Higher inflation and interest rates are likely to curb America’s economic growth next year, but business investment in the Tennessee Valley remains robust, at least for now, according to the Tennessee Valley Authority.
“We’re staying busy and not seeing any slowdown yet,” John Bradley, TVA’s senior vice president of economic development, said in a telephone interview this week.
In the fiscal year that ended Sept. 30, TVA recorded its second-best year ever for new business investment, attracting $10.2 billion in business investment. Fiscal 2022 was surpassed in new investment only by the record high $11.3 billion of investment TVA attracted four years ago.
The new investments are projected to add 66,500 jobs, which was the fifth-highest number in the history of the TVA economic development program.
The Tennessee Valley continues to benefit from its location within a day’s drive of 60% of the U.S. population and its favorable energy prices, state and local taxes, and costs of doing business, Bradley said. Although new investments have come across an array of industries, the region is benefiting the most in recent years from the growth in electric vehicles and the batteries needed to power such cars and trucks.
Tennessee, which is already home to growing EV production plants at Volkswagen in Chattanooga, Nissan in Smyrna and General Motors in Spring Hill, landed its biggest investment ever in late 2021 when Ford Motor Co. and LG Chem announced plans for a $5.6 billion EV and battery production complex in Stanton, just outside of Memphis. The plant will be built in the West Tennessee megasite that local governments and TVA have been assembling and equipping for more than a decade.
To supply the new Ford facility and other EV plants, LG Chem announced earlier this week it plans to build a $3.2 billion battery plant in Clarksville, Tennessee, that will add 860 jobs when in full production by 2025. The Clarksville announcement came 14 months after GM and LG Chem announced plans for a joint venture known as Ultium Cells to build a $2.3 billion battery plant in Spring Hill that is projected to add 1,300 jobs.
“I’ve been doing this for 42 years and I’ve never seen anything like what we’ve seen in the past two years,” Bradley said. “We knew that the electric vehicle market was coming, but what was surprising is to see how big and how fast it has now come to this region.”
Bradley said the announced expansions are likely to bring new suppliers into the region and sustain growth even as many interest-sensitive industries scale back their expansion plans as the Federal Reserve Board raises key interest rates to slow the economy.
The new EV and battery plants will also be big electricity users, boosting demand for TVA energy. TVA President Jeff Lyash, who expects power demand could double in the Tennessee Valley by 2050 because of business and residential growth, said the Southeast is attracting the biggest share of the EV market due to its attractive energy costs.
TVA is in the fourth year of what it has pledged will be a decadelong freeze on base power rates in its seven-state region. Although higher fuel rates have boosted electricity prices this year to an all-time high, Lyash said the utility has pared its operating costs, reduced its debt and positioned itself to keep other expenses in line. TVA has also offered pandemic and long-term power purchase credits that will total $1.4 billion in power rate savings over three years for the 153 local power companies that distribute TVA power.
“TVA power is among the lowest cost, most reliable and increasingly most sustainable in the nation,” Lyash told industry analysts during TVA’s recent earnings call last week.
The average retail-delivered cost of power by TVA in the 12 months ending in July was 9.85 cents per kilowatt-hour. By comparison, the median price of such power among all of the 100 largest U.S. electric utilities in the same period was 11.09 cents per kilowatt-hour.
“That difference amounts to about $1.9 billion in annual costs in areas served by TVA and our local power companies,” Lyash said.
The Southern Co. also boasts some of the lowest industrial power rates, helping Georgia to land both a $5 billion Rivian Automotive plant east of Atlanta with 7,500 jobs and a $5.5 billion Hyundai EV plant in southern Georgia that is projected to add 8,100 jobs. The two new EV plants in Georgia are the biggest economic development projects ever announced in the Peach State.
To supply the growing EV market, SK Battery America also is building a $2.6 billion plant in Commerce, Georgia, that is projected to add 2,600 jobs. On Friday a Korean newspaper reported Hyundai Motor and the Korean battery maker SK On are entering into a joint venture to build a $1.9 billion battery plant in the U.S.
In the Chattanooga area, the battery material supplier Novonix continues to expand production at its plant while Piedmont Lithium is building a $600 million plant in Etowah, Tennessee.
Novonix, which began operation at a plant on Chattanooga’s riverfront late last year to produce synthetic graphite for electric vehicle batteries, was recently picked by the U.S. Department of Energy to receive $150 million for a factory in the planning stages. Piedmont Lithium, which plans to make lithium hydroxide for batteries in McMinn County, was selected for a $141.7 million DOE grant.
Bradley said most of the EV auto assembly and battery plants locating in the Tennessee Valley are requiring investments of more than $1 billion “and that was something we just didn’t see in the past.”
In 2021, TVA was rated as the top utility for job additions and was behind only Entergy in total investments last year, according to a ranking of utility economic development results by Site Selection magazine.
Major Chattanooga investments
In the past year, major projects announced in the Chattanooga area included:
— $118 million expansion at the GE Appliances Roper plant in LaFayette, Georgia, adding 600 jobs
— $56 million expansion at Lodge Manufacturing in South Pittsburg, adding 239 jobs
— $24.2 million iFixIt repair tool distribution facility in Chattanooga, adding 201 jobs
— $11.2 million expansion by Steam Logistics in Chattanooga, adding 400 jobs
— Doubling of leased facility for CKH Transportation, adding 150 jobs
— $3 million expansion by Taimen Transport in Chattanooga, adding 55 jobs
Source: Chattanooga Area Chamber of Commerce
Investment in the Tennessee Valley
Over the past decade, TVA’s economic development division has worked to recruit or grow investment in the Tennessee Valley.
2022 — $10.2 billion and 66,500 jobs
2021 — $8.8 billion and 80,900 jobs
2020 — $8.6 billion and 67,000 jobs
2019 — $9 billion and 66,000 jobs
2018 — $11.3 billion and 65,400
2017 — $8.2 billion and 70,076 jobs
2016 — $8.3 billion and 72,100 jobs
201 — $7.8 billion and 76,200 jobs
2014 — $8.5 billion and 60,300 jobs
2013 — $4.1 billion and 39,000 jobs
2012 — $5.9 billion and 48,500 jobs
Source: Tennessee Valley Authority
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340. Follow him on Twitter @DFlessner1.
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