7 Questions on Energy Transition and Utility Infrastructure: Growth, Investment and What Comes Next

As part of our “Inside FMI” series, we’re interviewing our industry experts who work with companies across the built environment on what they’re seeing, how they help clients and trends that are shaping the business environment.

In this issue, we sat down with managing directors Russell Clarke, Andrew Henderson and Dan Shumate to discuss recent trends, challenges and innovations driving the energy transition forward — and how certain companies are positioned to thrive amid this industry transformation.

Their insights come at a pivotal moment for the sector. As the energy landscape evolves at a rapid pace, businesses across the value chain are navigating both unprecedented opportunity and increasing complexity. From electrification and renewable integration to digitalization and grid modernization and decades of deferred maintenance, all among shifting political and regulatory climates, the forces shaping this transition are redefining how energy and power are generated, distributed and consumed.

Question: What are the most significant challenges facing the energy transition today?

Clarke: Skilled labor shortage continues to be a fundamental bottleneck across most key segments of the value chain. Even as permitting and financing and other soft costs make meaningful improvement, deployment and maintenance and the associated progress to meet power and energy needs ultimately depends on the availability of skilled labor to design, build and maintain energy infrastructure. Technology is heavily influencing this bottleneck in both white-collar and blue-collar applications, but in many segments, people are still the pinch point and will be for some time to come. For example only 70% of skilled electricians are being backfilled with retirement demographics. We have not seen “control of the labor” be as important as it is today at any point in the last couple of decades.

Henderson: Regulatory volatility also still poses risk to end-market concentration. Shifting legislation, changing subsidies and inconsistent long-term policy signals make it difficult for investors to plan with confidence. For example, sectors like electric vehicle (EV) charging have seen strong initial funding, but uncertainty around future programs has slowed momentum despite continued growth and demand for the infrastructure.

Shumate: To bring a bit of optimism, despite hurdles, opportunity remains abundant in many segments — but success requires adaptability, capital discipline and the ability to manage through cycles of uncertainty. We have seen this clearly play out across the power and energy segments over the last several decades, where well-run businesses have the ability to weather changes and adapt to a new normal.

Question: Which innovations or shifts will shape the industry most over the next five years?

Henderson: The growing emphasis on commercial and industrial (C&I) energy efficiency will continue. Rising tariffs and material costs are pressuring margins, prompting companies to look inward at operational efficiency. Investing in energy-saving upgrades offers an immediate path to cost reduction and improved profitability for commercially oriented enterprises.

Clarke: At the same time, permitting reform remains one of the most critical — and elusive — needs. Complex, slow approval processes delay infrastructure and power projects across the country, which is why so much attention is put on this soft cost. Applying AI and digital tools to streamline permitting will unlock substantial economic and environmental benefits. Overall, the next five years will be defined by how quickly the industry can translate opportunity into execution — balancing innovation with the realities of workforce and regulatory constraints.

Question: What emerging trends or technologies are having the biggest impact on the industry landscape over the next several decades?

Clarke: The U.S. is seeing meaningful power load growth for the first time in decades, driven largely by data centers, AI and onshoring of manufacturing. This surge is reshaping demand across the grid and highlighting the need for smarter, more integrated energy management. Digitalization is playing a critical role. Advanced tools are helping optimize assets, automate workflows and enhance grid efficiency — though the field remains constrained by the ongoing shortage of skilled labor, both in engineering and field services.

Henderson: Battery storage is another game changer, enabling two-way power flow at scale and transforming traditional energy models and systems. More than 65GW of capacity is expected to be online by the end of 2026 compared to 28GW in 2025. Combined with the continued rise of distributed assets and EV adoption, these shifts are driving a more dynamic, interconnected energy ecosystem.

Clarke: Ultimately, an efficient and resilient future depends on the “orchestration” of these technologies — making generation, storage, transmission, distribution and consumption systems work together to meet growing demand and resiliency.

Question: Where do you see the biggest opportunities for near-term growth in the current energy landscape?

Shumate: There remains significant opportunity in power and renewable energy buildout. While the world now derives more power from renewables than coal, much of that is from long-established sources like hydropower. The U.S. still has room to expand solar, storage and wind capacity to meet demand and climate targets. Power needs and large users will help determine technology mix.

Clarke: Growth is less about new frontiers and more about speed to scale. The challenge lies in how quickly the market can deploy and integrate existing technologies amid policy and regulatory uncertainty. This has turned attention to critical services. Beyond renewables, C&I energy efficiency and facility services present major opportunity. Efficiency initiatives are gaining further traction in the private sector as technology and financing mechanisms improve and power prices increase. Companies increasingly view energy savings and resilience as a business decision, not just an ESG goal — improving operational margins and long-term financial health. We have seen great traction with electrical contracting and electrical services businesses focused on power and electrification as a result.

Question: How is today’s market environment shaping deal flow and valuations?

Clarke: Across the sector, investors are showing a clear “flight to certainty.” Businesses with stable, recurring revenue tied to utility and infrastructure services are commanding premium valuations. Meanwhile, companies more exposed to policy risk, commodity volatility or less predictable demand have seen valuation pressure and slower deal flow. The market has become increasingly bifurcated — rewarding proven operators while tempering enthusiasm for emerging or speculative segments.

Henderson: Still, the fundamentals remain strong. Capital is being redeployed toward core, diversified platforms that touch multiple points of the energy value chain. Consolidation — especially in areas like EV charging and distributed energy — continues to drive the movement toward stronger, more resilient companies positioned for the next growth cycle.

Question: What trends or risks are people not paying enough attention to right now?

Clarke: A critical yet often overlooked issue is deferred maintenance across all infrastructure types, from grids and facilities to vertical and horizontal assets. This sits at more than $1 trillion today and continues to expand daily, as required maintenance consistently outpaces the work being completed. The result is a compounding effect: a growing market need coupled with mounting long-term strain on service providers and public systems alike. Closely tied to that is the concept of resiliency. As climate events and grid disruptions increase, the need for durable, reliable energy systems has never been greater. Distributed generation and behind-the-meter solutions, despite political debate, are increasingly recognized as essential to resilience — powering everything from military bases to biotech facilities.

Shumate: Lastly, the shift in customer dynamics bears watching. As power generation increasingly occurs behind the meter, the traditional role of utilities is changing. This shift could redefine who the “customer” is — and where investment and maintenance responsibilities lie — in the next phase of the energy transition.

Question: How does FMI fit into helping clients navigate these challenges and opportunities?

Shumate: FMI’s strength lies in its deep, long-term perspective across the energy and infrastructure sectors. Having guided clients through multiple market cycles, FMI helps business owners distinguish perceived challenges from real ones and develop strategies to maximize growth and valuation.

Clarke: For clients, FMI provides an objective, market lens, helping uncover blind spots and position opportunities to articulate full value and maximize transaction objectives amidst current market conditions. For investors, FMI maps the value chain, identifying where capital can be deployed most effectively given various priorities, including adjacent sectors that share similar demand drivers but offer lower risk exposure. Whether we are advising on exits, recapitalizations or growth, FMI’s integrated view helps clients make decisions grounded in experience, data and industry insight.