Liberty U Acquires Research Park, Advances Research Ambitions

Center for Advanced Engineering and Research in Bedford County. Photo credit: Virginia Hamrick Photography

Expanding its role as the economic dynamo of the Lynchburg metropolitan region, Liberty University has finalized a $4.3 million purchase of the Center for Advanced Engineering and Research (CAER) in Bedford County.

Reports “Work It, Lynchburg“:

For Liberty, the purchase of the CAER facility is an opportunity to build a new research campus on the surrounding 28-acre lot at the New London Business and Technology Center park. The space will serve as the new home for the Liberty School of Engineering and Computational Science.

“This is an exciting step for Liberty University as we expand our presence as a research university and do so at a new location in Bedford County,” Liberty President Jerry Falwell said in a news release from the university. “Our investment in this facility and our commitment to relocate our School of Engineering and Computational Sciences to this site demonstrates our goal to expand our partnerships with business and industry and offer exciting new opportunities for our students.”

Liberty plans to grow its engineering program to 800-plus students and 30-plus faculty and add new undergraduate and graduate degrees along with a new doctorate focused on energy, according to remarks made by Bob Bailey, the executive director of CAER and a member of the LU engineering department advisory board, at a January meeting of the Tobacco Region Revitalization Commission.

Evan Feinman, executive director of the tobacco commission, had described the project as in “financial distress.” An initiative of the Region 2000 economic development group, CAER was originally conceived of as “an industry-focused regional research and development center that drives the development of innovative products and processes by providing local access to university and federal research and inventions.”

Bacon’s bottom line: LU President Jerry Falwell Jr. has set his sights on transforming Liberty University into a religious-oriented, higher-ed powerhouse akin to Notre Dame University or Brigham Young University. From that perspective, acquiring the research center, relocating the school’s engineering and computational sciences program there, and reinforcing ties with regional industries makes total sense. With LU’s resources behind it, the research center could grow into an innovation ecosystem that could spawn new businesses and drive economic growth in the Lynchburg region.

That’s great news for economic development in the Lynchburg region, and it’s a positive sign for the continuing evolution of LU from its origins as a bible college to liberal arts college to online learning pioneer and, now, research university. LU’s business model is highly profitable, and it is investing its non-profit “surplus” into growth.

My main reservation is that Liberty could choose to make its education more affordable by lowering tuition instead — it could perfect a business model of low-cost higher ed that serves as an example to the entire country, thus addressing one of the nation’s major socio-economic crises. Instead, Falwell seems driven to implement a high-prestige, high-cost model of higher ed that is part of the national problem. What a shame. What an opportunity lost. But LU is a private institution, and Falwell is answerable to no one but his own board. Creating a new research university out of fallow fields is a tremendous accomplishment and a not-insignificant consolation prize.

Woo Hoo! Stewart Promises Billions in Toll-Free Projects

Photo credit: Washington Post.

Claiming the populist niche in the contest for the Republican gubernatorial nomination, Corey Stewart has given away a semi-automatic rifle as part of a fund-raising effort, defended monuments of Confederate generals, and bashed Dominion Energy for its coal-ash disposal plans. Now he’s added to his rabble-rousing resume by promising voters to meet Virginia’s transportation without raising taxes or imposing new tolls.

“We obviously have transportation needs, and the way we’re going to fund those is by finding efficiencies within existing spending in Virginia. No new tolls; no new taxes. That’s what I’m pledging,” Stewart said yesterday in a Virginia Beach news conference.

Where would the money come from to pay for projects such as two more lanes for the Hampton Roads Bridge Tunnel, costing an estimated $3 billion? Reports the Virginian-Pilot:

Stewart said he would eliminate the need for new tolls by slashing $2.2 billion from the state budget, which is about $104 billion over two years, and redirecting it toward transportation.

Under Stewart’s plan, the $2.2 billion in redirected spending would come in his second year in office. He’s proposing that on the heels of another plan calling for cutting another $2.2 billion in spending in his first year so the state could reduce the income tax rate most people pay from 5.75 percent to 4.75 percent.

