Cornell Takes 2nd at the Duke Energy in Emerging Markets Case Competition

By Seth Olson

The Kenyan energy system is currently in a fascinating moment. On one hand, Kenya’s widespread adoption of mobile money has allowed it to emerge as a success case for innovative pay-as-you-go (PAYG) solar companies that enable households at the base of the economic pyramid to access solar electricity. On the other hand, Kenya’s national utility, the Kenyan government, and the World Bank are pushing hard for universal access to the power grid within the decade, bringing electricity to millions but undercutting the off-grid solar market in the process. This dichotomy was the backdrop for this year’s Energy in Emerging Markets case competition hosted by Duke University.

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The case competition asked participating teams to recommend a course of action for M-KOPA, the global leader in PAYG solar, to respond to Kenya’ rapidly changing energy landscape. M-KOPA has experienced exponential growth in recent years, but with the energy sector shifting underneath their feet, they face an uncertain future. The Cornell team proposed that M-KOPA implement a two-part solution that combined important financing and marketing insights. The first component was to adjust the company’s capital structure by securitizing solar home systems – a measure only recently made possible by capital markets reforms in Kenya. Securitization would provide the structural flexibility that would enable the second component: investing in a parallel pay-as-you-go home appliance business. This business, called M-KOPA Nyumbani (‘home’ in Kiswahili), would bring refrigerators, stoves, and other appliances within reach for low-income grid-connected Kenyans, helping customers make the most of their energy access. This solution rose to the top of the field, with Cornell placing 2nd in a field of 34.

For this year’s competition, I joined up with two Johnson students, Crosby Fish and Madeleine McDougall, to lay out our vision for M-KOPA. As a master’s student in applied economics at the Dyson school, working on this interdisciplinary team was an exciting, informative experience. Energized by a shared passion for sustainable enterprise, we combined my academic thought process and research background (in a line, my thesis work is about how rural Kenyans interact with credit markets) with Crosby’s and Madeleine’s b-school training and expertise in energy and international development to develop a well-researched solution that made sense for M-KOPA. Just going through the process of developing our proposal and presentation was a valuable exercise for me, and the case itself offered some great learning opportunities.

The more I learned about M-KOPA, its accomplishments, and its challenges, the more I appreciated the power of electricity access to improve a household’s quality of life. In developing our solution, I also found myself thinking beyond energy access to also consider the benefits of that access. I also learned a lot about the financial challenges of bottom-of-the-pyramid businesses and the creative solutions that firms are using to overcome those obstacles.

Advancing to the finals in Durham was the cherry on top of the whole experience. Between hearing the diversity of strong solutions and meeting other students who are passionate about using business to solve societal challenges like energy access, it’s hard not to feel excited about our generation’s potential for leading a global transition to sustainable energy systems.

I’m grateful for having the opportunity to work with my fantastic teammates on this interesting and impactful case. In my final thought, I’d like to thank the Cornell Energy Club and the Johnson community for their helpful insights and support in making our participation possible.

Posted on November 27, 2017 .

CEC 2017 Takes on the ‘Generational’ Shift in Energy and Power

By Matt Volkov

Attendees at this year’s Cornell Energy Connection (CEC) were treated to a variety of different perspectives on the state of the energy and power industries. My classmates and I agreed that it was hard not to feel excited about our futures as MBA students interested in energy. That’s because the historic transition now underway in energy and power represents a massive and interesting – a “generational,” as one speaker and Cornell alum put it – opportunity.

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The emergence of cost-effective renewable energy projects was among the biggest topics discussed at CEC this year. We heard first-hand about the ways in which the deployment of solar, wind and other renewable facilities are impacting the industry from alums working at utilities, equipment manufacturers, consulting firms and renewable power developers. The diverse perspective provided by the speakers highlighted the extent to which renewables are impacting myriad aspect of the energy, power, oil and gas and related industries.

Also under discussion at CEC this year was the role that policymakers and regulators have to play in enabling our energy future. For example, one Cornell alum working at a renewable power developer suggested that state-level initiatives (such as New York's Reforming the Energy Vision program) are necessary to enable the ongoing modernization of the electric grid. I was excited to hear from our speakers about the importance of policy and politics to the future of energy.

CEC was one of my favorite Johnson events of the year. Aside from allowing my classmates and I to engage with an array of energy and power professionals, the event also allowed us to apply the principles we have learned in our core economics, finance and accounting classes to the trends shaping the energy and power sectors in the 21st century. I left the event feeling more driven to understand the forces at play in energy and power – and I’m sure I wasn’t alone in that feeling.

