State Economic Development Executives (SEDE) Network

Category: Business Development and Incentives

  • Building the Electro-Industrial Investment Pipeline: A Recap from Basalt

    Building the Electro-Industrial Investment Pipeline: A Recap from Basalt

    A joint convening with CREC and RMI brought together state energy offices and economic development organizations to tackle one of the biggest opportunities in state economic development today: the electro-industrial era.

    In July, the Center for Regional Economic Competitiveness (CREC) partnered with the Rocky Mountain Institute (RMI) to host a three-day Electro-Industrial Investment Workshop in Basalt, Colorado. This workshop brought together representatives from State Energy Offices (SEOs) and state economic development organizations (EDOs) from nine states. The goal was to help states build the coordination, knowledge, and action plans needed to attract and grow investment in manufacturing, grid infrastructure, and power-dense industrial projects. The electro-industrial era marks the convergence of clean energy, smart manufacturing, and electrified infrastructure into a unified industrial stack, and ensuring states are prepared is important. CREC was a strong partner for RMI given its management of the State Economic Development Executives (SEDE) network.

    Why This Matters for State EDOs

    Energy and economic development touch the same investment decisions, but the two activities aren’t always coordinated inside state government. As data centers, advanced manufacturing, and other energy-intensive industries reshape site selection and readiness, that coordination and alignment matters more than ever. States that pair predictable permitting and siting with proactive grid planning and thoughtful incentive design are best positioned to compete for these projects.

    A recent CREC white paper  The Digital Backbone: Data Centers, Community Tradeoffs, and Regional Competitiveness, frames the challenge well. It argues that large power users like data centers are best understood as enabling infrastructure (comparable to ports, airports, and electric grids) whose value comes less from the direct jobs on site and more from the economic activity they support elsewhere: cloud services, advanced manufacturing, research computing, and the broader digital economy. That framing cuts both ways. It means these projects deserve to be evaluated on more than headline job counts, but it also means the tradeoffs — electricity costs, water use, land use, and who bears the cost of new infrastructure — are real and shouldn’t be waved away.

    The paper’s core argument is that good governance is itself becoming a competitive advantage: the states and regions that pair transparent, evidence-based decision-making with fair cost allocation and durable public trust are the ones best positioned to benefit from this wave of investment. Getting there requires exactly the kind of coordination this workshop was built around, with SEOs and EDOs working from a shared strategy, rather than making decisions about the same projects from separate silos.

    The workshop’s three objectives captured this well:

    1. Equip state teams with actionable best practices for building an electro-industrial investment pipeline.
    2. Lay the foundation for a State SEO–EDO community of practice, so states can keep learning from each other after the event ends.
    3. Produce tangible outcomes for every state team — including the start of a State Electro-Industrial Action Plan and 1–2 prioritized policy solutions with clear next steps.

    Key Pieces for State Economic Development Leaders

    A few of the ideas and tools referenced throughout the workshop are worth understanding in more depth for state EDO teams building their own electro-industrial strategy.

    Advanced Industrial Zones (AIZs)

    AIZs are a place-based policy model designed to solve one of the biggest bottlenecks in industrial development: the fact that a single large project — a chip fab, a battery plant, a green steel facility — has to clear municipal, county, state, and federal approvals separately, often with no coordination between them. The AIZ model instead pre-designates specific areas where a state (or state-community partnership) proactively lines up the pieces a manufacturer needs before a project ever applies: streamlined and often single-point permitting, coordinated infrastructure (power, water, rail, roads), and workforce development pipelines tied to the industries the zone is targeting. Learn more here: https://www.industrialzones.org/

    Energy zones more broadly

    “Energy zones” is a catch-all for a growing set of geographic designations that unlock funding, tax treatment, or streamlined permitting for projects sited within their boundaries. For state EDOs building an electro-industrial pipeline, understanding which designations exist in your state and how different designations such as Opportunity Zones, DOE-designated Energy Communities, and state-designated enterprise or industrial zones stack is increasingly a core part of site strategy, since the strongest packages often come from projects that qualify for more than one. The practical next step for a state EDO is mapping which of these overlap with existing priority sites and industries in-state.

