Front-end engineering design (FEED) studies play a crucial role in the planning and execution of large-scale energy projects. During the 2000s, a significant number of natural gas power plants were built, especially lower-emission natural gas combined cycle (NGCC) facilities. As a result, natural gas generation grew from 12.3% to 39.8% of the U.S. electricity supply. Currently, the energy landscape is rapidly evolving, driven by factors such as the planned retirement of U.S. coal plants by 2035 and the need for new gas projects to meet rising energy demands. Traditional forecasting methods are becoming less reliable, and even the U.S. Energy Information Administration (EIA) decided not to publish its annual energy outlook in 2024 due to the unprecedented pace of market transformation.
FEED studies can play an important role in this environment, providing accurate cost estimates by involving key suppliers, contractors and market testing resources early in the project. This approach helps businesses adjust for fluctuations in pricing and availability of materials, equipment and labor.
FEED studies play a crucial role in contributing to project success by addressing several key aspects, including:
- Improved cost and schedule certainty. FEED studies often involve generating detailed cost estimates by involving key suppliers, contractors and market research early in the project. This helps utilities and energy providers adjust for fluctuations in pricing and availability of materials, equipment and labor. Additionally, FEED studies allow for realistic scheduling, which is helpful as the power market faces increasing capacity demands; effective planning helps identify potential bottlenecks and develop procurement strategies.
- Risk reduction. With forecasts for energy market capacity rapidly evolving, early risk identification is essential. FEED studies provide the opportunity to assess technical, regulatory, environmental and financial risks before entering the construction phase. For example, new source performance standards (NSPS) may influence the decision between building simple cycles, combined cycles with carbon capture, reciprocating engines or a mixture of these.
- Better alignment. In a market characterized by increasing energy demands and shifting regulations, collaboration among clients, contractors and original equipment manufacturers plays an important role in a project’s success. FEED studies foster early engagement with all parties, promoting alignment on project goals, deliverables and timelines.
- Procurement and equipment readiness. FEED studies allow utilities to assess procurement needs early, especially for long-lead equipment like gas turbines, which may face limited availability due to increased demand. By incorporating proactive procurement strategies into FEED studies, companies can mitigate the risk of schedule delays caused by supply chain issues. This approach allows them to garner key materials and equipment early in the project and provides the opportunity to lock in an EPC contractor.
By using FEED studies effectively, utilities and energy providers can improve project outcomes, reduce risks and promote smoother transitions from design to execution. In an industry characterized by fluctuating market conditions and significant changes, a well-executed FEED study can contribute greatly to a project’s success.
In today’s unpredictable market, effective project management is crucial for owners in the electric power industry. Navigating fluctuating material costs and labor shortages demands a strategic approach to contracting. Leveraging innovative delivery methods, such as collaborative engineer-procure-construct (EPC), can help all parties better manage risk and achieve project success while adapting to unprecedented challenges.