Posted on November 4, 2017 .

The Black Oak Wind Farm: A Rollercoaster Episode on the Layers and Challenges of Renewable Energy Projects

By Mark DesMeules

In late April, Marguerite Wells spoke to the Cornell Energy Club (CEC) about her experiences as Project Manager of the Black Oak Wind Farm project. Ms. Wells spent nearly ten years working in the green roof industry before her entrepreneurial impulse pointed her towards a unique opportunity in the wind sector.

CEC members hear from Marguerite Wells on her experience leading the development of the Black Oak Wind project.

CEC members hear from Marguerite Wells on her experience leading the development of the Black Oak Wind project.

Alongside a few other hardy souls seeking to bring wind energy to the Ithaca area, Ms. Wells submitted the Black Oak project for a New York state energy development tender, and won. The project was designed as a 16.3MW community-owned system to be established in Tompkins County, New York. The technology to be used in the wind farm project included seven 2.3MW GE wind turbines, with construction was slated to begin in 2015. However, the contract presented challenges that Ms. Wells had not faced in her previous work. The capital intensity of the wind farm meant significant upfront collateral was required to keep the winning project bid. Furthermore, Ms. Wells noted that finding a credit-worthy offtaker for the energy produced was an critical achievement in the early days of the project. Despite the difficulties, the project cleared both of these early hurdles. Cornell University agreed to sign a power purchase agreement (PPA) for all of the energy to be produced by the project. Likewise, Ms. Wells completed a scrappy round of fundraising focused on interested parties in the community. The wind farm was to be wholly community-owned, meaning all capital contributors would come from the Tompkins County region, and each would be a partial owner of the project.

During her presentation to the Energy Club, Ms. Wells described some of the unique challenges that Black Oak faced when moving into the next phases of project development. First, the project size, 16.3MW, was too small to attract the interest of large financial institutions. Second, Ms. Wells and her team lacked the track record that investors often desire when vetting a greenfield infrastructure investment. As such, Ms. Wells was not able to obtain investment from banks. Beyond the challenges of securing investment, Ms. Wells detailed the numerous other hurdles that Black Oak needed to overcome to succeed. Being a non-utility-developed energy generation system, the Black Oak project needed interconnection with the electricity grid. This required costly equipment and added another layer of complexity.

Despite Ms. Wells’ diligent efforts, the project has been left in developmental limbo with a dim outlook after facing pushback from residents living nearby the slated construction site – one of the many challenges that can prevent a renewable energy project from becoming a reality. Ms. Wells’ presentation on the rollercoaster ride of community wind-farm development provided a fascinating and local look into the many layers and steps involved with bringing an energy project from conception to reality, as well as the challenges and variables faced by developers along the way.

While the Black Oak wind farm may have an unknown future, the renewable energy development story for Ms. Wells didn't end there. Her time working on the wind farm shaped her into a wind industry veteran with a deep understanding of wind development in New York state and the scars to prove it. Ms. Wells' scrappy, self-starter attitude and unshaken spirit led her to join Invenergy, one of the country's leading wind energy developers. There, she is working to help the company identify and develop wind projects in New York, furthering the state’s renewable energy goals and moving the US further along the road to a low-carbon economy. 

Posted on June 29, 2017 .

CEC Participants Undergo 'Newtonian Shift'

By: Crosby Fish

During this year's Cornell Energy Connection (CEC), I took ‘Western Energy’ – previously a leading utility – to the verge of bankruptcy as acting CFO. In the face of a changing energy landscape, my company was over-leveraged, slow to adapt to new technologies, and unprepared for the new competitors rewriting the rules of the energy economy. Even our core business of operating the power grid was under threat from nontraditional players like technology companies building out smart grid infrastructure.

Participants examining the town of 'Newtonia' and its energy needs.

Participants examining the town of 'Newtonia' and its energy needs.

Fortunately for my nonexistent shareholders, ‘Western Energy’ is a fictional company in the energy transition strategy simulation called Newtonian Shift, which featured heavily on the second day of this year's CEC. Originally designed to model the ongoing energy transition for utility executives, the simulation is set up like an intricate board game. Each player assumes a different role, from railroad executives to low-income energy consumers, and must collaborate, transact, or compete with other stakeholders in order to achieve a specific set of goals. The regulatory environment also changed drastically over the course of the game, as the government of ‘Newtonia’ enacts taxes, subsidies, and free trade agreements. Rapid policy changes upended my team’s strategy more than once over the course of the simulation.

