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Why does Utility Co. use more gas as fuel during the night vs the day?

approaching a case
New answer on Sep 04, 2021
1 Answer
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Anonymous A asked on Sep 04, 2021

Hi everyone,

Our client is a Utility Company.

They use a mix of coal and gas as their source of fuel and power.

Our client noticed that they are using more gas during the night vs the day as the source of fuel for the power plants.

What are assumptions we can make on why is this happening?

*Coal and gas prices are fixed

(edited)

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Ian
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replied on Sep 04, 2021
#1 BCG coach | MBB | Tier 2 | Digital, Tech, Platinion | 100% personal success rate (8/8) | 95% candidate success rate

Hi there,

Sounds like you need to create a framework to figure this out! 

I do have some clarifying questions but quick brainstorming leads me to think it could be any of the following:

  1. Coal is more expensive (as a raw input), so at night, when there less demand, they'll burn gas as a first option (Im assuming the statement is they use more gas as a % of the totla)
  2. There is more demand at night. So, while coal may be the default/base/preferred thing to burn, our client is forced to burn gas at night to meet demand (it's their “excess” demand source)
  3. The coal plants need maintenance at night
  4. Either coal or gas is easier to ramp up/ramp down in terms of energy production, so as energy demands shift at night, they ramp up/down the easier asset
  5. Coal plant staff are unionized and therefore are paid overtime at night…so gas is preferred.

^This is a “random” list but you get the idea! Now, the challenge is the create a framework that can figure out the root cause in a systematic way!

 

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Ian

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