Stewart did not specify what would be cut from the budget under his proposals, but said “there are billions of dollars worth of savings out of the state’s annual $52 billion budget that can be found.”

Bacon’s bottom line: This is magical thinking, and it’s wrong in oh so many ways.

First, it is a fantasy to think that billions of dollars of “inefficiencies” can be squeezed out of the existing state budget by going through by line item by line item — the only way to achieve savings under the current paradigm of government. Medicaid, a federally mandated programs, continues to grow at the expense of other programs. (Virginia, by the way, already operates one of the leanest Medicaid programs in the country.) The state is under-funding its K-12 schools based on Standards of Quality, and it has chopped per-student support to higher education. Virginia has huge unmet needs for mental health and substance abuse. It has massive unfunded pension liabilities. The list could go on and on. Anyone who thinks they can cut the income tax rate at a revenue cost of $2.2 billion and then find another $2.2 billion laying around to be reallocated to transportation is deluded.

Second, Stewart is misguided in his no-new-tolls stance. But at least he has a rationale. Quoth the Pilot:

What makes this tolling plan so absolutely heinous is that taxpayers have already paid for these roads. It’s absolutely wrong. It’s absolutely wrong to tax citizens twice for the same road. You need a third crossing, we need a third crossing here in Hampton Roads, but that project is really a state project. It should not be borne upon the citizens of Hampton Roads to pay for a project that is really meant for the Port of Virginia, which is owned by the entire state.

I would agree, it is wrong to “tax” (or toll) citizens twice for the same road. But doubling the capacity of the Hampton Roads Bridge-Tunnel would not be tolling the “same road.” Most likely the new tunnel would be set up as HOT lanes, in which motorists would continue to use the original tunnel for free but would pay a premium to use the new tunnel as a way to bypass congestion. No one would be compelled to use the new tunnel; no one would be forced to pay the toll. But everyday motorists would benefit to the extent that the tolled road diverted some traffic from the untolled road.

I also would agree that it is reasonable to ask the Port of Virginia to help pay for transportation improvements that give tractor-trailers better access to inland markets. But the most logical way to collect money from port-related activity is for time-sensitive tractor-trailers to pay tolls to avoid congestion!

Corey Stewart reflects the id of the Virginia psyche in which everyone wants transportation improvements but they want someone else to pay for them. Stewart is promising to find “someone else” to pay. Thus, roads and highways effectively become free goods — free to the motorist, not the taxpayer. In other words, Stewart is a transportation socialist. The Bernie Sanders crowd might be OK with that. But I can’t imagine the gambit will take Stewart far with the Republican Party.

PHCC Drops Agricultural Degree Programs — Why It Matters

Farm sales by Virginia locality 2012, taken from the StatChat blog. Red circle shows location of Martinsville/Henry County.

The Patrick Henry Community College in Martinsville has dropped its agricultural degree program along with certificate programs in horticulture and viticulture. Between declining enrollment in the programs and state budget cuts, it is no longer feasible to offer the courses, President Angeline Godwin told the Martinsville Bulletin.

Many people might view this flotsam in the torrential current of news coverage as utterly without interest. To Bacon’s Rebellion, the story is imbued with deeper significance in at least two ways.

Market-responsive education. First, it shows how at least one community college is responsive to market forces. Each degree program is the functional equivalent of a product line. The agriculture/horticulture/viticulture product line wasn’t selling in the Martinsville-Henry County area and could not be operated at a profit. So PHCC eliminated the program. Wise decision. As the map above shows, there was not enough farming activity in Henry County in 2012 to register any farm sales. While there still may be some hobby farms, career farming in that part of the state appears to be a defunct vocation.

Virginia’s colleges, universities and community colleges offer literally thousands of product lines — everything from two-year degrees in agriculture to four-year degrees in Tibetan language studies. Some programs are in greater demand than others. Some programs are more “profitable” than others — profitable in the sense that the share of tuition revenue attributed to class enrollment exceeds the cost of employing faculty and administrative overhead to teach them.

