Utility infrastructure projects face high costs, labor shortages and global competition for resources.
Lori A. Burkhart is a managing editor at Public Utilities Fortnightly.
Global demand for raw materials and physical infrastructure in general is having a negative effect on utility construction projects in North America. Companies that build such infrastructure now are competing with production needs all over the world.
Major uncertainties exist regarding the future of fossil fuels—coal in particular. Global warming fears have resulted in recent cancellations of many proposed coal-fired power plants. At the same time, however, contractors report significant backlogs of unfilled orders. Demand for their services is being driven by increased interest in renewable technologies, a resurgence of nuclear power and natural gas-fired power plants, plus more retrofitting of plants to meet stringent environmental requirements. Other trends include project risk-sharing due to the high costs of construction and persistent and increasing labor shortages.
Such shortages and high costs appear to have an upside, however—most notably, increased physical efficiencies and innovations leading to lower lifetime plant costs. And creative methods of educating and retaining skilled employees, such as ABB’s building of a training facility at a university campus in Mexico, are another direct benefit of the need to get these projects done on time and on budget.