Why Regulatory Risk Has Replaced
Construction as the Critical Path
FEATURED PAPER
By Avilio Castellano González
Chile & Colombia
Abstract
The traditional paradigm of energy infrastructure project control — centered on construction velocity, electromechanical assembly, and physical progress metrics — is no longer sufficient to protect CAPEX and investment milestones in utility-scale renewable energy projects. This article argues that regulatory permitting and grid interconnection processes have displaced construction as the primary critical path variable in Solar PV, Wind, and Battery Energy Storage System (BESS) projects across Latin America and the United States. Drawing on direct project management experience in utility-scale energy infrastructure spanning over 25 years and multiple geographies, this paper examines three strategic responses available to modern Project Directors: the adoption of dynamic, probabilistic baselines through Monte Carlo simulation; the early integration of grid operators as active technical stakeholders from the detailed engineering phase; and the structural alignment of EPC payment milestones with critical regulatory approvals to protect project cash flow. The central thesis is that profitability in energy infrastructure is no longer won during construction — it is defended during development, through the disciplined management of regulatory risk as a quantifiable CAPEX variable.
Keywords: CAPEX management, regulatory risk, grid interconnection, Monte Carlo simulation, EPC contracts, utility-scale renewables, COD, project finance, permitting, energy transition.
- Introduction
For decades, the project management discipline in energy infrastructure was built around a straightforward premise: the project that builds fastest, wins. The critical path ran through earthmoving, transformer delivery, and electromechanical assembly. The skills that mattered were construction supervision, supply chain management, and physical progress tracking. The tools that prevailed were the Gantt chart, the earned value report, and the site visit.
That paradigm is no longer adequate for the current landscape of utility-scale renewable energy development. Across Latin America, the United States, and Europe, a structural shift has occurred: the variables that most frequently destabilize cash flows, delay Commercial Operation Dates (COD), and destroy CAPEX are not found in the construction sequence. They are found in the labyrinth of sector permits, grid interconnection queues, regulatory approvals, and technical compliance processes that must be navigated before — and during — physical construction.
This article examines this paradigm shift and its implications for modern Project Directors managing utility-scale Solar PV, Wind, and BESS projects. It is grounded in direct field experience across multiple geographies and project types, and structured around three practical strategic responses that have proven effective in protecting CAPEX and COD targets in regulatory environments of high complexity.
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How to cite this paper: Gonzalez, C. A. (2026). Energy Infrastructure CAPEX: Why Regulatory Risk Has Replaced Construction as the Critical Path. PM World Journal, Vol. XV, Issue IX, September. Available online at https://pmworldjournal.com/wp-content/uploads/2026/09/pmwj168-Sep2026-Castellano-Gonzalez-Energy-Infrastructure-CAPEX.pdf
About the Author
Avilio Castellano Gonzalez
Chile & Colombia
Avilio Castellano González is a Civil Electrical Engineer, PMP® and Senior Project Director with over 25 years of experience leading large-scale infrastructure projects in the Energy, Oil & Gas, and Renewables sectors. He has managed project portfolios exceeding USD $140M, specializing in the full project lifecycle from greenfield development through Ready-to-Build (RTB) to Commercial Operation Date (COD). Avilio has held executive leadership positions at prominent international energy firms, developing deep expertise in utility-scale Solar PV, BESS, and High Voltage Substation projects across Latin America and international markets. He is a recognized regional thought leader whose technical-operational analyses have reached a global audience of over 21,000 professionals, garnering more than 32,000 total impressions with a confirmed impact across eight countries (Chile, Spain, Mexico, Colombia, Peru, Argentina, Honduras, and the USA). He serves as an Award Judge for the PMI Latam Excellence Awards (2023–2025) and as a Global Reviewer for the PMI Leadership Institute (2026).
Contact: aviliocastellano7@gmail.com / www.linkedin.com/in/avilio-castellano-66ab277
