Techno-Economic Analysis (TEA) - ARPA-E

1 Techno-Economic Analysis (TEA)Madhav AcharyaT2M AdvisorTechno-Economic Analysis1 An assessment of the overall value (benefit & cost) of a technology Imprecise by definition but accuracy/certainty improves over time Uses of TEA Provide potential investor/user with basis for investment decision Guide technical tasks towards improving overall value propositionKey Elements of TEA2 ValueRaw materialsMarket costPre-treatmentTransportationProcessin g costCapitalEquipmentSizePressureTemperat ureOperatingEnergyLaborProduct dispositionYieldValueBy-productsRaw materialProcessProductUsing TEA as a guide Sensitivity Analysis identifies parameters that have the biggest impact on overall value Determines whether R&D will make a big enough difference3 Product priceNPVP roduct YieldRaw material costBy-product disposal costTransportation

2 CostCapital costCapital costProduct YieldProduct priceRaw material costBy-product disposal costTransportation costTEA Do s and Don ts Do Document basis, assumptions and sources of information Identify all parameters that impact value Include appropriate margins for uncertainty Refine your model as new information becomes available Don t Ignore trivial issues like transportation, waste disposal costs Use optimistic numbers to make your economics more favorable Spend valuable effort on lowering uncertainty associated with marginal parameter Get too detailed early in the process4 Sources of Information Other Techno-Economic Analyses! DOE and affiliates Technology Licensors IHS, Lux Research Pricing Vendors/Suppliers Open Market data Be aware of scale impacts factor will likely not span 3 orders of magnitude5 THANK YOU!

3 ANY QUESTIONS?6