“May you have a strong foundation when the winds of changes shift”…Bob Dylan
Unless you’ve been comatose for the past several months, you have probably become aware of some significant shifting in the economic winds: a breeze that bodes well for the construction industry in general, but for specific sectors.
While pursuing a number of recent articles pertaining to the building trades, I began to recognize a relevant trend in a certain direction. Of course I am alluding to the phenomenal shift in energy policy, with a serious emphasis away from renewables over to natural gas and nuclear power.
There are several contributing factors to this movement, all of which add up to additional opportunities in the construction sector. Perhaps the most substantive of all issues lies with demand. As we have noted in previous columns, electrical generation levels (which affect the greatest percentage of demand) are currently inadequate—woefully so when compared with projected demand due to the advent of AI and its attendant impacts.
Combine this current shortfall with an alarming deterioration of the power grid’s infrastructure (recent research indicates that 30% of transmission lines and 45% of distribution equipment are near or beyond expected service life), then the demand picture becomes grim indeed. Clearly, the status quo is unsustainable.
Grid growth must match the demands of AI innovation. Planned supply falls short of need. But necessity is the mother of invention, as they say, and nothing less critical than national security depends on the reliance of current and future energy use. Something’s got to give, and on the double.
Enter the obvious solution: build new power plants (including infrastructure) to increase supply and/or to retire and replace obsolete facilities. Now, the newly formed administration has revamped current federal energy policy, de-emphasizing (not eliminating!) renewable sectors, re-emphasizing fossil fuels (coal and oil), but especially focusing on increasing natural gas and nuclear sources.
In fact, the chair of the Federal Energy Regulatory Commission recently stated that “New and expanded natural gas infrastructure is essential to help America avoid a grid reliability crisis.” Similarly, the secretary of energy has been mandated by Executive Order to quadruple U.S. nuclear power capacity by the year 2050. These policy shifts are not only the consequence of the demand urgencies but are supportive evidence of a more common-sense approach to the use and distribution of energy resources.
Emphasis on Natural Gas Expansion
Better for the environment. Compared with coal and oil, which are still the anchor resources for national energy usage, natural gas burns cleaner, emitting less carbon dioxide.
Stability. Reliability is a critical issue regarding data center usage and other AI related requirements. Natural gas provides a stable and reliable resource for peak demands in power generation.
Cost efficiency. Natural gas can be more cost effective than fossil fuels and/or renewables.
Expansion flexibility. As data center expansion becomes more critical, scalability of plant growth becomes more equally urgent. Natural gas utilities can adapt more readily to expansion than competing services.
Emphasis on Nuclear Expansion
Long term. Offers a near-permanent solution to energy demand. Eliminates fuel consumption.
Zero carbon dioxide. Completely eliminates greenhouse gases.
Conclusion
One conspicuous aspect of this recent shift in energy policy lies with a perceived retreat from the development of renewable sources. Granted, the sense of urgency seems to have abated somewhat. But solar, wind, and hydroelectric power continue as vital contributors to a total approach to power generation, as reflected in overall policy.
While we concede that many arguments to these proposed strategies, both pro and con, can be legitimately raised, we prefer to conclude by accentuating the positive aspects that expansion and acceleration of building added power plants—specifically natural gas and nuclear power plants—can bring.
First, a shift is synonymous with change and change with renewal. A new direction in energy policy indicates new opportunity augmented with added growth. Second, we recognize that old strategies become stagnant with time, and construction activity thrives on constant innovation. Lastly, we identify secondary stimulation chain reaction of activity positively impacting one with another, as is the case with development of infrastructure because of primary projects.
One can easily see how building more power plants impacts estimators, i.e., the cost effects of everything. We will recognize the changes in security, safety, special tools and fasteners, material costs, special programs (read: increased BIM enhancement), new terminology, next generation technologies, the list goes on forever.
All of this adds up to the fact that a new opportunity is knocking at the door of contractors and managers in the form of a change in energy policy. We wall/ceiling contractors and estimators hope the shift is welcomed with open arms.
