Utility System Construction
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 17,700 utility system construction firms in the US are specialty contractors that develop buildings, structures, and distribution networks associated with water, sewer, petroleum, gas, power, and communication systems. Firms provide new construction, reconstruction, rehabilitation, and repair services. Companies may specialize in a utility sector or offer services across multiple utilities.
Difficult Work Site Conditions
Utility construction projects can involve complex site conditions, including difficult to reach terrain and underground locations.
Seasonality and the Weather
Seasonal demand for utility system construction services creates uneven cash flow.
Industry size & Structure
The average utility construction firm employs 36 workers and generates about $9 million in annual revenue; the average water and sewer line construction firm employs 15 workers and generates $4 million annually; the average oil and gas pipeline construction firm employs 103 workers and generates about $27 million annually; and the average power and communication line construction firm employs 44 workers and generates about $12-13 million annually.
- The utility system construction industry consists of about 17,700 companies that employ 579,000 workers and generate about $158 billion annually.
- The oil and gas pipeline segment and the power and communications segment are concentrated at the top with the 50 largest firms representing 64% and 59% of the segment's total revenue, respectively. The water and sewer segment is more fragmented with the 50 largest firms representing just 20% of the segment's total revenue.
- The utility system construction industry includes several large players with national to near-national scope, regional firms, and many small independent firms that often serve as subcontractors to larger firms and operate within a limited geographical market.
- Large companies include MasTec, Dycom Industries, and Granite Construction. Some large firms have international operations.
Industry Forecast
Utility System Construction Industry Growth
Recent Developments
Jan 17, 2025 - Biden Signs Executive Order to Support AI Infrastructure
- In mid-January, President Biden signed an executive order to help speed up data center development to power AI, as well as the clean-energy electricity generation needed to power the data centers, according to Utility Dive. The order directs the US departments of Defense and Energy to locate lease sites on federal lands for private-sector development of gigawatt-scale data centers and clean electricity generation plants to power them. After the site selection process is complete, the DOD and the DOE will open competitive bidding for leases for private construction, operation, and ownership of AI infrastructure. Project owners will be required to use clean energy for all their electricity needs. The order also calls for expedited project permitting to speed development.
- In December, Commonwealth Fusion Systems (CFS) announced it would build the world’s first commercial fusion energy plant in Chesterfield County in Virginia, according to Utility Dive. CFS was spun out of Massachusetts Institute of Technology in 2018. The firm has received $16.5 million in US Department of Energy grants and has raised more than $2 billion in capital. CFS will receive non-financial cooperation from Dominion Energy Virginia – the current owner of the site for the proposed fusion plant – including technical and development support and leasing rights. There is not yet a timeline for the fusion plant’s completion, but CFS said it would eventually generate enough electricity to power about 150,000 homes.
- In October, the US Department of Energy (DoE) awarded $3.5 billion in funding to support expanded electricity transmission infrastructure and climate resistance grid projects. Nearly $2 billion will go for grid-shoring projects in 42 states and the District of Columbia, including six in Florida for damage caused by hurricanes Helene and Milton and 950 miles of new and higher-capacity transmission lines. The DoE is also providing $1.5 billion in funding to add 1,000 miles of new transmission infrastructure and 7,000 megawatts of new electricity capacity in Louisiana, Maine, Mississippi, New Mexico, Oklahoma, and Texas.
- The EPA issued a final rule in October 2024 requiring the identification and replacement of all US lead pipes within a decade. The Infrastructure Investment and Jobs Act includes $15 billion for lead pipe replacement, and in 2021, the Biden administration set aside $11.7 billion in funding through the Drinking Water State Revolving Funds (DWSRF) program. Another $2.6 billion in DWSRF funding was announced in October. About nine million homes receive drinking water from lead pipes. The American Water Works Association estimates the actual compliance costs for meeting the lead pipe removal timeline could exceed $900 billion.
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