First quarter brings a lot of stresses for first-year students: meeting new people, studying for classes, recruiting, and adjusting to a new definition of pizza. To add to the mix, during the midterm week of this past Fall Quarter, first-year students Rachel Enright, Conor Coughlin, Richard Yin, Louis Ernst, and John Chiulli participated in the University of Michigan Ross School of Business Renewable Energy Case Competition. The goal of the case was to provide an innovative solution to achieve 100% renewable energy usage for a small food production firm that has several locations across the United States.
Hear from guest blogger John Chiulli how their team worked together through thick and thin to take home the prize for renewable energy.
Working on the case was a pleasure from start to finish, owing to the terrific collection of individuals on the team. Coming into the competition, the group already had the foundations for strong team chemistry: Conor and I had indirectly worked together in our pre-Booth positions, and Richard and I had already worked together as “Partners Leads” for First Day (Booth’s admitted student weekend celebration). In addition, Conor, Rachel, and Richard had formed a strong bond by going through the challenges of consulting recruiting together. Lastly, Louis was one of my first Booth friends, as we had met very early on at last year’s First Day. Each member of our team had volunteered for the case to learn more about the industry, and each member of the team had a passion for energy and renewables.
Our team came from a wide variety of professional backgrounds, including consulting, financial services, economic analysis, tech, and engineering, and as such was able to combine a rich breadth of perspectives on the different issues facing the corporation. We used an innovative solution that blended several different types of purchase agreements, including virtual power purchase agreements (VPPAs) and green tariffs as a foundation for the strategy.
In a VPPA, the firm purchases a stake in a renewable energy project, with the agreement that a portion of any gains and losses on the proceeds from the project would be realized or incurred, respectively, by the investing firm. In a green tariff agreement, the firm simply pays a premium to its utility to ensure that the energy that it uses is derived from “green” sources. Our strategy allowed the firm to reduce its exposure to future energy prices, as VPPAs and green tariffs are financially beneficial in opposite energy price scenarios. Our goal in this strategy was not to make a bet and earn a profit, it was to allow the firm to claim 100% renewable energy in a way that minimized risk. In addition, the team provided a full design of an on-site solar energy and storage system for one of the production facility locations to illustrate a tangible renewable commitment to the customers and for positive brand imaging.
Our team faced a variety of challenges in the preparation and delivery of the presentations. The case was distributed at the beginning of midterms week, which coincided with the throes of on-campus recruiting. The case was due Saturday at midnight… the same night as the Deloitte Case Competition and the Oxford Private Equity Challenge, which caused two team members to scramble in order to meet these obligations. The presentation was sent at exactly 11:59 pm, after which several team members proceeded directly to the nearest bar, laptop bags in hand. Exhausted after a grueling final push, we agreed that we had really enjoyed working with each other regardless of how the case turned out. Several days later, we were informed that we had made it into the Top 16 and were invited to present to the judges in Ann Arbor, Michigan.
Rachel Enright, in particular, showed incredible dedication: she had commitments in Chicago until 10:00 pm the night before the presentation, and had to drive in the middle of the night to Ann Arbor to help the team present the next morning. Luckily, there was plenty of coffee available at the Ross Business School to help her survive on only two or three hours of sleep.
Our team presented twice that day: once in the morning to a small audience, and once again in the finals, against the other top four remaining teams. Saluting the Booth curriculum, the judges told us afterward that the Booth team was the only one that prepared “before” and “after” financial statements with discounted cash flow analysis to analyze the impact on the financial performance of the firm. Perhaps to our benefit, we received unanimous praise for our team name: Tyrannosaurus Unbundled RECs (unbundled RECs being another method for purchasing renewable energy that we rejected, perhaps because our vision was based on movement).
In my opinion, the team was successful because we came from different backgrounds, all of which were in some way relevant to the case. In addition, we shared in the common purpose of wanting to learn from each other. The team had a unique combination of collective empathy, friendliness, and a genuine drive to find the best solution to the case. Winning the competition was truly a highlight of our first quarter at Booth, and I think I speak for everyone when I say that holding a giant cardboard check was the ultimate highlight.
John Chiulli is a first-year full-time student from Raleigh, North Carolina. He received his undergraduate degree in mechanical engineering from North Carolina State University, and his master’s in mechanical engineering from Clemson University. John spent six years designing and improving power plant systems prior to coming to Booth. John is an active member of the energy and corporate finance groups, and is part of the First Day team at Booth.