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An Innovative Approach to Economic Diversification with a Healthy Dose of Solar in West Virginia

Sep 23, 2013

Aptly referred to as “America’s backyard” in the recent documentary featuring the West Virginian coalfields, Hollow, much of the nation can hardly imagine the terms “progress” and “central Appalachia” in the same sentence. From the region responsible for the industrialization of our nation, namely, the central Appalachian coal counties of West Virginia and Kentucky, we have extracted coal as well as myths of a region completely devastated not so much by coal but a lack of economic diversification, very much in tow with Detroit and their single industry — General Motors. 

Keeping in line with the most realistic of energy policies proposed in the United States thus far — an “all of the above” strategy developing smarter fossil fuel technologies as well as sustainable energy sources — a team of visionaries from Mingo and McDowell Counties, WV and Pike County, KY have come up with a plan to bring sustainable energy as well as significant economic diversification to the coalfields of Appalachia. You can read report here: 2013 CASE Study - Energy Integration: An Evaluation of Solar in West Virginia by Sustainable Williamson.

According to National Resource Defense Council, only 11 percent of surface mine land has been reclaimed with any beneficial economic purpose – golf courses and industrial parks are among the most common uses. A vast majority of reclaimed surface mines across central Appalachia are covered with easy-growing grass seed in an attempt to rebuild the soil lost to mining. Why not use a small fraction of this land for redefining central Appalachia as a leader in smarter energy technologies through an adoption of what Sustainable Williamson’s CASE Study is calling an “integrated path forward?”

This realistic approach calls for assets that surface mine sites in West Virginia and Kentucky have in excess: exposure to the sun for solar panels, natural gas for steady electrical output, area for experimenting with biomass, and coal for researching alternative “smart-coal” applications. These resources combine into an innovative economic development tool appropriately deemed “Integrated Energy Parks,” or “IEP” model (outlined in this video).

Given that the U.S. Energy Information Administration predicts Appalachian coal mining will not become significantly more productive than its current state, an integrated path forward presents a solid source of well-paying jobs to aid in the offsetting of lost coal mining employment, a profession with a median annual income of $68,000. Below is an excerpt from the CASE Study concerning job development and tax revenue that, in the words of McDowell County Economic Development Authority’s Director Peni Adams, “may very well define the future of southern West Virginia.” Here are some more quotes concerning the CASE Study's proposed integrated path forward:

Steve Kominar, Director of Mingo County Redevelopment Authority, emphasized what he believed to be “the most important thing to take away from this report.” He stated that “its proposed integrated path forward signifies a genuine all-the-above energy strategy where both traditional and emerging energy resources are integrated synergistically in order to position West Virginia as an energy leader for other states and perhaps the nation to follow.” 

Ken NemethExecutive Director of the Southern States Energy Board, outlined his support of the integrated path forward, “diversifying our energy resource base in the U.S. will ensure that we have adequate fuel reserves for many generations to come.  By capitalizing on innovation and new technologies, we can build a clean, affordable, reliable and secure energy sector.” He ended saying that he was “proud to see West Virginia leading the way.”

Peni Adams, Director of McDowell County Economic Development Authority, said that “an integrated path forward is a win-win for all forms of energy, not just solar.” She went on to note that “the reports proposed Integrated Energy Parks may very well define the future of Southern West Virginia.”

Job Creation and Tax Revenue

The first step in assessing job output from each potential IEP required a baseline density of natural gas wells within a reasonable distance from the site – 5 miles. Using natural gas wellhead data from the West Virginia Geologic and Economic Survey’s interactive online maps, an average production for each wellhead was evaluated based upon production between the years 2008 and 2012. Using .KMZ files pinpointing ten “AM active” and “A2 active, reclamation” surface coal mining sites across six West Virginia counties, natural gas wellhead data from the West Virginia Geological and Economic Survey’s interactive maps, and information from the gas generator suppliers, it was determined that around 13 wells on average would be able to supply our 10 MW natural gas facility (see Appendix B in report). Our team found at least 60 active surface mining sites, all of which were in close proximity to over 13 wellheads. Running NREL’s Jobs and Economic Development Impact models for 2 MW of solar capacity and 10 MW of natural gas capacity, the following table displays potential job growth for West Virginia given a full deployment of IEP’s across the state:

Again, this is a conservative estimate of job creation, especially given that these figures only include solar and natural gas deployment, neglecting biomass and smart coal development/research potential on these sites. 

As for tax estimates, each integrated energy park would be subject to the West Virginia business and operations (B&O) tax as well as the local property tax. According to data provided by Mark Muchow and Jeff Amburgey of the West Virginia Department of Revenue, as well as being subject to a 6.5 percent corporation net income tax, each 12 MW IEP would be expected to contribute around $54,500 per year in B&O tax. As for property taxes, each IEP would be subject to an average 2.21 percent or 2.85 percent tax on 60 percent of assessed land value, depending on whether the site is located outside of or within a municipality. In total, the IEP model presents large job creation and tax revenue growth for West Virginia.

(co-written with Frank Feneis)

The information and views expressed in this blog post are solely those of the author and not necessarily those of or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

First and foremost a philosopher, J. Eric Mathis has been at the forefront of initiatives to bridge the gap between the fossil fuel and renewable energy industries through the development and implementation of innovative finance and business models. These models are designed to be beneficial to b...


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