    A few examples illustrate how this has worked in practice:

    • Texas’s Competitive Renewable Energy Zones (CREZ), 2005: The Texas legislature directed its public utility commission to designate priority wind-resource zones and build the transmission needed to connect them to load centers, rather than waiting for individual developers to justify transmission investment project by project. The state approved 3,600 miles of new 345 kV transmission in advance of generation, which helped unlock 15 GW of new wind capacity within a decade and cut wind curtailment by 16.5 percent within five years.
    • Illinois’s own Renewable Energy Access Plan: Because Illinois sits inside two multi-state grid operators (PJM and MISO) and can’t unilaterally direct regional transmission expansion, the Illinois Commerce Commission designated its own renewable energy zones based on resource potential, developer interest, and land use so the state could use those designations to engage PJM and MISO.

    Siting and permitting reform

    Permitting speed is consistently one of the biggest bottlenecks between a state winning a project and losing it to grid delays or approval uncertainty. States are experimenting with a few approaches:

    • Consolidating review. Rather than requiring a project to clear separate municipal, county, and state processes sequentially, some states are moving toward single-point-of-contact or concurrent-review models.
    • Pre-clearing sites. “Shovel-ready” or certified site programs where a state or regional EDO has already completed environmental assessments, utility studies, and zoning clearance before a company ever shows up can compress a multi-year siting timeline into months.
    • Setting clear standards up front, especially for energy infrastructure. Oregon’s Energy Facility Siting Council process, used for large solar, storage, and other energy facilities, is one example of a state permitting body with defined statutory criteria and timelines, paired with negotiated community benefit commitments.

    RMI has developed a State Permitting Power Tool to help states move past treating “permitting reform” as a single goal and instead identify exactly which problem they’re facing. The tool sorts challenges into high-level categories — things like fragmented governance and authority, community opposition and social acceptance, or unclear jurisdictional boundaries — and then surfaces relevant reforms for each one, drawn from real examples across states.  The tool helps policymakers identify potential state-level permitting reforms that could be employed to address these permitting challenges.

    Load growth and grid readiness

    As of mid-2026, roughly two dozen states have approved at least one “large-load tariff” — a special utility rate class for very large electricity customers. The core policy problem these tariffs are trying to solve: when a single customer needs 50, 100, or 500+ megawatts, the utility often has to build new generation, transmission, or distribution infrastructure to serve them. Without a large-load tariff, those costs can get spread across all ratepayers, including residential customers, even if the large project never materializes or leaves early. Ohio, Georgia, Texas, and Oregon are cited examples of different approaches to this problem.

    Incentive design: what the research says

    Tim Bartik of the W.E. Upjohn Institute, who presented at the workshop, recently co-published a multi-state study on whether clean energy incentives actually pay off for residents, conducted in partnership with RMI. The study examined 50 of the largest clean energy projects nationally. A few of the key findings are directly relevant to any state building an incentive strategy for electro-industrial investment:

    • Project type matters. EV and battery manufacturing projects had a median benefit-cost ratio well above wind, solar, and clean fuels projects. The gap comes down to jobs: EV/battery projects tend to create far more direct employment per dollar of incentive.
    • Bigger incentive packages don’t mean better outcomes. The 10 projects with the highest ratio of incentives to jobs all had lower benefit-cost ratios, meaning the largest deals were disproportionately likely to be bad deals for residents.
    • How an incentive is delivered matters as much as how much. Structuring incentives as specialized services — workforce training, infrastructure improvements — rather than straight cash improves cost-effectiveness by about 50%.

    Read more here: https://www.upjohn.org/research-highlights/new-study-incentives-most-clean-energy-projects-yield-positive-economic-return

    Next Steps

    The workshop was explicitly framed as the start of a longer conversation, not a one-off event. RMI and participating states are laying the groundwork for an ongoing SEO–EDO community of practice, which will become a standing space for peer learning, shared troubleshooting, and continued refinement of state action plans as they move from planning into implementation.

    For state economic development organizations, electro-industrial investment is no longer just an energy policy conversation or just an economic development conversation. It’s both, at the same time, and the states that build that early will have a real advantage in the years ahead.

  • The Digital Backbone: Data Centers, Community Tradeoffs, and Regional Competitiveness

    Data centers are the most visible physical form of the AI economy. They are arriving faster than many states and communities can evaluate them. They bring billions in private investment, expand local tax bases, and fund grid, fiber, and water improvements. But they also raise questions about electricity demand, water use, air quality, and whether communities get fair value for the incentives they grant.

