Economic Summit ~ New ventures sought in morning after Imperial County energy boom

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(Part 2 of 2)

By Gary Redfern

Chocolate_Mountain_50MW_solar_PV_park_California_Image_8minutenergyHEBER — Drive almost anywhere in Imperial County and it does not take long to see what has changed: vast parcels of desert and farmland gleaming, steaming and whirling, now assimilated into an archipelago of electric-power generation. The “power” is not just the electricity itself, but also in the impact this stampede has on the land and its people, and in the fact it is cherished “renewable” energy being so prodigiously produced.

The timing with which the county brass started seeking to book its renewable gigs in the early 2000s was impeccable. Striving to reduce pollution and fossil-fuel dependency, California in 2002 set a goal of requiring utilities to get 20 percent of their energy from so-called “renewable” resources, such as geothermal, solar and wind, by 2017. In 2006 the goal accelerated to do that by 2010.

With its open land, 350 sunny days a year, regular swift winds off coastal mountaintops and numerous plots with 400-degree water beneath its surface, Imperial County was, in the vernacular of the poker craze of the time, “all in.”  Through exhaustive networking by the independent Imperial Valley Economic Development Corp., in partnership with government agencies and businesses leaders, the area soon attracted interest.

The state added to the pot when it further hastened the pace of renewable goals. In 2011 it raised the renewable percentage to 33 percent by 2020. In 2015 that was upped to 50 percent by 2030.

Now, in 2016, Imperial County has 10 vast operational solar farms with about another 20 under construction or planned, a wind farm with 112, 300-foot-tall windmills and two new geothermal plants. The original flurry of geothermal-plant construction was in the 1980s and 1990s.

The county finds itself facing a morning-after affect. It got what it sought. But, as with most ventures, there are positives—a diversified economy, some revenue, some jobs and a stake in an
industry that will surely grow—and negatives—complaints too much quality farmland was taken out of production for solar panels, concerns the renewable industry is not creating enough jobs and revenues, and a reflection that a portion of Imperial Valley’s rural charm has been irreparably chewed up by legions of gargantuan futuristic contraptions.

Denizens are left to ponder what comes next because economic development is not a venture completed and left. Competitive global markets require constant new relationships. As county leaders met for the Imperial Valley General Assembly & Economic Summit May 18-19 at the Twin Dragon Restaurant here, itself a testament to economic expansion, the plotting of new romances in the renewable-energy post-honeymoon era was clearly afoot. Panelists in a number of the presentations touched on who the suitors might be and more detailed strategies were revealed in interviews.

The event was co-hosted by IVEDC and the Imperial County Transportation Commission.

There are signals Imperial County could benefit from what economist Michael Bracken of the Development Management Group, Inc., called “the Orange County effect” in reference to the legions of well-off Baby Boomers residing there.

As the summit’s lead speaker, Bracken told the fixated gathering, “A generation that cashes out (will be attracted) as you build what I call the quality of life effect. That could be one of those game changers. Shopping, leisure, travel access. As people retire, they look for affordable places to retire.”

With housing and living costs among the most affordable in California, access to major leisure areas and a mild winter climate, Bracken, who has done studies on the Imperial County economy for many years, explained the area has the basis to attract retirees. One recent action could tip the balance.

“Scripps is a game changer. Access to more world-class medicine. The (top doctors) will rotate in here,” he said of Pioneers Memorial Healthcare District’s affiliation with Scripps Health Network.

The hospital is based in Brawley.

There are indications some locals are foreseeing this opportunity, Bracken added, stating: “Some of those wheels started to run. Some land owners did some very large specific plans. wind turbineEntitlement plans under CEQA (California Environmental Quality Act) are in place. Land entitlement completed. Investors go where the action is.”

Besides requiring the right local environment, such potential depends on larger forces as well.

“What would really drive this is if the (national) economy continues to go up” so Baby Boomers can sell their homes and retire, Bracken said.

A more immediate economic diversification effort involves so-called “data centers,” said IVEDC Chief Executive Officer Timothy Kelley.

“That’s where we (IVEDC) spend the most (marketing) money. We have about four companies interested. Once you get one, others will get interested. Eight years ago people said, ‘Solar will never come here.’ Today, Imperial County leads the nation in solar, over 2000 megawatts,” Kelley told the summit audience.

Data centers are hubs that large Internet companies, such as Google and Facebook, as well as other firms, use to store their data on massive computers.

In an interview during a break Kelley explained further that Imperial County has several distinct advantages sought by the site selectors that advise firms on where to locate. They include
affordable land, access to affordable water and being on a major fiber optic line.

“The companies we’re working with are looking at us because we have the fiber, we’re centrally located and inexpensive. The tax and job impacts are huge,” Kelley said.

“In the last year we’ve had more interest in data centers than we’ve had in the last eight years. Salt Lake City is powering their data centers with coal. Soon there is going to be a regulation that data centers have to be powered with renewable energy,” Kelley noted of the edge of having so much local renewable energy.

