Evaluate Energy One's Transition to Renewable Energy Sources
Overview
This question evaluates financial modeling, capacity planning, unit economics, and scenario/sensitivity analysis skills applied to an energy transition case, testing a data scientist’s ability to interpret costs, revenues, and policy constraints within an energy-sector context and is categorized under Analytics & Experimentation.
Capital One
Jul 12, 2025, 6:59 PM
Data Scientist
Onsite
Analytics & Experimentation
49
0
Energy Transition Case: Feasibility, Capacity, and Options
Context (assumptions to interpret the case)
- Treat $/MWh values as constant market prices (pre-tax, ignore financing, depreciation, and inflation unless asked).
- Fixed costs occur annually; variable costs scale with MWh produced.
- Capacity figures are annual maximums unless capped by policy.
Questions
- What factors would you consider when evaluating Energy One's transition from fossil fuels to renewable power?
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Fossil-fuel plant economics:
- Max capacity: 8.8 million MWh/year
- Lease: 60 million/year)
- Other fixed cost: $25 million/year
- Variable cost: $20/MWh
- Revenue (price): $40/MWh
- Initial investment (capex): $400 million
- If government policy caps fossil-fuel generation at 5 million MWh/year, which alternative power sources should Energy One pursue and why?
3b. If no new power sources are added, what levers could keep profitability stable under the 5 million MWh cap?
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Test plants:
- 4a. Solar test plant: 0/MWh; price $40/MWh. How many years to break even?
- 4b. Ethanol test plant: 30/MWh; price $40/MWh. How many years to break even?
- With no budget limit, which test plant would you recommend and why?
Solution
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