Will We Have Enough Electricians?

The Real Estate Espresso Podcast

Will We Have Enough Electricians?

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Will We Have Enough Electricians?

Welcome to the Real Estate Espresso Podcast, your morning shot of what’s new in the world of real estate investing. I’m your host, Victor Menasce. On today’s show we’re talking about the impact of data center infrastructure on the cost of new construction for single-family homes and apartments.

Data centers are power-hungry beasts, and building them is going to require a lot of electricians. The concern is that the U.S. does not have enough electricians now. Many of those electricians are nearing retirement, and the number of new entrants into the trade are not replenishing those who are exiting.

There are so many electricians required for data centers that there may not be enough for the scale of work required across all sectors. The net result could be a massive increase in the cost of building housing because of the labor being siphoned off to build these data centers.

That’s the theory. So on today’s show we’re going to analyze whether that hypothesis is indeed true and, if we really do have a shortage of electricians, what do we do about it? What needs to change in order to build homes in a reasonable timeframe without facing massive increases in cost?

Let’s start by examining how much demand is being added to the network. We’ll try and calculate how many electricians will be pulled out of the market just to service the data center industry. As of mid-~~2025~~📝2024 the North American construction pipeline, including those projects that are currently under construction, is pretty significant. One report suggests an 8 gigawatt construction pipeline that is currently 73% preleased, indicating a substantial capacity is planned to come online within the next couple of years, most likely ~~now~~📝between now and ~~2007~~📝2027.

Some estimates that I’ve seen imply another 8 gigawatts worth of construction is planned for the time period between 2027 and 2030, for a total of 16 gigawatts worth of new construction between 2025 and 2030. Now, I’ve seen numbers that are well in excess of that. I’ve heard even a hundred gigawatts worth of new capacity being added. That seems a little bit fantastic to me. That’s almost a ten percent increase in the total electric consumption for the entire continent of North America.

Now, if you’re not in the business, you might be wondering, how much is a gigawatt and why do we care? To put this in perspective, a gigawatt is enough power to power about eight hundred and fifty thousand homes. So we’re talking about adding the equivalent of six point eight million homes worth of demand to the network.

Data centers are huge buildings. They’re filled with equipment, servers, and with air conditioning to cool down the servers. The power requirement is roughly divided between providing power for the servers themselves and then the air conditioning to get the heat out of the servers so they don’t overheat.

It’s not enough to know how many hours are gonna be required to build a data center, we need to know how quickly these huge buildings are going to be built. The faster the construction, the more people are gonna be required to actually build them. I’m not going to take you through all of the math used to arrive at these numbers. We believe it’s going to take about seven and a half million man-hours to do the electrical work for one gigawatt worth of data center.

Now we’re talking ~~a~~📝about eight times that amount over a two-year period. So if each electrician works 150 hours a month, they’re gonna do about 1,700 hours a year when you take vacations and inefficiencies into account. That means that each gigawatt worth of data center construction would need a labor force of about 2,000 electricians working full-time for two years.

The additional demand on the labor force for eight gigawatts worth of data center construction would be about 16,000 electricians. Now, that number is highly sensitive to a few factors. Some states and certain union regulations stipulate a ratio of master electricians to journeymen and apprentices. If the mix required by the project doesn’t match the state requirements, there’s gonna be a loss of efficiency, which will require even more labor.

Now, the U.S. has about 700,000 electricians nationwide. As an overall percentage, 16,000 electricians doesn’t sound like that much. It doesn’t sound like it’s going to have such a big impact. But of course, electricians are not all created equal. The large data centers will have massive power feeds coming into them. They will have their own electrical substations. They’ll have their own generation nearby in some cases.

The very specialized electricians who know how to work with extremely high voltages are few in number. They make up ~~of~~📝about 127,000 out of the total, and they currently work for the electric utilities. These folks are already busy. They don’t need extra work. They’re often working in crisis situations to repair outages that are the result of storm damage. These people will be needed in large numbers for the data centers.

Now, we’re experiencing problems now with the electric utilities being extremely slow to provision power to new construction projects. We currently have a construction project that’s been waiting for power for months. It has not received power in over 14 months. We are not building in a greenfield area; this is already a developed area where there is power coming up to the property line.

Now, when there are shortages of people, timelines get extended and costs increase, as owners of each project bid up the price of the labor to work on their project instead of the next one. What I’m talking about is not some future issue. This is starting to hit construction projects now. The only reason you might not be feeling it is because there is a downturn in residential construction.

If you want to build efficiently in a manner where you don’t suffer labor shortages, then you need to rethink how your buildings are being built. If you can build your buildings in modules in a factory environment, you might not need as many licensed trades. That’s true for electricians, plumbers, mechanical, and so on.

You will certainly need licensed trades at some point to hook things up, but factory environments could use much lower-cost labor in the assembly process. This fact is also true, by the way, for the data centers. If you can build portions of the data center in modules in a factory environment, and then transport those modules to the data center itself, you have the opportunity to save a lot of labor.

The construction industry has been slow to evolve as a whole, but if you embrace the most advanced building methods you might save a lot in both time and money.

As you think about that, have an awesome rest of your day, and go make some great things happen. We’ll talk again tomorrow.

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