< Previous34 JULY 2024 SITE SELECTION the country among partners in New England, the Southeast, Midwest, Texas, California, Nevada and Oregon. The injection into the supplier base — more than double the previous year’s — is to help “build and maintain capacity and capabilities needed for sustained growth,” said a company statement. In an April earnings call, GE Aerospace CEO Larry Culp broke down the plan for addressing lingering supply chain constraints. “We can track about 80% of our largest delivery challenges back to 15 supplier sites,” Culp said. “We’re deploying more than 550 engineers and supply chain resources — up 25% from last year — working with them to improve quality and delivery performance.” Growth of the D.C. Metro Cluster When The Aerospace Corporation announced in March that it was relocating its corporate headquarters from El Segundo, California, to Fairfax County in northern Virginia, leadership of the non-profit research and development lab sounded a refrain that’s become familiar among technology companies rushing to plant flags in and around the nation’s capital. “By shifting our headquarters to the Washington, D.C., metro region, we will deepen our ties with key decision-makers and stakeholders and re-affirm our commitment to working side by side with our partners as they carry out our nation’s critical missions,” said Aerospace Chief Executive Steve Isakowitz. As one of the D.C. metro’s top selling points for corporate investment, “proximity to the nation’s capital” isn’t what it used to be. It’s more. “This,” says Anna Nissinen, senior vice president of the Fairfax County Economic Development Authority, “is where all the defense dollars are coming. We’re at the center of the world’s largest customer — the federal government — and we rank number one in the nation for government contracting dollars coming to our companies. And that number is growing.” Not long before the move by Aerospace — which despite the headquarters relocation to Chantilly, Virginia, is nonetheless investing $100 million in its El Segundo campus — aerospace and defense conglomerate RTX and Boeing both shifted Source: GE Aerospace GE AEROSPACE: $650 MILLION IN MANUFACTURING INVESTMENTS36 JULY 2024 SITE SELECTION their global headquarters to Arlington, another booming location in northern Virginia located just across the Potomac River from Washington. They joined global giants including General Dynamics, Northrop Grumman, Lockheed Martin, Rolls- Royce, BAE Systems and Airbus among the many aerospace and defense companies that make up the regional cluster. Both Fairfax County and Arlington provide a muscular tech workforce and relatively lower costs than other major tech hubs, with Fairfax leaning toward the manufacturing and innovation side and Arlington a strategic location for government relations. A report from Avison Young on northern Virginia’s office market stated that aerospace and defense companies accounted for 32.9% of leasing volume during Q1 2024. “We offer services and support for their growth journey,” Nissinen tells Site Selection. “We’re flexible, adaptable and resilient and I think that is our superpower. Things are changing fast. We don’t even know what’s going to be there in 10 years, but we’re adaptable to that. It’s as if every company in the aerospace and defense sector in particular are going to be in the space industry one way or the other.” Québec Makes a Play for the Future Aéro Montréal, the strategic think tank that helps drive the development of aerospace companies in Québec, announced in late May the formation of a designated aerospace innovation zone. Espace Aéro, the organization said in a release, “will strengthen the attractiveness of the industry and the strategic international positioning of Québec’s aerospace sector. It will also propel Québec’s aerospace cluster to the next level of collaborative innovation and accelerate the transition to sustainable and intelligent air mobility, while attracting talent and companies from home and abroad.” In a demonstration of the high-level support the initiative enjoys, the announcement was attended by François Legault, Québec’s premier; Pierre Fitzgibbon, the provincial minister of economy, innovation and energy; and François-Philippe Champagne, Canada’s influential minister of innovation, science and industry. “After the Quantum Zone in Sherbrooke, the Digital Technologies Zone in Bromont and the Energy Transition Valley for batteries in Mauricie- Centre-du-Québec, I am very proud to announce the designation of a fourth innovation zone, in