It’s a new year and with it, exciting opportunities here at home, and nationally, for growth in the commercial electrical services market. Here, we provide an energy outlook for 2022.
Commercial Electrical Services Outlook
The infrastructure bill passed by Congress and signed by the President on November 15, 2021 is on everyone’s mind in the construction and energy markets. Among other things, the bill allocates more than $7 billion towards improvements and projects that affect the energy storage sector.
Even businesses not directly involved in the manufacturing of battery supply and storage could benefit from provisions in the bill that set aside $8 billion in manufacturing tax credits for companies that invest in their facilities to either make or recycle energy-related products or to reduce greenhouse emissions.
The bill also allocates over $25 billion to grants and programs that enhance the nation’s electric grid. NECA applauded the bill for its investment in rebuilding and modernizing America’s infrastructure, including its electrical infrastructure.
There are also funds set aside for electric vehicles and charging stations. This positive energy forecast is all good news for Omaha, where Miller Electric has already been involved in installation of green energy features like electrical vehicle charging stations, solar-powered crosswalks and solar panels for buildings and facilities.
Energy Usage Forecast
The U.S. Energy Information Administration (EIA) released its short-term energy outlook, outlining expected electricity production sources for the new year. Highlights include the following:
- 17 gigawatts of new wind capacity came online in 2021; another 6.9 are expected to become available in 2022
- Utility-scale solar capacity rose by 15.7 gigawatts in 2021; an additional 18.2 gigawatts is expected to be added in 2022
- U.S. energy-related CO2 emissions increased by about 7 percent from historically low levels in 2020, and are expected to increase by 1 percent in 2022
Energy produced from coal is expected to fall by about five percent in 2022, after rising by 18 percent in 2021.
Commercial Electrical Contractors Construction Outlook 2022
A sector of primary interest to all of us in the electrical contracting industry is the construction market. A look at the forecast both locally and nationally reveals changes in a positive direction.
Nationally, new builds are expected to increase by six percent in 2022. While that is above 2019 levels, it is down from 2021 activity, which was projected to finish up 12 percent. The main driver of new construction activity in 2021 was residential in nature. When residential construction projects are removed, the increase in new construction starts was up only four percent.
At the start of 2021, the number of general building projects being bid was ahead of early 2020 levels, but was still slightly behind 2019 levels. The construction industry is expected to continue to face challenges in high material prices and supply shortages in the early part of the new year.
These factors could slow new construction starts at the beginning of the 2022. Material delays were affecting 60 percent of small construction business, nationwide, at the end of 2021. Continuing labor shortages are also expected to remain a challenge for construction and commercial electric companies.
Nationally, the warehouse sector is expected to continue growing, as Amazon and other retail giants erect massive distribution centers across America. Other areas that should see growth in the commercial sector include office additions and renovations, data centers and manufacturing facilities.
Construction Outlook for Nebraska
Creighton University’s regional Business Conditions Index indicated health manufacturing growth and pointed to overall healthy growth in the new year. Among other things, it found:
- Manufacturing business activity is at a positive pace
- Regional growth will remain solid, but somewhat slower
- About one-third of firms continue to see difficulties finding and hiring new workers
- Nebraska manufacturing employment expanded by 3.4 percent
The Department of Economics at UNO reported positive news for the Omaha area, including sustained economic recovery from 2020 levels. It found a peak in building permits, a continued rise in net taxable sales, and slow but sustained recovery of airport traffic and lowering unemployment levels.
About half of the sectors surveyed are expected to outperform state-wide projected growth levels. Ultimately, while the Omaha and Council Bluffs metropolitan area is still below pre-Covid-19 levels, continued recovery in the right direction is occurring.
Miller Electric has the Values and People to Prosper
Ultimately, business confidence is up and that spells bright things in the year ahead for Miller Electric and our partners and vendors
Our strong culture, commitment to electrical training and safety, and the values and integrity of our employees will translate into success for our clients and community.
The key to our continued success will be getting each project completed on time, within budget and without error – something we have a 110+ year reputation for delivering.