    This white paper offers state, regional, and local leaders a grounded, evenhanded account of both sides. It argues that data centers are best understood as enabling infrastructure—like ports, airports, and electric grids—whose value lies in the economic activity they support rather than the handful of permanent jobs they create. Drawing on new causal research, case studies from Loudoun County to Lenoir to Lancaster, and the wave of legislation now moving through more than 30 states, the paper shows why benefits concentrate where deals are well structured and thin where communities accept investment figures at face value.

    With data center development shifting toward rural areas that often have the least capacity to assess the tradeoffs, the paper lays out the questions leaders should be asking, principles for responsible decision-making, and the distinct roles state, regional, and local leaders each play. Above all, it makes the case that public trust and sound governance are themselves competitive assets in the age of AI.

    Read the full white paper to see how your state or region can turn a contentious moment into lasting prosperity. 

  • Smart Incentives: Incentives for Entrepreneurial Firms

    This report analyzes state and local incentives for entrepreneurial firms and offers guidance for offering them. It addresses the definitional problem that “entrepreneurial firm” and “incentive” are used inconsistently, then builds a typology: the most common incentive types are financial, fiscal, and services, generally divided between two targets — small business entrepreneurs and innovation- or technology-oriented entrepreneurs — with new or young firms rarely named as the target. It documents six implementation findings: incentives are a minor component of the entrepreneurial ecosystem; program rules can inadvertently constrain access; awareness and access remain a challenge; most programs assist very few firms; BIPOC- and women-owned businesses and firms in rural and distressed urban areas remain underserved; and careful design and active management improve effectiveness. On outcomes, it reports that small business lending programs can work but are usually too small to have substantial impact; public equity programs carry significant risk; grants show positive firm-level effects but limited community reach; angel investor tax credits show mixed results and can flow to insiders; tax incentives are poorly suited to firms with little tax liability; and services generate positive firm-level effects, though the most valuable service types are unclear. It concludes with three recommendations: design incentives to leverage other resources and boost the ecosystem, strengthen management and implementation procedures, and establish data and research standards so evaluations can determine best practices.

    Read more here.

  • Ellen Harpel, Randall Bauer, and Joe Buckson: Incentives Best Practices

    This brief summarizes ten best practices the PFM and Smart Incentives team identified from dozens of state incentive evaluations conducted since 2020. The practices: incentives should be targeted (for example, to exporters or high-impact companies); discretionary, usually through an application process; structured to leverage private capital at several multiples of the public investment; concentrated in the first one to three years with limited duration to prevent the incentive from becoming a subsidy; aligned with a location’s economic development strategy; built on clear, measurable goals; transparent in purpose, eligibility, and reporting; accountable, often through pay-for-performance and claw-back provisions; capped to protect fiscal health; and simple enough to administer and comply with. The authors note these practices may need to be weighed against one another — for instance, reporting requirements can reduce simplicity — and observe that states alone offer more than 2,000 incentive programs costing billions, which is driving more governments to evaluate their portfolios rigorously.

    Read more here.

  • Smart Incentives: Incentives that Work: A guide for designing and managing effective programs

    This guide addresses whether incentives work, concluding that they influence business decisions but are not solely responsible for them, and that they generate positive outcomes only with sound program design and implementation, supported by project monitoring and reporting. It presents the features evaluations associate with effective programs, including targeting, discretion, leveraging significant private capital, limited duration, transparent rules and reporting, accountability, caps or limits, simplicity, and alignment with state strategy. It argues for crafting competitive packages by combining multiple program components and partner offerings, and for shifting from a program-management mindset to an investment-partner one — viewing incentives as investments and companies as partners, and investing in workforce, site, and infrastructure that stay with the community. It supplies questions to ask before offering an incentive (how it supports strategy, what outcomes are sought, whether the timeframe fits, who tracks costs and benefits, what risks exist) and points to fiscal and economic impact analysis, performance agreements with milestones, and results reporting as accountability tools.

    Read more here.

  • Smart Incentives: Incentives 101 – The Essential Concepts

    This presentation defines business incentives three ways: programs designed to influence business investment behavior, taxpayer-financed programs that support individual businesses, and offerings that alter, reward, or subsidize an action or behavior. It identifies six incentive types — financial, tax, regulatory, workforce, site- or zone-based, and services — and notes that the number of state incentive programs has grown across the 1999–2025 period. It frames incentive use as a process rather than a transaction, and situates incentives within site selection, where workforce, infrastructure, site availability, and cost of doing business drive investment decisions while incentives play a role at each stage to maximize opportunity and minimize risk. It lists the design elements of good programs: clear and measurable goals, pay-for-performance, caps on outlays, limited duration, a targeted and discretionary application process, and built-in reporting. It closes with four takeaways: incentives should serve economic development goals rather than only winning deals, governments use many incentive types beyond tax breaks, economic developers can adopt procedures for sound decisions, and those procedures help answer whether incentives are working.