Public colleges and universities in Virginia must seek approval of new degree programs by the State Council for Higher Education in Virginia — and SCHEV does not act as a rubber stamp. The council scrutinizes requests and sometimes sends them back for revision or reconsideration. But once an institution gets the OK for a degree program, SCHEV does not monitor its ongoing progress. I have seen no evidence that even the Boards of Trustees of the institutions themselves track the enrollment numbers in degree programs. Do college administrations even compile these numbers? Surely, they do, for they must have some rational basis for deciding how to allocate resources for hiring faculty. But if they do, the public never sees these numbers.

The PHCC article reminds us that some degree and certificate programs fall out of favor. PHCC made a good business decision by shutting down three for which demand had evaporated. But note this: The college acted out of the necessity caused by cuts in state support. Would it it have acted otherwise? Who knows?

My question is this: How many other zombie degree programs are there in Virginia’s system of higher education that are shuffling around half-dead? Could Virginia’s colleges and universities combat runaway costs by chopping out the deadwood?

The decline in farming. The second lesson to learn from this seemingly innocuous article is that inhabitants of what we think of as “rural” Virginia appear to be losing interest in pursuing rural livelihoods, the most notable of which is farming. Based on farm sales, the only part of Virginia where large-scale agricultural operations takes place is the Shenandoah Valley.

When we think about rural economic development in Virginia, one would think that farming would be a major underpinning of the economy. After all, one thing rural Virginia has is a lot of land. Inexpensive land. And Virginia has water. We don’t have to fight wars over water rights like farmers do in California and the Inter-Mountain West. As manufacturing jobs dry up, why aren’t people turning back to farming to make a living? Is the work too hard — it is work that Americans don’t want to do anymore? I don’t know the answer. But the question seems important to ask.

Virginia Voters Back Pipeline by Nearly Two-to-One

Question: Do you support or oppose building the Atlantic Coast Pipeline?

Registered voters in Virginia favor construction of the Atlantic Coast Pipeline (ACP) by an almost two-to-one margin over those who oppose it, according to a poll released by the Consumer Energy Alliance (CEA) today. Fifty-four percent support the controversial project strongly or somewhat, while 31% oppose it.

Eighty-three percent of voters say they consider “energy issues” to be very or somewhat important in the upcoming gubernatorial election. Forty-eight percent say that are more likely to support a candidate who “favors more infrastructure projects like the Atlantic Coast Pipeline” while 27% say they would more likely prefer a candidate opposed to the pipeline.

The poll of 500 Virginia voters was commissioned by the CEA, a non-profit, non-partisan trade association for the purpose of “providing reliable, affordable energy for consumers.” The organization strongly supports the pipeline. Dominion Energy, the managing partner of the ACP, is a member. (See the questions and results of the Virginia polling here.)

Clearly, the results are favorable to the ACP, which has encountered stiff resistance from environmentalists and landowners along the pipeline route. In rolling out the poll to the media, CEA made no secret of the fact that the timing is designed to stiffen the backs of gubernatorial candidates who favor the project. Tom Perriello has made opposition to the pipeline a major issue in a tightly contested race for the Democratic Party nomination against Lieutenant Governor Ralph Northam.

In past posts I have noted biases, both pro and con, in polls that framed questions to elicit answers from respondents that their sponsors were looking for. This poll shows no obvious sign of such of bias. Here are the two key questions:

I’d like to talk now about energy issues. Have you heard or read anything about a proposed natural gas pipeline from West Virginia to public utilities in Virginia and North Carolina, or is that not something you have heard or read about?

And:

As you may know, there is a proposal to build a 600-mile Atlantic Coast Pipeline to bring natural gas from West Virginia to public utilities in Virginia and North Carolina. Do you strongly support, somewhat support, somewhat oppose or strongly oppose building the Atlantic Coast Pipeline?

The polling sample seems reasonably representative of the Virginia population: 74% white, 16% black, 36% Democrat, 27% Republican, 23% conservative, 16% liberal. The margin of error due to sample size is +/-4.4%. The polls results do not provide a geographic breakdown.