As a first-year MBA student seeking to better understand the prevailing structure of the energy industry and the ongoing transition to distributed generation and renewable resources, Newtonian Shift was eye-opening. First, I was actually working alongside practitioners with decades of experience in the utility and energy consulting sectors to solve the challenges in the simulation, which offered a form of networking refreshingly different from the standard happy hour and coffee chat networking settings. Second, the simulation itself highlighted the complexity and the magnitude of the effort required to deploy existing generation and efficiency technologies to adapt our energy system to the 21st century, particularly with accelerating pace of distributed generation. Over the course of the three-year simulation period, the ‘Western Energy’ team lost some of our biggest clients as they invested in wind, solar, and hydro resources.

The CEC as a whole illustrated the passion of the Cornell community for the future of the energy industry. Having spent the prior day absorbing broad industry concepts and developments from professionals throughout the energy industry – including our incredible keynote speakers Katherine Hamilton and Jigar Shah – the simulation offered an opportunity to watch some of these trends unfold in ‘real’ time. Those of us lucky enough to participate in the CEC and Newtonian Shift left the event better informed and better able to navigate the changing energy world. I, for one, am already looking forward to CEC 2017.

Posted on October 31, 2016 .

From the Northwest to New York: Following the Clean Energy Standard

Prepared by Geoff Johnson – 08-15-16 

Each summer, millions of visitors flood Seattle’s Pike Place Market to marvel at the Puget Sound and watch swashbuckling fishermen zing salmon across packed market stalls. This place is almost always crowded – and rightfully so. There’s a ton to do, taste, and see. One visitor this summer, however, was looking for something else here (hint: it’s me). 

I interned at OneEnergy Renewables, a utility-scale solar developer based right next to the market that builds construction-ready solar assets throughout the United States. During my summer, I worked across regional teams developing tools to better understand property tax implications for solar, analyze prospective markets and competitive landscapes, and monitor regulatory changes in a rapidly evolving energy industry. 

New York State is home to some of the most rapid changes. Reforming the Energy Vision (REV), an energy modernization initiative launched by Governor Andrew Cuomo in April 2014, seeks to transform the way electricity is distributed and used throughout the state. As part of the REV process, Governor Cuomo directed the state’s Department of Public Service (DPS) in December 2015 to develop a Clean Energy Standard to meet the state’s goal of generating 50 percent of electricity from renewable resources by 2030. 

This is what I was waiting and looking for all the way from Pike Place: a Clean Energy Standard that would inform how New York would achieve its renewable energy goals and what the implications would be for solar projects in the state. 

On August 1, 2016, New York approved this Clean Energy Standard. The order is an ambitious and impressive step that mandates utilities to procure increasing levels of new renewable resources through Renewable Energy Credits starting next year. It also establishes subsidies for struggling nuclear power plants which are critical to New York achieving its 50 percent goal. 

Despite its successes, the order falls short for some solar developers. For example, procurement criteria for new renewable resources include diversity of resources. They do not specify targets specific to solar, wind, or any other renewable resource. 

Furthermore, procurement targets of 30.5 percent for renewables through 2021, while laudable, are conservative in the context of an Investment Tax Credit (ITC) that expires after 2023 (particularly given a renewable resource baseline of 25.7 percent). In other words, DPS could increase procurement targets earlier on to take advantage of the ITC and more efficiently achieve its 50 percent renewable energy goal. 

Opportunities in New York are very much still present for solar developers as the REV process continues. This process will, among other things, define a methodology to more accurately value solar on the grid by incorporating avoided infrastructure costs and environmental benefits which were previously not considered. 

This summer emphasized the importance of policy conversations and the myriad of players that are all integral to developing a large-scale solar project. I am excited to continue tracking these conversations and leading these players after graduation in an increasingly crowded solar industry. If it’s anything like Pike Place Market, I’ll be more than ready.

Posted on August 31, 2016 .

The Potential of Nuclear Energy: Practicality Debates Theory at the 2016 Lund Critical Debate on May 3

by Geoff Johnson

 

Daniel Kammen (left) debates with Lauri Muranen (right) on the future of nuclear. Annelise Riles of the Cornell Law School. Photo by Geoff Johnson.

Daniel Kammen (left) debates with Lauri Muranen (right) on the future of nuclear. Annelise Riles of the Cornell Law School. Photo by Geoff Johnson.

