It’s tempting to attribute the recent slowdown in electricity demand growth entirely to the Great Recession, but consumption growth rates have been declining for at least 50 years. The new normal...
The Big Build will test the industry’s access to Wall Street.
reliability of power increases in states where the regulators prove most consistent in their approach to pricing.
While one key question concerns sources of financing, the other big issue is finding enough people to deliver the program. It will take a huge, skilled workforce to build the new infrastructure we need now, and operate and maintain it into the future. While there are plenty of options for raising money, the answer to the people issue is more complex.
A pervasive talent shortage has been growing quietly. It began with the need to control operating costs, and was exacerbated by the fact that the last major buildout of the U.S. utility system ended in the 1980s. This skills shortage is now a serious threat. For example, around half of the electricity utility workforce could become eligible for retirement within a decade 8—and businesses are not even attracting enough people to replace these retirees, let alone account for expected growth. The shortage is appearing across the board: from nuclear engineers to experienced plant operators, from geophysicists and geologists to construction project managers, from senior management teams to field workers.
We may even have reached the point where future energy supplies—including the type of infrastructure we build—could be dictated by the sheer unavailability of skills. If, for example, there is a 15-year time lag to get sufficient numbers of people through the necessary nuclear engineering training, utilities might decide not to build nuclear, but meet demand other ways.
The obvious result is that attracting talent will become increasingly costly and competitive, and that training expenses necessarily will rise. The more proactive companies are tackling the problem at the root level, for example developing relationships with high schools to boost interest in the careers they can offer and to attract people into industry training programs. Power and utility companies also are reaching out to energy service companies and outsourcers for a greater proportion of their generation and T&D construction and maintenance, and this trend is widely expected to accelerate as the workforce challenges grow more severe.
Another influential factor is the question of whether critical infrastructure components actually are available to buy. As is evident from International Energy Agency (IEA) forecasts, the United States is competing with the rest of the world for the same resources.
Heavy worldwide demand is putting massive pressure on the whole supply chain, resulting in higher prices for raw materials like uranium, and long waiting lists for manufactured components like turbines. At present, for example, there is only one heavy metal forger in the world (located in Japan) that can build the necessary steel pressure vessels for nuclear plants. How will the suppliers cope with demand from the United States, let alone the rest of the world? Of course, prices will rise.
Fueled by massive demand from developing economies such as China and India, prices for vital commodities like steel and cement also have risen. It’s the same dynamic that’s driving the price of oil higher. This factor also, inevitably, pushes up the price of infrastructure