Engineering, procurement, and construction (EPC) contracting is seeing a shift due to equipment lead times, workforce shortages, and data center timelines. Disruptions include geopolitical tension affecting supply chains, competition between traditional energy and renewables, and a surge in electricity demand from data centers. Utility earnings reports indicate unprecedented demand growth and rethinking of project timelines.
Entergy and American Electric Power (AEP) are expanding their infrastructure to meet growing data center demand. Entergy has secured 19 GW of generation components and AEP projects 65 GW system peak demand by 2030, with $72 billion in capital investment. Dominion Energy and NextEra Energy are also increasing their capacity to meet data center demand, with projects including wind installations and storage filings.
Southern Co. is focusing on contract-based generation and forward procurement, signing large-load agreements totaling more than 2 GW. Georgia Power and Alabama Power are supporting new capacity requests, including gas units, battery storage sites, and new gas and storage builds. This shift reflects a significant acceleration in load outlook and potential demand growth through the mid-2030s. CFO David Poroch ensures cost recovery as load ramps with new data center contracts including minimum-bill provisions. Operational profile strain noted at Experience POWER conference, with peak energy use shifting to winter days. Urgency reshapes EPC contracting, straining utilities to meet data center demand. Equipment procurement remains a challenge as demand surges.
GE Vernova CEO Scott Strazik details the shift towards securing long-lead equipment early with slot-reservation agreements. Orders for gas turbines surge, highlighting the competition for manufacturing capacity. Transformer shortages prompt increased sales to data centers. Demand for T&D equipment spikes due to data center expansion and grid modernization efforts.
Wood Mackenzie analysis reports surge in demand for T&D equipment, leading to transformer shortages. Power transformer lead times remain high, straining domestic production capacity. Medium-voltage breakers emerge as component bottlenecks. EPC firms evolve to address shifts in the energy industry, collapsing traditional boundaries between strategic planning and project execution. Utilities are facing 18-month data center interconnection timelines but lack internal capacity for feasibility studies, equipment selection, and procurement strategy. Consulting firms like Burns & McDonnell offer end-to-end solutions to help manage assets and plan for a sustainable energy future. The gas market has shifted to prioritize technology flexibility, with load growth surpassing emissions reduction as utilities’ main focus, leading to more diversified energy portfolios. Bechtel is leading the way with projects like the Natrium Demonstration Project in Kemmerer, Wyoming, showcasing the expanding role of EPCs in advanced nuclear technology projects. Other firms like Kiewit are securing contracts for small modular reactors and gas generation projects, positioning themselves for success in the evolving energy landscape. However, not all EPCs are taking on construction risk due to equipment scarcity and timeline compression, with some firms like KBR and AECOM shifting focus towards advisory and professional services models to adapt to changing market conditions. Jacobs CEO Bob Pragada announced at the May 2025 Bernstein Strategic Decisions Conference that 70% of the firm’s work is now cost-reimbursable. WSP’s $1.78 billion acquisition of POWER Engineers in 2024 reflects a shift towards advisory services rather than fixed-price construction. Contractors are moving away from lump-sum contracts due to high premiums and past misalignments on successful outcomes.
Workforce limitations are becoming a significant bottleneck in project execution in 2025. A Kearney study released in August 2025 found that the global power engineering workforce must grow by 100% to 200% by 2030 to meet demand. Bechtel projects a shortfall of 45,000 to 50,000 craft workers on the U.S. Gulf Coast alone, prompting proactive EPCs like Burns & McDonnell to launch workforce development initiatives. Burns & McDonnell opened a Construction Academy in Pearland, Texas, offering knowledge assessments and hands-on training to address labor constraints and develop talent at scale. Bechtel is collaborating with Gdansk University of Technology in Poland to train the next generation of nuclear engineers. Bechtel and Kiewit are focusing on workforce development in Texas Gulf Coast communities to address the shortage of tradespeople in the construction industry. Companies like Burns & McDonnell are also investing in training programs and technology to strengthen construction capabilities and drive integration across project delivery phases. The industry is evolving to support a new generation of skilled professionals.
Read more at Yahoo Finance: How Disruptions Are Flipping EPC Contracting