For the first time in two decades, power demand is growing again. Data centers, electrification, and industrial load are pushing power markets into a fundamentally different environment. Yet many developers trying to capitalize on that demand are running into the same problem: greenfield projects are taking longer, costing more, and carrying greater execution risk than they did just a few years ago.
Greenfield solar in CAISO now takes up to 22 months just to clear the interconnection queue. That clock starts before construction, before permitting, before a single network upgrade cost surfaces.
For many developers, that number alone has shifted the thinking.
Acquiring a later-stage or operating asset can significantly reduce queue exposure and development risk, sidestep rising capital costs, and still put you in position to capture the same demand tailwinds everyone else is chasing. More importantly, it can dramatically shorten the path to commercialization. In markets where load growth is accelerating, shaving years off a development timeline can mean the difference between capturing demand and arriving after the opportunity has passed.
This is the first in a three-part series on executing power and renewable asset M&A with data. We cover the macro picture here: why greenfield economics have deteriorated, where the tailwinds are actually concentrated, and what all of it means for your pipeline strategy. Posts 2 and 3 go into the workflows: how to screen markets and assets, how to model project economics without a banking engagement, and how to quantify network upgrade cost exposure before you are committed to a deal.
The greenfield math has changed
Capital costs for new gas-fired generation have roughly doubled over the past 12 to 18 months. Building a new combined cycle plant cost approximately $1,000 per kilowatt in 2023 and 2024. Today, quotes are running $2,000 to $3,000 per kilowatt. At those numbers, project-level returns and debt service coverage ratios are extremely tight in most markets, even before financing costs enter the picture. Some state-level programs, like the Texas Energy Fund, were specifically designed to provide low-cost financing to work around this environment, but access is limited and the underlying cost pressure extends across the entire space.
Supply chain pressure compounds the timeline. Ordering gas turbines today puts a new combined cycle build roughly 80 months from concept to first power on average. That is nearly seven years. Alternative technologies can help in some cases, but the lead time challenge extends well beyond combined cycle generation.
On the renewable side, the constraint is the interconnection queue. Applications have surged over the past decade, driven by IRA incentives, improving technology costs, and rising clean energy demand. Queue delays have lengthened materially as a result. In CAISO, developers can expect delays of up to 22 months and that figure covers queue processing time only.
The grid itself has tightened in parallel. Network upgrade costs in the Eastern interconnection have risen sharply since 2019. Finding greenfield sites with sufficient substation headroom and manageable upgrade exposure is harder than it has ever been. We cover that dynamic in depth in Post 3 of this series.
Bottom line: Greenfield development remains viable, but longer timelines, higher costs, and growing interconnection risk are increasing the value of later-stage and operating assets.
Policy is compressing the timeline for
earlier-stage projects
The passage of the One Big Beautiful Bill has accelerated the phase-down of the Investment Tax Credit and the Production Tax Credit. Safe harbor provisions will protect a meaningful volume of capacity already in development, but the window for earlier-stage projects to qualify is narrowing toward the end of the decade.
The impact lands hardest in markets with lower solar capacity factors. In New York and ISO New England, LCOE rises materially when tax credit support steps down, and PPA prices will need to move up to compensate. Projects that made sense under the previous policy environment may not under this one.
This does not make renewables development unviable. It does change which projects and which markets hold up under tighter economics, and it raises the bar for greenfield diligence considerably.
Bottom line: Policy changes are not eliminating opportunity, but they are increasing the importance of timing. Projects that are further along the development curve have a growing advantage.
The tailwinds are real. And increasingly, they
favor speed.
The reason M&A activity is accelerating is not because developers have become more risk averse. It is because the opportunity set has expanded. The demand side of the power market has shifted in a way not seen in two decades. Load growth that was flat or declining for years has reversed. Multiple drivers are stacking simultaneously for
the first time:
- Data center buildout: AI infrastructure is driving sustained, concentrated power demand across major markets
- EV adoption: Fleet and consumer electrification is adding load across ISOs at a pace that has outpaced
earlier forecasts - Heating electrification: State incentives have accelerated the shift from gas to electric heating across several key markets
Our long-term load forecasts, built from the bottom up across load drivers, reflect all of this. For a deeper look at where that demand is concentrating geographically, the Enverus Intelligence® Research team has published analysis on data center power demand that is worth reading alongside this post.
