Kellogg Energy Case Competition

This past Saturday, April 6th 2019, the Tepper team traveled to Evanston, IL to compete in Northwestern Kellogg’s inaugural Energy Case Competition. This was the third energy case comp for the Team Turn Down For Watt name, however our members had changed since some of the original crew needed to stay back to represent the club for Welcome Weekend. The team consisted of myself, Dave Turner, Tomasz Szostek, Linh Bao Pham and Simon Cardona.

Impressions

The more you participate in these competitions the more burning the midnight oil, pushing off all other social and homework obligations, and traveling to another city to suit up and present in front of industry executives becomes natural. Each time I’m neck deep in the pressure of preparing a case pitch I question why I continue to compete, but after its all said and done and you’re basking in a wave of gratification you remember that it’s worth it. These events are a great way to dive into practical applications of your studies to tackle real-world challenges. There’s no better way to learn a subject in a quick amount of time than through a case comp. They are an intense learning experience and a fantastic way to get know your classmates better as well as meet other like-minded business students who will go on to form your future industry network.

The Case

This case, co-written by Kellogg Energy & Sustainability Club and AlixPartners, challenged students to propose a bid to purchase a struggling nationalized island utility. The criteria was a holistic evaluation of the competitiveness of your purchase price along with alignment of strategic goals toward meeting targets to reduce the retail price of electricity, reform the generation mix to hit greater penetration of renewables while maintaining reliability, and stimulating the economy through jobs creation and GDP growth. It was a great exercise in understanding the balancing act that utilities must maintain while also diving into financial analysis and optimization problems. Being good Tepper students, our team instantly recognized the opportunity to develop an optimization model in analytical solver with the objective of minimizing the levelized cost of energy while meeting the constraints of increasing energy access to 100% of the population, minimizing technical losses of the transmission system, and changing the generation mix to hit 75% renewables.

Lessons Learned

We really got to practice our energy finance modeling through DCF valuation, Levelized Cost of Energy calculation and enterprise value. We also researched at depth the inputs to our model such as jobs created per MW of generation type, CAPEX and OPEX for various generation types, utility enterprise valuations and grid balancing under high renewable penetration scenarios. Another fun exercise was exploring the potential impacts of pumped hydro storage, battery storage and demand-management through time of use rates and load shifting.

The judges’ feedback was positive: they complimented us on our optimization model, technical due diligence, ability to draw upon comparable examples and story-telling. Ultimately where we fell short was complimenting our quantitative analysis with qualitative impact and recommendations. The winning team, Hong Kong, came from our bracket and their effort was certainly admirable as exemplified by their 50 slide appendix.

Overall

This was the most well-rounded presentation we’ve put together yet. Our team was a great mix of industry experts and consulting/strategy experts, which provided an important boost to how we approached and framed the problems. Kellogg put together a fantastic weekend at an impressive business building and we were able to network and learn from other students across the b-schools of: Duke, Michigan, Texas, Rice, Hong Kong, Purdue, Kellogg, NYU, Yale, Columbia and Dartmouth. We were excited to represent Tepper within the business school energy scene and we brought back a lot of tips and best practices for formulating next year’s inaugural Tepper CleanTech Case Competition.