    Read more here.

  • Urban Institute: How Has Federal Spending on Place-Based Programs Changed Over Time?

    Between 2010 and 2024, federal spending on the country’s largest recurring place-based programs climbed from roughly $44.1 billion to $60.7 billion in inflation-adjusted terms—yet direct program spending fell over that same span.

    Urban Institute’s report traces this shift across 13 programs and finds that tax expenditures like the Low-Income Housing Tax Credit and Opportunity Zones now account for 84 percent of tracked spending, up from 66 percent in 2010, handing the private sector a larger say in where federal dollars land.

    If you are deciding whether current funding matches the needs of your community, or you are interested in who now directs these investments, tyou should read this report.

    Explore the full breakdown here.

  • CREC Blog: What Communities Should Know About Data Centers

    CREC Blog: What Communities Should Know About Data Centers

    The race to build data centers is reshaping local economies faster than almost any other real estate trend. From 2023 to 2024, data center construction spending increased by 70%, more than triple the rate of any other property type. The sector is drawing billions in venture capital and now consumes up to eight percent of total U.S. electricity.

    For local communities, that growth is arriving with both a windfall and a set of tradeoffs: improved fiber and broadband networks, short-term and permanent job gains, and large tax receipts on one side, with infrastructure demands, public health concerns, and general local opposition on the other. Data centers are coming; the question is how economic developers can help communities capture the benefits and manage the tradeoffs.

    Why are there so many new data centers?

    A data center is a facility used to house large computer systems. There are many types of data centers hosting different services, but today’s headline centers are mostly used for cloud computing, including massive hyper scalers, which host at least 5,000 servers and can be 60,000 square feet in size. Cloud computing is an on-demand computing service, which can be rented by consumers. These centers are used for various IT purposes like storage, networking, and software deployment.

    Separately, AI training data centers use cloud-computing’s on-demand infrastructure with specialized hardware and storage to train Large Language Models (LLMs), like ChatGPT. The AI market is booming and driving data center growth through investments by such companies as Microsoft, OpenAI, Google, and AWS. As these companies search for sites, EDO leaders are often the ones asked to explain what a data center will mean for a community. This piece is built for those conversations: a guide to the benefits, costs, and tradeoffs that come up when a project is proposed.

    Read More on the CREC Website Here.

  • Brookings: Turning the data center boom into long-term, local prosperity

    The AI goldrush roars on. Hyperscalers like Google and artificial intelligence (AI) upstarts like OpenAI continue to pour massive sums into building gargantuan data centers, often in small- and medium-sized communities.

    As the deals proliferate, concerns are rising about the huge amounts of electricity and water required to keep the centers running. At the same time, pitched battles over zoning and permitting rules are pitting tech-firm developers against local land-use managers, especially in rural and exurban America.

    Yet beyond such infrastructure and resource concerns, sharp debates are also engulfing the facilities’ core economic proposition for communities. Local leaders are questioning the credibility of Big Tech’s promises of spillover effects that will produce high-quality economic development beyond near-term construction. What’s more, skeptics are wondering about the veracity of the developers’ assurances of a thrilling new era of “reindustrialization” across Main Street America.

    These debates raise fundamental questions: To what extent are the data center builders’ promises of economic development more than hype? And if these promises are more than hype, how can communities make sure these pledges translate into a durable local economic advantage?

    Continue reading here.

  • AMCC: 10 Questions SMEs Should Ask About Data Centers

    During a February 6, 2026 AMCC call, Dr. Deborah Stine provided an excellent discussion on data centers and advanced manufacturing.

    To view the presentation recording (her presentation begins at the 11:30 mark) and slides, click here.

    The American Manufacturing Communities Collaborative (AMCC) is designed to create and strengthen an alliance of communities with regional economic development initiatives underway dedicated to achieving sustainability through economic growth, improved environmental performance, and inclusive well-paid job creation supporting initiatives to create new opportunities and equity within a revitalized American manufacturing base.

    Read more here.