1472078 How Many People in Uganda Has No Access to Elctcty?| Management Consulting Case Interviews roiya tog ost Management Consulting Case Interviews Welcome Tushar How Many People in Uganda Has No Access to Electricity? Case Type: industry analysis; math problem. Consulting Firm: Boston Consulting Group (BCG) first round full time job interview. Industry Coverage: energy industry; utltes. Case Interview Question #01142: This is a multi-step case which will encourage the candidate to think creatively through several stages of a case that they likely have little background in. Encourage the candidates that formal frameworks are not really required for this case (as is the case in many BCG case interviews) but ccan be used if they think it would be helpful. Additional time should not be allowed for a candidate to build a framework for any of these prompts. ‘The Organisation for Economic Co-operation and Development (OECD) is an intergovernmental ‘economic organisation with 35 member countries, founded in 1960 to stimulate economic progress and world trade, Most OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries. Many non-OECD countries suffer from frequent blackouts and shortages in electricity. This is a known fact. Prompt A: List at least 3 reasons for why electricity shortages occur and may be more frequent in non-OECD countries. Possible Answer: The interviewer should encourage the candidate to think through and list as many reasons as they can think of, Fee! free to ask them to elaborate or explain any reason further. Note: OECD countries include all wealthy European and North American countries as well as Australia and New Zealand Possible reasons: + Poor infrastructure + Inefficient electrical grids + Lack of adequate funding available to finance investment in electrical infrastructure (build power plants, etc.) + Large population growth + Rapid industrialization + High GDP growth that has outpaced investment in the electricity infrastructure + Natural disasters + Old power plants unable to meet current demand or may require frequent maintenance, Prompt B: Why is the lack of electricity such a serious problem? Possible Answer: Encourage the candidate to think beyond the basic answer that no power = no television, no light ete. Ideally, the candidate will delve deeper into the “so what" here and recognize some of the deeper implications of power outages. hitpsswoconsultngease101.com/how-many-people-i-uganda-has-nc-accessc(o-lecticy! 1s1472078 How Many People in Uganda Has No Access to Elctcty? | Management Consulting Case Interviews No power will result in + Lower productivity + Poorer education, healthcare, quality of life + Limited access to information + Political instability (see below) Further clarification: Access to electricity has essentially become a right and a necessity for the current generation. People living anywhere except maybe the poorest countries in the world are demanding access to not only food, water and shelter but also electricity. For example, much of Africa gained access to cellular phones before landlines and as such the massive increase in the use of electrical products (phones, computers, TVs, radios) has been a primary driver for the shortage in electricity worldwide, Perhaps more dangerous is that blackouts and shortages have the potential to create significant instability for a government, Access to electricity means access to information and limiting a population's access to information can spur revolt. As a result of these implications, rental power providers have seen their industry grow massively over the last decade with projects of the industry doubling every 3- 4 years. Prompt C: Following the massive earthquake in Japan in 2011, there were significant power shortages in the country as a result of the TEPCO (Tokyo Electric Power Company) nuclear reactors going offline due to significant damage. In fact, Japan was left with a deficit of nearly 2 gigawatts due to this disaster (1 GW = 1000 MW). To bridge this gap, Japan turned to rental power providers which were able to provide 2000MW of temporary power within 3 months. Similarly, many rapidly developing countries utilize the same rental power providers to help bridge the gap in their own electrical infrastructures. Due to many of the reasons in prompt A, the demand for power is high and while rental power providers have been extremely successful and profitable in providing power to electrical utilities in these countries, itis estimated that the market is as much as 10x larger than initially expected. List § or more data points that you would require to determine which countries a rental power provider should prioritize, Possible Answer: If necessary, clarify the question by rephrasing: How would you decide which countries would be the most profitable for a rental power provider? There are a number of variables that are useful for this analysis and the candidate should get at least 5 Basic: population, population growth, per capita GDP, GDP, GDP growth, Intermediate: fossil fuel production, energy generation/consumption, power outages per year. Advanced: + % of electrical production from hydroelectric power plants (see next prompts for clarity) + Electrical grid utilization rates (high grid utilization means a greater likelihood of blackouts during peak loading periods) + Political and financial risk levels (many international organizations rank countries by this) + Corruption levels (many international organizations rank countries by this). Prompt D: The Uganda Electricity Transmission Company (UETCL) is suffering from severe electrical shortages due to recent droughts. Why might this be? hitpsswwwconsultngase101.com/how-many-people-imuganda-has-nc-accessc(o-lecticy! 261472078 How Many People in Uganda Has No Access to Elctcty? | Management Consulting Case Interviews Possible Answer: Itis not expected of the candidate to figure this out without any guidance. If the candidate is struggling, or asks questions, inform himvher that Uganda produces 99% of their electricity through hydroelectric power. Clearly, Uganda is heavily reliant upon hydroelectric power. In times of drought, water levels are lower, rivers flow more slowly, etc and as a result the amount of electricity that can be generated is significantly lower. Prompt E: Is it possible to forecast how much power the UETCL will require during a drought? If yesino, please explain why. Possible Answer: Yes. We can forecast the energy production by examining water levels, power plant efficiency and electrical production over time. Specifically, the amount of water held in a hydroelectric dam’s reservoir will be the most telling indicator, These variables can determine how much electricity is typically available during normal periods and in droughts. From these variables, the water level is the one that varies the most, Therefore, we can e production using rainfall forecasts and knowledge of the hydroelectric grid. fate the power ‘The power consumption varies according to the economy, When the GDP grows, the power consumption is also expected to grow in the same proportion In conclusion, we can predict the power production using rainfall forecasts and consumption data using economic forecasts, such as the GDP, all of which are typically publically available. Prompt F: Assume the 250MW Bujagali hydroelectric plant in Uganda typically produces about 1 million MWh (megawatt hours) annually assuming there are no droughts and the water level of the dam’s reservoir is at least 100 ft deep. Due to recent droughts, the water level in the reservoir has fallen to 76 ft and is expected to stay around that level for the next 6 months before returning to normal (100 ft). If the reservoir falls below 50 ft no power can be produced Please calculate what the electricity shortage will be for the next 12 months. Note: the production capacity decreases proportionally when the water level is bellow 100f, reaching 0% when the water level is at 50 feet, Possible Answer: The candidate should recognize that the 250MW installed capacity of the power plant is extraneous information. If asked, briefly explain that power plants MW are units of power and MWH are units of energy or rather the amount of energy used over time. Assume a linear function of depth vs. power producing capacity. Also assume even power production for every month of the year with the only varying factor being a drought. Solution 1: | 50 ft = 0% production and 100 ft = 100%, then 76 ft 6 months normal production = 500,000 MWh 6 months low production = 52% of 500,000 MWh = 260,000 MWh hitpsswowconsultngase101.com/how-many-people-imuganda-has-nc-accessc(o-lecticy! a8 (76-50)I(100-50) = 52% production