Determine Optimal Energy Project for 10% ROI Target

##### Scenario An energy company is evaluating investments in new renewable projects and must hit a 10% annual return on investment (ROI). Fixed and variable costs differ between solar and a second technology with $30/MWh variable cost. ##### Question What qualitative and quantitative factors would you consider when selecting a new energy project? 2. If the target is a 10% annual ROI, how many MWh must be produced each year to reach it? (Expected: 6.25 MWh × 10^ 6) 3. Production is capped at 5 MWh × 10^6 per year. What actions could still deliver a 10% annual ROI? 4. Two options exist: (a) Solar with zero variable cost, (b) Alternative technology with $30/MWh variable cost. For each, calculate years to breakeven; both should be ~2.5 years. Show your math. 5. Which option would you recommend and why? 6. In 30 seconds, summarize your analysis and recommendation to senior management. ##### Hints Apply ROI = (annual profit) / initial investment. Factor in price per MWh, cap-ex, opex, subsidies, risk, scalability, and regulatory constraints.