Bringing new gas generation online has never been a small feat but the unique state of today’s market has made effective project development increasingly complex. As the electric utility industry continues to see demand for firm and dispatchable gas generation, power generators have had to rewrite the traditional development cycle rulebook. For many power producers, the landscape of today’s market looks significantly different than it did during their last major capital project.
If you've ever watched a skilled marksman at a skeet shooting range, the adage ready, aim, fire is second nature. Each step builds on the last, from preparing the stance, aligning the shot, to pulling the trigger at just the right moment. It's a disciplined rhythm of predetermined steps and for years, the gas turbine construction industry followed a similar pattern.
Ready in the project development world meant initial front-end planning: identifying project needs, conducting screening and feasibility studies, financing, weighing options and developing an overarching plan. These early steps helped to ground the project in well-researched data and position for success. Aim referred to refining project scope, schedule and budget, obtaining project approvals, and commencing permitting processes. Perhaps requests for proposals (RFPs) were issued to equipment providers and/or contractors. Fire signaled the start of larger commitments, such as an award of major equipment, and commencing detailed engineering and construction. This was when crews broke ground and turned detailed plans into power plants across the country that reliably served communities.
This deliberate, step-by-step process worked well in a market that allowed for long-planning horizons and predictable grid interconnection processes. In today’s market, the landscape has shifted dramatically. Large coal plants are approaching retirement, often leaving behind major dispatchable, baseload capacity voids that can’t be filled with intermittent renewables alone. Additionally, utilities are forecasting load increases of 35-50% over the next 15 years, to accommodate the electrification of buildings, vehicles and data centers. This increasing demand has resulted in a red-hot market for new gas generation — extending major equipment lead times and increasing uncertainty around interconnection applications nationwide.
As a result, the current market has functionally flipped the adage to ready, fire, aim. Now, power generators are required to pull the metaphorical trigger earlier than ever, locking in long-lead equipment and entering interconnection queues as early as risk appetites will allow. In many cases, this means placing deposits early — before securing project permits and other approvals, or even before the project is fully defined. These actions, once considered part of mid- or late-stage development, have become the price of entry.
The good news is that the U.S. power sector has already begun to adapt to maintain the reliability of the grid for customers. With updated market information power generators can start planning for these obstacles — and many already have. They are moving forward with project development in a way that balances responsible resource allocation with calculated strategy to bring generation online within target dates.
Project Inception and Feasibility
Even in a busy market, well-developed gas generation projects start with identifying a clear need. Historically, this occurred through a detailed process of forecasting load growth in service territories, reviewing regulatory requirements and analyzing the current generation portfolio’s strengths and weaknesses.
Power generators also create financial models to evaluate the feasibility of self-building generation projects, as opposed to entering into long-term power purchase agreements (PPAs). However, as the industry struggles to keep up with rising demand, PPAs are becoming increasingly cost-prohibitive, with insufficient gigawatts available to satisfy demand. Self-developed, new generation projects are becoming the optimal path in many regions with the help of an engineer-procure-construct (EPC) firm.
Once a power generator has determined the need for self-developed dispatchable generation, early feasibility studies are used to screen technologies, site locations and permitting pathways. This stage of project development starts to assemble the bones of a potential project. Collaboration with construction during this process can create efficiencies and engineered solutions to meet critical path items.
Long-Lead Procurement
Once a project has progressed through feasibility phase, it is ready to enter conceptual design. This stage is critical for determining budgetary estimates and actionable schedules for project execution. Projects today require procuring long-lead equipment items such as turbines, high-voltage breakers and large transformers, as early as possible. Schedules are often driven by these supplier delivery dates rather than by engineering or construction durations.
To keep projects moving, equipment deposit funds are often committed as soon as conceptual design has reached enough definition to confidently engage a supplier. Reserving spots in supplier queues is critical to secure critical path dates that the rest of the project schedule can be structured around. Projects that move quickly and decisively, even at the cost of accepting calculated risk, position themselves for long-term success in this booming market cycle.
Engaging the Right Partners
In addition to securing equipment, power generators should begin early assembly of key partners who will contribute to the permitting, design, construction and long-term operation of the facility. Capacity of these key players over the proposed project schedule may also dictate important project execution decisions.
Finding qualified partners to execute a project in this market necessitates early engagement, alignment on execution models and a partnership-focused approach. With limited resources available, EPC firms are unlikely to pursue projects that don't have clear direction and alignment early. Securing an EPC contractor early in project development can be critical to reducing owners' risk of having significant capital invested in long-lead equipment without a partner to design and execute.
Construction and Execution
Craft labor shortages are widespread, with significant manufacturing reshoring, data center megacampuses and other large generation projects competing for a limited pool of skilled labor. Local knowledge matters; projects in remote or challenging environments require construction managers who understand the terrain, permitting hurdles and community dynamics that all need to be navigated throughout a project’s life cycle.
Unrealistic planning or delays in labor sourcing can be detrimental to schedules, especially when projects are chasing the same peak-season construction windows. Those that plan ahead and partner with qualified EPC firms with significant, recent execution experience in both the union and nonunion labor markets are far more likely to meet their financial and schedule targets. It’s also vital to have a realistic project schedule for design and construction, unrealistic schedules may result in surprises later in the project.
Thriving in a Hot Market Takes Strategy
While it’s impossible to predict just how many gas generation projects will end up connected to the grid, sales of gas turbines are rising and project schedules are swelling. Securing equipment and an EPC firm early is key to keeping a project progressing.
The market can be tough, but the path to a successful project starts with acting early, building the right team and making smart choices every step of the way. When the process is followed with intention and strategy, a project is set up for real, lasting success.
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