Nuclear energy can't produce the energies observed in these compact objects. The only source with enough power is gravitational infall. In order to produce such luminosities, the most efficient process is for material to spiral in a disk into a black hole. The black hole may have formed through coallescence of stellar mass black holes, or through direct collapse of a central gas cloud. A quasar is only as powerful as its fuel source.
Gas has to continue feeding into the black hole, or the quasar shuts off.
Galaxy mergers may provide the material. With less fuel, a quasar may look like an ordinary galaxy.