Spring 2014
Power Structure South Carolina’s energy future is a balancing act GE workers prepare for test of gas turbine system at Greenville facility.
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Cities Mean Business | Collaborative Work Space | S.C. Delivers
Table of
Contents COVER STORY: Energy IN S.C. As South Carolina’s utilities work to balance their energy portfolios, some adjustments are under way. Nuclear generation remains the No. 1 source, but utilities are making efforts to include natural gas, as well as solar, biomass and other renewables, as part of the picture.
COVERAGE STARTS oN Page 16
Cover Photo: A gas turbine is prepared for testing at GE’s facility in Greenville. (Photo/GE)
Feature
Special section: CITIES MEAN BUSINESS 34
Cities Mean
Working closely
How office design promotes collaboration
B u s in e s s r o l i nA n of south cA pA l As s o c i At i o of the Munici A p u B l i c At i o n
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2014
A day in the life
A day in the life of an economic development director: It’s not for those who like routine and predicability.
Economic development s director’s job change by the minute
Strategic tourism s Attracting visitor a boon to cities
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Photo/Jeff Blake
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Departments 4 Bill Settlemyer’s Viewpoint
8 Business Accelerator
38 S.C. Delivers
5 Upfront
10 Spotlight: Clarendon County
48 1,000 words
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Dear Reader,
Editor
This issue of SCBIZ is full of energy. We hope you can feel it! Our state is blessed with plentiful, well-priced sources of power, one of the basics for attracting economic development. To match the needs of a growing state means constant updating of our power structure. We are fortunate to have utility companies that are equal to the task. As concerns about coal-fired plants have grown, our state’s utilities have turned to other sources of electricity generation. South Carolina is one of the few states where new nuclear units are under way, with SCE&G building two units at its V.C. Summer plant, co-owned by Santee Cooper. It’s an amazing thing to watch the construction, near Jenkinsville in Fairfield County. You can see photos at the website of the SCANA Corp. (www.scana. com), the holding company of SCE&G. With all the sunshine South Carolina pulls in, many customers are asking why we don’t get more of our power by solar Licia Jackson generation. As it happens, all the state’s utility companies are Editor, working on solar projects. As we were putting this magazine SCBIZ Magazine together, Santee Cooper showcased a new solar farm in Colleton County. The farm is being built by TIG Sun Energy, with Santee Cooper and the state’s electric cooperatives buying all the power generated. Look inside to read about nuclear and solar and all the other building blocks in South Carolina’s electric power structure: natural gas, biomass, wind and, of course, coal. Speaking of energy, there’s a renewed infusion of it into many workplaces as younger workers come on board. Sometimes, it calls for rearranging work space to improve collaboration and creativity. Read our story inside for more about that. This issue is packed with much more for you, with the Don Ryan Center for Innovation as our featured Business Accelerator and historic Clarendon County in the County Spotlight. Bill Settlemyer writes about how everything we need to know begins in prekindergarten — for those who get the chance to attend. Add to all this the latest supply chain news in S.C. Delivers and you’ve got a lot to look at here. So, keep warm and read – spring will be here before we know it.
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Bill Settlemyer’s
Viewpoint Governor gets an ‘incomplete’ on education plan
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ov. Nikki Haley recently unveiled her plan for education improvement, proposing to spend $160 million with a focus on poor children, many of whom live in rural areas of the state. While some critics were quick to suggest this was a politically motivated election-year move that should have been made years ago, the consensus appears to be that the governor’s proposal is serious and constructive and that it deserves to be graded on its own merit, politics aside. And that’s where the “incomplete” grade comes in for failing to propose funding for universal 4K early childhood education. Universal 4K is the essential launching pad for any serious effort to create an “opportunity society” that gives all the state’s children a shot at being productive citizens and valuable members of the state’s workforce. Partial strides have been taken towards this goal, but as with many other needs in this state, we never seem to cross the finish line. Most business people are familiar with the concept of the “sales funnel,” a process used to sell expensive or complex products and services. First, you identify a large target market of people who might make a purchase. Your sales staff makes thousands of contacts to identify hundreds of serious prospects, and out of those hundreds of prospects a smaller number are successfully converted into customers.
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Partial strides have been taken towards this goal, but as with many other needs in this state, we never seem to cross the finish line. There is an analogous process for producing the workforce we need to grow South Carolina’s economy. At the front end of the “workforce funnel,” you need a high graduation rate from our K-12 schools. For all but the lowest paid jobs, those students must continue their education with advanced training that includes at least two years of technical college or apprenticeship training. Beyond that, a smaller pool of students will go on to attain four-year college or graduate degrees. It makes sense that the higher the number of qualified high school graduates entering the workforce funnel, the higher will be the number of students moving on to the higher education levels that today’s job market demands. That’s where universal 4K comes in. Think about it: Pre-kindergarten schooling is a common expectation of middle and higher income parents who can afford to give their children this important head start
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on the learning process. Both at home and in the school setting, children of affluent and middle class families are more likely to be exposed to key social skills and learning tools before starting the traditional school curriculum. In contrast, poor children begin life in an environment laden with disadvantages, with struggling parents (often a single parent) who are ill equipped in terms of time, resources and experience to help their children gain essential social and learning skills during the key development period from birth until the start of kindergarten. And these are the very same children that have limited access to preschool education and the ones most in need of an early exposure to social and learning skills. For decades, “economic development” has been the top priority for every South Carolina governor up to and including Gov. Haley. Building a workforce that is competitive and that meets the needs of today’s (and tomorrow’s) employers starts on day one of the life of every child in our state. Universal 4K is an essential building block in the process and should receive the full support of our leaders in state government.
Bill Settlemyer bsettlemyer@scbiznews.com
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UPFRONT
regional news | data
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BMW helps U.S. bobsled team go for gold
s they were pursuing Olympic gold this month at the Sochi 2014 Winter Games, Team USA’s two-man bobsled team had new ammunition – a sled completely redesigned by BMW. In collaboration with USA Bobsled and Skeleton Foundation, BMW applied the same expertise it uses in vehicle development: application of BMW EfficientDynamics, using lightweight materials to optimize weight placement to distribute and balance the regulationrequired weight. The sled was a project of BMW DesignWorksUSA, a de-
sign studio in Newbury Park, Calif., led by creative director Michael Scully. Among the tools BMW’s design team turned to were computer-aided modeling, computational fluid dynamics, full-size wind tunnel testing, on track testing and athlete scannings. The result, according to a BMW press release, is a worldclass bobsled that can perform in the extreme conditions these athletes face. After more than 75 years without Olympic gold in this event, Team USA did what the winners do – turned to the best designers to boost its speed.
FAST FACTS | ENERGY IN S.C.
S.C.’s electric power generation by energy source Source: U.S. Energy Information Administration, figures for October 2013
Cover Story
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51.5 % Nuclear
2.7 % 2.2 % Other Renewables Hydeoelectric
13.2 % Natural Gas
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30.4 % Coal
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Upfront
A growing market
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If you had to name an agricultural industry that takes in $300 million per year but has little to do with food, you might be stumped. But that’s how much our state’s greenhouse, nursery, turf and floriculture business brings in each year, according to the S.C. Department of Agriculture. That said, it’s about time to start thinking about those spring plant and flower festivals at the state’s farmers markets. If you’re interested in selling at the festivals, the vendor applications are available at agriculture.sc.gov/ plantandflowerfestivals. Deadline is Feb. 21. If you want to shop, festival dates are: Midlands Plant and Flower Festival, April 10-13, S.C. State Farmers Market in West Columbia; PeeDee Spring Plant and Flower Festival, April 24-27, Pee Dee State Farmers Market in Florence; Piedmont Plant and Flower Festival, May 1-4, Greenville State Farmers Market.
NEW ECONOMIC DEVELOPMENT Here are announcements made in South Carolina since December 2013. Company Ulbrich Precision Flat Wire Belk Inc. Flame Spray North America Inc. McCall Farms Inc. STARTEK Inc. Keer Group Benefitfocus Inc. Molina Heathcare Canfor Southern Pine Advanced Composite Materials Valley Forge Flag Co. Quality Model Highland Industries Inc. packIQ Stueken LLC ChartSpan Medical Technologies LLC CHOMARAT North America Sandvik Inc. Kent International Inc. Baldor Electric Co. CeramTec North America Corp. Accent Stainless Steel BOMAG Americas
County Investment No. of jobs Oconee $5M N/A Union $32M 170 Laurens $9.1M 45 Florence $19.3M 140 Horry $10M 665 Lancaster $218M 501 Berkeley N/A 1,200 Charleston N/A 150 Darlington $8M 50 Greenville $3M 10 Williamsburg $2.5M 100 Orangeburg $3M 26 Chesterfield $4.1M 24 Anderson $2.1M 50 Greenville $3.2M 27 Greenville N/A 41 Anderson $10M 20 Oconee $12M N/A Clarendon $4.3M 175 Anderson $15M 45 Laurens $13.2M 40 Horry $3.1M 65 Fairfield $18.2M 121 Source: S.C. Department of Commerce
Here are some other prefiled bills of interest: S. 0149/H. 4356: Would allow a county to impose by ordinance, if approved by referendum, a user fee of up to two cents a gallon on retail sales of motor fuel, with the funds
to be used for road improvement projects and maintenance within the county. Filed by Sen. Chauncey K. Gregory, R-Lancaster; Rep. Raye Felder, R-York; Rep. Deborah A. Long, R-Lancaster; Rep. Craig A. Gagnon, R-Abbeville; Rep. Edward L. Southard, R-Berkeley. S. 907: Would allow a tax credit up to $500 a month for employing an individual who has previously been incarcerated 90 days or longer and who, since then, has not been charged with a crime or held another full-time job. Filed by Sen. Marlon Kimpson, D-Charleston. S. 901: Would reduce the state’s 7% income tax rate by 1.4% annually until it is eliminated. Does not include a proposal to replace the revenue. Filed by Sen. Katrina Shealy, R-Lexington. H. 4400: Would establish the statewide minimum wage at $10 an hour or at the federal minimum wage, providing the U.S. wage is greater. Filed by Rep. Gilda Cobb-Hunter, D-Orangeburg.
