Construction Trend Tuesday (#21)
Power investment: Solar up, wind down, oil nonexistent
Construction Trend Tuesday covers one (hopefully) interesting industry trend in a quick, two minute read. You can access the archive of CTT posts here.
Construction spending on power projects surged 85% between January 2019 and December 2023. Chalk that growth up to expanded demand for electricity(think data centers), massive public funding (ARPA, IRA, etc.), and the fact that these data aren’t adjusted for inflation.
While spending in the category has slid about 6% since reaching its all-time high (mostly due to a decline in public funding), it remains historically elevated due to strong private investment. Let’s look at it by subsegment:
Spending on nonalternative electric projects (nuclear/oil/gas/coal power plants, transmission lines, etc.) has been rising steadily since 2017 and accounts for about half of the total segment.
Alternative energy categories like solar and geothermal are booming, with construction spending up an incredible 2,834% since 2010.
There’s this notion that solar is liberal, or woke, or whatever, but red Texas has increased its solar capacity by more than 1,000% since 2019 and installed about 2x more alternative energy capacity than any other state in 2024.
Wind was looking great right up until the pandemic, but the ensuing increase in borrowing and turbine costs devastated the segment, with spending down about 40% since the 2020 peak.
Investment in oil production-related projects was essentially nonexistent as of the end of 2024 (where this chart ends). For context, we spent about the same amount on shopping malls as we did on oil infrastructure last year.
2025 has been even worse for U.S. oil investment. Tariffs have raised the cost of building an oil rig, while lower oil prices (slowing global growth) have massively disincentivized domestic production. As we discussed in the last Week in Review, rig counts have plunged as a result of these dynamics.
What’s Next
This week is crammed with economic data releases, including the Fed’s favorite measure of inflation, construction spending, and a critically important jobs report. We’ll cover that and a whole lot more in Week in Review, our every-Friday post that covers all the economic news and data in a breezy, five minute read.
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