U.S. Electrical Contractors Market - Industry Outlook & Forecast 2024-2029

MARKET INSIGHTS

The U.S. electrical contractors market size was valued at USD 237.59 billion in 2023 and is expected to reach USD 256.65 billion by 2029, growing at a CAGR of 1.29% during the forecast period. The rise in 5G technology, demand from data centers, shift toward clean energy, and demand for EV charging infrastructure contribute to the market's growth. Also, the U.S. electrical contractors market in the South U.S. is expected to experience significant growth. The south U.S. region witnessed a high demand for electrical contractors, with many firms investing in colocation. Colocation is usually a rental space for customers to store their necessary hardware and servers for daily operations. Electrical contractors design and build these spaces. Thus, electrical contractors are vital in the U.S. construction industry and the broader economy. They are responsible for employing a substantial workforce and generating significant annual revenues. These contractors deliver crucial services that ensure the operation of modern society, including the design, installation, and maintenance of electrical systems powering homes, businesses, and communities. With the ongoing expansion of the U.S. economy and the rising demand for electrical services, the U.S. electrical contractors market is projected to grow in the coming years.

Electrical contractors are individuals or companies that provide electrical services. They are responsible for designing, installing, maintaining, and repairing electrical systems and components in residential, commercial, and industrial settings. Electrical contractors mainly focus on electrical, telecommunications, fire & safety, electrical control, highway, and other sectors. They typically include a team of skilled workers, including electricians, with the knowledge and experience necessary to safely and effectively complete electrical projects. The U.S. electrical contractors market offers a wide range of services, including installing electrical systems in new construction projects, retrofitting and renovating existing structures, electrical maintenance and repair services, and emergency electrical services. They may also specialize in various electrical systems, such as fire and security, lighting, renewable energy, etc. Furthermore, electrical contractors generally ensure that electrical systems and components are installed, maintained, and repaired safely and efficiently. They provide essential services that support modern society's functioning and help power homes, businesses, and communities.

MARKET TRENDS & OPPORTUNITIES

Demand From Data Centers

Electrical contractors play a crucial role in ensuring the reliability and efficiency of facilities, in addition to powering data centers. This includes designing and implementing backup power systems, such as generators and UPSs, to ensure that data centers can continue operating during a power outage. They also design and implement energy-efficient systems, such as power management systems, to reduce data centers’ energy consumption. DC Blox has adopted 72 acres of land in Conyers, Georgia, to create a new hyperscale-ready data center campus. At full capacity, the campus is designed to accommodate 750,000 square feet of space and is supported by a total power commitment of 216 MW from Georgia Power. Some electrical contractors expand their service portfolio by providing services to data centers. For instance, Cache Valley Electric is a known and leading critical data center electrical contractor. The company specializes in complex data center construction and maintenance to deliver electrical construction and communication solutions that help make online data secure and accessible. Overall, the U.S. electrical contractors market is critical to the data center industry. They provide the necessary expertise and skills to design and maintain electrical systems that power these facilities and ensure their reliability, efficiency, and security.

Demand for Electric Vehicle Charging Infrastructure

The dynamics of the U.S. automotive industry changed over the years. U.S. consumer preferences have changed from internal combustion engine (ICE) vehicles to electric vehicles (EVs) or green vehicles. This is primarily due to the rise in fuel cost, pollution, and overall decline in Electric Vehicles. For instance, the U.S. is the second-highest carbon emitter after China globally. In addition, federal and state governments implement various policies to control the harmful emissions from vehicles, driving the shift from ICE vehicles to EVs. Furthermore, 15 states of the U.S. and the District of Colombia plan to convert 30% and 100% of commercial heavy-duty vehicles (HDVs) to zero-emission vehicles (ZEVs) by 2030 and 2050, respectively. During the first quarter of 2024, sales of EVs reached approximately 350,000 units, representing an increase of nearly 15% compared to the same period the previous year. Overall, in 2024, electric car sales in the U.S. are expected to increase by 20% compared to 2023, amounting to nearly half a million additional sales relative to 2023. However, despite a challenging end to 2023 for electric cars in the U.S., sales are projected to remain strong in 2024. Electrical contractors are mainly licensed professionals to perform electrical work. Therefore, electrical contractors usually hire professional electricians to install EV charging, apply for permits, and meet obligations mainly related to conducting electrical work, including safety requirements. Therefore, the rise in the demand for EV charging infrastructure is majorly driven by a combination of factors, mainly an increase in the number of EVs on the road, government incentives, environmental concerns, consumer convenience, and business opportunities. Thus, the demand will continue to rise as more people adopt EVs as their primary mode of transportation. Also, electrical contractors are mainly licensed professionals to perform electrical work. Therefore, they usually hire professional electricians to install EV charging, apply for permits, and meet obligations mainly related to conducting electrical work, including safety requirements.

