Techno Economic Assessment
The world innovates every day. No matter how important and dynamic a set of new technologies may be,
it only merits attention if it is commercially, socially and environmentally sustainable. The chemical and process industry is no different. The chemical and energy industries are under transformation as they cope with uncertainty in the era of low-priced and plentiful petroleum and severe global warming. The disruption brought by the COVID-19 outbreak has further exacerbated the situation. Techno-economic Analysis (TEA) has hence emerged as one of the most important activities during the development phase of new products or services.TEA is the evaluation of the economic feasibility/viability of chemical projects – it connects R&D and engineering to business.
It is the art of utilizing reasonable technical and economic assumptions to estimate commercial feasibility and success probability for a number of competing technologies under a range of market conditions. The application of TEA at the beginning of a project can greatly assist in reduction of unnecessary project costs and investment risk. Whilst TEA is not commonly a feature of early research projects, as the project proceeds along from preliminary R&D and pilot development to successful commercialization, it becomes increasingly critical to be able to justify investment in continued development.
TEA also provides insights into key developmental areas where further R&D efforts should be more focused to achieve the most significant and optimal improvement in the process economics – e.g. through the replacement of an expensive raw material (catalyst or unit), or improvement of the yield in a particular process step. Such modeling further provides immensely valuable cost and performance boundaries that help in the creative process, i.e., guiding scientific and technology development teams to work within these confines leads to new thought processes and solutions.
In techno-economic analysis, multiple analyses are required: technology, design, project capital costs, operation and maintenance (O&M) costs, and operational cash flows. These analyses are strongly interconnected, and different tools are employed for each stage of the analysis. A comprehensive TEA for an emerging (in current market) or conventional chemical technology (into a new market) is often a team effort that entails chemical and process engineering, project management and finance, and data analysis. The output provides certain scope to the investor and technology developer such as:
- Evaluate the economic feasibility of a specific project
- Investigate cash flows (e.g. financing problems) over the lifetime
- Evaluate the likelihood of different technology scales and applications.
- Compare the economic quality of different technology applications providing the same service.
The team at PEC supports our clients across business and strategy development, positioning and more via our techno-economic analysis services. The team develops techno-economic models utilizing process simulation (Aspen Plus, HYSYS) and spreadsheet software to specification, and provides model software programs, tech memos, and reports for clients. These models integrating technical, economic, and process engineering information are versatile and precise tools that serve in a number of ways, example:
- Evaluation and comparison of alternative processes,
- Evaluation of alternative technologies for relative value,
- Providing a framework for test, analysis and a basis for continual process improvement,
- Sensitivity to changes in prices / efficiencies on project worth, and more.
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