While supporting the ACP, voters gave even stronger endorsement of “renewable energy projects, such as solar and wind power” — with 69% strongly in favor, and 20% somewhat in factor. Weaker majorities favored expanding offshore oil and gas drilling in U.S. waters, and generating electricity using coal-fired plants.

Dominion has been criticized for its influence in state politics during this campaign season. Another questions asked: “As you may know, Dominion is one of the companies that has proposed the Atlantic Coast Pipeline.” Seventy-eight percent said that Dominion’s involvement would have no influence on their support, either way. Ten percent responded they would be more likely to back the pipeline; 8% said they would be more likely to oppose it.

Remarkably, despite intensive media coverage of the pipeline controversy, 47% of respondents replied that they had not heard of the ACP.

Retrofitting Alexandria: Another Office-to-Residential Conversion

This Stovall Street property within Alexandria’s Hoffman Town Center is due for a makeover, says the Washington Business Journal.

Washington, D.C.-based Perseus Realty has contracted to acquire a six-acre site in Alexandria’s Hoffman Town Center with plans to convert an obsolete, 610,000-square-foot building into a residential-dominated mixed-use project. Reports the Washington Business Journal:

The effort, if approved, will entail the addition of 25,000 square feet of ground-floor retail, conversion of two lower floors into parking and the construction of upper floor additions that raise the building’s height from 150 to 200 feet. Perseus representatives were not immediately available for comment. It is unclear how many units the building might include when complete. …

The Perseus project comes as Alexandria considers whether, and how, to encourage additional office-to-residential conversions. In Eisenhower East, for example, a 2003 small area plan sought a 50-50 split between commercial and residential. But now, city staff and the Alexandria Economic Development Partnership are of the belief that for the community to thrive, it will need 2 to 3 times more residential than office.

Conversions have had a net positive fiscal impact for the city, generated significant private investment, and changed obsolete office buildings to a “higher and better use,” according to a report produced by AEDP, city staff and consultant TischlerBise. These projects take excess office space off the market and shield aging office buildings “from potential years of high vacancy, special servicing, or foreclosure.” …

There is a downside to conversions, in that residential requires far more city services than office. According to the study, for every dollar of tax revenue generated by an Alexandria multifamily project, 38 cents are needed to support that project with government services while 62 cents are available for general budget use. With office, only 12 cents on the dollar are needed for services and 88 cents are available to the general fund.

Bacon’s bottom line: It looks like office-to-residential conversions are the next big thing in real estate development. I’ve blogged about the trend in downtown Richmond and Norfolk, and it should be no surprise that it’s happening in Alexandria, too.

As the WBJ article pointed out, the conversions address two problems. First, they find a new use for aging and obsolete commercial structures with prime locations. Second, they create new housing stock for growing populations. While apartment buildings are not as “profitable” for localities as office buildings — they generate a smaller surplus of revenue over costs — they are hugely beneficial from a Northern Virginia regional perspective. The alternative would be to build more green-field housing on the metropolitan fringe, requiring investment in new roads, water, sewer, sidewalks, etc, as well as the transportation infrastructure to move workers from exurban bedroom communities to urban job centers.

Judging by the article, the City of Alexandria has made the calculation that office-to-apartment conversions pencil out profitably. The infrastructure is already in place. And tax revenues even cover the cost of education.

Every urban locality in Virginia has large tracts of land zoned decades ago for commercial and retail uses. The rise of Internet commerce is demolishing the retail sector, especially big boxes and department stores, and the demand for office space is shrinking as corporations rationalize the excessive use of office space. (Although I must note a possible counter-current in IBM’s recent announcement that it was calling thousands of work-at-home employees back into the office.)

Localities that figure out how to retrofit aging and obsolete retail strips and office parks into vibrant, mixed-use communities will prosper in the years ahead. Those who dither will be left behind.

Why Panda Power Loves Natural Gas

Bechtel, which helped build the Stonewall station, used a 500-tire trailer the length of a football field — to deliver manufactured components to the construction site.

