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Thermal Power Generation

We help electric-power generators enhance revenue, reduce costs, and transform fleet performance.

As lower gas prices, constrained demand, tighter environmental controls, and shifts to renewable energy combine to exert pressure on generators’ margins, operational excellence is at a premium. Our comprehensive approach helps clients simultaneously improve plant performance, strengthen central procurement, and optimize capital portfolios.
To maximize impact, we help clients address all value levers at the plant level: revenue, commercial optimization, fixed cost, and variable cost, including fuel cost. We embed capability building into project design so that clients increasingly rely on their own resources as the program is scaled up, and our support is gradually reduced from one wave to the next.

What we do

We work with many of the world’s largest power-generation fleets to secure lasting improvements in frontline operations. We help our clients develop capabilities to build a strong foundation for performance excellence. We provide access to an unparalleled global network of specialists who have deep expertise and hands-on experience in the power industry, lean operations, and energy efficiency.

  • Frontline plant operations. Our distinctive field-tested process, supported by learning modules, IT packages, and lean techniques, helps clients identify improvement opportunities, generate and evaluate ideas, set priorities, and track results. We tailor each program to the relevant generation technology—fossil, hydro, or nuclear—targeting heat rates, individual productivity, and outage times.
  • Portfolio and operational risk management. By following our systematic approach to evaluating risks and returns, clients can make better decisions on sourcing mix, the wholesale/retail balance, long-term versus short-term sales, and hedging programs. We help clients align commercial and operating incentives to capture opportunities and drive sustained impact.
  • Performance transformation. Our pragmatic emphasis on value creation enables clients to capture operational gains quickly, adjust performance in real time, and track progress effectively. To ensure that transformation delivers continuous improvement, we focus on long-term shifts in mind-sets and behaviors as well as short-term performance gains.

Examples of our work

In the past 5 years we have supported clients on more than 400 projects in thermal-power generation, including the following:

Growing a Country’s Electric Power Capacity

Supporting a country in building up 20 gigawatts of electric-power capacity over a 20-year period, including helping to develop supply and demand models, draft a strategy and implementation plan, explore efficiency opportunities with an offshore-wind developer, and capture savings of 30 percent in capital expenditures and 10 percent in time

Identifying Personnel Trends

Creating personnel-management tools drawing on untapped databases to help a client identify trends in overtime and absenteeism and cut hours affected by half

Improving Heat Rate

Using advanced analytics to help an aging-coal-plant client analyze more than 3,000 production variables and millions of data points to isolate six parameters that affect heat rate and can be controlled by operators, resulting in a 2 to 3 percent improvement in heat rate and a substantial reduction in cost

Featured capabilities

We constantly invest in creating innovative tools and methods to enhance our service to clients, such as the following:

  • McKinsey Power Gauge. Our global benchmarking tool uses data from 600 thermal-power stations to develop insights into operational best practices and improvements.
  • Wind O&M Benchmarking. This operations and maintenance specialist tool provides technical and economic assessments of more than 440 wind parks and 10,000 wind-turbine generators.
  • Commercial optimization tool kit. Our proprietary dispatch-optimization model helps generators maximize revenue in a variety of wholesale-market conditions.
  • Tetris. Using McKinsey’s proprietary Power IQ tool, Tetris helps identify optimal-spend profiles and regulatory constructs to maximize value for utilities and their customers.

Impact Story

How a power plant switched on sustainable savings

A lean pilot sets a utility on course to achieve $9.5 million per gigawatt in annual bottom-line savings.

Related Insight


Unlocking the value of digital operations in electric-power generation

– To stay competitive in electric-power generation, gas- and coal-powered plants need to improve fuel efficiency and performance. A digital-enabled operational transformation allows them to do so.

Connect with our Electric Power & Natural Gas Practice