Willdan Group, a company specializing in clean energy transitions and sustainable solutions, may be poised for significant growth thanks to the unexpected rise of AI and its insatiable hunger for electricity. While not a household name, Willdan's recent Q1 2024 earnings call revealed a "new catalyst" for their services: the surge in electricity demand driven by data centers powering AI processing.

CEO Mike Bieber highlighted how AI is driving electricity demand "far faster than most predicted," a sentiment echoed by the International Energy Agency (IEA) and reflected in data from the Federal Energy Regulatory Commission (FERC). This surge in demand poses a substantial challenge for utilities and governments striving to build a grid capable of handling the rapid electrification of transportation, buildings, and industry. Adding AI's energy needs to the mix creates a "perfect storm" of escalating demand and rising electricity prices.

This scenario presents a golden opportunity for Willdan, with its comprehensive suite of services. They offer policy consulting, software solutions (including their LoadSEER software for grid planning), energy efficiency programs, and engineering expertise – a crucial toolkit for navigating the complexities of a grid under unprecedented strain.

Willdan's AI-Powered Growth Potential

While Willdan's 2024 guidance projects modest growth, it doesn't explicitly account for the potential impact of the AI-driven energy surge. If this trend continues, as Bieber's anecdotes suggest, Willdan's current projections might be overly conservative. Let's explore some key indicators:

LoadSEER Software Sales

The IEA study mentioned by Bieber predicts a doubling of data center energy consumption by 2026. Although no specific figures were provided for the AI component, it's reasonable to assume it constitutes a significant portion of this projected growth. Willdan already secured two confidential LoadSEER sales this quarter. Assuming each sale conservatively contributes $1 million in revenue (based on their past Exelon contract), that's $2 million directly attributable to AI-driven demand. Sustaining this momentum with just two LoadSEER sales per quarter for the remaining three quarters could bring in an additional $6 million in potential revenue. This is a substantial figure for a company with projected 2024 net revenue of $270 million to $280 million.

Data Center Energy Efficiency Business

Willdan's existing $10 million energy efficiency business, focused on data centers, secured a new contract with AT&T. This suggests that growth in this segment is not solely reliant on new client acquisition. Contract expansions, driven by increased energy efficiency needs at existing data centers, might be a significant driver.

Strategic Acquisitions

Willdan is actively seeking acquisitions in four key areas: waste-to-energy, electrical engineering, front-end consulting, and analytical software. These acquisitions could further bolster their ability to capitalize on the AI-driven energy surge, particularly in grid planning and energy efficiency.

Willdan Group, operating under the radar for decades, might be at a pivotal point in its history. They've established a resilient business model focused on a future-proof market. With the emergence of AI and its massive electricity demands, Willdan appears well-positioned to ride a wave of growth that few anticipated.

"Hypotheses for 2024: * Willdan's LoadSEER software sales, driven by AI-related grid planning needs, will continue at a rate of at least two sales per quarter, contributing a minimum of $8 million in additional revenue for 2024. * Willdan's data center energy efficiency business will experience organic growth exceeding 10% in 2024, fueled by contract expansions with existing clients like AT&T."

These are just two potential scenarios, and the overall impact of the AI power surge on Willdan's business could be even more profound. It's a trend worth watching closely.

"Fun Fact: Willdan helped the Clark County School District upgrade energy efficiency in about a third of its schools, potentially saving the district millions of dollars in energy costs."