H. 4405: Would require SC Works job trainees to be tested for illegal drug use and have a criminal background check performed by SLED. Filed by Rep. Stephen Goldfinch, R-Murrells Inlet. H. 4351: Would require the Department of Insurance to maintain a profile of each adjuster, agency, broker, company and producer licensed in South Carolina; would include biographical information as well as complaints of violations of state insurance regulations. Filed by Rep. Don Bowen, R-Anderson. H. 4370: Would allow a funeral home, funeral director or embalmer to refuse to release a body to the family until any financial arrangements have been made for payment of services. Filed by Rep. John King, D-York. H. 4376: Would allow a highway improvement project to be added to the Department of Transportation’s priority list if it has substantial immediate economic benefit. Filed by Rep. Don C. Bowen, R-Anderson.
UPFRONT
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ixing South Carolina’s crumbling highways and bridges has gotten the most attention at legislative forums before the 2014 session of the Legislature, which convened on Jan. 14. A step in that direction has been proposed by Sen. Ray Cleary, R-Murrells Inlet. Senate Bill 891 would increase the state’s 16.75-cents-a-gallon gas tax by 2 cents each year, until it reaches 36 cents a gallon in 2023. Cleary says the amount of increase is a fee, not a tax increase, because the revenue would go to road and bridge work only. Other bills to provide road repair money via the gas tax have also been filed (see below).
Legislative Update
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Business accelerator
Business Accelerator
At left, Don Ryan Center executive director David Nelems pins Jared Jester of Jester Communications, among the second class of graduates of the center. At right, Ryan and Jennifer Crist of Incresol Group teach website strategy to entrepreneurs at the Don Ryan Center for Innovation. (Photos/Don Ryan Center for Innovation)
Don Ryan Center for Innovation aims for business diversity in a rural area By Jenny Peterson
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n Amber Alert-type mobile service for missing pets, an arsenal of all-natural pest control products, a fix-it-yourself car service where customers rent out bays at an auto repair shop, even a heart-healthy lobster roll – these are just a few of the startup businesses hoping to grow in Bluffton. The budding entrepreneurs are all sharing the same first step: They’re tenants at the Don Ryan Center for Innovation, a technology-business launch pad and incubator site that provides office space, professional services and networking for new businesses. “Our task is to diversify and grow the economy in the Bluffton region,” said David Nelems, center executive director. “We’re here to help startup companies in the early stage – some, even just concepts.” The center opened in May 2012 through a partnership with Clemson University Institute for Economic and Community Development and the town of Bluffton. It’s the first technology incubator site to be built in
“Our task is to diversify and grow the economy in the Bluffton region. We’re here to help startup companies in the early stage – some, even just concepts.” David Nelems
executive director, Don Ryan Center for Innovation
a rural area and two startup businesses have already completed the program. This spring, the center will accelerate nine new and diverse startups, with each spending from 12 to 18 months in the incubator. The center offers tenants 1,600 square feet of Class A office space in the CareCore National building off Buckwalter Parkway, space donated by CareCore founder Don
Ryan. It also offers critical business support such as market research, business plans, seed funding sources and direct exposure to a client base. Tenants get one-on-one meetings with experienced CEOs and other business professionals for mentoring and networking. Tenants also get access to resources across Clemson University, such as testing facilities. Each tenant pays $200 per month for all the services the center provides. Nelems, 50, is an entrepreneur himself. He started a business-to-business website in Atlanta in the late 1990s. “All these people can benefit from my experience,” Nelems said. He took over as executive director of the innovation center in the summer of 2013. He selects the businesses accepted into the program with a seven-member board of directors, which includes Bluffton Mayor Lisa Sulka as chair. The right fit, he said, is a business or idea that has the potential of making a significant economic impact in the area.
Business accelerator
“It has to be national or global in scale,” Nelems said. While the Don Ryan Center for Innovation is designed to focus on accelerating technology businesses to help foster a Silicon Valley-like reputation in the Lowcountry, businesses of all kinds are welcome to apply, Nelems said. There are five on a waiting list right now. “Until we can grow the region to be more high-tech, we’ll take (any) good idea,” Nelems said. “There are a lot of people with really good and really innovative business ideas in Bluffton.”
By the numbers 12
Number of jobs generated by the businesses at the Don Ryan Center for Innovation
1,612
Amount of square footage in office space available to innovators in the program in the CareCore National building
2
Number of businesses that have graduated from the Don Ryan Center for Innovation
9
Number of innovators in the program in spring 2014
5
Number of businesses on a waiting list for the center
$200
Monthly fee innovators pay for the services at the Don Ryan Center for Innovation
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12-18
Number of months it takes businesses to graduate from the program
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county spotlight
Clarendon
Ready workforce, natural beauty attract development to Clarendon County By Holly Fisher
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larendon County has landed on the South Carolina map as a great place to do business. Capitalizing on its natural resources, workforce training and proximity to interstate and port access, county leaders are seeing both population growth and new business development. Bob Edwards is the site manager for Meritor, a Manningbased plant that assembles brakes and slack adjustors for commercial trucks. The company opened its Manning plant 15 years ago and maintains low turnover among its 118 employees.
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Clarendon Section Sponsor:
About Clarendon County County Spotlight: CLARENDON
Population: 35,000 Average household income: $33,355 County seat: Manning Other key cities and towns: Turbeville, Paxville, Alcolu, Summerton Target industries: automotive, aerospace, building products, distribution, metal working Source: Clarendon County Development Board
Clarendon County Industrial Park has 230 developable acres with utilities available. The park has easy access to Interstate 95 and U.S. 301. (Photo/Clarendon County)
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“We don’t have a lot of people leaving us,” Edwards said. “Other plants have started up here, but we have been able to retain our workforce.” He uses Lake Marion along with the fact the area is less than two hours from both Charleston and Myrtle Beach as selling
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points for new hires. Any objections to the rural location can be offset by the fishing, hunting and natural beauty of Clarendon County. Dawn Griffith, executive director of the Clarendon County Chamber of Commerce, said not only does the chamber promote
local business but tourism as well. “There’s just a wealth of historic homes and churches. Take a trip through Clarendon County and it’s like going back in time,” she said. Located just southeast of the center of South Carolina, Griffith said the county’s centralized location makes it appealing to visitors as well as those looking to relocate. “We are truly in the middle of it all if you want to go to Charleston, Columbia or the mountains in Greenville,” she said. Manning is the county seat and geographical center of Clarendon County; other
U.S. Supreme Court officially overturned racial segregation in U.S. public schools in 1954.
County Spotlight: CLARENDON
key cities and towns are Turbeville, Paxville, Alcolu and Summerton. The county population is almost 35,000, and the average household income is $33,355.
Available workforce County history The county is named for Edward Hyde, Earl of Clarendon, and was first established in 1785. It was officially chartered as an independent county of South Carolina in 1855. Clarendon has produced five South Carolina governors and was the site of many of the Revolutionary War campaigns of Gen. Francis Marion, commonly known as “The Swamp Fox.” Among Clarendon County’s notable hometown residents are Althea Gibson, Wimbledon tennis champion, and Peggy Parish, noted children’s author and creator of the “Amelia Bedelia” series. The county also played a key role in the Civil Rights movement and bringing an end to school segregation as the source of the landmark desegregation case Briggs v. Elliott. Briggs was the first filed of the four cases combined into Brown v. Board of Education, the famous case in which the
In addition to its natural resources and convenient location, the Clarendon County Development Board promotes the county’s available workforce, training programs and Class “A” industrial sites. In 2009, the county conducted an analysis of its workforce availability and discovered the wider area has more than 61,000 underemployed workers, 37,000 unemployed residents who are actively job hunting, plus another 11,600 unemployed individuals considering re-entering the work force. That means employers have a potential workforce of almost 110,000 people. Building up a skilled workforce is a trend John Truluck noticed a dozen years ago when he took over as executive director of the Clarendon County Development Board. Existing industry leaders told him they had jobs, but just couldn’t find anyone qualified to fill them. A skills gap had developed in the county.
The Clarendon County Chamber of Commerce promotes local business and tourism.
