Start with the asset and its source of revenue
Energy and natural resources cases involve businesses whose economics are shaped by physical assets, long investment horizons and external prices. A wind farm, a regulated network, an oil producer and a copper mine cannot be analysed as if they were interchangeable.
Quick Prep’s preparation focuses on identifying the asset, the customer, the payment mechanism and the constraints. That gives you a sound basis for profitability, investment, operational improvement and portfolio cases.
The IEA’s World Energy Investment report tracks spending across fuels, power generation, grids, storage and efficiency. Its breadth is useful: an energy transition creates linked investment needs across a system, not just demand for one technology. IEA: World Energy Investment 2025
Distinguish the business models
Extraction businesses earn money from saleable output and realised commodity prices, less extraction, processing and transport costs. Mine output may depend on ore grade and recovery as well as tonnes processed. An oil or gas asset requires attention to production profiles, operating costs and supporting infrastructure.
Power generators convert capacity and operating conditions into electricity. Revenue can depend on market prices, contracts and other payments described in the case. Ask whether output is exposed to spot prices or covered by a contract.
Networks and infrastructure provide transport, transmission, distribution or storage. Their payment arrangements and investment incentives may differ from commodity producers. Establish the relevant jurisdiction and case assumptions before discussing regulated returns.
Energy users evaluate reliability and delivered cost. A factory considering electrification must assess equipment changes, power availability, production requirements and operating costs together.
For all four, separate the commercial model from the technology. Two identical assets can produce different financial outcomes because their contracts, locations and financing differ.
Use the right physical and financial units
| Concept | Case application |
|---|---|
| MW | Power capacity or instantaneous output |
| MWh | Energy generated or consumed over time |
| Capacity factor | Actual energy divided by capacity × hours in the period |
| Realised price | Revenue per unit after the case’s relevant adjustments |
| Cash operating cost | Cost of operating the asset, with scope defined |
| Capital expenditure | Cash required to build, expand or maintain assets |
| Recovery rate | Share of contained material recovered into saleable output |
For a generator, annual energy can be estimated as capacity × 8,760 hours × capacity factor, before any losses not already included in the factor. Be explicit about those boundaries to avoid subtracting the same loss twice.
For a mine, a simplified metal-output model is ore processed × metal grade × recovery. A lower grade can reduce output even when the plant processes the same tonnage. This is why volume alone is a weak performance measure.
Worked exercise: evaluate a power project
Illustrative interview exercise using fictional assumptions and a common currency.
A proposed 50 MW project has a 30% capacity factor. Assume its output can all be sold, the capacity factor already reflects operating downtime, and there are no additional transmission losses in this simplified model.
Annual generation is 50 × 8,760 × 30% = 131,400 MWh. At a realised price of 70 per MWh, annual revenue is 9.198 million. If annual cash operating costs are 2 million, the operating cash surplus is 7.198 million.
A construction cost of 60 million gives a simple payback of approximately 8.3 years. This excludes tax, financing, maintenance capital, working capital and closure costs. It also ignores the time required to construct the asset and the time value of money.
At a realised price of 50 per MWh, annual revenue falls to 6.57 million and operating surplus to 4.57 million. Simple payback stretches to approximately 13.1 years. A long operating life does not remove that price exposure.
Before recommending investment, ask about the contract duration, connection schedule, curtailment, asset degradation and capital overruns. Build a discounted cash flow analysis if the case supplies the necessary project life and discount rate.
Structure the decision under uncertainty
For a cost-reduction case, distinguish temporary savings from changes that threaten asset reliability or future output. Deferring essential maintenance can improve this year’s cash position while damaging the investment.
For a portfolio case, compare assets under consistent price scenarios. An asset that looks attractive at today’s price may be fragile under a downturn. Examine the ability to stage investment, pause development or contract output, and include the cost of those options.
For a decarbonisation case, identify the baseline, the emissions boundary and the required service level. Estimate cost per unit of emissions avoided only after stating how emissions and costs are measured. A cheaper option may not meet reliability or timing requirements.
For natural resources, include closure and restoration obligations as case-specific costs where relevant. Avoid inserting unsourced regulatory assumptions; ask for the jurisdiction or state what needs verification.
Prepare to explain a conditional recommendation
Choose one asset type and practise a base case, a downside and an upside. Identify the two assumptions that explain most of the change in value. State a decision threshold: for example, a minimum contracted price or a maximum connection delay.
The interview goal is a reasoned capital-allocation decision with clear operating conditions. Use Finance Modeling for cash flow and sensitivity work, and compare capital-intensive operations with the Advanced Manufacturing primer.
