Consumers Should Brace for Higher Prices on Electrical Projects

Consumers Should Brace for Higher Prices on Electrical Projects

As shortages of electrical supplies expand, electrical contractors are not only paying significantly more for copper wire but also facing significant challenges finding it in-stock. Raiven, a leading supplier of procurement solutions for contractors and building owners explains.

The National Association of Homebuilders (NAHB) recently released its May 2021 survey results and at least 75% of builders are reporting shortages in lumber, copper wire, plumbing supplies, windows and doors, and appliances. As a comparison, in June 2020, 7% of builders reported a copper wire shortage vs. 77% in May 2021.

While lumber led the meteoric surge in building materials prices with a 250% increase over the last year, copper wire prices are now following suit, soaring 40% - 50% over the last 60 days. Further, many distributors are backordered 30 – 60 days on the copper wire used in residential and commercial electrical projects.  

 

What factors are driving the supply shortage?

A perfect storm has hit the copper industry:

 

What type of electrical projects will be impacted?

Electrification projects, such as electric vehicle (EV) charger installations at homes and commercial properties; Solar, wind, battery storage and micro-grid installations; and power grid infrastructure will all be impacted. Further, home improvement and commercial retrofits that include electrical improvements, and new home construction will also be affected.

 

How much will prices increase?

Don’t be surprised if the electrical project quote you received 30-60 days ago increases by 20% or more depending on the quantity of electrical materials needed on your project. Most experts project higher prices and shortages of copper through 2022, so if you’ve been contemplating getting that EV charger installed in your garage, now is likely better than next year.

Brian Watson, owner of Watson’s Charging Stations & Electric explains the inflationary pressures being experienced, "We’ve installed thousands of EV charging stations and on every job, we use copper wire. A month ago, wire prices jumped 30% and now they’ve increased another 10% in less than two weeks. Inflation puts us in a very difficult situation with our customers because I either don’t pass along the higher prices and we lose money on the job, or I have to inform them that my estimate needs to increase.”

As Mark Cooper, President of H&D Electric, one of the largest electrical contractors in the Sacramento Valley explains, "We’ve been an electrical contractor for single-family and multi-family home builders since 1958. For the first time in my 30-year career, I had to call all my homebuilders to inform them that I needed to revise our contract to reflect the rapid rise in copper wire prices. In the past, I’ve always been able to absorb upticks in price but it’s just not possible when my Romex cost increased over 200% of the last year.”

 

What can electrical contractors do?

During turbulent times when products are frequently out-of-stock and prices are volatile, contractors need to leverage technology to quickly find where electrical supplies are in-stock and preferably, at the lowest price. Doing this manually by searching distributor websites and making phone calls is incredibly time-consuming for contractors.

Chris Davis of Spotlight Solar, a leader in solar and EV charger installations in New Jersey explains, “Three months ago, I could drive to my distributors and immediately find Romex or THHN in-stock. It was more expensive but at least I could find it. Now I find them out-of-stock. I’ve resorted to looking online but I’m finding it’s backordered 2-8 weeks. It’s time-consuming and frustrating because I’ve got customers wanting solar, home charger installations, battery storage and other electrical projects completed immediately.”

Brett Knox, CEO of Raiven, describes how technology advancements can help contractors save time and money in these situations, “Technology is now available that searches in real-time across distributors to find product availability and current prices. Raiven launched its sophisticated algorithm in a browser extension during the pandemic to help contractors and facility managers find COVID essentials. It’s now available for a wide variety of electrical, HVAC and building maintenance products.” Brett continues, “Distributors have different levels of pricing sophistication. Some update pricing daily while others may be months behind. In fact, Raiven’s algorithm found a major distributor that is selling Romex and other NM-B cable for 40% less than their competitors so contractors are stocking up. Raiven’s algorithms continue to identify pricing anomalies and product availability for high-demand products in short supply.

Leveraging technology to keep project costs down is paramount when shortages exist in the market. Learn more at Raiven.com.

 

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ABOUT RAIVEN

Raiven is a leading purchasing and procurement platform enabling contractors and facility managers to digitally transform their procurement process and obtain 7-25% discounts on their common purchases. Raiven’s cloud-based procurement platform helps businesses source and purchase smarter and more efficiently through patent-pending AI algorithms as well as a purchasing program that delivers significant discounts from industry-leading suppliers.

Topics: Procurement, News