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County Spotlight: CLARENDON Central Carolina Technical College provides training for business and industry. At right, Scott’s Branch High School is the first of two New Tech High Schools in the state. These schools use project-based learning and technology to prepare students for the workplace and higher education. (Photos/Clarendon County)
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The days of promising a perspective business an available workforce have passed and now businesses want to know training programs are in place to fill the jobs they can bring to an area. “We saw that trend developing so we tried to be ahead of the curve,” Truluck said. Interested businesses have access to readySC, a program of the S.C. Technical College System that provides training services to new and expanding businesses at
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no charge. The program determines knowledge, skills and abilities of a business’s workers and then provides necessary training so those workers are ready to go to work. Additional education and training are available at Central Carolina Technical College in nearby Sumter. The college has offered a two-year scholarship to Clarendon County high school students in the class of 2015 who maintain a “C” average and test ready for college work. And its Workforce
Development Division provides training and technical assistance to local business and industry. One of the county’s most significant achievements in the area of workforce training and development is that it was the first county in South Carolina to meet 100 percent of the National Certified Work Ready goals. Of the required four criteria, the county has met the National Career Readiness Certificate, Business Support and High School Graduation Rate goals. The county is working to earn the required National Career Readiness Certificate Plus that measures work discipline, teamwork, managerial potential and customer service orientation.
County Spotlight: CLARENDON
Manning is the county seat and geographical center of Clarendon County. The county was first established in 1785.
New business announcements Clarendon Memorial Hospital, at the center of the Clarendon Health System, has a new 47,000-square-foot addition with advanced operating rooms, emergency department, same day surgery department and spacious patient rooms. (Photos/Clarendon County)
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Griffith said becoming a National Certified Work Ready community has encouraged industries to look more seriously at Clarendon County, whereas previously, they may have looked beyond Clarendon to other parts of the state for a developed workforce. As evidence of the success of the county’s focus on economic development, longtime Clarendon County Council Chairman Dwight Stewart points to developments by Georgia Pacific Corp., which opened a $250 million oriented strand board mill last year and planned to hire 150 people, along with the soon-to-open Spirit Pharmaceuticals, with a $12.2 million investment and almost 300 new jobs. Also announcing plans for Clarendon County in 2013 were Swift Group of Industries, maker of replacement refrigerator filters, with 60 jobs and a $3.5 million investment, and Advanta Southeast, maker of reusable packaging, bringing 30 jobs and a $3.5 million investment. And while water and sewer infrastructure remain an area of improvement for the county, Stewart said work is being done on that front as evidenced by the county’s collaboration with neighboring Sumter, Lee and Williamsburg counties on a 1,400-acre mega industrial site in the northern part of the county right off Interstate 95.
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GE is testing newer and larger gas-powered turbines at its facility in Greenville. (Photo/GE)
Energy in S.C. | Natural GAS
Power structure South Carolina’s energy future is a balancing act By Ashley Boncimino, Staff Writer
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his winter’s bone-chilling polar vortex has done more than just stress people out. It also stressed the U.S. power grid to the point of exhaustion, resulting in some of the highest spot prices for natural gas in the last decade across the country and casting the energy proble m into sharp relief
for utility companies and businesses. Natural gas – long heralded as a balancing force and increasingly used to replace aging coal units in the Southeast – spiked to $30 more per million British thermal units from the December average price of $4.24/MMBtu listed on the commonly used benchmark Henry Hub.
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Biomass
Wind Page 32
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COAL Page 33
Solar Page 28
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Nuclear
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Energy in S.C. | Natural GAS www.scbizmag.com
GE’s test facility in Greenville analyzes its gas turbine systems under real-world power plant conditions, without limitations of the grid. (Photo/GE)
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Weather alone multiplied the spot price to $72.43/MMBTu for zone 5 on the Transcontinental Pipeline, serving the MidAtlantic. The December $4.24/MMBtu price was a previous 18-month high. While the spike caused by the polar vortex was admittedly extreme, the event has thrown light on a subtle but growing change in the South Carolina energy market – a move towards a more diversified energy portfolio that, despite lower natural gas
prices, strives to evenly distribute energy expenditures and generating capacities.
The rise of shale For years, utilities and energy providers have been bullish on the future of natural gas due to the fact the resource has enjoyed its lowest prices in nearly a decade. Due to the spread of a practice called hydraulic fracturing (or “fracking”), the energy market has been flooded with cheap natural gas that was previously trapped in shale rock forma-
tions across the country. The cost is down to current prices of $4.24/MMBtus on average for December 2013 from a high of $13.42/MMBtus on average for the month of October 2005. The resource hit a low of $1.95/MMBus for the month of April 2012. These rock-bottom prices paired with increasing prices and emissions regulations for more traditional energy sources like coal caused many companies in both the state and the country to shift their attention —
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“Natural gas is a big part of our plan,” said Lee Mazzochi, Duke Energy’s senior vice president and chief integration and innovation officer, during the Upstate Energy Summit presented by GSA Business and the Upstate SC Alliance in October. South Carolina has been using natural gas at an increasing rate since 2008, particularly in the electric power sector, where natural gas consumption has doubled between 2008 and 2012. The low cost of natural gas in the U.S. has a particular allure when it comes to exporting it to places like Europe and Japan,
Energy in S.C. | Natural GAS
and their investments. For example, Charlotte-based Duke Energy is moving forward with five new natural gas turbines while continuing its retirement of 6,200 megawatts of coal-fired generating capacity during the next two years. The natural gas units will replace three coal units, and the company filed for an application of environmental compliance in October that would give Duke the option of building an additional 750-MW natural gas-fired combined cycle capacity at the W.S. Lee Steam Station in Anderson County.
where natural gas can cost four times as much as in the U.S. General Electric (GE), which operates a facility in Greenville, produced a report titled “The Age of Gas” that predicts world gas demand will increase to 36% more than is produced and consumed today and will make up 26% of the primary global energy consumption. GE predicts that gas used to generate electricity will increase by 50%, with nearly 20% of the world’s natural gas supply coming from unconventional — i.e., shale — gas by 2025. The company is investing in natural gas with new, larger gas turbines hitting its Greenville gas turbine manufacturing and engineering facilities in the next two years. New 50- and 60-hertz (cycles per second) turbines are targeting the European and Asian markets, as well as the U.S. market, as the company is predicting 60 years of plentiful gas supply in the U.S., said John Lammas, vice president of engineering for GE Oil & Gas. Some of these turbines have been marketed as both primary and back-up generators that can start up quickly and go from low to high output to make up for intermittent sources of energy such as wind and solar. When it’s cloudy outside, or when the wind dies down, utilities and businesses can shift their energy mix on demand. Low natural gas prices are having a broader impact than simply domestic electricity generation, and the U.S is predicted to become a net natural gas exporter of liquefied natural gas (LNG) by as early as 2016, according to the Energy Information Administration’s Annual Energy Outlook. Companies like Greenville-based Fluor Corp. are building more natural gas-based projects for its global client base. Natural gas plants can be built quickly and relatively quickly, according to Fluor Corp. Vice President of Sales David Williams. Natural gas is most efficiently transported in liquid form, but that means that it has to be converted to dry form for domestic use. Before the explosive growth of shale-sourced natural gas, the U.S. had LNG importing stations that converted it from liquid to dry form, but now needs to
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Energy in S.C. | Natural GAS
from 70% a few years ago. Around 30% is generated from natural gas, which is produced both by Santee Cooper and by other utility generators on the grid; 10% came from nuclear sources and the remaining 2% came from traditional hydroelectric sources and renewables. SCANA subsidiary South Carolina Electricity & Gas (SCE&G) has stated its goal to diversify its energy mix as the public utility generates, distributes and sells electricity to residents in the state. Fossil fuels currently account for 45% of SCE&G’s electricity generation capacity, with 19% nuclear and the remainder coming from natural gas and hydroelectric sources.
Coal more scarce but here to stay
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GE’s full-speed, full-load test facility in Greenville is the largest and most thorough gas turbine system validation in the world. (Photo/GE)
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convert existing stations and build new ones to convert it the other direction for export. Greenville-based Sempra U.S. Gas & Power is looking into several LNG facilities to both export natural gas and to serve industries that could benefit from having a micro-LNG market like the diesel-reliant trucking, marine transport and industrial mining industries. The company, a developer of renewable energy and natural gas solutions, established a regional headquarters in Greenville partially because of a pipeline that runs through the state, from the north part of the east coast all the way to Texas, said Sempra Regional President Michael Gallagher. A subsidiary of San Diego-based Sempra Energy, Sempra U.S. Gas & Power operates two natural gas distribution utilities in Alabama and Mississippi and holds more than 30 billion cubic feet of natural gas storage along the Gulf Coast with 12.5 billion cubic feet under development. Most telling of all, the company has plans to convert a Louisiana LNG operation from being a natural gas import station to an export station, and is looking into expanding natural gas pipeline infrastructure and small-scale LNG operations, according to Gallagher. The company hasn’t ruled
South Carolina out for those projects, he said.
