Even before Hurricane Sandy hit the eastern seaboard in October 2012, leaving more than six million Americans without power, business was booming for Rokstad Power Corp.
Formed in 2008, the Coquitlam-based power-line construction company's sales have been tripling each year, its headcount has grown to 300 from 40 in less than five years, and its founder expects the workforce to double again over the next three years.
"Everything we've done to date is purely organic," said founder and CEO Aaron Rokstad.
"I think our growth future is a combination of more organic growth, plus some strategic acquisitions. By the time we get to 2016, we think it's a fairly obtainable goal to be double where we're at – 500 to 600 people."
Rokstad was formed at the beginning of a cycle of investment in new power generation and transmission across Canada that CIBC estimates to be worth $298 billion over the next decade and a half.
The investment in grid infrastructure alone – transmission lines, transformers, etc. – is estimated to be worth $100 billion.
Allteck Line Contractors – founded by Aaron Rokstad's father, Bernie Rokstad, and now owned by Quanta Services Inc. (NYSE:PWR) – is experiencing the same business boom, with contracts for major transmission line projects in B.C. and Alberta.
Allteck's revenue grew 50% in 2012, and its headcount has doubled over the last couple of years to more than 300.
"Between now and 2035, right across North America, they anticipate the grid's going to need about $1 trillion worth of investment," Allteck president Keith Sones said, "and I would say at least half of that is not discretionary."
It's that kind of opportunity for growth that led First West Capital to back Rokstad's growth recently with a $5.5 million funding partnership.The money will be used to help the company buy new equipment and ramp up to meet a rapidly growing demand for its services, which includes high-voltage line construction and underground and submarine power-line installation.
"The industry is going through this tremendous investment cycle, so the market fundamentals – the demand for the types of services that Rokstad Power provides – are huge," said First West Capital vice-president Kristi Miller.
"You've got probably 10 years of really solid demand, so the macro industry fundamentals are very, very attractive to us."
BC Hydro alone is spending $1.4 billion on new transmission lines, including the $709 million 500-kilovolt Merritt to Coquitlam line, which Rokstad has the contract to build. Alberta's grid upgrade plans are even more massive.
The Alberta Electric System Operator (AESO) estimates Alberta needs to spend $13.5 billion over the next 20 years just on new transmission infrastructure.
Like Canada, the U.S. also has aging grids to upgrade, and a door to the U.S. market was blown open last year by Hurricane Sandy, which caused billions of dollars of damage to the power grid.
Rokstad sent 100 employees to New York to help with emergency repairs to the grid, and ended up signing a multi-year agreement to provide emergency line crews to respond to any future storm damage that might occur on the eastern seaboard.
Rokstad said his company's greatest opportunities lie in specialty areas, like underground transmission installation. Rokstad also does "bare hand" live line work; so does Allteck. This involves highly trained linemen working directly on live high-voltage wires wearing special suits made of steel mesh that allows the electricity to flow around them.
Sones said the biggest challenge for power line companies now is a looming skills shortage. Last year, the Conference Board of Canada predicted a shortage of 247,000 skilled workers in the energy sector over the next 10 years.
