Consider State Resource Limitations When Evaluating a Site

February 14, 2018 by Midlothian Economic Development

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When a business seeks to move or expand, they often focus on access to workforce, quality of life, and space concerns when they consider a new location. While these are all valid reasons for selecting a site, other considerations may be overlooked.  Perhaps the most commonly overlooked factor is access to and quantity of resources. While it can be easy to favor a site for its proximity to a major city, transit, and strong labor, if the area is resource-stressed, it can be harmful to a business down the line. While evaluating whether a site is resource-stressed, pay attention to these factors.

Water Access: Clean and Consistent

Limited access to water is a cyclical concern for many cities that are dependent on rainfall to replenish water reservoir supplies, but for some it’s becoming an imminent reality. For a business, the concern is twofold as access to clean water is not only important for the quality of life of employees, but also for certain manufacturing processes. Cape Town, South Africa is expected to run out of water by April, and, closer to home, California is facing a serious water shortage that has officials considering a drinking water tax to help clean up contaminated water and improve water systems. While it is possible for any city  to face dry spells and water shortages, strong water infrastructure that provides access to clean and consistent water is important for businesses that rely on water for their processes.

While Texas has gone through droughts in the past like many neighboring states, it does have resources to minimize drought impact in the state overall. Texas has enough underground water to supply the state for over a hundred years. The biggest issue here is that the water requires desalination in order to be usable for both residential and commercial purposes. Although desalination is expensive, its importance in providing access to a steady water supply has led to the state’s willingness to invest in desalination efforts. As of 2016, Texas’ total municipal desalination capacity is about 142 million gallons a day, with new desalination plants being built in San Antonio and Corpus Christi. These efforts show Texas as a state that is actively working to produce usable water before drought occurs, thereby avoiding the perils that other drought-stricken states are facing. This should give solid peace of mind to manufacturers considering the state for their business.

Energy Capacity: Meeting Growing Needs

As the world struggles with the limits of coal and gas to create energy, being mindful of energy production and consumption is important when evaluating a site. While energy consumptions is heavily correlated to population, some states have higher energy consumptions with productions that don’t match. During extreme times, such as intense weather and natural disasters, this can put great strain on the power grid and drive prices up. It is  important that states have strong production capacity, particularly in renewables. At present, the largest per capita consumer of energy is Louisiana, with 9.4% of that energy going to industrial consumption. Its production is similarly large due to natural gas (3793.5 trillion BTU as of 2012), but also points to an issue with the current energy production norms in the country.  States with large production of certain types of energy (oil and gas, natural gas, and coal) also consume large amounts of energy in order to produce and distribute the energy they have. This creates a system that is unsustainable and harmful to long term energy outcomes.

The key is to have an energy capacity with strong production that can be sustained by the grid and match consumption needs. Texas is a unique case when it comes to energy capacity and distribution. The biggest reason is that Texas is the only state that has its own electrical grid. Regulated by the Electric Reliability Council of Texas (ERCOT), the grid controls the flow of energy from the multiple electricity generators for transmission. The independent nature of ERCOT and the deregulation of the energy market from the state has allowed for more competition, and more investment into energy infrastructure by retail energy providers (REPs). This has allowed Texas to adapt with energy alternatives and improve transmission efficiencies. Texas also benefits from being the state with the largest alternative energy capacity and production. Although Texas only gets about 20% of its energy from renewables at the moment (the majority comes from natural gas), Texas has a wind energy capacity greater than any other state. As technology evolves to allow the proper harnessing and production of wind energy, Texas can be expected to tap more into this capacity.

Resources in Abundance

Texas’ resource abundance is not just limited to expansive land. As resource demands grow and change worldwide, it is important to think of how those changes will affect your business. When evaluating a site, it is important not only to consider current resources, but the area’s plan for future resources as technology and world events shape the future. Knowing what is in place can help you gain peace of mind when choosing the future home of your business.

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