There’s more to energy than natural gas But while low natural gas prices are making waves across the country, those aren’t the only plants being built in the Palmetto State, and for good reason. Natural gas has historically been a volatile resource, and while prices are predicted to remain low, this winter’s energy disruption only proves that companies need a diverse energy portfolio to keep consumer prices steady. South Carolina energy provider Santee Cooper has set its sights on a 30/30/30/10 energy mix for that very reason, according to the company’s media representative, Mollie Gore. “The point is that you have to plan for every eventuality,” she said. “It gives us maximum flexibility to put into play whatever mix is most cost effective for our customers on any given day.” Furthermore, the company recognizes the high cost of setting up new natural gasfired turbines and has elected instead to get a portion of its natural gas-produced energy from the grid. The energy company generated 58% of its electricity from coal units in 2012, down
Despite the onslaught of bad press raining down on coal-fired energy production, companies such as Duke, Santee Cooper and SCE&G have no intention of completely eliminating the more traditional energy source. “[Coal units] are very much a part of our future mix,” said Santee Cooper communications representative Gore. “We have got eight coal units currently operating and they all have a comprehensive suite of environmental control technology.” Santee Cooper retired four of its oldest and smallest coal units at the end of 2012, citing changing power generation needs and the expensive new environmental regulations that would have required significant upgrades and retrofits. While Duke Energy has been steadily downsizing its coal fleet, the company still obtains over a third of its energy from coal sources. In 2012, Duke Energy Carolinas generated 31% of its energy from coal, 62% from nuclear, 6% gas and 1% hydro. That same year, Duke Energy Progress generated 42% from coal, 41% from nuclear, 16% from gas and 1% from hydro. South Carolina still has a long way to go in terms of a balanced portfolio, however, as over half (51%) of the energy produced in the state comes from nuclear sources. It’s one of the most nuclear-reliant states in the country, and is home to the first nuclear units to be approved and under construction in the last 30 years.
Santee Cooper intend to make renewables only a small portion of their larger energy mix. Santee Cooper and South Carolina energy cooperatives have begun commercial operation for their solar farm project in Colleton County in December. The $6 million project involves 10,000 solar panels across 14 acres to essentially double the state’s previous solar power generation. While that sounds impressive, it means South Carolina gleans a mere 6 MW of energy from solar sources. For comparison, the 30-year-old Unit 1 nuclear reactor at the V.C. Summer station generates 966 MW. The solar farm is meant to serve as a test run for what might actually happen if the company chose to use it on a larger scale. The company’s goal for electricity generated from renewable sources in total is 10%.
An evolving industry South Carolina is not entirely unique among Southeastern states in terms of the energy industry’s resistance to large-scale
renewable shifts, but change would come sooner if the state had renewable portfolio standards like many Western states, according to energy leaders like Duke Energy Senior Vice President and Chief Integration and Innovation Officer Lee Mazzocchi and BMW Manufacturing USA and Canada Energy Manager Cleveland Beaufort. Such a portfolio would force South Carolina companies to generate a certain portion of energy from renewable sources, which would spur on research and development that has helped renewables take off in some Western states. “They were doing it because there was a requirement to have a renewable portfolio,” said Gallagher. “Getting the legislation to support the development of the technology is always important.” While a balanced energy mix might take years, the momentum for change is there, said Gallagher. “You never really know where the markets are going to change,” he said. “You don’t want to have all your eggs in one basket.”
Energy in S.C. | Natural GAS
In the 2000s, high natural gas prices and increasingly stringent emissions regulations made nuclear-generated power a more affordable and cleaner option. Companies improved the technology to allow for both higher efficiency and longer running times, meaning fewer nuclear units were needed to generate the same amount of electricity. But many of these units were built to run for 40 years, meaning some are reaching or about to reach the end of their intended lifespans. Four nuclear units in the U.S. were closed early due to stiff competition or high-cost repairs. While some of the slack will be taken up by higher-efficiency nuclear units and new natural gas turbines, energy companies are looking to begin supplementing with renewable energy. Companies like Duke Energy in particular have been talking about solar power, which makes up less than 1% of South Carolina’s energy mix. Even with grand strides, companies like
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Energy in S.C. | Nuclear SCE&G completes the nuclear island basemat placement in November for V.C. Summer’s Unit 3, near Jenkinsville in Fairfield County. The milestone came just seven months after SCE&G poured the concrete for Unit 2. (Photo/SCE&G)
Nuclear
By Ashley Boncimino, Staff Writer
Nuclear powers South Carolina
S www.scbizmag.com
outh Carolina is home to four nuclear power plants. More than half (51%) of the energy produced in the state comes from nuclear sources. It’s one of the most nuclear-reliant states in the country, and will soon be home to the first nuclear units to be approved and built in the last 30 years.
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Part of the reason for the rise of nuclear power was how cheap it was compared to other fuels years ago, said Michael Gallagher, president of Sempra U.S. Gas & Power in Greenville. “You were pretty happy 10 years ago when there were nuclear power plants when coal shot up and natural gas was $8 a gallon,” he said. “Nuclear has been an important part of the evolution and success of the U.S. economy since the first plants started being built in the late 1960s.”
“Nuclear has been an important part of the evolution and success of the U.S. economy since the first plants started being built in the late 1960s.” Michael Gallagher
president, Sempra U.S. Gas & Power
In addition to a 1984 nuclear reactor unit, the V.C. Summer Nuclear Station will soon house two new 1,117-megawatt reactor units slated to begin operating in 2017 in Jenkinsville, 28 miles northwest
of Columbia. The $9.8 billion project is being built by Cayce-based South Carolina Electric & Gas Co. and state-operated Santee Cooper. In January, SCE&G agreed to purchase another 5 percent of the project from Santee Cooper, increasing its overall interest to 60 percent. Duke Energy Corp. has ended talks about possibly buying a stake in the two nuclear units, according to a filing with the U.S. Securities and Exchange Commission. The units under construction by SCE&G illustrate South Carolina’s unique nuclear energy relationship. Elsewhere in the U.S., four nuclear reactors met an early closure date due to economic competition, safety concerns or structural damage. Additionally, five projects
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SCE&G employees work into the night to complete the 43-hour basemat placement for V.C. Summer Unit 3. (Photo/SCE&G)
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in other areas have been canceled that would have increased the power output of existing reactors, and construction of new reactors in Georgia and Tennessee have experience delays as well as billions of dollars in overrun construction costs Duke Energy’s own nuclear plans have been delayed by at least three years, to sometime in the 2020s, for its $11 million project for two 1,154-MW reactors at its Lee Nuclear Station in Cherokee County. The company decided to shutter plans for two reactors in Levy County, Fla. But shelved plans and reactor closures haven’t put a damper on South Carolina’s nuclear market so much as they’ve forced energy companies to increase output on existing units. Companies have been getting an additional 10% to 15% base load capacity by having the units run for longer periods of time and with improved technology. “Thirty years ago, they ran 70% of the time and that extra 30% was down time for maintenance,” said Carolinas’ Nuclear Cluster Chairman Jim Little, who is a 40-year veteran of the nuclear industry. “Now those plants are running above 90% of the time.”
Energy in S.C. | BIOMASS Sonoco’s new biomass energy plant can unload a tractor-trailer full of wood chips in seconds by lifting the entire rig to dump its contents. (Photo/Steve Roos, Sonoco)
BIOMASS
By James T. Hammond, Editor, Columbia Regional Business Report
S.C. forests fuel growing biomass energy sector
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he promise of South Carolina’s vast forest lands supplementing the state’s energy needs is finally being realized as several new projects have come online across the state in the past year. Woody biomass is a renewable resource that has the potential to supply 12-13% of the electricity used in South Carolina, according to Tim Adams, the South Carolina Forestry Commission’s resource development director. Global packaging company Sonoco in January dedicated a new biomass facility at its Hartsville plant, as part of a $100 million investment in the Darlington County manufacturing complex.
“Santee Cooper was the first utility in the state to deliver electricity to all our customers from new renewable resources 12 years ago.” Lonnie Carter
president and CEO, Santee Cooper
President and CEO Jack Sanders said Sonoco took more than two years to complete final engineering, fabricate the boiler, put
together the infrastructure and complete construction of what it says is a state-of-theart biomass co-generation boiler system. In 2011 Sonoco committed to a $75 million investment to replace two aging, coal-fired boilers and add the new biomass boiler at its plant in Hartsville. The new boiler is fueled primarily by woody biomass from regional logging activity but can also run on natural gas. The boiler will produce about 16 megawatts of green energy that will be consumed by the manufacturing complex, as well as steam that is used in the paper making process. Last November, EDF Renewable Energy and Santee Cooper dedicated the Pinelands Biomass project which comprises two plants
Biomass by the numbers 22 million
Number of tons per year of sustainable biomass available in South Carolina
4.8 million
Tons of coal this biomass could replace
12.2 million
Energy in S.C. | BIOMASS
Acres of S.C. timberland with woody material available for energy production Source: scbiomass.org
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with 17.8 megawatts of generating capacity in Allendale and Dorchester Counties. The Dorchester facility achieved commercial operation on Nov. 1; Allendale followed on Nov. 19. The two biomass generating plants connect to Santee Cooper’s transmission system, with renewable energy contracted to the utility under 30-year Power Purchase Agreements. “Santee Cooper was the first utility in the state to deliver electricity to all our customers from new renewable resources 12 years ago,” said Lonnie Carter, Santee Cooper’s president and CEO. “The partnership forged with EDF Renewable Energy helps advance Santee Cooper’s role as the state’s leader in generating renewable energy.” Allendale and Dorchester Counties have a substantial and reliable wood supply. The woody biomass facilities, with a consistent wood demand, will bring significant economic benefits to both counties by contracting with the existing trucking and wood supply industry, Santee Cooper said. Also, the two facilities created more than 250 construction jobs and 38 full-time positions. The projects use a well-proven biomass design with a stoker boiler, supplied by Factory Sales Engineering, and a steam turbine generator supplied by General Electric. EDF Renewable Services will provide long-term operations and maintenance. The largest biomass electricity and steam plant built in South Carolina so far is the $795 million plant at the Savannah River Site near Aiken. The 20-megawatt unit was completed in 2012 and is operated by Ameresco Inc., an energy efficiency and renewable energy company, under a 20-year contract with the U.S. Department of Energy. The SRS Biomass Cogeneration Facility replaced the 1950s-era deteriorating, inefficient coal powerhouse and oil-fired boilers at the DOE facility. In the first year the facility operated without interruption, averaging 200,000 pounds of steam per hour while generating a total of 1.67 billion pounds of steam and 20 megawatts of electricity. The plant processed more than 10,000 tons of tires and 221,000 tons of clean biomass, consisting of local forest residue and wood chips.