The auditorium was radiating as Daniel Kammen (University of California, Berkeley) and Lauri Muranen (World Energy Council, Finland) took to the stage for the 2016 Lund Critical Debate. Both gentlemen boasted formidable resumes in the energy space and the audience was ready for a heated debate. In one corner of the ring, we had Kammen, a renewable energy expert who runs Berkeley’s Renewable and Appropriate Energy Laboratory. In the other corner, we had Muranen, a leading nuclear power advocate from a country that could produce 60 percent of its electricity using nuclear by 2025.

Those who wanted these combatants to come out swinging would have been underwhelmed – the gloves stayed on and by their sides for the most part. The two agreed that nuclear energy is an important part of the energy mix. They differed in the details of implementation and to what extent nuclear energy could be a solution to climate change.

Kammen’s primary argument centered around nuclear technology being too slow and costly in practice to tackle climate change and rising temperatures. He alluded to the $10 billion cost for new reactors, the existing 400 reactors that will retire in the coming decades, and the lackluster financial performance of these reactors. Cost overruns and risks surrounding nuclear waste have made and continue to make new nuclear reactors a hard sell for today’s politicians. Finland’s fifth reactor, for example, was proposed in the 1980s, again in the 1990s, approved in 2002, and began construction in 2005.

Kammen highlighted renewable technologies such as solar and wind as a viable solution to the world’s energy problems. Unlike nuclear, these technologies are becoming less costly and more efficient over time. He recognized the trickiest challenge renewables faces is building in energy storage given the intermittent nature of the sun and wind. He also recognized the world’s decreasing supply of lithium which will be critical to fulfilling the potential of storage. In response to this challenge, Kammen noted some companies are exploring and using different resources other than lithium to build storage systems.

Following his counterpart’s opening argument, Muranen seemed somewhat overwhelmed but managed to stay unnerved like Finland’s bedrock. He alluded to the predictable costs of nuclear and its low levelized cost of electricity. For Finland, a country with minimal irradiation and stable bedrock, nuclear provides a viable source of energy. Outside of Finland, Muranen shared an anecdote on nuclear stability in Gabon, where the remains and spent fuel of a natural nuclear reactor has not moved in one billion years. For countries less prepared to store nuclear waste, he highlighted the role of the International Atomic Energy Agency which is to exchange best practices on waste storage between regulators around the world.

Kammen emphasized that the question of nuclear storage is not if Finland can do it right – but if the world can build a system to do it right. Even with international assistance, not all countries are not as good at managing risk as the Finnish. Yucca Mountain in the United States is an example of a poorly planned and executed nuclear storage facility. It cost the government $30 billion and will likely not be used due to water flowing under the mountain.

In a moment of clear agreement, Kammen noted that one of the most attractive features of nuclear energy is the ability to standardize hardware and thus jobs. In France, for instance, a worker can move around the country and work at any nuclear reactor because every reactor has the same design. This uniform approach presents a potential opportunity for nuclear. The problem exists in that countries like the United States have taken the opposite approach and customized each reactor.

Ultimately, Kammen argued that nuclear energy will not produce enough energy quickly enough to tackle climate change and rising temperatures. Muranen seemed to agree, noting that he, “wouldn’t mind 100 percent renewables if we could do it.” These two experts see nuclear energy as a part of the energy equation. Whether it is for research, large-scale reactors, or small modular ones, it is clear that we need to tap into whatever technology we can to combat climate change.

Posted on June 6, 2016 .

Welcome the New Energy Club Board!

By: Jon Bruss

The Cornell Energy Club has elected and transitioned to its new Board for 2016. We want to thank the outgoing board for the amazing job they have done and wish them luck as they transition into their careers.

Please join me in welcoming the new board! Check out their bios on our Officers page to learn more about their backgrounds and roles in the club.

Posted on April 12, 2016 .

2015 Cleantech Trek: Cornell Energy Club Visits and Shines in Bay Area

By: Geoff Johnson

A month after Johnson Energy Connection (JEC) and a month before the end of the fall semester – some of us in the Energy Club started talking. We brought so many great companies to campus for JEC in October. What about those cutting-edge companies who couldn’t come? We wanted to see first-hand what they were up to, and what trends they see going forward in the cleantech industry. We decided the Bay Area was the place to do just that.

We organized visits over a four day period in December to a diverse set of firms working in solar, energy management, energy storage, and clean energy finance, among other areas. These firms included Bloom Energy, Building Robotics, First Solar, Greentech Capital Advisors, Lucid, Opower, NRG, the Roda Group, SolarCity, Stem, and SunEdison.

The visits provided a unique opportunity for seven Johnson students to hold conversations with some of the most innovative companies in the cleantech space. Not only did these visits provide an opportunity to ask questions and learn about career opportunities, but they exposed us to new business models and technologies – from Lucid’s cloud-based building management system, buildingOS, to Building Robotics’ office climate control software, Comfy.

