TOPIC #2
Large Loads and the Speed-to-Power Challenge
Can utilities and constructors secure the materials, equipment, and labor needed to build at speed?
Infrastructure Demand Meets Physical Constraints
As hyperscalers continue to accelerate capex budgets, data center load growth is reshaping utility load forecasts and capacity plans. A recurring question across the industry is whether electric infrastructure can be planned, procured, and built fast enough.
An emerging challenge is that both the data center and electric infrastructure buildout rely on critical inputs that are increasingly scarce, specialized, and difficult to substitute.
This section examines the drivers and chokepoints shaping the industry’s ability to deliver speed to power. Key considerations include hyperscaler investment, commodity availability, electrical equipment availability, generation supply chains, and skilled labor.
Key Takeaways
Data center load growth creates a major capacity opportunity, but project realization remains uncertain as data center forecasts, business models, and AI efficiency continue to evolve.
Constraints now span the full supply chain, making schedules and project costs increasingly dependent on early procurement.
Utilities will need adaptive planning, portfolio-level procurement, and workforce strategies to preserve reliability, affordability, and execution discipline.
Hyperscalers Allocate More Capital to Data Centers
The “Big 4” hyperscalers—Amazon, Google, Meta, and Microsoft— are investing heavily in frontier AI models, agentic systems, and enabling infrastructure needed to advance toward artificial general intelligence (AGI) capabilities. The term AGI refers to AI capabilities that can match or exceed human capabilities.
Surging capex budgets illustrate the intense competition to build and power “AI factories.” The Big 4 hyperscalers have announced more than $700 billion in planned capex for 2026. Multiple Wall Street analysts anticipate the industry will surpass $1 trillion in capex in 2027.
The scale of investment is difficult to comprehend. For comparison, consider the following:
- $208 billion: Estimated capital expenditure of U.S. investor-owned utilities in 2025
- $868 billion: Department of Defense expense on military programs during FY 2025
- $1.1 trillion: Market cap of 37 investor-owned utilities tracked by the Edison Electric Institute on December 31, 2025
AI factories create a near-term load growth opportunity for utilities. However, it remains difficult to determine which projects will overcome mounting market challenges and become a reality. Recent reports suggest that construction has not begun on 60% of data center capacity planned for completion in 2027.
FIGURE 1
"Big 4" Historical and Announced Capex Plans (as of April 30, 2026) ($ Billions)
Note: A means announced. *Figures for 2026 represent Q1 company guidance; Meta’s figure is midpoint of estimated range.
Source: Bloomberg News
FIGURE 2
AI Capex Estimates (2026-2031) ($ Billions)
Source: Goldman Sachs
Supply Chains Start with Commodities
The supply chain required to build data centers and electric infrastructure starts with commodities experiencing supply shortages and higher prices.
For the electric sector, important metals include copper and aluminum. These commodities are essential for conductors, cable, transformers, switchgear, substations, motors, and renewable interconnection equipment.
Copper prices hit a record high on the London Metal Exchange in May 2026. Despite elevated prices, the market faces declining ore grades, rising capital intensity, long development lead times, and smelting and refining concentration risk. As a result, the International Energy Agency forecasts that the copper market could face a supply deficit of 30% by 2035.
While aluminum can reduce copper exposure in some applications, the metal hit a four-year high on the London Metal Exchange in May 2026. Recurring supply deficits, import dependence, energy-intensive smelting, and tariff exposure are likely to sustain price volatility and procurement risk.
FIGURE 3
Copper Supply-Demand Balance and Price (2020-2035) (as of May 2026) (000s of Metric Tons and $/Metric Ton)
Note: LME 3M means London Metal Exchange 3-month forward contract; E means estimate; F means forecast.
Source: S&P Capital IQ Pro
FIGURE 4
Aluminum Supply-Demand Balance and Price (2020-2035) (as of May 2026) (000s of Metric Tons and $/Metric Ton)
Note: LME 3M means London Metal Exchange 3-month forward contract; E means estimate, F means forecast.
Source: S&P Capital IQ Pro
Electrical Equipment Is a Gating Constraint
Since 2019, demand for electric equipment has surged, with increases 35% to 274%, depending on equipment type. In 2025, there were supply deficits for transformers, switchgear, breakers, substation equipment, and cable.
Electric equipment lead times are now critical to project schedules, with transformers being the longest lead time item. In Q2 2025, the lead time on generation step-up transformers averaged 143 weeks, and power transformers averaged 128 weeks.
Wood Mackenzie reports that the ongoing market shortages are pushing prices higher across electric equipment. Transformer prices have risen by roughly 80% over the last five years. In addition, tariff exposure could add 1% to 20% in equipment costs, depending on type and sourcing.
Manufacturers are responding by increasing production capacity. For example, Siemens Energy announced plans to spend $1 billion to boost its manufacturing of grid and power-generation equipment in the United States. Wood Mackenzie notes nearly $1.8 billion in investments have been announced for transformer production targeting the North American market.
FIGURE 5
Electric Equipment Market Deficit (2025)
Note: Market deficit represents how much higher annual demand is than the available supply, including the order backlog due to long lead times.