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Energy in S.C. | SOLAR Workers monitor test solar panels at Duke Energy’s McAlpine Creek substation near Charlotte. Electricity from the panels can go directly into distribution lines or be used to charge a storage battery. (Photo/Duke Energy)
SOLAR
By Ashley Boncimino, Staff Writer
Interest in solar energy flares up
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ith coal on the defensive, natural gas on the rise and nuclear power moving ahead slowly, the missing component to South Carolina’s diverse energy mix has been renewables such as wind, geothermal, hydro, biomass and, of course, solar. The primary problem with solar is the expense of solar power generation. Though solar installations cost half of what they did a decade ago, renewable energy made up just 4% of the energy mix in the state in 2011, over half of which was from conventional hydroelectric power, according to the U.S. Energy Information Administration. While Duke Energy, Santee Cooper and
SCE&G have embarked on small-scale solar projects, their budgets (and the resulting energy mixes) point less towards significant renewable energy reliance and more towards even splits with coal, natural gas and nuclear sources. “The barrier for greater adoption of clean energy often comes down to price,” said South Carolina Clean Energy Business Alliance Executive Director Jim Poch. “Utilities are mandated to provide reliable and affordable electricity to their ratepayers and anything that challenges that mandate is carefully reviewed.” Poch said that while solar energy is more expensive at the moment than other sources, progress is being made. For exam-
ple, solar module pricing has dropped 60% in the last 18 months, and utility scale installations have grown 670% in the last two years, he said. “The transition is happening and the closer innovation brings us to grid parity in terms of pricing, the quicker that energy mix will change,” he said. To reach its solar goal, Santee Cooper is collaborating with Central Electric Power Cooperative and the state’s electric cooperatives on a 3-megawatt solar farm in Colleton County. The farm, the largest of its kind in the state, had already begun producing electricity in late January. The farm is owned and operated by TIG Sun Energy, a subsidiary of InterTech Group in North Charleston, and the utilities are purchasing
Energy in S.C. | SOLAR
A solar farm – by the numbers
Here are some statistics about the new solar energy farm in Colleton County
3
The number of megawatts of electricity the farm will produce
300
Number of homes this energy will power
14
Acreage of the farm
10,010
Number of photovaic panels Source: Santee Cooper
the total energy output of the farm. It will serve as a kind of experiment for the longterm, large scale viability of solar sources in South Carolina. SCE&G plans to place up to 20 megawatts of new solar energy on its system. The first 2-MW solar farm will be built on seven acres near the Lake Murray dam this year, the utility announced in November. It has named a Renewable Energy Products and Services team to develop its strategy on solar, wind and biomass. The company has 4 MW of solar on its system, including a 2.6-MW rooftop installation at Boeing’s 787 Final Assembly Facility in North Charleston. Several industry leaders have attributed the state’s slow pace to South Carolina’s lack of renewable portfolio regulations that would require companies to incorporate renewable sources into their energy mix. South Carolina is one of only 13 states without some form of voluntary or mandatory portfolio standard, and state legislators have long resisted adding portfolio
requirements that have jump-started the development and adoption of renewable technologies in other states. “Getting the legislation to support the development of the technology is always important,” said Michael Gallagher, regional president of Sempra U.S. Gas & Power in Greenville. Portfolio standards in many West Coast states such as California and Arizona “allowed the technology to evolve much quicker than it would have by itself,” he said. Because solar power and renewables are not yet mandatory inclusions, energy companies haven’t opted to take on the significant financial hit, nor have they had to pass it on to their customers. “We’re blessed here in the Carolinas with four or five really good utilities that are able to produce electricity at some of the lowest rates in the U.S.,” said Gallagher. “You never really know where the markets are going to change, but you also don’t want to have all of your eggs in one basket.”
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The solar array at the Colleton Solar Farm consists of 10,010 photovaic panels . Some are fixed while others follow the direction of the sun. (Photo/Jim Huff, Santee Cooper)
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Solar energy an important part of South Carolina’s energy future Editor’s note: As interest in solar energy grows in South Carolina, Clark Gillespy, Duke Energy president-South Carolina, takes a look at some of the issues that need to be addressed.
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customers the same for a kilowatt-hour of electricity as what we charge. Basically, customers pay us about 10 cents per kilowatthour for our product which is available 24/7; we pay solar customers the same 10 cents for excess energy whenever it’s available and whether we need it or not. Again, these rules were created when solar energy technology was in the early stages of customer use. The rules need to be updated. It might sound hard to believe, but Duke Energy pays homeowners more for their solar energy than we pay for electricity from large power facilities. Obviously, there needs to be a better method for pricing solar power to reflect the intermittent nature of it, and the fact that solar customers can only count on solar energy about 20 percent of the time. Another reason to update the rules now is so companies – including Duke Energy – can participate in bringing solar energy to customers with an established set of rules that are fair to all participants. By updating the rules and regulations around solar, we will be better able to participate in South Carolina in this growing area. Over the years, Duke Energy has produced electricity using hydroelectricity, coal, nuclear and natural gas. We see solar as the next step in that evolution. The technology and the economic impact solar can bring to South Carolina makes sense to us. We look forward to working with leaders in South Carolina to make solar policies fair for all customers and to encourage the use of cost-effective solar energy in this state. Together, we have an opportunity to build a foundation to ensure that solar is an important part of the energy future of South Carolina.
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he number of South Carolina homes and businesses using solar energy is relatively small right now. But that number is growing. Falling solar panel Clark Gillespy, prices and attractive Duke Energy federal tax incentives President – South have many homeCarolina owners and businesses looking at supplementing some of their purchased electricity with solar electricity. It’s happening all over the nation. Duke Energy is no stranger to solar energy. We own more than 100 megawatts of utility-scale solar farms across the United States. The company is the eighth largest purchaser of solar electricity for our customers in the nation, according to the Solar Electric Power Association. In the six states where we have retail customers, about 3,000 of our 7.2 million customers own solar installations at their homes. More than 100 are in South Carolina. That number is small, and is significantly less than the 190,000 customers that one utility has in California. But it brings up an issue that some states are wrestling with, and that needs to be addressed in South Carolina: How do we properly structure solar energy rules and regulations to make sure they do not result
in costs being shifted from solar customers to nonsolar customers? As we know, the sun doesn’t shine all the time. Over the course of a year, solar panels operate an average of 20 percent of the time. The other 80 percent of the time, those customers are still using Duke Energy’s electric grid, just like everyone else. So how does Duke Energy charge for a customer’s use of the electric grid? The current rules allow solar customers to forgo the real cost of maintaining the electric grid – putting an extra burden on nonsolar customers. You might wonder if Duke Energy is only looking out for its best interests. It’s a fair question. But given the way current regulations work, the costs of the electric grid would be spread to other customers – basically nonsolar customers would pay more to compensate for what the solar customers are not paying. Does that sound fair? No, it doesn’t. In the past, the cost of the electric grid was embedded in what you pay for each kilowatthour of electricity. Solar energy turns that upside down. Solar customers should be paid for what they contribute to the electric grid. But they also should contribute to the utility’s transmission and distribution system, which they depend on just as much as nonsolar customers. Solar energy is an important part of the state’s energy future. We, and others in South Carolina, recognize the rules need to be updated to enable solar to have a sustainable, long-term future. How much is solar really worth? The second issue that needs addressing is the cost utilities should pay solar customers. Under the current system, we pay solar
Energy in S.C. | SOLAR
SOLAR | COLUMN by Clark Gillespy
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Energy in S.C. | WIND
WIND
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By Liz Segrist, Staff Writer
Testing facility drives wind energy sector
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he world’s largest wind turbine drivetrain testing facility recently opened its doors in North Charleston. The $98 million project, which is led by Clemson University’s Restoration Institute, will stress test the largest drivetrain systems for wind turbines from around the world. It’s capable of highly accelerated mechanical and electrical testing. The center can test drivetrains on two test rigs: one up to 7.5 megawatts and the other up to 15 MW. Drivetrain manufacturers for the wind turbine industry will rent the facility to test their equipment. It provides real-world testing for manufacturers, program manager Jim Tuten said. The project began four years ago when a team of Clemson University administrators with a variety of backgrounds decided to compete for a $45 million grant from the U.S. Department of Energy to build and operate a facility to test next-generation wind turbine drivetrain technology. “We got the last page in right before the deadline. It was absolutely incredible,” said Elizabeth Colbert-Busch, the Restoration Institute’s business development director. In November, more than 1,000 people filed into the 82,000-square-foot facility on the former Navy base for the dedication event. The wind turbine drivetrain testing facility, recently named S.C. Electric & Gas Co. Energy Innovation Center, is open for business. As the first company to use the facility, GE Power and Wind will test its next-generation wind turbine drivetrain technology
FASingTmoFreAthaCn aTBoSeing 787 jet filled
Weigh d luggage, specifiwith fuel, passengers an 15-MW test rig are cations for the facility’s components have its so large that many of d, according to ne never before been desig Clemson University. rsity Source: Clemson Unive
to a simulated electrical grid. Clemson University President James F. Barker said the testing facility has the potential to create thousands of jobs and to make South Carolina a hub for energy systems research and testing. The facility creates “the opportunity to accelerate the development and deployment of new technologies; to meet the rising energy demands and to reduce costs ... the opportunity to shorten the time to marketplace, and the potential to increase the safety, reliability and security of the nation’s power grid,” Barker said.
