The cost of a cubic metre of desalinated water, and why energy prices matter
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The prompt
A developer is bidding for a 300,000 cubic metre a day reverse osmosis plant on the Red Sea coast of Saudi Arabia. It will cost USD 300 million to build, and the developer uses a capital recovery factor of 8 percent a year (the yearly payment that repays the plant and its financing). The plant runs 95 percent of the time. It uses 3.5 kWh of electricity per cubic metre at USD 0.04 per kWh. Other running costs are USD 0.08 per cubic metre. What is the cost per cubic metre? What if the electricity price doubles? (Figures are illustrative.)
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3. Speak the case out loud. Your partner shares data when you ask, then scores you with the rubric.
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Clarifying questions, with the interviewer's answers
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