The new administration has already had a notable impact on several industries, and infrastructure will be no exception. Within thirty days of taking office, Trump made moves to pursue an expansive update to America’s infrastructure, an initiative which has the benefit of bipartisan support. 

This infrastructure agenda presents a major opportunity in the power, utility and alternative energy sectors, according to Mizuho analyst Jim von Riesemann. A few key points are outlined below.

Trump’s Vision

Trump set the tone for the impending infrastructure overhaul with fifty priority projects across the transportation, water/waste water and electricity sectors. A focus on infrastructure updates has seen a bid/ask between $137 billion to $1 trillion in the first year and the promise of massive job generation.

Trump’s commitment to this plan was reiterated in late February as he urged Congress to approve a $1 trillion infrastructure bill to be “financed through both public and private capital – creating millions of new jobs." 

Industry Impact

One concern surrounding the energy sector under the new administration has been the treatment of alternative energy projects.

"Trump has promised to reduce regulations in regards to climate change impact and more focus on fossil fuel production,” said von Riesemann. However, he notes, “among the priority electricity & transmission projects are a series of proposals developing ‘clean’ infrastructure using wind, hydro and solar generation. This could be, in our view, an indicator that renewable energy still has a life in the Trump administration.”

Among the specific projects expected to be advanced is the Atlantic Coast Pipeline – named priority number 20 – the only oil & gas sector project included. Von Riesemann expects that this will likely prove “very constructive for Dominion, Duke Energy (owner of Piedmont Natural Gas) and Southern Company (owner of AGL Resources) as they continue to work their way through the regulatory process and completion of the pipeline.”

While the project received a draft environmental impact statement (EIS) supporting the pipeline with a final EIS due in June, von Riesemann expects that the Trump Administration will help pave a smoother path towards full approvals. If granted, construction is slated to begin in late 2017.

The water utility sector also stands to gain from the infrastructure push with “significant opportunity for larger water utility companies to engage with the smaller project developers and municipalities in these projects.” With spending proposed of over $100 billion for water & sewer system rehabilitation, “utilities could contribute their resources and regulatory standing to further support these projects in the longer-term construction phases,” says von Riesemann.

For the power, utilities and alternative energy sector, Trump’s directive, and the bipartisan support it currently enjoys, could prove a boon. Still, barriers remain to implementation as Trump defines further details, particularly when it comes to financing.

Great Expectations

Among the criticisms of the plan are a lack of adequate workforce and training to quickly ramp up construction efforts. This is a barrier that Obama also encountered during his tenure, Fortune notes.

On the other hand, Bloomberg writes, there is also the sense that Trump must act with urgency to effectively implement his plans, while he has the greatest political capital to do so – heeding another lesson from Obama’s infrastructure stalemate.

While details are still unfolding, it seems safe to say that power, utilities and alternative energy will be paid “great” attention over the next four years.

 

Simon Hylson-Smith
CEO, Paragon
Simon Hylson-Smith is a former financial industry editor and currently CEO of Paragon.