Welcome back to The Month in Infrastructure, a monthly recap of the top trends affecting the built environment and the people who work in it.
The buzzword of the month is “bottleneck.” The US added a record 75 GW of new generating capacity this year. Billions in water infrastructure funding sits unspent. The construction pipeline keeps growing. And yet across energy, water and transportation, the same problem keeps surfacing: The money and the megawatts exist, but the systems meant to deploy them can’t keep up.
In May, the headlines told a story about execution failures at every level of the infrastructure economy. Federal dollars are stuck in bureaucratic pipelines. Power generation is outpacing the grid’s ability to connect it. And the physical work of building and maintaining roads is getting more dangerous and less fundable.
The water funding paradox
A sharp divide is opening up in the water sector. On one side, public works officials are warning of alarming declines in the condition of local water and sewer lines, driving a surge in billion-dollar replacement projects across the country. On the other, a federal watchdog revealed that the EPA has spent 41% of the $39.8 billion that had been obligated allocated under the 2021 Infrastructure Investment and Jobs Act as of January. Final appropriations are set to expire at the end of September.
Municipalities are watching their pipes actively degrade while billions in authorized capital sits logjammed at the federal and state levels. The EPA inspector general’s office put it plainly: Significant portions of available funding have yet to be committed to projects, leaving necessary infrastructure work unfunded.
The problem has become less about a lack of money and more about execution and permitting issues. States are struggling to move allocated funds through their revolving loan programs fast enough to meet the need, and the White House has proposed cutting future EPA State Revolving Funds by nearly 90%, arguing that states are too slow to deploy the capital they already have. That logic creates a high-stakes dynamic where municipalities with water infrastructure needs must unlock existing money now or risk losing access to future funding entirely.
Contractors and engineers working in the water sector realize the project backlog is massive and growing, but the funding pathway is fragile. Firms that can help municipalities navigate the federal drawdown process and accelerate project delivery timelines are in a strong position.
Big Tech learns to “speak FERC”
The Federal Energy Regulatory Commission announced a record 75 GW increase in US generating capacity year over year, driven largely by solar, wind and battery storage. About 26 GW of that is in Texas, with another 13 GW across the West and 11 GW in the MISO market. Generation additions are outpacing demand growth, and the summer reliability outlook has improved.
That should be good news, but the real story in May is that new generation capacity doesn’t matter if it can’t connect to the grid fast enough. Interconnection wait times, regional transmission organization friction and regulatory complexity have shifted the constraint on the AI power buildout from a generation problem to a transmission and permitting problem.
Tech companies are starting to respond. Microsoft, Google, Amazon, Meta, OpenAI and Anthropic are each making massive investments in data center infrastructure, and they’ve realized that acting as simple energy buyers is no longer viable. Following a blunt warning from FERC Chairman Laura Swett that AI developers “don’t speak FERC,” these companies have launched a regulatory sprint to engage directly with grid policy debates they had previously skirted.
Swett has signaled that FERC will push its authority to the legal limit to address interconnection bottlenecks. The agency is expected to release a decision in June on DOE-proposed rules governing how data centers can connect to the transmission system.
Meanwhile, major power companies are not waiting for regulatory clarity. NextEra Energy announced a $67 billion all-stock merger with Dominion Energy, the largest electricity deal since the mainstreaming of AI. The combined company would serve roughly 10 million utility customers across Florida, Virginia, North Carolina and South Carolina, and would control a 130 GW large-load project pipeline that runs straight through Northern Virginia’s Data Center Alley. SoftBank and AEP Ohio are separately redeveloping federally owned land to support a giant data center complex in southern Ohio.
Grid modernization, substation construction and transmission line buildout are now gated by regulatory process as much as by engineering capacity. For contractors and engineering firms, the opportunity is enormous, but the timeline depends on how quickly FERC and the regional transmission organizations can clear the path.
Highway construction: More dangerous, less fundable
The physical execution of surface transportation projects is facing severe headwinds. A survey from the Associated General Contractors of America found that highway work zone crash risks are rising drastically, with 60% of contractors reporting collisions caused by speeding and distracted driving. The combination of inconsistent enforcement and rising costs for safety equipment is making work zones more dangerous for both motorists and construction crews.
Simultaneously, municipal budgets are buckling under a massive backlog of local road repairs. Cities and states are running out of local revenue to maintain minor roads, and the pothole crisis visible on streets across the country is a symptom of a deeper fiscal problem. Local governments are being forced to rely on federal backing for maintenance work they used to fund themselves, and that federal backing is itself uncertain.
The transportation construction industry is lobbying Congress to pass a new surface transportation funding reauthorization bill, but the path forward is unclear. Construction margins are being squeezed by operational delays from work zone disruptions, and contractors are navigating severe physical hazards on site while facing uncertainty about whether long-term highway funding will materialize.
The nuclear execution gap
The broader energy supply picture in May carried a stark warning. Lorie Logan, president of the Federal Reserve Bank of Dallas, cautioned that Permian Basin production cannot fill the global supply gap caused by the ongoing Strait of Hormuz conflict, which has left roughly 10% of global oil and LNG supplies effectively stranded.
The domestic need for reliable, carbon-free baseload power is urgent. Nuclear energy is the obvious candidate to fill that role, and strategic interest in new nuclear is at a high point. But a major assessment published by the American Nuclear Society warns that the global nuclear renaissance is suffering from what it calls an “execution gap.” The practical reality of building nuclear plants comes with immense capital requirements, long construction timelines and struggles to hedge early-stage risks without heavy balance-sheet or sovereign guarantees.
Ryan Nielson, head of nuclear technology at Citi, wrote in the assessment that nearly all new nuclear builds in Europe today rely on explicit government or sovereign guarantees, often supplemented by export credit agency support. The investor base remains split between growth-oriented capital willing to underwrite technology risk and patient institutional money that won’t commit until projects demonstrate real construction and operating performance. Until more projects move from paper to concrete, nuclear financing will remain a bottleneck.
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Editor’s note: This article has been updated to clarify reporting from an EPA watchdog.