Yesterday I wrote about the 778-megawatt gas-fired Panda Stonewall power station starting up near Leesburg. Against the backdrop of ongoing debate over gas versus solar here in Virginia, I wondered why the Dallas, Tex., investors behind the plant were willing to risk more than half a billion dollars in equity and debt on a merchant generating facility that would sell into the wholesale electricity market.

How did these newcomers to the Virginia energy scene see the future of electricity? Aren’t they worried that solar energy will displace gas in a few years as the price of solar continues to drop and the cost of natural gas is expected to rise? Aren’t they worried their big investment will be rendered valueless? Remember, Panda has zero political influence in Richmond, and the company can’t go running to the State Corporation Commission to bail it out if the bet on natural gas goes sour.

Bill Pentak, vice president of public affairs, says Panda Power Funds owns both gas and solar facilities. “We understand solar,” he says. “We built the largest solar project in the northeastern United States, covering 100 acres in southern New Jersey.”

Panda Power Funds will invest in projects that make economic sense, Pentak says, and right now the economics tend to favor natural gas. Take that New Jersey solar facility — it produces 20 megawatts of electricity. “That’s gross. But you’ve got to convert [the electricity] from DC power to AC. You lose 10 percent in the conversion. In the real world, it produces 18 megawatts.”

Then there’s the land use to consider, he says. Solar requires lots of acreage, and it takes up land that has alternative economic uses such as farming. The Stonewall plant takes up a fraction of the space and produces far more energy — 62 times as much on one fifth the land.

Then factor in solar’s intermittent production. Solar does not generate electricity at night, and it fluctuates during the day. The more solar installed, the more gas is needed as a backup. Says Pentak:

If you have ton of solar or wind on your grid, you make it less stable. If the wind dies down or the sun stops shining, the grid operator will have to call upon power that can be quickly dispatched. It won’t be coal fired, which takes three days to ramp up. It won’ t be nuclear, which takes three weeks. All that’s left is natural gas. A combined-cycle plant can cycle up in an hour and a half. A combustion turbine can in 30 to 40 minutes.

Thus, gas will be needed both as a base-load energy source and a back-up energy source. “We think Stonewall will operate as a base-load plant,” he says. But technology has blurred the distinction between peak load, intermediate load and base-load. Combined cycle plants — which generate electricity with gas-burning turbines and recycle the waste heat to run steam turbines — can operate as a base-load power source if need be, and also can dial output up and down as required.

Battery technology is not at the point where batteries can store enough energy to meet large-scale power needs, Pentak says. Moreover, batteries are not environmentally friendly. “Where do you put spent batteries? Solar technology is promising, but it’s not there yet.”

Running in Neutral: a K-12 and Higher Ed Scandal

If a student hasn’t graduated from college within six years, the odds of completing a degree are extremely low.

In this month’s issue of Atlantic, Nick Ehrmann writes a perceptive article, “Solving the Mystery of Underachievement: Why work hard enough to earn an A when a D will suffice for college admission?” He tells the story of an intelligent African-American lad who was groomed to attend college — and ended up dropping out after the first semester. The article goes to the heart of one of the most pressing issues in American higher education today: the high rate of college drop-outs.

Literally millions of young Americans, disproportionately minorities, borrow money, attend a few semesters, and then drop out, never acquiring the college credential that will allow them to pay off their debt. A primary goal of Virginia higher education policy today is to reduce the number of these college drop-outs, who are all-too-prevalent in the state, as elsewhere in the country. The “retention” rate is a key metric used to measure the performance of Virginia’s public colleges and universities. (See the chart above.)

In my commentaries on the subject, I have assumed that dropping out of college could be explained by one of two factors: (1) poverty, or (2) lack of academic preparedness. True enough, poor kids can qualify for tens of thousands of dollars Pell grants, federal loans and institutional financial aid. But that assistance rarely covers all costs, and students from lower-income families typically have to work part-time jobs, or even drop out for a semester or two to find the extra money. Once a student drops out, he or she is at higher risk of never re-enrolling. The other problem is that lower-income kids tend to come from lower-income neighborhoods, which tend to have poorer schools. The inadequate academic preparation makes it difficult to keep up with college-level work. Discouraged and demoralized, students question what they’re doing in college at all.