the Aerospace Corp. is working on NASA’s Artemis program to the moon. Photo courtesy of NASA/Bill Ingalls38 JULY 2024 SITE SELECTION aerospace field,” said Legault. “Concentrated in the Greater Montréal area, Espace Aéro brings together companies, universities and research centers to carry out training, cutting-edge research and applied testing.” Boeing announced an immediate anchor investment of $75 million (CA$100 million) in an Aerospace Development Centre at Espace Aéro. “Recognizing that Espace Aéro seeks to foster a culture of collaboration, with a mission to advance sustainable aerospace in Canada, Boeing is assessing additional projects to locate in Espace Aéro, aligned with the zone’s technology development priorities of decarbonization and autonomy,” said the Arlington- based company in a statement. Boeing also announced additional investments in Québec-based enterprises, including $70 million (CA$95 million) in Wisk Aero’s autonomous electric vertical takeoff and landing aircraft and $25 million (CA$35 million) toward advanced landing gear research at Espace Aéro with Québec’s Héroux-Devtek. The company says the investments are part of Boeing’s Industrial and Technological Benefits commitment to Canada for its selection in December of Boeing’s P-8A Poseidon to fulfill its long-term multi-mission aircraft role. “These investments serve as a testament to Canada’s aviation leadership and exemplify Boeing’s unwavering commitment to the country, where we have been driving innovation and fostering collaboration across the nation for over a century,” said Brendan Nelson, president of Boeing Global. “Québec’s aerospace capabilities are recognized worldwide, and we are excited to partner with the province on new initiatives that will generate cutting-edge technologies, drive economic growth and support decarbonization of aviation.” Canadian dignitaries and aerospace leaders announce plans for Espace Aéro, May 21. Photo courtesy of Boeing SITE SELECTION JULY 2024 39 A rtificial intelligence (AI) is driving the data center market and the data center market is driving the energy market. I remember 20 years ago when the regulated utility companies were wondering where the next major power users were going to come from. Little did we realize consumer demand for Netflix, Facebook, iPhone pictures, Instagram and TikTok would ultimately drive the energy market. Who is creating this energy demand? The “hyperscalers” are typically companies that need large data centers to manage and process their data in an efficient and timely manner. These companies include Microsoft Azure, Amazon Web Services, Facebook (Meta), Apple and Google Cloud, as well as data center deployers like IBM, Alibaba Cloud and Oracle. All of these companies were rooted in innovation, and these innovators literally changed the landscape of how we function as individuals and as a society on a daily basis. How Is AI Affecting the Data Center and Energy Markets? Conservative estimates anticipate that AI data centers will require seven to 10 times the power of a conventional data center due to the densification of the AI servers. In addition, these AI data centers will require significantly more cooling capacity than ever before, with increased water energy demands. While the industry is exploring other cooling technologies, conventional wisdom is that if water is available, it will lend itself to a more efficient AI data center that will significantly increase processing capacities while minimizing costs. So how do we solve this problem we helped create? As a licensed Professional Engineer by education and training, I know as engineers we put a man on the moon, and soon will put a woman on the moon. Give the engineering profession enough time and money, we can do anything. In this business, it’s a matter of how much time, how much money and, more importantly, who pays. Nuclear energy done right (key words are “done right”) is one of the best carbon-free energy solutions that exists. According to the U.S. Energy Information Administration, in 2023 the U.S. energy mix was 60% fossil fuels, 18.1% nuclear and 21.4% renewables, so there is plenty of opportunity for nuclear to grow. How does this affect data center and site development? We are working with a number of clients that are trying to maximize the land they currently have available and already zoned and/or entitled for technology or data center uses, especially given the pushback they are receiving in some communities that have become “anti-data center” and with land prices exceeding $3 million per