The Energy Club is excited to continue engaging with these firms as it plans for JEC in the fall of 2016, and as Cornell students graduate and head off to work for and propel these companies into the future of the cleantech industry.

Posted on April 4, 2016 .

Johnson Greets Austin at the 11th Annual NEFC

by Erika Roby

The National Energy Finance Challenge, hosted by UT-McCombs, is the premiere business school case competition for Oil and Gas finance. In its eleventh year, I had the opportunity to lead a few peers down to Austin to compete against schools from around the country. It was exciting (and a little nerve racking)—overall an enriching experience that was well worth the time and effort put in.

L-R: Erika Roby, Bryan Koch, Yanika Chanapol

L-R: Erika Roby, Bryan Koch, Yanika Chanapol

The experience was not without adversity however, as our original five-person team fell to just three a few days before the case was disseminated, due to interviews from prospective employers. My teammate Yanika Chanapol, who has an impressively relevant background working for Thailand’s largest oil, gas, and power company (PTT), was one of our strongest contributors. She and I could not fault our teammates for prioritizing employment, but made up for the hole by recruiting a fourth teammate, Bryan Koch, a friend and peer with an outstanding Oil and Gas background in accounting and banking. Unfortunately though, during the case itself we lost yet another member due to other commitments. Bryan, Yanika, and I finished the case together, submitting our deck at 9:59 pm—not a moment to spare—via email.

Once our final deck was submitted, relief washed over us as our remaining priority was to fly to Austin and present. Upon arrival we realized that the weather in Austin was nothing like Ithaca—a staggering 93 degrees in mid-October! Yanika and I found it refreshing, while Bryan (a Texas native) lamented the heat to which he was all too well accustomed.

We were up first with a bright and early 8:00 am presentation. Our presentation went well! We pitched an offshore project over other options within the case, among them a prospective M&A deal and a share buyback. Bryan and Yanika really shined—Bryan fielded questions regarding the project and Yanika piped in with her experience, while I tried to tackle the M&A issues as best I could.

When they announced the finalists, of course we were disappointed to hear that we were not selected. Entering in the finals were teams from Rice, Cox (SMU), Booth (U of Chicago), and Ross (U of Michigan). Cox ended up winning! As an SMU alum, Bryan was very pleased to see his alma mater do well.

Our team was able to bond that evening and see some more of Austin. We ate some amazing barbeque at Black’s and met up with some of the other teams on Rainey Street. All in all, despite the loss, we had a great trip and found it to be a great way to meet other high-level individuals in the Oil and Gas sector. I almost wish I was a first-year so I could come back and do it again!

Reflections on JEC 2015

by Victor Omoniyi

Johnson Energy Connection 2015 (JEC), in its seventh year, was the most successful ever. The two-day event brings together students, faculty and industry professionals that are interested or passionate about energy. There were over 150 participants, including company representatives, students, staffs and faculty. And, the keynote speaker for the event is the current CEO of SunEdison, Ahmad Chatilla.

Ahmad’s speech on gender diversity and women at SunEdison marked the beginning of the end-product of seven months of intensive planning and coordination between the Cornell Energy Club (CEC) and the Center for Sustainable Global Enterprise (CSGE).

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There were multiple sessions on the first day of JEC covering different relevant topics in the energy industry, such as Consumer’s Utility Bill and Why it Matters, Natural Gas & Electricity Markets, Creating Renewable Energy from Landfill Gas, just to name a few, more details can be found here. Students then had networking opportunity with company representatives during the famous “Company Office Hours”. The day was concluded with a reception at the Baker Portico in the Physical Sciences building, where CEC and SGE club members connected with industry professionals in an informal setting.

Jaime Martinez Soto of Emerson Process Management led a workshop for the Saturday case competition that saw about twenty five students attempt to solve a relevant business problem that Emerson experienced in the past. Five teams of five students each had about 1 hour to come up with a solution. Jaime and Mike Train, Senior Vice-President of Emerson, listened to students pitch their solutions. Mike gave feedback to students after the presentation and highlighted the solution that was implemented at Emerson.

While JEC 2015 has gone into the record books, the next one is only a few months away and planning will be starting soon. Many thanks to everyone who made JEC 2015 a huge success, including but not limited to alums, industry professionals, SGE and Energy club members, the Center for SGE, and everyone else (lots of people) who contributed in one way or the other to make JEC 2015 a special and successful event!

 

 

#CornellMBA

Posted on October 13, 2015 .