Sources: Wood Mackenzie
FIGURE 6
Electric Equipment Lead Times (Q2 2025)
Source: Wood Mackenzie
Natural Gas Turbine Orders Outstrip Production
Bloomberg estimates more than $400 billion of planned natural gas-fired power plants are in jeopardy of delay or cancellation because of lack of manufacturing capacity.
Manufacturing shortfalls are driving higher costs and longer lead times for combined-cycle gas turbines (CCGT):
- Installed cost jumped from ~$800/kW in 2021 to ~$2,600/kW in 2025.
- Lead times for a new CCGT can exceed five years.
Three companies dominate the global gas turbine manufacturing market (respective market shares noted in parentheses):
- GE Vernova (25%)
- Siemens Energy (24%)
- Mitsubishi Heavy Industries (22%)
When combined with smaller competitors, the global manufacturing capacity for natural gas turbines was 72 GW in 2025. Manufacturing capacity is expected to increase to 97 GW in 2028 as original equipment manufacturers expand production.
This demand is in sharp contrast to 2017 and 2018, in which the gas turbine market was impacted by the significant shift to renewable resources and OEMs’ need to improve cost structure.
However, supply chain constraints present meaningful execution risk, particularly in specialized materials and component manufacturing. For example, there are limited supplies of high-temperature alloys used in turbines, and turbine blade production is limited to two major players (i.e., PPC/Precision Castparts and Howmet Aerospace).
FIGURE 7
Historical and Forecasted Global Gas Turbine Orders and Production Capacity (2001-2030)
Source: Rystad Energy; Bloomberg; ScottMadden analysis
Skilled Labor Is a Scarce Resource
The availability of skilled labor remains a challenge and bottleneck for data center and electric infrastructure development.
The Associated General Contractors of America conducts an annual survey of commercial construction firms to gather insights into expectations for the coming year. Key findings from their 2026 survey include:
- Construction of data centers, power facilities, and healthcare projects will drive private sector construction in 2026.
- Contractors identified insufficient workers or subcontractors, rising direct labor costs, worker quality, and material costs as top concerns after recession risk.
- More than four out of five contractors with openings report difficulty filling hourly craft roles, and a majority expect hiring craft workers to remain difficult or become harder.
Electrical and mechanical trades are expected to remain in high demand. The U.S. Bureau of Labor Statistics projects nearly 10% employment growth for electricians and 7% growth for electrical power-line installers and repairers from 2024 to 2034. Utilities may face additional gaps in technical and supervisory fields to support major construction efforts such as project managers, engineers, and permitting professionals.
FIGURE 8
Top Concerns Among General Contractors (% of Positive Survey Responses) (Jan. 2026)
Source: Associated General Contractors of America, 2026 Construction Outlook, National Survey Results
FIGURE 9
Skilled Labor Employment Outlook (2024-2034)
Source: U.S. Bureau of Labor Statistics
Key Considerations for Utilities
Utilities must rapidly expand generation capacity while contending with uncertainty in load forecasts, long lead times for critical equipment, and tighter labor availability.
The current market requires utilities to explore and develop new approaches to capital planning and execution. In particular, utilities should consider the following actions:
- Ensure timely data collection and analysis: Develop and track key metrics quarterly. Key metrics should include project realization, energization date, load realization, load ramping, and load factor or load shape.
- Build agility and flexibility into planning and execution: Monitor signposts and adjust operations to ensure optimal outcomes in a changing environment. Key signposts include data center forecasts, AI model adoption, and technology innovation.
- Expand access to skilled labor and improve workforce productivity: Develop an integrated approach, leveraging enhanced training, digital augmentation, and strategic partnerships.
- Transition from project-driven to portfolio procurement: Consider a multipronged approach focused on equipment standardization, strategic partnerships (e.g., multi-year framework agreements, pooled inventory management, etc.), and strategic stockpiles.
Implementing these actions will help utilities manage uncertainty while ensuring reliability, managing customer affordability, and maintaining execution discipline.
FIGURE 10
Key Signposts to Monitor
Implications
Utilities are entering a capacity race to deliver speed to power. The utilities best positioned to succeed will be those able to distinguish firm load commitments from speculative interconnection requests while securing scarce inputs earlier than traditional planning cycles allow.
Regulators and customers will expect utilities to balance speed with prudence. Transparent load validation, flexible procurement, and workforce development initiatives will be critical to maintaining reliability and affordability while avoiding stranded investment.
Electric utilities may benefit from shifting from project-by-project execution to portfolio management. In addition, standardized specifications, framework agreements, pooled inventories, advance commitments, and strategic supplier partnerships (including partnerships with engineering, procurement, and construction firms) can improve access to constrained equipment and reduce exposure to price volatility.
CONTACT OUR EXPERTS
On Large Loads and the Speed-to-Power Challenge
Chris Sturgill
PARTNER
csturgill@scottmadden.com 919.781.4191
Gerardo Morales
PARTNER
gjmorales@scottmadden.com 404.814.0020
Tony Gonzalez
PARTNER
tgonzalez@scottmadden.com 404.814.0020
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