eGRID
John Kelly, Clemson University’s economic development vice president, says the wind turbine facility in North Charleston is a game changer for the industry. (Photo/Craig Mahaffey of Clemson)
on the center’s 7.5-MW test rig for several months beginning in the spring. “The Clemson testing facility represents a critical investment to ensure America leads in this fast-growing global industry — helping to make sure the best, most efficient wind energy technologies are developed and manufactured in the United States,” U.S. Deputy Secretary of Energy Daniel Poneman said. The center also houses the Electrical Grid Research Innovation and Development center, which Duke Energy named eGRID. The center tests electrical devices connected
Curtiss Fox was working as an intern at the Restoration Institute when he came up with the idea to use the electricity generated by the drivetrain testing facility to create an electric grid that could test devices on a scale unavailable at any other facility. Fox is now the operations director for the grid center. The Department of Energy helped finance the $10.1 million project. The grid responds like the actual electric grid, enabling manufacturers to connect their devices to the simulator and test them in a real situation. The 15-MW device can simulate the electrical grid of any country in the world. It aims to speed new electrical technologies to market. Poneman of the Energy Department said the grid will enable testing to see how electrical grids can respond faster to storms and how they can enhance cyber security.
“These projects are only a steppingstone for the research and innovation that will be needed for the grid of the future. I hope to contribute to those efforts.” Curtiss Fox
operations director, electrical Grid Research Innovation and Development center
By Andy Owens, Managing Editor
COAL
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uclear power is the largest source of energy produced in the Palmetto State, but most South Carolinians get their electricity from several sources, including from plants burning oil and pulverized coal. Coal-fired energy along with nuclear account for 84% of the electricity generated in the state, but only 33% of the energy used in the state comes from coal, according to a report from the S.C. Energy Office. The state’s electricity plants also sell energy to other regions of the U.S. A study by the American Council for an EnergyEfficient Economy said 61% of electricity consumed by residential and business consumers in South Carolina in 2007 came from coal-fired plants. In 2011, the S.C. Energy Office reported that 21% of consumption came from coal. As of 2013, South Carolina has nine coal-fired plants generating electricity in South Carolina, according to the S.C. Energy Office, which is part of the state Budget and Control Board. The state’s reliance on coal is diminishing. In 2012, SCE&G announced plans to close up to six coal-fired generating units at three locations by the end of 2018. That plan was accelerated last year when the company closed its Canadys Plant near
Coal-fired power by the numbers 33%
Percentage of net energy produced in S.C. from coal-fired plants.
21%
Percentage of energy consumed in S.C. that comes from coal in a year.
2,330 megawatts
Power generated by the state’s largest coal-fired plant, Santee Cooper’s Cross Generating Station, Berkeley County Source: S.C. Energy Office, 2011
Walterboro. “As SCE&G retires its older coal facilities, along with adding new nuclear generation to its system, it will help the company meet increasingly stringent environmental regulations and achieve a more balanced generation portfolio,” SCANA public affairs officer Emily Brady said. She said by the time new nuclear units are completed, the company expects to have 30% nuclear, 30% natural gas and 30%
scrubbed coal along with some hydroelectric and renewable sources of power. “With this more balanced energy generation portfolio, about 60 percent of our annual generation will be noncarbon-emitting,” Brady said. “Additionally, we will have the flexibility to take advantage of whatever generation option makes economic and environmental sense for our customers at any given point in time.” South Carolina doesn’t produce any coal, so tons are brought in by train and trucks from states with coal deposits along with a small amount imported from other countries. Most of that coal, 47%, comes to South Carolina from Kentucky, the third-largest coal-producing state in the U.S. behind Wyoming and West Virginia, according to the U.S. Department of Energy. South Carolina also pays more than most states for generating energy from coal. The Energy Department said the state paid a wholesale price of $3.85 per million Btu, fifthhighest in the U.S., and paid more than $1.4 billion to produce electricity from coal in 2011. South Carolina consumers, both residential and industrial, paid $25.78 per million Btu in 2011, which is 32nd in the U.S., for a cost of more than $7 billion, the Energy Department reported.
Energy in S.C. | COAL
South Carolina continues to rely on coal for now
South Carolina’s Coal Imports
The coal that produces electricity in South Carolina comes entirely from other states and countries that mine coal deposits. Here is a breakdown of the source of imported coal in 2012.
5%
International
2%
Virginia
Tennessee
11%
47%
West Virginia
Kentucky
11%
Illinois
17%
Pennsylvania Source: S.C. Energy Office
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7%
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Collaborative work spaces
Work with me New office designs let collaboration in By Mike Fitts
W www.scbizmag.com
here we sit shapes how we work, according to the latest thinking in office design. With this in mind, businesses have been redesigning workplaces to fit the collaborative work style of the high-tech generation. The goals: Help collaborations happen more quickly and spontaneously even as the workplace seems more welcoming to the team. For those who are ready to rise up out of their isolation and see the sun during their workday, read on. As the team at Corporate Concepts of Columbia works with businesses large and small to help with office design, they are seeing more and more offices think about
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The main hallway at Abacus Planning Group has clerestory windows that bring light in for a bright, airy atmosphere. Offices open onto the hallway. (Photo/Jeff Blake)
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Collaborative work spaces www.scbizmag.com
Keys to a Collaborative Office
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• An open plan that includes places for people from different departments to interact. • Visual contact — if people can see each other, they will go over and talk to each other. • Numerous welcoming common areas, close to the work stations, where teams can gather; with data, power and shared vertical boards available. • Emphasis on areas where multiple people work over single-occupant offices. • Flexible arrangement so that workers can switch where they sit depending on which team they’re working with. • Set-aside “thinking areas” that encourage workers to ponder challenges in a place where they can turn to others for collaborative support. Source: Adam Alter, New York University Stern School of Business; 360steelcase.com
Emily Holland, left, chats with coworker Tracy Barrera in an open work space at Abacus Planning Group. The low cubicle walls encourage communication and collaboration and the artwork gives the space the feel of a gallery. (Photo/Jeff Blake)
collaboration as they buy new furniture. To meet this need, furniture designers have moved toward creating comfortable gathering spaces and open spots where a worker with a laptop can just settle in. Companies are moving away from the big, scheduled meeting in the separate conference room with the polished table, said Bruce Fewell, Corporate Concepts coowner. Those take too long to organize and may not be conducive to creativity. Instead, new office layouts include small gathering tables for the “two-minute meeting.” The idea: a few team members can get together, compare ideas and hash something out quickly. So in many new office layouts, a work area will have a spare circular table in the middle – or a high counter at the back of a couch – for such gatherings.
AgFirst Lets the sun shine in Corporate Concepts is working with AgFirst as it prepares to move into its new
offices in a downtown Columbia high-rise. The move is intended to provide space that better fits the needs of a technology company, said Charl Butler, AgFirst’s CFO. AgFirst provides financial and IT services to farmer-owned cooperatives in 15 Eastern states and Puerto Rico. Its current offices feature limited light coming from the windows and solid walls that made renovation impractical, Butler said. The new space will be completely different. There will be low cubicle walls throughout and glass offices along the building’s exterior, so light will shine throughout the area, Butler said. Think “airy” instead of the classically formidable bank setting.
Abacus: A bright home A small business also can adopt these ideas of being a brighter and more collaborative workplace. Abacus Planning Group, a financial adviser in Columbia, planned its office to be inviting, open and collaborative,
A space at the back of the offices of Abacus Planning Group holds an art studio and beanbag chairs. The room and its furnishings are used for informal meetings. (Photo/Jeff Blake)
Collaborative work spaces
according to architect Doug Quackenbush. A variety of informal meeting spaces are available around the building, and rolling chairs help to bring team members together, he said. The seating even encourages collaboration over hierarchy: Owner Cheryl Holland has a desk at the end of one row rather than a separate office. Raised windows above the main hallway form a clerestory to bring natural light into the middle of the building, and small alcoves along the sides also bring in sunlight. The overall effect is warm and elegant. A couple of considerations had to be kept in mind, Quackenbush said: providing some comfortable but private space for meetings with clients and striving to keep the overall noise under control.
