Buildsylvania: Pennsylvania’s AI-Driven Construction Boom
Welcome to Buildsylvania!
Pennsylvania is poised to experience its biggest construction boom since the height of the Industrial Revolution. The unprecedented, AI-fueled need for energy, coupled with a national strategic imperative to “win” the artificial intelligence race, has positioned Pennsylvania to reclaim its Gilded Age role as the nation’s economic and innovation leader.
These are big times for the Keystone State – and it has been quite some time.
As deindustrialization hollowed out Rust Belt states like Pennsylvania, policymakers leaned into an eds-and-meds strategy. Buoyed by federal spending on education and medicine, Rust Belt states have since tried to tread water on taxpayer largesse. Cities and suburbs grew while the rest of America was left behind.
Twenty years ago, nothing short of a miracle happened in Pennsylvania with the advent of fracking in the Marcellus Shale natural gas formation. The fracking boom generated tax revenue and made Pennsylvania a net energy exporter. Fracking was a difference maker, particularly for those owning mineral rights and seeking rewarding, family sustaining careers in places that national policymakers had condemned to failure.
International relations and energy independence notwithstanding, fracking was more of a lifeline than revolution for most Pennsylvanians. While fracking was a blessing, artificial intelligence will be its “killer app” – a transformational economic engine that creates wealth by making, not taking.
Understanding the new demand for energy is relatively simple. The eds-and-meds economy fueled demand for software platforms like Microsoft Word and Google. So called “knowledge workers” need to access data and repackage it. The contemporary energy infrastructure was able to support cloud servers, laptops, and smartphones.
Compared to a Google search, a query on AI platforms like ChatGPT or Grok consumes 10 to 100 times more energy. Last week, the Midatlantic’s sprawling grid operator held its annual electricity auction. The auction closed at $329.17 per MW per day – a 22% increase from last year and a tenfold jump from two years ago. This new demand is almost exclusively driven by the rise of artificial intelligence requiring the construction of energy production facilities on a scale unimaginable just two years ago.
In July, U.S. Senator Dave McCormick announced $92 billion dollars of energy and artificial intelligence investment coming to Pennsylvania from the private sector. The deals range from private equity partnering with utilities for grid upgrades to tech giants refurbishing dams to generate electricity.
When Buildsylvania is complete, it will be a trillion-dollar, multi-front construction project unlike anything Pennsylvania has ever seen. Building power plants and data centers is just the beginning.
While the uses of artificial intelligence are still being learned, the one industry we know for certain to benefit is advanced manufacturing. That means even more building.
The combination of electricity prices and private market investment has given the green light for the energy industry to start building. To date, government has not been asked to do much.
By next year, though, that will change as industries will confront state government on two fronts: regulations and workforce development.
Frankly, it’s unclear if these industries can survive Pennsylvania’s red tape that has driven away countless large industrial projects. But once the permitting process is hurdled, somebody still must build all of it. That is where the real crisis begins.
There are five retirements for every two new skilled workers entering the workforce. Pennsylvania only graduates approximately 17,000 Career and Technical Education students annually, representing less than a fifth of all high school graduates. Fewer than half of those 17,000 students likely graduate into a trade.
Policymakers must adopt a “All of the Above” approach to prepare young adults to build Pennsylvania’s future. School choice for trades? Increase apprenticeship programs tenfold? Triple the seats in Pennsylvania’s Career and Technical Education Centers? Offer tax credits for private industry to partner directly with high schools? Reimburse tuition for engineering degrees? Call a special legislative session on career and technical education? Fine. And yes.
For state policymakers, focusing on building our workforce will be the first time in a long time that regular people care about what is happening in Harrisburg.
Nonetheless, it’s time to build.
