Is the labor, funding there to see through $90B in energy, tech projects in Pa.?

Announcements are easy.

Following through could be the hard part for companies that pledged more than $90 billion in investments across the state Tuesday during the Pennsylvania Energy and Innovation Summit at Carnegie Mellon University, organized by U.S. Sen. Dave McCormick, R-Pittsburgh.

At least a quarter of that money is expected to flow into Southwestern Pennsylvania.

From up to $100 million in upgrades at a Charleroi plant that makes power-grid equipment to a $15 billion pledge to buy Pennsylvania natural gas to fire a new power plant in Homer City, turning these lofty plans into reality will take careful coordination of labor, energy and funding needs.

“It’s one thing to announce your intention to do something,” said Jeff Nobers, executive director of the business and labor alliance Pittsburgh Works Together. “It’s another thing to get it funded and then actually move forward with everything you have to do to execute it.”

Pittsburgh Works Together and similar groups are generally bullish on the state’s ability to meet these challenges, as long as permitting doesn’t become too arduous.

They say the payoff could be huge, with Pennsylvania’s vast energy reserves shaping it into a hub for artificial intelligence companies and their power-hungry models.

“Energy is what’s needed to power everything,” said Audrey Russo, president and CEO of the Pittsburgh Technology Council. “When we have that and people know that there’s access … that’s attractive to build businesses.”

Getting the green lights

Business interests are acutely aware that most aspects of these projects can’t go forward without the green light from regulators.

“I think the biggest thing in the bottlenecks right now would be certainly our permitting,” Russo said. “Can we be nimble enough?”

The state Department of Environmental Protection reviews all projects that disturb a significant amount of earth or might pose risks to air or water quality. Anything from a large home to a sprawling power plant falls under at least one of these categories.

Gov. Josh Shapiro has gotten kudos from the business community for his efforts to fast-track environmental approvals, even as the overall view on the state’s permitting process remains mixed.

DEP officials say their permit backlog is down 98% since November 2023.

“Nobody is going to turn around a permit on a power plant or data campus in 30 days,” Nobers said. “But it shouldn’t take three years, either.”

Powering up

The data centers that make artificial intelligence models work eat up tons of electricity by running and cooling servers. These facilities consumed about 4% of U.S. power in 2023, and are projected to reach up to 12% by 2028.

Industry boosters claim natural gas is well-suited to meet rising demand.

Pennsylvania is already the second-largest natural gas producing state, and Jim Welty, president of the Marcellus Shale Coalition, said that supply isn’t running out any time soon.

Fracking to extract natural gas only started in the Marcellus Shale Formation in the mid-2000s. The formation, which covers a majority of Pennsylvania, is one of the largest shale deposits in the world.

More wells can and may need to be drilled.

But the “permitting process,” Welty said, “I think that’s what’s key.”

A tax credit program backed by the governor and under consideration in the state Senate would further incentivize drilling by offering breaks to producers of hydrogen and certain fertilizers, which are both made using natural gas.

EQT and CNX, the two major natural gas players in Southwestern Pennsylvania, did not return requests for comment.

EQT acquired local competitor Olympus Energy earlier this month for $1.8 billion, suggesting the firm sees strong times ahead for the industry.

‘We’re ready to go’

Incoming energy and tech investments promise to bring tens of thousands of jobs to the state, many of them in the skilled trades.

Building the Homer City plant, in the works prior to the summit, is expected to create 10,000 construction jobs alone.

Darrin Kelly, president of the Allegheny-Fayette Central Labor Council, expects the projects announced at the summit to keep the roughly 30,000 tradespeople he oversees busy for the next 15 to 20 years. He’s confident in the skill and supply of electricians, welders, heating and cooling specialists, and others.

In fact, he anticipates Southwestern Pennsylvania workers will get pulled onto projects across the state.

“We have the most seasoned energy workforce in the country,” Kelly said. “We’re ready to go for anything that comes our way, and everybody is actively recruiting.”

It wasn’t too long ago that Boilermakers Local 154 was turning away the few recruits that walked through its door. It historically sourced much of its work from a dwindling number of coal-fired power plants, but over the past decade saw its ranks plummet from more than 1,500 members to around 700.

“How was I going to take new apprentices?” said Shawn Steffee, business agent for the local. “I can’t put them to work.”

New work has emerged in recent years, a trend that will be turbocharged once the projects announced Tuesday get underway.

The union is in the process of taking on 100 new apprentices.

“It’s just going to be the timing on a lot of these projects,” Steffee said. “If everyone wants to do these major projects at one time, of course it’s going to be a problem on the manpower.”

Funding puzzle

Major energy and tech infrastructure projects rarely have full funding when they’re announced — especially one like Blackstone’s proposed $25 billion data center and energy infrastructure project in Northeast Pennsylvania.

Allegheny Conference on Community Development CEO Stefani Pashman said the further out a groundbreaking is scheduled, the more likely it is that significant financing gaps remain.

Few firm dates were offered at the summit. Westinghouse was one of the only companies to set a timeline, saying it will have 10 new, large nuclear power plant reactors under construction by 2030.

While all of the projects announced at last week’s summit were likely in the works before the event was publicly announced in June, companies may have closed deals more quickly than they would have otherwise to capitalize on summit’s fanfare, Pashman said.

To that point, the value of the deals set to be unveiled jumped about $20 billion in the hours preceding the summit.

“If something had occurred that day … I’d imagine the timing is going to take a little longer,” Pashman said.

Amid all the excitement surrounding the announcements, Sean O’Leary, a senior researcher at the Ohio River Valley Institute, offered a sobering reminder that capital can be hard to find.

He pointed to the struggling Appalachian Regional Clean Hydrogen Hub concept, which would concentrate hydrogen production, storage and use in the Appalachian region, as an example of how hype can give way to fiscal reality.

Since the federal government announced funding for the hydrogen hub in 2023, more than a third of related projects have been canceled — in part due to undercapitalization.

“The two problems that have haunted many, many projects in these industries, and this is going to be especially true of data centers, is that many of them won’t be able to find capital to go forward,” O’Leary said. “And the other one is that many of them, if they do go forward, will struggle to find markets.”