Ehrmann’s article suggests a third reason why kids drop out of college — the phenomenon of “running in neutral.” The article, I believe, is so important that I will summarize its contents in detail, highlighting what I deem to be key insights. But don’t settle for the Bacon’s Digest version — read the full essay yourself.

Enrollment in higher education is reaching record-high levels, just a hair below 70% of all high school graduates. But being “eligible” for higher education does not mean that students are academically prepared, writes Ehrmann. He knows from first-hand experience teaching kids in Washington, D.C. He mentored one young man, Travis Hill, who showed flashes of brilliance, and kept tabs on him through the years.

In the fifth grade, Travis was admitted into a scholarship program through the “I Have a Dream” Foundation, which guaranteed that any participating student who graduated from high school would receive a college scholarship. The idea was that removing financial obstacles to college enrollment would encourage students to achieve. “Travis, like many of his classmates,” writes Ehrmann, believed there was ‘no doubt’ he would graduate from high school and enroll in college. He did graduate, and he did enroll in Lincoln University, a historically black university in Pennsylvania. But he dropped out after a semester. Why?

In Ehrmann’s view, there are two schools of thought. One is the “culture of poverty” theory in which “low-effort syndrome” or cultural adaptations like a prejudice against “acting white” prevent young people from living up to their potential. The other is the “structural barriers” theory that emphasizes how poverty, institutional racism, segregation and lack of adequate health care stack the deck against poor, minority students.

Writes Ehrmann:

The problem is that neither story is completely right. Over the course of a decade … I witnessed a significant number of students develop a sophisticated logic of underachievement that challenged the popular accounts for how inequality in higher education is created and sustained. For many students, their pursuit of long-term educational success was grounded and strategic. Educated in environments that measured academic success primarily by enrolling in college — not necessarily graduating with a degree — they developed strategies to achieve that goal with minimal effort in school.

Travis made no effort to make As and Bs. To the contrary, he skated by with the minimum passing grades. “Doesn’t matter,” he said. “I work hard when I want to work hard, and that’s what a lot of people can’t do. Some people might not look at it as a skill, but to me it’s a skill.”

That message was inadvertently reinforced from other directions. During his freshman and sophomore years on overnight campus trips sponsored by his high school’s college-placement office, Travis learned that “a couple hundred” colleges and universities across the United States would offer him admission. “Everyone was telling me I could get into college with my grades,” he confided. “I don’t remember exactly how or when I heard it, but that message was seeping into my brain. If I got straight Cs, admissions would be a breeze.”

Every marking period, Travis let his grades slip, When midterm grades were sent home, his grades were typically Cs, Ds and Fs. His mother and stepfather got on his case, and he promised to get his act together. In the final weeks of the term, he approached his teachers one by one and exhibited greater effort in class. His strategem: “Just go to the teacher and act like you care.” Continue reading

Dominion Urges Citizens to Report Suspicious Activity

PG&E’s Metcalf substation, where a sniper attack knocked out 17 transformers. Photo credit: Wall Street Journal

Dominion Energy issued an unusual press release a couple of days ago, urging customers to “report suspicious activity.”

“Suspicious activity includes anything from someone recording or monitoring Dominion Energy facilities to someone who doesn’t seem like they belong in a certain area or is behaving strangely,” said Marc Gaudette, Director of Corporate Security, Safety and Health. “What may seem like a small piece of information could be the missing piece of the puzzle that law enforcement needs to prevent an unexpected event.”

