E15 - Voltage Valley Opportunity - Ohio Is Winning

Voltage Valley is the new Silicon Valley. Electrification, a 20 billion dollar Intel plant and data warehousing to support Technology companies use of Artificial Intelligence & Machine learning are creating a construction boom in Ohio.
Outside of Youngstown, General Motors has built a $2.3 billion battery factory for electric vehicles and a battery innovation center. The electric truck startup Lordstown Motors is within 15 minutes of the GM battery factory.
In the Columbus area, Google, Amazon and Facebook have built or will build billion-dollar data centers and facilities. A $20 billion Intel chip facility will break ground in late 2022, finishing in 2025. Intel CEO Pat Gelsinger said, as reported in Crain's Cleveland Business, that "the $20 billion investment could grow to $100 billion and an additional six factories in the future."
Earlier this month, the federal government approved $52 billion to help boost chip R&D and manufacturing in the United States. The construction spends in Ohio's "Voltage Valleys" from 2020 to 2025 will be greater than the $26.9 billion construction spend for the entire state of Ohio in 2019.
A Voltage Valley is a geographic business cluster where electric vehicle battery plants, data centers, microchip plants, crypto mining facilities, recycling plants or other large power users affiliated with digital transformation or electrification are located. An example of electrification is powering a car with electricity versus a carbon-based fuel like gasoline. Silicon Valley and electrification are the driving forces behind Voltage Valleys.
Voltage Valleys need reliable, resilient and sustainable power to drive advancements in artificial intelligence, blockchain, machine learning, faster computer chips, manufacturing robots, recycling, and for product manufacturing that supports electrification.
The success of the Silicon Valley companies leveraging digital transformation has created seven of the 10 most valuable companies in the world — Apple, Microsoft, Alphabet (Google), Amazon, Tesla, NVIDIA (artificial intelligence) and Meta (Facebook). General Motors and Ford have less than 10% of the trillion-dollar market valuation of Tesla. Investment in digital transformation and electrification is already taking place and will only accelerate.
The question is: Where will these companies strategically invest to sustain and grow their market capitalizations? The answer is Ohio.
Ohio has a playbook for creating Voltage Valleys. The current Voltage Valleys in Ohio have large transmission and distribution systems to supply power, have government-supplied incentives, and have a robust primary and higher education system.
The continued success of a Voltage Valley will be determined by local companies that can digitally design and construct the required infrastructure. The long-term required Voltage Valley infrastructure is digitally connected, is zero carbon and is socially inclusive.
We can see two examples of Voltage Valleys in Ohio — the Youngstown and Columbus regions. So, how did these two geographic business clusters became the first examples of the Voltage Valley in Ohio?
Reliable, resilient grid
Deregulated power markets in 1999 forced Ohio utilities to invest in electric grid distribution and transmission assets, with the utility earning a return on these installed assets. Additionally, it is understood by regulators and utilities in other states that Ohio's investor-owned utilities are very efficient and effective at installing these grid assets. A reliable and resilient grid takes time and appropriate investment — this is necessary for a Voltage Valley.
Renewable energy resources
It has been said that there must be renewable energy assets in place or the Intels, Googles, Amazons and Facebooks won't come.
What we found was that 4 gigawatts (GW) of approved renewable energy resources comprised of wind and solar approved for development was enough for the companies. Once companies announce their intentions to locate to the Voltage Valley, then developers start building the renewable energy resources. Once the renewable energy resource is built, developers contract with the Voltage Valley companies using power purchase agreements.
The renewable resource most contracted by the Voltage Valleys in Ohio are solar and wind farms.
Aggressive incentives
Ohio has been aggressive with incentives to companies. In the case of the Intel plant that will be located in New Albany, just outside of Columbus, the state of Ohio put over $2 billion of tax benefits and incentives on the table.
A $2 billion investment for $20 billion of construction, plus the ongoing business of those facilities, is an easy decision. There is also the upside of additional facilities totaling $100 billion.
Education
Intel announced the company will invest $100 million in the Ohio and National Semiconductor Education and Research programs. Intel sees a promising investment in the people of Ohio.
Fifteen years ago, Ohio made a commitment to build green schools. Ohio has more LEED certified primary schools (green schools) than any other state in the country. Studies show that LEED certified schools can improve test scores by 20%. A LEED school does cost a bit more, but in Ohio we decided that our children are worth the investment.
The higher education enrollment at Ohio State University and Columbus State Community College exceeds 100,000 students. Ohio State has a world-class electrification research school focused on EV charging — this is an opportunity waiting for additional investment. OSU, Ohio University, Kent State, the University of Cincinnati and Case Western Reserve University are recognized as R1: Doctoral Universities. This R1 designation indicates very high research activity. The University of Akron School of Polymer Science and plastics engineering program was ranked No. 1 in the world by EduRank.
Competitive advantage
Ohio's higher education resources give it a competitive advantage in developing technologies and products for the circular economy.
Solar panels, electric vehicle batteries and obsolete chips will need to be recycled. Ohio's commitment to invest in the research university and private industry partnerships will be a key if Ohio is to continue to win the Voltage Valley race. Silicon Valley has invested hundreds of millions of dollars in these university and private industry partnerships with immense success.
Ohio, which is 12 hours from 60% of the U.S. population, is well positioned to manufacture and distribute the new products created from the circular economy.
The continued success of Ohio's Voltage Valleys will be determined by local companies that can partner to digitally design and construct the required infrastructure.
We will need to innovate from Ohio's traditional power delivery systems of large transmission systems and augment the traditional power grid with advanced microgrids. The advanced microgrids will be composed of renewable power such as wind and solar, steam-powered turbines, thermal batteries, and hydrogen-fueled combined heat and power systems. The advanced microgrids will be built using integrated project delivery, virtual design and construction, digital twins and prefabrication.
Business and communities will need to work together as project teams with intentional collaboration. Intentional collaboration allows individuals to share their insights with confidence and know they will be heard. The ability to intentionally collaborate needs to be a required part of the Ohio government RFP selection process and final contract. Our government regulatory bodies will need to digitize standards that can directly integrate into software. Digitization allows a greater reliability and traceability to the final constructed product.
The Ohio Voltage Valley is off to a good start. The long-term success of the Voltage Valley will be our ability to embrace digital transformation to create long-term competitive advantage.
Paolillo is vice president of strategic alliances and advanced technologies at J.W. Didado Electric. He is also a visiting lecturer on leadership and lean building science at the University of Akron.