Like virtually any industry today, electrical contracting has its benefits and its headwinds. According to a new study by Cascade Partners, the industry was valued at $255 billion in 2024 and is expected to reach $295 billion by 2030, at a compound annual growth rate of 2.4%.

The good news is that the industry should grow due to renovation and retrofitting projects in 2025 and beyond, especially through energy-efficiency projects and smart home technologies.

The challenge is, no surprise, labor. Skilled and qualified contractors that can complete more complex projects, including in the areas of energy efficiency and clean energy, will be important. The study said the “backlog of ‘trade’ focused workforce continues to be light.”

Additionally, Cascade Partners estimated the U.S. construction industry will need 454,000 additional workers this year beyond normal hiring to match demand.

There’s more. Economic uncertainty through inflation, interest rates and tariffs have impacted construction spending, though growing areas include data centers and institutional projects like school and hospitals. Material prices are still volatile, especially for copper and other metals.

More crucially, banks are not as active lending to electrical contractors for a number of reasons, including lack of collateral, bonding requirements and general market volatility.

The study also delved into industry merger and acquisition activity. Private equity firms have traditionally not invested in electrical contractors because of the project-based nature of the business and lack of lenders. But over the first part of this decade, there has been more interest by private equity firms in contractors for a grab bag of reasons, including forecasted tailwinds providing attractive trajectory.

The study noted that acquisition drivers include seeking a contractor with established scale, thus serving as a company to build around. Typical characteristics including service of at least two high-growth end markets; strong local presence but regional scale; at least a 50:50 ratio of new construction to retrofit and service revenue; and a management team capable of driving growth.