating these resources requires demand-side management that includes energy efficiency measures and increased storage capacity, via large-scale batteries or fuel cells. This robust energy strategy considers adaptable distributed generation capabilities that enable organizations, campuses, eco-districts and entire cities to “plug and play” or integrate and package diverse energy resources.

Distributed Impact™ and solutions like it will continue to evolve and be enhanced as market and consumer demands shift. But it is the best response I’ve seen to overcoming the challenges and questions that coincide with the construction of an energy infrastructure that can drive economic development. With considerations for sustainability demands, reliability requests, national security needs and corporate cost-cutting, systems such as Distributed Impact™ enhance a city’s chance of gaining a competitive edge, and stimulating economic growth.

The energy industry holds the power to drive significant development, to reshape cities and to support a strong national, and worldwide, economy. So the next time you seek economic and energy answers – Ask Us.

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