acre in Northern Virginia. With the densification of these servers and the move toward multi-story data centers, it is not uncommon for a reasonably configured 1,000+-acre data center site to need 1 to 2+ Gigawatts of power long term. As a matter of perspective, a typical nuclear power plant will generate 1.5 to 2.5 GW of power. This was further exemplified by AWS purchasing 1,200 acres of data center campus from Talen Energy and then recently rezoning 1,600 acres for the data center campus that is powered by the No Power, No Project Could hyperscalers help resolve the No. 1 issue in data center site selection with an out-of-the-box solution? DATA CENTERS In October 2023 the Rolls- Royce SMR was shortlisted in the Great British Nuclear Small Modular Reactor technology selection process. That same month, Westinghouse agreed to design the fuel for the SMR, which Rolls-Royce says would provide clean power for 1 million homes for more than 60 years. Rendering courtesy of Rolls-Royce by JOE HINES, TIMMONS GROUP40 JULY 2024 SITE SELECTION Talen Nuclear Power Station in Pennsylvania, which has a generation capacity of 2.5 GW. As we lay out data center sites, the typical substation size is 300 MW, which requires anywhere from 10 to 20 acres of reasonably configured land. The Small Modular Reactors (SMRs) that are considered commercially viable will range from 60 to 300 MW in capacity, with Westinghouse and GE Hitachi currently developing and permitting 300-MW SMR prototypes for deployment. It is anticipated these SMRs will need approximately 10 to 20 acres to site a facility dependent upon the size of the SMR, very similar to the size of currently substation layouts. It is entirely possible for a 300-MW substation to be removed and a 300-MW SMR to be put in its place to take on the data center load. As the industry looks to develop these SMRs, there will still be significant permitting hurdles to get over and a corresponding timeline, which will ultimately drive costs. With the advent and evolution of AI, data center energy demands are projected to double by 2030, going from 4% of total energy today, to upwards of 9.1% in 2030 as noted by the Electric Power Research Institute (EPRI) in May 2024, creating an energy demand curve like we’ve never seen before. Desperation leads to innovation, and innovation leads to transformation. Keep in mind that during The Great Depression, the Empire State Building was designed in two weeks and constructed in 407 days in 1930 and 1931. If you’re motivated (and desperate), you can literally build skyscrapers or move mountains to make a project happen. Golden Rule: ‘He (or She) Who Has the Gold Rules!’ As we look out over the landscape of who can solve this problem, it becomes obvious that the hyperscalers are going to be central to the solution. And as you look at their market capitalization (or valuations) relative to the regulated utility providers, it’s obvious who has the financial capacity to help creatively solve these problems. As of market close on May 31, 2024, the top five hyperscalers have a combined market capitalization of approximately $11.2 trillion as compared to the top five regulated energy companies in the United States, which have a combined market capitalization of about $622 billion, or just 5.5% of the top five hyperscalers. How much and who pays for the SMR deployments? In May 2023, Westinghouse announced it will produce a new 300-MW small modular reactor (AP 300) that will be commercially available in 2027 and cost around $1 billion installed. Meanwhile, AWS is making significant investments in multiple data center sites: $35 billion announced in Virginia, $10 billion announced in Mississippi, $11 billion announced in Indiana, over $10 billion in Ohio. And, according to a report by tech publication The Information in April, Microsoft and Open AI plan to invest almost $100 billion in a data center complex that will house an AI supercomputer called “Stargate,” set to launch in 2028. I doubt these hyperscalers will let these investments and assets sit idle without helping solve the energy crisis themselves. In fact, as this issue went to press, Duke Energy, Amazon, Google, Microsoft and Nucor on June 10 announced at the White House Summit on Domestic Nuclear Deployment that they have already started exploring these opportunities via an MOU that proposes new rate structures under the Accelerating Clean Energy (ACE) tariffs, which will allow large customers “to directly support carbon-free energy generation investments through innovative financing structures and