Utility System Construction NAICS 2371

May 18, 2026 - Utility Construction Spending to Notch Steady Growth

• Utility system construction spending is expected to post solid growth in 2026, according to FMI’s second-quarter 2026 North American Engineering and Construction Outlook. Sewage and waste disposal is expected to lead growth at 8%, fueled by Water Infrastructure Finance and Innovation Act (WIFIA) financing, PFAS compliance, and increasing data center and industrial demand. Water supply construction is forecast to rise 5%, supported by population growth, industrial activity, and data center demand, with additional momentum from lead water pipe replacement, water reuse, and resilience investments, despite permitting and funding uncertainties. Power construction is projected to grow 4% in 2026, supported by rising US electricity demand driven by data centers, industrial expansion, and electrification. Major investments in transmission and distribution, renewables, and battery storage will also support power construction spending, but labor and equipment constraints may delay timelines.
• Utility Dive reports that Bechtel and North America’s Building Trades Unions have launched a partnership to modernize nuclear construction apprenticeships as power demand rises. The effort targets both traditional reactors and small modular reactors, aligning training with evolving methods while maintaining strict safety and quality standards. The move comes amid rapid growth in power construction, with utility and gas starts up 59.3% and electric power activity surging more than 350% in March, driven by AI, data centers, and electrification, according to Dodge Construction Network. Bechtel said the initiative supports a steady ramp-up in nuclear development as utilities seek reliable, low-carbon energy.

• The US utility-scale solar industry is undergoing an unprecedented surge in “safe harboring” as developers rush to secure tax incentives tied to the Inflation Reduction Act and the One Big Beautiful Bill Act, according to Solar Quarter. Analysts estimate that 216 to 240 gigawatts of direct current (GWdc) capacity will be preserved before the July 2026 deadline, enough to cover projected installations through the end of the decade. However, stricter IRS rules, foreign entity restrictions, and supply chain constraints are increasing project risk and complexity. Delays tied to transformers, interconnection, and financing may limit final totals. Projects starting after mid-2026 face steep hurdles in meeting the 30% Investment Tax Credit timelines. The shift signals a turning point, as utility-scale solar developers increasingly rely on project economics rather than incentives, favoring larger firms and accelerating industry consolidation.
• Two US offshore wind projects totaling up to 4.4 GW will be canceled after developers agreed with the Interior Department to end leases in exchange for reimbursement tied to equal investments in US liquefied natural gas, oil, and energy infrastructure, according to Utility Dive. The department valued potential reimbursements at $765 million for Bluepoint Wind in New York and $120 million for Golden State Wind in California. Portugal-based EDP, which has stakes in both projects, said payments depend on reinvestment aligned with administration priorities and may occur in 2026. Interior Secretary Doug Burgum criticized prior subsidies, while industry groups and some experts questioned the legality and cost to taxpayers. The deals follow a similar agreement with TotalEnergies and have drawn political and legal scrutiny, though no lawsuits have been filed.