Strangely, the fiber optic line running through Imperial County is known by a celestial-sounding term, “dark fiber,” because the county does not now have access to it, Kelley added. While that can be mitigated, what could not be is expensive or scarce water. Fortunately, that is not an issue in water-rich Imperial County and Kelley explained IVEDC and other county representatives let potential developers know it.

Data centers need water to cool the large computers at their core. Abundant water, plus the fact large amounts of water flow by gravity in Imperial County rather than by fuel-hungry pumps, has data developers engaged, Kelley told the summit audience.

When it comes to the county’s water, seeing is believing, explained Tom DuBose, owner of Design, Development & Engineering in El Centro, who has held several top local economic development posts and is currently vice chair of the Imperial-Mexicali Binational Alliance. DuBose was part of a summit panel discussion on “Imperial Valley: Working Tri-Nationally.”
In an interview during a break, DuBose explained the reaction of potential developers who attended county tours hosted by IVEDC by stating, “The jaw dropped when we told them how much water was available for industry.  Our IID (Imperial Irrigation District) has set aside 25,000 acre-feet of water (a year) for industrial development at $100 per acre-foot.”

As far as who is taking a keen look, DuBose noted interaction with Chinese investors is pivoting from their involvement with building projects in the U.S. to having them actually establish or expand businesses here to access the markets in North America. Chinese investors have funded a number of projects in the county, including the multi-commercial site on which sits the Twin Dragon Restaurant where the summit was held.

“What they’re (China) doing is encouraging people to do is bring their business over here. They’re looking for diversity and Mexico is a big attraction,” he said. “Economists at the World Forum said in the next 10 years the U.S. is where most capital investment will take place. We want a small—or not-so-small—part of it.”

The World Forum for Foreign Direct Investment was held in San Diego in April. DuBose explained IVEDC made sure Imperial County had a notable presence.

Asked what specific industries were targeted, he quipped, “Any industry that has a need to operate with close proximity to (major) markets, is labor intensive, needs renewable power.”

While the bulk of the renewable electric power being generated in the county by all those solar panels, windmills and geothermal plants, is exported out of the area, DuBose revealed that is about to change as California ramps up to requiring utilities to get 50 percent of the electricity they sell from renewable sources.

“What’s around the corner is renewable built not to send out, but to supply here. We produce a competitive rate that is not so low when you have to pay for transmission,” he said, explaining it would be a major attraction for industry to have access to such power minus transmission costs.

geothermal plantAs Imperial County has seen, however, economic growth and diversification has its angels and its demons, and the risks were hinted at or simply laid bare at the summit.

A number of the solar farms were built on viable farm ground. That remains an open wound for those who disagree with swapping out Imperial Valley’s long-standing and prosperous farming for a new industry some see as not generating many jobs and having a dubious long-term future.

“We were not ready for solar. We thought we were smart, but we weren’t,” admitted Jim Minnick, director of the Imperial County Planning and Development Services Department, which issues permits for projects in the county’s unincorporated lands. He spoke during a discussion titled “Access to Infrastructure.”

“With the renewables we did not estimate the impact on our farming communities,” he continued. “We actually put people to work, so you can’t say solar is all bad. How do we reduce the impact on farming? That’s what it’s all about.”

Minnick said the county faced a situation where solar developers did not want to build in the desert due to the need to mitigate environmental factors, or on some lower-quality farm land due to the lack of transmission lines. That caused some solar farms to end up on good farming ground.

To head off that issue now, Minnick explained the county is streamlining the permitting process for renewables in non-farm areas and requiring a difficult amendment to the county general land plan to get them in farming areas. Only four such amendments are available per year, he said.

It was also clear from summit discussions and interviews the recent developments and those sought are no cure-all for a county whose unemployment and poverty rates are among the highest in California and the nation.

Asked about the number of jobs data centers would create, Kelley acknowledged they are not direct large employers but do increase demand for services.

“If it goes down, it has to be back up immediately,” he said of the data center computers, noting they require maintenance workers, computer technicians, heating and air conditioning service and backup generators, all of which could be provided by local vendors.

Getting the first data center should not be downplayed, Kelley said and added, “If we had a center, we’d have more. We are working with site selectors.”

In his presentation economist Bracken predicted attracting retirees could in turn have a ripple effect on the local economy beyond their purchasing activity.

“One or both (of a retired couple) go out into the workforce or start a company that brings in the highly skilled professionals that help the economy,” he said.

DuBose had perhaps the best possible news, though at the time of the summit it remained speculation: the shuttered beef processing plant in Brawley that employed hundreds until its closure in 2014 could be reopened soon, albeit on a somewhat smaller scale.

“Re-opening of the beef plant gets us back to cattle. It’s really a model about why can’t we, and how should we, add to the agricultural commodities we have?” Dubose said in the interview, explaining IVEDC is a strong advocate for generating more jobs through the billion-dollar farming industry the county already has.

Bracken put an exclamation point on the urgency of such endeavors when he stated, “Imperial Valley lost its (beef) packing industry. (Local cattleman Bill) Brandenberg told me he put his cows on wheels to Yuma and the Central Valley.”