Co-working it out
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Several small businesses around South Carolina are dedicated to the proposition that collaboration is important even with people who don’t work with you. These coworking operations offer to rent you a place to work and also the opportunity to use their other members as a team for expertise. The Iron Yard has opened co-work destinations in Greenville and Spartanburg, while Provisions is a co-work space operating in Charleston. Columbia’s Vista neighborhood now features SoCo Co-Work, operating 24/7 out of a renovated building a couple of blocks from the State House. The idea is for people from different fields such as web design, graphic design and videography to share a space, even if they work as freelancers. It’s a resource that many folks need to tap into to get a second opinion or the benefit of someone else’s experience. “Otherwise it’s just you and Google,” said co-owner Gene Crawford. The room has long tables and a few ready workstations for those who have signed up to pay extra for a permanent setup. It’s an effort to provide a central place, based in a desirable locale, to increase creativity. “There’s an energy when there’s a roomful of people here working,” said Crawford. “Sharing what you’re doing is encouraged.”
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S.C. DELIVERS
Ports, Logistics & Distribution
Photos/Kim McManus
Boeing’s expansion may foreshadow 787-10 assembly By Liz Segrist, Staff Writer
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he Boeing Co. recently filed plans to expand its 787 Dreamliner campus in North Charleston using 468 acres leased from the state. The move could signify that the Lowcountry will get another 787 Dreamliner production line, said
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Saj Ahmad, chief analyst with StrategicAero Research, an aerospace analysis and research consultancy.
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“Given the size of 787-10, I see it as inevitable that Charleston will get the work,” Ahmad said. See BOEING, Page 40
S.C. Delivers Construction crews continue to work on the Boeing S.C. campus in North Charleston. The company announced its second phase of expansion last year and has applied for water permits for more construction on nearby land the company plans to lease from Palmetto Railways. (Photos/Kim McManus)
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BOEING, from page 38
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Currently, Boeing’s operations in North Charleston and Everett, Wash., produce the 787 fleet. The Lowcountry operations will always build the aft and midbody for all Dreamliner models, beginning with the 787-9 next fall, Boeing South Carolina Vice President Jack Jones said. The 787-9 is currently assembled in Everett, Wash., from components and aircraft sections produced around the world. As for the 787-10, Jones said the final assembly site will be announced in the first quarter of 2014. “The land buy points to more internal Boeing competition between 787 plants as well as laying down the gauntlet for Washington unions to say that we can and will move production,” Ahmad said regarding the back and forth between the Machinists union and Boeing regarding the 777X labor agreement. The battle over the 777X assembly site ended in early January when the International Association of Machinists and Aerospace Workers approved a contract extension with Boeing by a 1% margin. The vote ensured the plane’s assembly and the manufacture of the composite wings would be done in Puget Sound. Boeing filed a notice late last month with the U.S. Army Corps of Engineers and
“We’ve got the land. We’ve got the flexibility, and that’s where we are.” Jack Jones
Vice President, Boeing South Carolina
the state office of Ocean and Coastal Resource Management detailing plans to nearly double its 1.2-million-square-foot 787 Dreamliner final assembly building to the south beginning next year in North Charleston. Plans call for building up to seven more manufacturing buildings, additional office buildings and a third paint hangar, according to the filing. In the second stage of construction, Boeing plans to build 3.4 million square feet of manufacturing buildings and 400,000 square feet of administration buildings, according to the filing. Building is expected to begin on that phase sometime after 2016. The plans also call for nine more slots
on the flightline — for a total of 16 — where the planes sit post-assembly. Boeing filed the application Dec. 20 for a permit to fill in 151 acres of wetlands. The filing also discusses how Boeing plans to preserve wetlands elsewhere as mitigation. “The overall project is described as the Boeing South Carolina Expansion Program and is expected to meet both the existing and the future development needs of the Boeing Company’s North Charleston campus for the next 30 years,” the filing reads. Boeing’s lease of 468 acres from Palmetto Railways earlier this month was an increase from the original plan to lease 267 acres. Charleston County Aviation Authority sold the land to the Palmetto Railways, a division of the S.C. Commerce Department. In a December news conference, Jones said the land is for future expansion options. “Now that we have the land, there is no plan on the side or some secret. We’ve got the land. We’ve got the flexibility, and that’s where we are,” Jones said. “We’re ready to go if our corporation says we want you to do ‘X’ work.” The next day, Boeing S.C. filed the wetlands permit application that detailed the expansion plans.
787 Progress The Boeing Co.’s Lowcountry and Puget Sound operations were on track to build 60
S.C. Delivers
Dreamliners in 2013, Jones said. Following the battery and electrical issues it experienced earlier last year, Boeing resumed 787 airplane production in April and began delivering planes in June. The delays cut Boeing’s Lowcountry and Puget Sound operations’ 12-month timeline to assemble 60 planes in half, Jones said. Boeing is currently producing roughly 10 Dreamliners a month, but has not said how many of those are coming from South Carolina. It plans to produce up to 12 airplanes a month by 2016 and up to 14 a month by 2019. Looking forward, Jones said South Carolina’s state and education leaders need to focus on science, engineering, technology and math education to prepare a workforce for Boeing’s future growth in the Lowcountry. Trident Technical College plans to build a $79 million aeronautical training center with county, state and college funds at its North Charleston campus to provide training in aircraft assembly, aircraft maintenance and avionics for the college’s academic programs.
Part of the increased fuel efficienty of the 787 Dreamliner comes from the plane’s composite wings, which are produced in Japan and flown to assembly sites in North Charleston (above) and in Everett, Wash., as part of the company’s global manufacturing supply chain. (Photo/Kim McManus)
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S.C. Delivers
Logistics
By Liz Segrist, Staff Writer
Regulations create roadblocks for trucks
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he truck-driving industry is struggling amid massive workforce shortages and new regulations that experts say could impact job growth across many sectors. The industry today faces a 20,000-driver shortage that is expected to grow to more than 1 million by 2023. Additionally, new regulations that restrict truck drivers’ consecutive driving hours can affect delivery times, according to several industry leaders. “This regulation exacerbates congestion, drives more drivers out of this industry and delays the free-flow movement of U.S. commerce,” said Phil Byrd, president and CEO of North Charleston-based Bulldog Hiway Express. Private companies, manufacturers and the Port of Charleston depend on truckers throughout the state and across the country to transport their goods. The new regulations were created in an effort to reduce crashes and improve truckers’ health. Byrd said the “bad regulations,” which went into effect July 1, need to be reviewed and amended. Several members of Congress, including Rep. Tom Rice, R-S.C., introduced H.R. 3413, the True Safety Act, in October as an effort to delay the trucking regulations until an independent review of their effectiveness can be completed. The bill is currently in committee. S.C. Trucking Association President Rick Todd said the new regulations are constraining the economy and disrupting the supply chain. “It can impact productivity with your truck fleet or your ability to serve your
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“It can impact productivity with your truck fleet or your ability to serve your customers with the hours and delivery times they’ve gotten used to.” Rick Todd
President, S.C. Trucking Association Photo/Kim McManus
customers with the hours and delivery times they’ve gotten used to,” Todd said. In 2008, truck drivers were limited to 14-hour workdays, 11 of which were filled with driving, while the rest were used for breaks. Truck drivers were required to have 10 consecutive hours off duty. The new regulations limit the maximum work week to 70 hours, down from 82 hours. Those reaching the 70-hour maximum within a week must rest for 34 consecutive hours, including at least two nights off-duty blocks from 1 to 5 a.m. The new rules maintain the 14-hour workday. U.S. Transportation Secretary Ray LaHood said the rules are common-
sense, data-driven changes to reduce truck driver fatigue and improve safety for all travelers. According to the Federal Motor Carrier Safety Administration, “Working long daily and weekly hours on a continuing basis is associated with chronic fatigue, a high risk of crashes and a number of serious chronic health conditions in drivers. It is estimated that these new safety regulations will save 19 lives and prevent approximately 1,400 crashes and 560 injuries each year.” A study by the Owner-Operator Independent Drivers Association found the new hours “reduced flexibility in a driver’s work week schedule” by revising the 34-hour required break to require the two rest periods from
chairman for the American Trucking Associations, a national trade association for the industry, will be to secure better pay and promote respect for truck drivers to make the job more enticing. He also said trucking industry officials need a seat at the table when regulations are being discussed. “We’re going to need to hire 1 million truck drivers over the next decade to enjoy the capacity that we do today,” Byrd said. “That is a daunting task.”
The Port of Charleston is demanding better logistics and infrastructure to support the influx of cargo headed toward the East Coast, as bigger ships are being deployed and the Panama Canal expansion nears its 2015 completion. In addition to increasing rail capabilities and road capacity, S.C. State Ports Authority President and CEO Jim Newsome said the port needs a viable, growing trucking industry to haul port containers. He noted that only 25% of the port’s cargo moves by rail, because there’s not enough rail capacity at this time to move more. None of the SPA’s terminals have on-dock rail access.
