Utility System Construction NAICS 2371

        Utility System Construction

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Industry Summary

The 17,800 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.


Recent Developments

May 16, 2025 - Many Proposed Data Centers Unlikely to be Built
  • Utilities and grid operators are grappling with a flood of speculative interconnection requests for data centers that may never be built, according to Utility Dive. Grid optimization software firm Camus Energy estimates there are between five and 10 times as many interconnection requests as the number of data centers being built. US data center load growth forecasts often diverge widely. A 2024 projection by the RAND Corporation estimated the AI sector would boost power demand by 347 gigawatts (GW) by 2030. In April 2025, Schneider Electric cited other sources that estimate growth will be less than 100 GW. Speculative requests by data center developers make it challenging for grid operators and utilities to plan for future power needs. To reduce the risks of overbuilding, some utilities are introducing standardized large-load interconnection processes, and others are requiring data center developers to shoulder more of the upfront costs.
  • North American construction and engineering spending in the power sector in 2025 is expected to grow by 6% and notch robust annual growth through 2029, according to FMI’s second-quarter 2025 North American Engineering and Construction Outlook. While the Trump administration is emphasizing natural gas and oil production, the ongoing electrification of transportation and manufacturing, as well as voracious demand from data centers, will increase demand from all electricity sources except coal. Technology firms are investing in clean energy microgrids, nuclear energy, and battery storage systems to power their data centers. According to the 2024 US American Society of Civil Engineers’ infrastructure Report Card, 20% - or about $2 trillion – of the US’s total infrastructure needs through 2023 are related to energy. FMI forecasts that energy construction and engineering spending will rise 5% in 2026, 3% in 2027, 4% in 2028, and 6% in 2029.
  • More clean energy-related projects are being paused, downsized, or cancelled due to policy shifts under the Trump administration, according to Manufacturing Dive. In the first quarter of 2025, companies announced $8 billion in project downsizing and cancellations, according to E2, a clean-energy nonprofit that tracks and releases monthly updates on green energy project announcements. In all, 16 projects were cancelled in the first quarter, including solar, wind, and electric vehicle plants. After the passage of the Inflation Reduction Act (IRA) in 2022, the law’s tax credits for clean-energy manufacturing projects and direct funding and loan financing attracted billions in climate-related investments. However, on his first day in office, President Trump froze funding under the IRA pending government review. Trump has been critical of EV tax credits under the IRA, as well as a Biden-era executive order calling for EVs to make up half of US auto sales by 2030. The clean energy sector is also bracing for the impact of tariffs, which would drive up project costs for key inputs, including EV battery and solar cell components.
  • US electricity generation capacity additions in 2025 are expected to be led by solar and battery storage projects, according to the US Energy Information Administration (EIA). The US is projected to add 63 gigawatts (GW) of generating capacity in 2025, led by utility-scale solar with 32.5 GW, followed by battery storage (18.2 GW), wind (7.7 GW), and natural gas (4.4 GW). Additions in Texas (11.6 GW) and California (2.9 GW) will account for nearly half of the solar capacity additions in 2025. Other states that are expected to have significant upticks in solar additions in 2025 include Arizona, Florida, Indiana, Michigan, and New York.

Industry Revenue

Utility System Construction


Industry Structure

Industry size & Structure

The average utility construction firm employs 34 workers and generates about $11.4 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 17,800 companies that employ 602,800 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

                      Industry Forecast
                      Utility System Construction Industry Growth
                      Source: Vertical IQ and Inforum

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