Case

# E.ON Inhouse Consulting case: Robinson

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## Problem Definition

Mrs. Robinson and Mr. Friday live on an island. Their only access to civilization and trade are the inhabitants of the neighboring island, a people of excellent engineers (they also have electricity). The island is quite large with a small desert in the middle, surrounded by stormy sea. Mr. Friday has found a treasure some time ago and now lives off this fortune; he has build a private entertainment park near the shore requiring 1000x more energy than a normal household – but he has no electrical power yet! Mrs. Robinson is far less wealthy than Mr. Friday, but she has a great entrepreneurial spirit, know-how and enough money to invest. She is keen to supply Mr. Friday with power to earn some of his Euros. Her equipment suppliers are the neighboring engineer islanders; but she has access to neither fossil nor nuclear fuels.

This is an example case study to help you prepare for your interviews at E.ON Inhouse Consulting. Practice ideally with a partner who can challenge your thinking and give feedback.

The analysis is divided into four parts; the interviewee should present a conclusion in each section based on the information available, and then refine his calculations based on the findings and new information shared by the interviewer. The interviewee should actively ask for the assumptions and data that are needed to run the analysis.

## Detailed Solution

Paragraphs highlighted in green indicate diagrams or tables that can be shared in the “Case exhibits” section.

Paragraphs highlighted in blue can be verbally communicated to the interviewee.

The following structure provides an overview of the case:

### I. Background

At this point the interviewee should understand the situation and structure the problem solving strategy.

Share Drawing with interviewee.

Part 1:

How much power is needed?

Mr. Friday needs in the area of ~5000 MWh of power (1000 x 5000 kWh, which is roughly the European average for a household)

What are the options for Mrs. Robinson?

Mrs. Robinson could build up renewable generation with a suitable transmission and storage system, mainly: Wind power onshore, Wind power offshore, Hydro power, Solar PV, Concentrated solar power, Biomass

What does she need to consider in her decision making generally?
• Need to consider invest per capacity, output (demand), price and O&M cost
• Need to consider technology risks
• Need to consider whether Mrs. Robinson could just install an interconnector from neighboring island

Part 2:

What factors could influence the technology decision (except for CAPEX required)?

Mrs. Robinson should consider external factors influencing the output and the stability/risk of systems

• Wind power onshore: How much wind is there? How many hours per year?
• Wind power offshore: How much wind is there? How to solve foundation issue? Where is site exactly/accessibility? Need transmission.
• Hydro: Are there suitable sites: Rivers, waterfalls, tidal power, etc. ?
• Solar PV: Is there sufficient sunlight? Can use diffuse light. Which technologies feasible: Thin film / conventional mono-crystalline silicon? [deep knowledge – nice-to-have only]
• Concentrated solar power: Direct sunlight available? E.g. in desert. Need transition cable. (Has storage solution integrated.)
• Biomass: Sufficient fuels available in a sustainable way?

### II. Analysis

Part 3:

Suppose now that Mrs. Robinson’s engineering suppliers on the neighboring island only make a reasonable offer on wind power technology.

How should she decide between offshore and onshore systems given the following information?

Share Table 1 with interviewee.

In order to solve the questions, the interviewee should perform calculations.

Analysis & calculations

Running hours (hrs/year)

= 24h * 365d * Load factor

= 5,256 (Offshore) // = 2,190 (Onshore)

→ Approx. running hours: 5,000 (Offshore) // = 2,000 (Onshore) [rounded for easier calc.]

Capacity needed

Capacity installed(kW)

= Demand / Running hours * 1,000

= 1,000 (Offshore) // = 2,500 (Onshore)

Analysis & calculations

Price (EUR/MWh)

= Price in ct/kWh * 1000 / 100

= 100 (Offshore) // = 100 (Onshore)

Earnings

Revenues (EUR/year)

= Price * Demand

= 500,000 (Offshore) // = 500,000 (Onshore)

Invest (EUR)

= Capacity * Sum of CAPEX

= 2,000,000 (Offshore) // = 2,500,000 (Onshore)

Depreciation (EUR/year)

= Invest / Time horizon [linear]

= 200,000 (Offshore) // = 250,000 (Onshore)

Profit after depreciation (EUR/year)

= Revenue - Depreciation

= 300,000 (Offshore) // = 250,000 (Onshore)

Part 4:

Suppose now that Mrs. Robinson finds out about potential differences in O&M cost. How does this impact on earnings?

Share Table 2 with interviewee.

Analysis & calculations

Cost of O&M (ct/kWh)

= Cost in ct/kWh * 1000 / 100

= 50 (Offshore) // = 20 (Onshore)

Cost of O&M (EUR/year)

= Cost in MWh * Demand = [Output]

= 250,000 (Offshore) // = 100,000 (Onshore)

Earnings

Cost of O&M (EUR/year)

= Revenue - O&M Cost - depreciation

= 50,000 (Offshore) // = 150,000 (Onshore)

Following the calculation you can share Table 3 with interviewee.

### III. Conclusion

What is your recommendation for Mrs. Robinson?

The interviewee should make a top-down summary of findings and most critical areas. He or she should also make a reference to the risks of maintenance in offshore windparks (hard during some times of the year, need ships etc.).

## Difficult Questions

More questions to be added by you, interviewer!

If the interviewee solves the case very quickly, you can come up with more challenging questions to ask them.

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Case exhibits