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 17,500 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 31 workers and generates over $9 million in annual revenue.

    • The average water and sewer line construction firm employs 14 workers and generates $4 million annually.
    • The average oil and gas pipeline construction firm employs 103 workers and generates about $27 million annually.
    • 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 17,500 companies that employ 543,700 workers and generate about $158 billion annually.
    • Water and sewer construction firms account for about 28% of industry revenue and 60% of firms. Oil and gas pipeline construction firms account for about 31% of industry revenue and 11% of firms. Power and communication line construction firms account for 41% of revenue and 29% of firms.
    • 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 Layne. Some large firms have international operations.
                      Industry Forecast
                      Utility System Construction Industry Growth
                      Source: Vertical IQ and Inforum

                      Recent Developments

                      Nov 16, 2022 - Grid-Enhancing Technologies Needed to Bridge Clean Energy Transformation Gap
                      • At the recent WIRES conference in Washington DC, electricity industry panelists suggested transmission planners and regulators should use “grid enhancing technologies” (GETs) to quickly ramp up transmission capacity as the country transitions to clean energy, according to Utility Dive. To meet clean energy goals and support the growing number of electric vehicles and homes, annual US transmission spending will need to triple, according to UK-based electric power and gas firm National Grid. However, because transmission projects can take a decade to build, electric utilities need to optimize their grids with GETs. Examples of GETs include digital substations, power flow technologies, advanced conductors, energy storage, and advanced power flow controllers. WIRES is a trade group consisting of transmission providers and customers, regional grid managers, and equipment and service firms.
                      • On a seasonally adjusted basis, the total value of power project construction put in place decreased by 0.3% in September 2022 compared to August, according to the US Census Bureau. Unadjusted power project construction spending was down 8.1% in September compared to a year earlier and fell 11.4% on a year-to-date basis from the first nine months of 2021. In September, the seasonally adjusted total value of sewage and waste disposal projects put in place fell 1.5% compared to the month before; spending was 16% higher than in September 2021 on an unadjusted basis. Adjusted water supply project spending was down 1.4% in September compared to August, but unadjusted water supply project construction spending increased 26.7% year over year.
                      • Solar installations of 1,877 megawatts (MW) in Q3 2022 were down 23% compared to Q3 2021, according to the American Clean Power Association’s (ACP) latest Clean Power Quarterly Market Report. Solar capacity additions have been slowed by a shortage of solar panels, in large part due to US Customs enforcement, including under the Uyghur Forced Labor Prevention Act. Despite delays and rising costs, the pipeline of new renewable projects is robust. At the end of Q3 2022, solar accounted for 60% of the renewable project pipeline, with 78,181 MW in development. Texas leads the nation with the largest amount of solar capacity in the development pipeline, followed by California and Indiana. While the renewables sector faces some short-term setbacks, the ACP anticipates the Inflation Reduction Act (IRA) will help bring 550 gigawatts of clean energy online by 2030.
                      • In the third quarter of 2022, the wind sector added 356 megawatts (MW) of new land-based generating capacity, down 78% compared to Q3 2021, according to the ACP’s latest Clean Power Quarterly Market Report. The slowdown in the wind sector was due to supply chain-related delays and delays in grid interconnections. Overall, more than 1.1 GW of land-based wind that was planned to come online was delayed. However, most of those projects are projected to be completed before the end of the year. Texas had the strongest land-based wind project pipeline in Q3 2022, with 6,250 MW in development, followed by Wyoming with 3,000 MW. The leading states for offshore wind development include New York (4,362 MW in development), New Jersey (3,758 MW), Massachusetts (3,242 MW), and Virginia (2,587 MW).
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