In the meantime, companies are facing a shortfall. “All our members agree that workforce shortages are a (if not the) top concern across the entire electrical contracting sector,” says Julie Beaufils, general secretary of EuropeOn, the regional association for the electrical contracting industry. A decline in trade schools, alongside an aging population, has exacerbated the lack of supply needed to meet energy transition goals, she says.

Companies – whether they are waste operators, renewable platforms or logistics providers – are seeing vacancy levels from 10 percent to 30 percent, according to Dhawan, with some sectors recording even worse shortages.

Wages are also being affected. For instance, in the United States, pay for electricians has climbed by more than a third over the past decade, according to the Bureau of Labor Statistics.

This squeeze is changing the calculus for infrastructure investors, given the labor-intensive nature of the space. The old underwriting approach, which simply indexed costs according to the Consumer Prices Index (CPI), now fails to capture the reality of wage inflation and staff attrition, says Dhawan. “The days of regular CPI indexation for inflation are gone.”

Opportunity ahead

To manage the labor constraint, proactive investors are stepping in to help their portfolio companies get ahead.

“Investors have a real opportunity to support this sector, which is rapidly evolving,” says Beaufils.

Part of the solution is straightforward: pay and conditions. Dhawan notes that employers must be honest about what it now costs to attract and retain workers, while investors must be willing to stump up to ensure proper staffing.

Investment in training is especially key, says Casper Edmonds, who heads up the Energy unit at the International Labour Organization. “Skill development is a matter of urgency. Skills must be integrated into energy transition planning, from the very start.” One way companies can find top talent to train, he notes, is to invest in partnering with universities or other groups.

Beyond wages, companies also need to think strategically about investing in technology (including AI) and digitalization. This can help ease the labor bottleneck, says Beaufils; not by replacing workers themselves, but by reducing manual tasks and streamlining processes.

Adapting to the challenge

For example, Reworld, a major U.S. sustainable waste operator backed by EQT, has rolled out AI-directed remote monitoring systems. This technology reduces the need for on-site staff while improving safety, catching dangerous materials in the waste stream before they enter processing.

By using AI and drones for remote monitoring and analytics, you’re able to avoid a physical person driving out to a site, says Dhawan, who has overseen investment in portfolio companies like Reworld.

Meanwhile, energy platform Madison, another EQT-backed company, has applied AI to its cost-intensive sales engine. It can take months to qualify commercial leads, but an AI system can now, in hours, canvass thousands of potential sites, Dhawan explains. It can do this by processing clients’ roof sizes, solar potential, interconnection capacity and corporate sustainability goals and then generating actionable sales leads.

“It’s really transformational, some of the things that are happening in the portfolio,” he adds.

To boost the labor supply and navigate the energy transition, Dhawan stresses that energy and infrastructure investors need to do the hard work of partnering with management teams to understand employee needs and support training.