Bacon’s bottom line: Dominion, like other electric utilities, finds itself in a difficult situation. On the one hand, it is rightfully concerned about the threats to the integrity of the electric grid at the hands of terrorists or other saboteurs. The electric power industry has been on hyper alert ever since a 2014 sniper attack on Pacific Gas & Electric’s Metcalf Transmission Substation, which severely damaged 17 transformers and forced the utility to reroute electric power in order to avoid blackouts. The situation is all the more urgent for Dominion, which has shut down two of three of its Yorktown Power Stations, leaving the Virginia Peninsula more vulnerable than usual to blackouts should an accident knock out a transmission line on a hot-weather day with elevated electricity demand.

Dominion cannot survey every substation or every mile of transmission line 24/7, and it makes sense to call upon the public if someone sees something suspicious. As the press release states: “”Think security and safety… If you spot something suspicious, speak up. … Act as our eyes and ears and report any suspicious activity near a Dominion Energy facility by calling 1-800-684-8486. Of course, in an emergency you should always call 911.”

Dominion’s problem is that it can’t get too specific about what to look out for. For one, the utility doesn’t want to generate unnecessary public alarm by exaggerating the threat. Even more important, the company doesn’t want to tip the hand of any potential bad guys by getting too specific about what to look for, thus revealing potential vulnerabilities.

The result of these conflicting imperatives leaves people unclear about what exactly they should be looking for. But a half-informed citizenry is preferable to a totally uninformed citizenry. And, given the stakes involved, false alarms are preferable to no alarms. I live near an electric transmission line and substation, which I routinely ignore. Now, I’ll be keeping an eye out for… whatever…. I’m not quite sure. But better safe than sorry.

Panda Stonewall Gas Plant Starts Cranking out 778 Megwatts

Aerial view of the Panda Stonewall facility in Loudoun County.

Aerial view of the Panda Stonewall facility in Loudoun County.

Panda Power Funds has commenced commercial operations at its 778-megawatt “Stonewall” combined-cycle, natural gas-fired power plant near Leesburg. The plant is capable of providing the electric power needs of up to 778,000 homes in the Washington metropolitan area, the company announced in a press release yesterday.

“Panda Stonewall is one of the newest, cleanest and most efficient natural gas-fueled power plants in the United States,” said Todd W. Carter, CEO and senior partner of Dallas, Tex.-based Panda Power Funds.

Panda estimated that the project will inject $7.1 billion into Virginia’s economy during the construction phase and first 10 years of operation. The Bechtel Corp./Siemens Energy Inc. consortium employed 700 people at peak construction. The plant employs 27 full-time employees to oversee operations and maintenance of the facility.

The Stonewall project is Panda’s sixth built in a three-year period. The Stonewall facility raised debt capital of approximately $570 million. Panda Power Funds supplied equity capital along with large institutional co-investors, including Siemens Financial Services. Said Kirk Edelman, Global Head of Energy Finance at Siemens Financial Services: “Our investment underscores Siemens’ strong commitment to supporting projects that deliver cleaner, more environmentally-friendly and sustainable energy.”

The plant, located four miles southeast of Leesburg, will use reclaimed water from the town to cool the facility.

The press release did not say who Panda Stonewall will sell electricity to, noting only that the plant is located in “one of the fastest growing metropolitan areas of the United States.” The company quoted the George Mason Center for Regional Analysis as saying that the metro region is projected to add more than 410,000 new households by 2023 as a result of job growth. In addition, “Loudoun County, dubbed ‘Data Center Alley,’ hosts the largest concentration of data centers in the world. More than 70 percent of the world’s Internet traffic flows through the County on a daily basis.”

Panda Stonewall will be able to draw upon gas from either Dominion Energy or Columbia Gas, both of which pass through the plant site. The plant connects to the grid through an existing Dominion 230 kV electric transmission line that connects the Pleasant View and Brambleton sub-stations.

Bacon’s bottom line: The press release does not say who will purchase Panda Stonewall’s electricity, but it seems reasonable to infer that the plant will sell into the PJM Interconnection wholesale market. As a combined-cycle facility, Stonewall will be a base-load facility, not a peaking facility. Panda Power would not have made the investment unless it was confident that it could displace older, more expensive electricity sources serving the Washington metro market.