contributions that address project risk to lower costs of emerging technologies.” No power, no project. So, what happens if a hyperscaler brings its own SMR to the negotiating table, or if it decides to invest heavily in a regulated utility company? What happens if hyperscalers help bring SMRs to market sooner rather than later and help put power back on the grid in the process? Historically, hyperscalers are risk mitigators as much as they are risk takers. Historically, it’s also true that the consumer ultimately ends up paying for everything. That may be the case here too. But it also stands to reason that hyperscalers could foot the bill up front for a nuclear solution to our insatiable hunger for data. Joe Hines, PE, MBA, is a Senior Principal and Director of Economic Development / Site Selection for Timmons Group, an engineering and technology firm. For more information, visit www.timmons.com. TOP 5 HYPERSCALE DATA CENTER COMPANIES (AS OF MAY 31, 2024) COMPANY NAME MARKET CAP Microsoft $3.09 Trillion Apple $2.95 Trillion Google (Alphabet) $2.14 Trillion Amazon $1.84 Trillion Facebook (Meta) $1.19 Trillion TOTAL MARKET CAP $11.2 Trillion TOP 5 REGULATED UTILITY COMPANIES (AS OF MAY 31, 2024) COMPANY NAME MARKET CAP Georgia Power $221.4 Billion NextEra Energy $164.4 Billion Southern Company $87.6 Billion Duke Energy $79.9 Billion Constellation Energy $68.5 Billion TOTAL MARKET CAP $622 Billion42 JULY 2024 SITE SELECTION WHERE’S THE BEEF? Not in These Facilities A lternative proteins are a booming sector of the food and beverage industry with new facilities coming online to keep pace with demand. The sector includes insect-, plant- and microbe-based proteins designed to replace animal-based proteins. Weight management and immune system health are among the benefits, and clean proteins’ role in future food security initiatives will be significant. Market research organization Future Market Insights, Inc. says the alternative protein market had a valuation of $76 billion in 2023, which will climb to $423 billion by 2033. In 2022, global human and animal nutrition provider ADM forecast the alternative proteins market would reach $125 billion by 2030. That same year, ADM invested about $300 million to expand its Decatur, Illinois, alternative protein production facility with a new Protein Innovation Center. The site is the home of ADM’s Food Application Center and Animal Nutrition Technology Center. “The global trends of food security and sustainability are driving structural changes in the food industry, including strong growth in alternative proteins, and we’re investing to ensure ADM remains a leader in this vast and exciting space,” said Leticia Gonçalves, ADM’s president of Global Foods, in a release. Industrial Production Accelerates This year, Believer Meats (formerly Future Meat Technologies) is opening a 200,000-sq.-ft. facility in Wilson, North Carolina, that it says “will be the largest cultivated meat production center in the world with the capacity to produce at least 10,000 metric tons of cultivated meat.” The $120 million plant will house custom bioreactors for producing high cell densities and yields. The Wilson site was chosen by MARK AREND mark.arend@siteselection.com FOOD & BEVERAGE A rendering depicts GEA’s New Food North America facility in Janesville, Wisconsin. Image courtesy of GEA SITE SELECTION JULY 2024 43 A number of new food pioneers in the U.S. are already writing innovation history. When it comes to industrial production, the market is still on the starting blocks. GEA’s new food center bridges a gap in the innovation landscape, driving forward the development of complementary proteins through technology.” — Dr. Reimar Gutte , Senior Vice President, Liquid and Fermentation Technologies, New Food for GEA A number of new food pioneers in the for its large supply of STEM talent and proximity to biotech and food technology companies. Ground was broken earlier this year by Düsseldorf, Germany-based GEA on a $ million technology center for alternative proteins in Janesville, Wisconsin. e facility will pilot microbial, cell-based and plant- based foods. “A number of new food pioneers in the U.S. are already writing innovation history,” said Dr. Reimar Gutte, senior vice president, Liquid and Fermentation Technologies, leading New Food, when announcing the project. “When it comes to industrial production, the market is still on the starting blocks. GEA’s new food center bridges a gap in the innovation landscape, driving forward the development of complementary proteins through technology.” Next >