Skanska JV's Equipment Installation Contract Signals a Broader Trend in U.S. Power Infrastructure Modernization

A construction crew installing solar panels at a large-scale renewable energy facility, with cranes and heavy machinery in the foreground. The site features modular solar arrays and a control center, emphasizing technological integration and scale.

The recent award of a $148 million contract to Skanska's joint venture with Railroad Construction Company for a standby power generation facility in Newark, New Jersey, underscores a pivotal shift in U.S. power infrastructure modernization. This project, designed to provide 34 megawatts of backup power for the Newark Bay Wastewater Treatment Plant, reflects growing demand for resilient energy systems amid climate risks and aging infrastructure, according to a Skanska press release. While the project has faced local opposition due to its reliance on gas-fired technology, NJ Spotlight reported strong community pushback; the project nonetheless aligns with broader industry trends driven by policy incentives, technological innovation, and the urgent need to decarbonize critical infrastructure.

Policy and Market Tailwinds Fueling Growth

The U.S. clean energy construction sector is being propelled by landmark legislation such as the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA). These policies have unlocked over $132 billion in clean energy manufacturing investments since 2022, with states like North Carolina and Georgia emerging as hubs for solar and battery production, according to Manufacturing Dive. The IRA's Section 45X tax credit, for instance, has incentivized firms to scale up domestic manufacturing of clean energy technologies, reducing reliance on global supply chains, as noted by Deloitte Insights.

Market data reinforces this momentum. The U.S. Engineering, Procurement, and Construction (EPC) market, valued at $241.85 billion in 2024, is projected to grow at a compound annual rate of 3.10%, reaching $328.20 billion by 2034, according to an EPC market report. This growth is fueled by utility-scale solar and wind projects, which are expected to add record capacity in 2025, a trend Chambers for Innovation attributes in part to AI-driven demand for data centers and industrial electrification.

Skanska's Project in Context: Resilience vs. Sustainability Tensions

Skanska's Newark project highlights the tension between infrastructure resilience and environmental justice. The Passaic Valley Sewerage Commission argues the gas-fired plant is necessary to prevent outages during extreme weather events, as TapInto reported, while critics emphasize that renewable alternatives like battery storage could achieve the same goals without exacerbating air pollution in the Ironbound neighborhood, according to NJ.com. This debate mirrors national challenges in balancing short-term reliability with long-term decarbonization goals.

However, the project's inclusion of hydrogen-blended turbines-a technology still in its infancy-signals a cautious pivot toward cleaner fuels, as observed by Transect. If successful, such hybrid systems could serve as a transitional model for integrating low-carbon energy into critical infrastructure.

Investment Potential in Construction Firms

The surge in clean energy projects has elevated the strategic importance of construction and engineering firms. Companies like Bechtel, AECOM, and Kiewit Corporation are leveraging their expertise in large-scale infrastructure to dominate the renewable energy sector. For example:
- Bechtel is advancing nuclear and geothermal projects, including the Vogtle nuclear reactors in Georgia, according to Civil Eng Gascent.
- AECOM is deploying Building Information Modeling (BIM) and AI to optimize project timelines and reduce waste, as reported by EE Power.
- Kiewit is expanding into offshore wind, with partnerships on projects like Empire Wind 1 in New York, per NES Fircroft.

These firms are also benefiting from a $134 billion infrastructure fundraising haul in H1 2025, according to CBRE. Moreover, advancements in automation and modular construction are enabling faster, cost-effective project delivery, further enhancing margins, as highlighted in the Deloitte outlook.

Navigating Risks and Regulatory Uncertainty

Despite the optimism, challenges persist. Federal policy shifts, such as the Trump administration's cuts to clean energy grants and delays in offshore wind leasing, have introduced regulatory uncertainty, as AP News reported. Additionally, community opposition to projects in overburdened neighborhoods-like Newark's Ironbound district-requires firms to prioritize stakeholder engagement and environmental justice frameworks, a point raised by the Ironbound Community Coalition.

Conclusion: A Strategic Inflection Point

Skanska's joint venture in Newark is emblematic of a sector at a crossroads. While the project's reliance on gas underscores the complexities of transitioning to clean energy, it also highlights the indispensable role of construction firms in modernizing the grid. For investors, the key lies in identifying firms that balance innovation with adaptability-those capable of navigating policy shifts, technological disruptions, and social equity concerns. As the U.S. races to meet its climate targets, the construction and engineering sector stands to gain not only from policy tailwinds but also from the urgent need to rebuild infrastructure for a resilient, low-carbon future.