S.C. Delivers
1 to 5 a.m., by limiting those restarts to once every seven days, and by requiring periodic 30-minute breaks. The study said the new regulations affect the ability of truck operators “to drive while rested, operate their businesses efficiently and make a living.” Of the more than 4,000 truck drivers who responded, about 46% reported feeling more fatigued since the changes in hours of service, and 65% said they now receive less income. The report also found that limiting the 34-hour restart to once per week has caused 56% of the respondents to lose mileage and loads hauled per week. In addition to new regulations, truck driver recruitment is up against decreasing pay and quality-of-life factors, such as time spent away from family, the wear and tear of being on the road and a lack of respect for drivers, Todd said. Todd said recruitment of future drivers is a challenge because truck driving is not generally talked about as a career option in schools and parents don’t encourage their children to be truck drivers. Byrd said part of his focus as the new
SSA Cooper Full-Service Stevedoring & Terminal Operation Breakbulk Handling Specialists
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S.C. Delivers
Inland Port
By Bill Poovey, Staff Writer
Adidas using inland port
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he S.C. State Ports Authority says the $47 million S.C. Inland Port that opened in October in Greer has customers in addition to BMW Manufacturing, but it isn’t saying who they are. A spokeswoman for Adidas, Lauren Lamkin, said the company’s distribution operation in Spartanburg is using the inland port. Jack Ellenberg, the authority’s senior vice president for economic development and projects, said users of the inland port are customers of Norfolk Southern and the 19 steamship lines that use Charleston, not the authority. “We are also talking to their customers” to make them aware of the inland port, Ellenberg said. He said the inland port investment is being recovered by charging fees for each container the authority handles. Ellenberg said BMW is not the only customer. He said “there is a blend of customers out there,” though he declined to say how many. “I can tell you we are seeing different cargo through there,” Ellenberg said. “I am not in position to identify specific companies at this time.” While rail service started in October for BMW, construction at the 91-acre railtruck transfer facility is continuing. Ellenberg also said the authority is “pleased with the direction we are going” at the inland port, which is intended to speed international cargo shipments among the Port of Charleston, the Up-
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state and neighboring states. S.C. State Ports Authority President and CEO Jim Newsome has said Norfolk Southern, which has a contract as the only rail company using the inland port, expects to initially move about 40,000 containers through the facility annually and increase to 100,000 lifts annually within five years. Authority and railroad executives, while refusing to publicly discuss rates, have predicted the inland port located 212 miles from the Charleston docks will reduce interstate truck traffic while providing a cheaper alternative for some companies. Imported containers arriving at Norfolk Southern’s Seven Mile Yard in North Charleston by 6 p.m. will be available at the inland port the following morning, and export boxes delivered to the inland port by 6 p.m. will be available at the Seven Mile Yard the next morning. BMW Manufacturing at Greer is relocating its export operation from Duncan to a new, $20 million building adjacent to the inland port. The 413,000-square-foot building is located on property owned by the Greenville-Spartanburg International Airport and was expected to begin handling shipments in January. Duncan-based Syn-
creon manages the automaker’s warehousing and logistics operations, preparing shipments of parts and components to markets such as Russia, Thailand, India, Indonesia, Malaysia and Egypt. Rick Todd, president of the S.C. Trucking Association, said he is seeing an aggressive national marketing campaign by the authority for the rail-truck transfer facility but has not heard of any trucking companies losing or gaining business due to clients using Norfolk Southern. “They are marketing like crazy,” Todd said. “They are doing it like it ought to be done.” He said some companies might not want to be identified as inland port customers. Newsome said the inland port is open 24 hours a day, six days a week, and roughly five to nine trucks are there every hour of every day. Authority executives said in October that they were talking to companies like Michelin and Adidas in South Carolina and Eastman Chemical and John Deere Power Products in Tennessee. Authority spokeswoman Erin Pabst said the authority’s marketing effort, in addition to prospective cargo customers, is “also talking with companies about the opportunity to locate their facilities near port in order to grow our cargo base.” She said the railroad and steamship lines are also marketing the facility.
Staff Report
Nuclear
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he Carolinas’ $20 billion a year nuclear industry can grow even larger through developing the region’s supply chain, according to a recent economic impact study for the Carolinas’ Nuclear Cluster. Prime candidates for expanding the industry’s supply chain are companies that provide maintenance and instrumentation upgrades at nuclear facilities in the Carolinas and United States, according to cluster members. “The Carolinas’ Nuclear Cluster has encouraged additional suppliers to locate and grow their businesses in the Carolinas,” said Jim Little, a 40-year veteran of the industry and chairman of the nuclear cluster. “These suppliers can provide materials to the nuclear industry, domestically and multinationally, as well as other industries.” Examples include industrial supply firms,
S.C. Delivers
Nuclear cluster seeks to expand regional supply chain
SCE&G completes the nuclear island basemat placement for V.C. Summer Unit 3. (Photo/SCE&G)
valve manufacturers, motor and pump makers, design firms, maintenance companies and services firms, such as security companies and laboratories. Some firms that already supply components for power plants fueled by coal and
natural gas might be able to serve nuclear facilities if the parts are not involved in safety-related areas of the plant. Also manufacturers might be able to obtain nuclear safety certification for some products. That’s because the difference be-
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S.C. Delivers
tween components for a nuclear facility and those for a fossil-fired power plant has to do with testing and quality control tracking. In many cases, the manufacturer can obtain the necessary certification without having to spend a lot of money or increasing production costs, proponents say. The ability of companies to sell materials across the supply chain of nuclear and other energy generation sources can help firms maintain a portfolio of sales opportunities and strengthen the supplier’s business position, said Little, strategic adviser for the URS Power Group and retired senior vice president of Fort Mill-based URS’s nuclear energy programs. “The Carolinas’ Nuclear Cluster is working to build a strong industry network, because we understand this country must have a balanced generation portfolio,” Little said. The Carolinas’ cluster represents more than 50 companies, colleges, and tech schools in North Carolina and South Carolina involved in the nuclear power industry. Presently the Carolinas are home to eight nuclear power plants, four each in North Carolina and South Carolina. In addition,
Fuel Cells
two Westinghouse 1,117-megawatt reactor units are under construction at South Carolina’s V.C. Summer Nuclear Station, 28 miles northwest of Columbia. The $9.8 billion program at V.C. Summer is one of two new nuclear projects to be licensed and built in the United States in three decades. The other project is being built by Southern Co. at the Vogtle Electric Generating Plant near Waynesboro, Ga. The nuclear supply chain could be bolstered by the development of small modular reactors, which are units that generate less than 300 megawatts and designed to be built in a factory and hauled to power plant site. Charlotte-based Babcock & Wilcox Co., which won the first round of U.S. Energy Department funding for SMRs, potentially worth $226 million, said it is working with more than 200 suppliers across 33 states to develop its small reactor unit along with Bechtel Corp. and the Tennessee Valley Authority. One of the Energy Department’s stipulations for obtaining funding for a small reactor unit is that its suppliers must be located in the United States.
The economic impact study conducted by researchers at Clemson University’s Center of Economic Excellence in Supply Chain Optimization found that the Carolinas’ nuclear industry provides 29,000 jobs. The cascading effect of dollars created by the nuclear industry adds another estimated $2 billion in indirect payroll, so that some 100,000 jobs are touched by the nuclear industry for a total of $4.2 billion in payroll. Additionally, the industry — including nuclear power plants and vendors working at the Savannah River Site in Aiken — accounts for a direct payroll of $2.2 billion a year and pays more than $950 million in state and local taxes. “Residents and businesses in the Carolinas receive real economic benefits from the nuclear industry through jobs, income creation and the multiplier of spending,” said Scott Mason, a supply chain researcher at Clemson University’s industrial engineering department. “This study not only looked at the impact of operating nuclear plants, but also producers of nuclear fuel, engineering and procurement companies, suppliers, and contractors, and others.”
Staff Report
Department of Energy recognizes S.C. as a leader in fuel cell technology
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outh Carolina has been recognized for the third straight year by the U.S. Department of Energy for its leadership in domestic fuel cell manufacturing and deployment. Meanwhile, the agency cited Spartanburg for showing growing support for fuel cells and becoming a catalyst for the fuel cell industry. In its State of the States, Fuel Cells in America’s 2013 report released at the end of the year, the Energy Department listed South Carolina among the top five states for leading the country with continued and expanded support for fuel cell and hydrogen technologies — helping to reduce emissions, improve energy efficiency and create new job and business opportunities. Other members of the top five are California, Connecticut, New York and Ohio. According to the Energy Department, ex-
amples of how South Carolina is leading in the development of fuel cell technology include: • The Savannah River National Laboratory and EngenuitySC’s partnership to bring innovations out of the lab to the marketplace. The agreement calls for the national laboratory to provide technical expertise on hydrogen innovation to the Fuel Cell Collaborative on various projects. • The Columbia Fuel Cell Collaborative, formed in 2006, comprises SCRA, the city of Columbia, University of South Carolina, Midlands Technical College, and EngenuitySC. The group’s mission is to make the Midlands a leader in fuel cell innovation and technology and attract private sector partners, fuel cell scientists, entrepreneurs and innovators. The organization also aims to collaborate with private sector leaders for fuel cell deploy-
ments in the city, university and commercial applications, the Energy Department said. • BMW’s production facility in Spartanburg County. The luxury automaker’s only U.S. plant hosts the world’s largest fuel cell-powered material handling fleet. BMW recently added 175 more fuel cell-driven pallet trucks and forklifts to boost its fleet to 275 across the 4-million square foot plant. Currently the fleet is fueled by hydrogen provided by Linde, but BMW is working with SCRA on a two-year landfill gas-to-hydrogen pilot project. Methane piped 9.5 miles from the Palmetto Landfill in Wellford supplies half the plant’s electricity and heating needs. BMW also is participating in two hydrogen storage projects with the Energy Department.
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1,000 WORDS
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In its heyday, the town of Olar was a thriving agricultural community, historians say. Its storefronts tell a different story today. The Bamberg County town, one of South Carolina’s smallest, was named for the daughter of Richard Morris, whose land was used for the railroad depot built in the late 1800s. (Photo/Kim McManus)