While a power plant theoretically can serve markets anywhere — power companies don’t control where their electrons flow — the shape of the electric transmission grid creates choke points, which get incorporated into the price charged to electricity consumers. I don’t know what the electric transmission grid looks like in the Washington metro area, but I would conjecture that Panda views the location on the metropolitan fringe as a competitive advantage for Stonewall over electricity wheeled in from greater distances. Additionally, the incorporation of state-of-the-art technology will make the plant more efficient than coal-fired plants and even older gas-fired plants.

Reading between the lines, it appears that Panda thinks the power plant will pay for itself and generate a profitable return over a relatively short time line — 10 years. Why do I say that? Because the press release calculates the plant’s economic impact over a 10-year period. Admittedly, that is pure surmise and needs to be confirmed by the company. But if I am correct, it says a lot about the competitive advantage of natural gas as an electric energy source in the near- to mid-term future. Even if electric utilities in the Washington metro area — Dominion, Potomac Electric Power Co., and the electric cooperatives — begin building solar energy on a large scale, merchant generators like Panda calculate that either (a) they can pay off their investment and generate a competitive return within 10 years, (b) they can continue continue selling electricity profitably beyond the 10-year horizon, or (c) some combination of the two.

Update: Panda spokesman Bill Pentak says there is no connection between the 10-year time frame of its economic-impact analysis and the company’s financial payback model. Additionally, he said that the $7.1 billion estimate of impact includes the multiplier effect of dollars circulating in the local economy.

Marriage, Fertility and Male Earnings

North Dakota fracking: higher male incomes did not translate into higher rates of marriage.

One of the great debates in the social science of poverty asks what accounts for the decline in marriage and the increase in out-of-wedlock births. There is a broad consensus among scholars of diverse ideological persuasions that children born into stable marriages tend to fare better in life than those raised by single mothers. The question is why the institution of marriage has declined so precipitously among lower-income Americans even while it remains strong and vibrant among affluent Americans.

In a new paper, “Male Earnings, Marriageable Men, and Nonmartial Fertility: Evidence from the Fracking Boom,” Melisa S. Kearney and Riley Wilson frame the issue this way:

In 2014, over 40 percent of all births in the U.S. were to an unmarried mother, with an even higher rate of 62 percent among non-college educated mothers. A leading conjecture as to why so many less-educated women are choosing motherhood without marriage points to the weak economic prospects of their male partners. The idea is that changing labor market structures and economic conditions have adversely affected the economic prospects of less educated men, making them less “marriageable” from the perspective of the women with whom they sexually partner.

Kearney and Wilson have flipped that conjecture around and hypothesize that improving earnings prospects by non-college educated males would be associated with an increase in marriage and marital childbirth. They tested that hypothesis by examining family formation between 1997 and 2012 in Census micro-areas experiencing a natural gas fracking boom, where non-college educated males experienced a jump in earnings compared to their peers in the rest of the country.

The result: “This analysis does not indicate shift toward marriage in response to an increase in the potential wages of less-educated men associated with localized fracking booms. But both marital and non-marital births increase significantly.”

The authors compared the fracking boom of the 2000s to the Appalachian coal boom of the 1970s and 1980s. Back then, in a different cultural era, increased earnings led to an increase in marriage rates, an increase in the marital birth rate, and a decline in the non-marital birth rate.”

In other words, the conjecture linking men’s income with their marriage prospects may have been valid 4o years ago, but it’s less valid today. Write Kearney and Wilson: “As non-martial births have become increasingly common, individuals are more likely to respond to increased income with increased fertility, whether or not they are married, and not necessarily an increased likelihood of marriage.”

Bacon’s bottom line: The interplay of economics and culture is incredibly complex. But the findings suggest that among a large portion of the American population, marriage is increasingly viewed as optional — regardless of the father’s economic circumstances. Further, out-of-wedlock birth is no longer stigmatized. This research calls into question the idea that blue-collar male earnings are the main stumbling block to family stability. We have passed a cultural Rubicon, and there may be no going back without a major change in values.