One emerging pattern worth watching is the rise of behind-the-meter power strategies for data centers. Some hyperscalers and co-locators are exploring on-site generation and storage to work around grid connection timelines. While we view this largely as a bridge solution rather than a replacement for grid interconnection, it highlights how valuable speed-to-power has become.
Forward prices have responded. PJM forward LMPs have seen material appreciation over the last two years as development pipelines grow and new large loads come online. That appreciation has already shown up in the equity performance of large thermal IPPs, Vistra, Constellation, Talen, and NRG among them, which hold substantial portfolios of operating gas generation positioned to benefit from higher clearing prices.
Corporate off-takers remain committed. The top 20 PPA buyers between 2020 and 2024, Amazon, Microsoft, Meta, and Google among them, are still expanding their clean energy contracting as data center capacity grows. Nuclear PPAs in PJM are executing at premiums of roughly $30 above prevailing forward prices, with deals running $80 to $90 per megawatt-hour on average. Natural gas facility PPAs are following with a lower but still meaningful premium over spot.
Perhaps most notably, the hyperscalers have started acquiring assets directly rather than contracting off them. Google’s acquisition of Intersect Power and AWS’s purchase of assets from the Pine Gate bankruptcy both signal a new exit pathway: develop and de-risk an asset to a certain stage, then sell at a premium to a hyperscaler based on proximity to their data center campuses. For developers, that potentially expands the exit universe beyond traditional utilities, infrastructure funds, and IPPs. A growing number of technology companies are becoming direct participants in power markets rather than simply power buyers.
State policy provides an additional backstop. Sixteen states have clean energy targets above 50% of total generation, and four are committed to 100% clean. Even with federal policy introducing uncertainty, that state-level commitment creates a durable demand floor for de-risked renewable assets in the right markets.
Taken together, these trends point to a market that is becoming increasingly supply-constrained rather than demand-constrained. For much of the past decade, developers worried about finding demand. Today, the bigger challenge is bringing capacity online fast enough to meet it.
Bottom line: Demand growth, stronger forward pricing, active corporate procurement, and new buyer classes are creating a more favorable market for de-risked assets than at any point in the last decade.
What this means for your pipeline strategy
Operating and later-stage assets capture the same upside: power price appreciation, PPA demand, state clean energy mandates. What they reduce is greenfield exposure: fewer queue-related delays, less construction cost uncertainty, and fewer late-stage development surprises.
The implication for developers is straightforward: project quality still matters, but asset maturity has become a competitive advantage. In markets where queue delays, network upgrade uncertainty, and policy timelines can add years to development schedules, later-stage projects have gained a scarcity value of their own.
The trade-off is diligence speed. When you are evaluating multiple opportunities at the same time with limited internal bandwidth, the bottleneck is not the decision. It is the time it takes to build a credible view of each asset. Queue history, power price realization at the node, network upgrade exposure, preliminary design feasibility: assembling those inputs from scratch on every opportunity is not viable at the pace M&A requires.
The winners of the next development cycle may not be the teams with the largest pipelines. They may be the teams that can convert opportunity into operating capacity the fastest. That is what we built for. Enverus PRISM® brings together queue data, substation headroom, nodal LMP forecasts, pre-built asset economics, and land feasibility in a single platform, updated daily. Our research team, through Enverus Intelligence® Research, tracks the policy environment, IRA phase-down, safe harbor capacity, and state RPS commitments, so you have the strategic context alongside the asset-level data.
In our next post, we’ll walk through how to screen thousands of operating and queued assets in minutes using nodal pricing, queue intelligence, and asset-level economics. After that, we’ll show how to quantify network upgrade risk before entering exclusivity.
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