INDUSTRY RESTRAINTS

Intense Competition

The U.S. electrical contractors market is experiencing heightened competition due to various factors, making it challenging for companies to maintain and grow their market positions. The rapid pace of technological innovation is a significant driver of competition in the electrical contracting industry. The transition to renewable energy sources, such as solar and wind power, requires contractors to continuously update their skills and expertise. For example, companies like Tesla and Sunrun dominate the solar installation market due to their advanced technology and extensive experience, putting pressure on traditional electrical contractors to keep up or risk being left behind. The industry faces a significant labor shortage, with a growing demand for skilled electricians outpacing the supply. According to the National Electrical Contractors Association (NECA), the shortage is driven by the retirement of experienced electricians and a lack of new entrants into the field. This shortage creates intense competition for skilled labor, forcing companies to offer higher wages and better benefits to attract and retain workers. Smaller firms often struggle to compete with larger companies like Quanta Services, which can afford to provide more attractive compensation packages. Thus, electrical contractors are adopting various strategies to enhance their competitive position. Firms invest in advanced training programs to equip their workforce with the latest skills and certifications. For instance, Rosendin Electric offers extensive training and apprenticeship programs to ensure their employees are proficient in the latest technologies and installation techniques.

SEGMENTATION INSIGHTS

INSIGHT BY SERVICE

The U.S. electrical contractors market by services is segmented into electrical, telecommunication, fire & safety, electrical control, highway, and others. In 2023, the electrical service segment dominated the U.S. market share. A rise in EV charging infrastructure is expected to boost the market during the forecast period. In addition, increased construction and renovation activities in residential and commercial spaces increase the demand for electrical contractors in the market. Moreover, the demand for electricity from the transportation industry is also expected to boost the demand for electrical contractor services. Huge construction networks of highways, railroads, processing plants, & others support the delivery of resources to generate services depending on electrical power and electricity. Hence, contractors play a major role in the processing and planning of electricity generation.

INSIGHT BY APPLICATION

The new construction application held the most significant share of the U.S. electrical contractors market in 2023. The surge in construction activities, rapid infrastructural development, and government initiatives to construct new buildings will propel the demand for electrical contractor services during the forecast period. Moreover, the construction of new non-residential spaces, including healthcare, offices, industrial, commercial, and transportation, also increased after the pandemic period. This drives the demand for services from electrical contractors, mainly for installation, wiring, and other things. Furthermore, the demand for renovation or maintenance from the residential sector is expected to be a major growth driver for the U.S. electrical contractors market.

INSIGHT BY END-USE

The U.S. electrical contractors market by end-use is segmented into outside, inside (residential, commercial, and industrial), and integrated building systems. In 2023, the outside segment dominated the market, accounting for an incremental growth of over USD 9 billion. The outside electrical contractors mainly manage systems outside the building, including line workers who provide electrical and telecommunication services through transmission and distribution lines. Some major vendors who provide outside or line services include Quanta Services, Rosendin Electric, PLH Group, Hot Line Construction, MasTec, and Power Line Contractors. Further, inside electrical contractors mainly manage electrical systems within or inside buildings, including light fixtures and electrical outlets, which are integral to building interiors. Also, the inside segment is sub-segmented into residential, commercial, and industrial. Integrated building contractors usually manage the electrical components of integrated systems, mainly climate control, access, lighting, networks, and others.

GEOGRAPHICAL ANALYSIS

The U.S. electrical contractors market is poised for substantial growth, driven by several key economic indicators. In 2023, South U.S. dominated the U.S. electrical contractors market, accounting for over 37% share by revenue. The U.S. population is largely tech-savvy and well aware of the benefits of modern technologies and smart services in terms of convenience and aesthetics. Consequently, the adoption rate of contractor services is high. Various sectors, including residential and commercial construction and institutional projects, drive the demand for electrical contractors. The electrical contracting market stands to gain significantly from a strong economy, a robust labor market, and moderate inflation. With the expansion of construction activities across residential, commercial, and industrial sectors, electrical contractors are presented with ample opportunities for growth and innovation. By staying informed about market trends and harnessing technological advancements, contractors can effectively navigate potential challenges and position themselves for success in a dynamic business landscape.

COMPETITIVE LANDSCAPE

The U.S. electrical contractors market is highly fragmented, with several vendors operating. Quanta Services, MYR Group, ArchKey Solutions, EMCOR Group, MasTec, and more have a sizeable local presence and major U.S. electrical contractors market vendors. The industry witnesses a sudden increase in electrical contractors. Several companies specialize in a limited number of services or cater only to one end-user segment. In addition, many vendors prefer skilled employees, mainly those with an electrical background. Thus, most employees need significant training, which further increases entry barriers.

In the U.S. electrical contractors industry, vendors differentiate themselves based on their range of service offerings, brand reputation, ability to customize solutions, pricing, skilled workforce, and technological capabilities. Many vendors provide comprehensive assistance portals and management services, collaborating with other entities in the electrical sector, such as those involved in transmission, distribution, substation, and Building Information Modeling (BIM) to offer a holistic corporate assistance program. Additionally, vendors frequently partner with technology companies to develop and enhance these assistance programs, ensuring they stay competitive and responsive to market demands.