Renewable energy analysis always includes techno-economic analysis which combines scientific findings, process design, and financial factors to provide a holistic picture of a technology’s economic potential. Good TEA experts can build useful models to help translate the results into action. So, should TEA be done in-house or outsourced? While everyone should agree that the more complex projects are best done by independent third parties, it is a common assumption of developers that investors or lenders will give them as much credence in a techno-economic analysis, as they would from the third party. Experience and statistics tell us that analyses that come from those who are requesting the funds are simply not given as much weight by funding providers as are third-party analyses. See our PPT on this subject. The techno-economic analysis is a part of an investor’s due diligence, and any savvy lender or equity partner needs to know certain things about the professionals providing the modeling:
Expertise: Within the bioeconomy, techno-economic (TEA) modeling is a unique skill set requiring a strong command of chemical engineering fundamentals and a practical understanding of process design and economics. TEA also requires a familiarity with the cost estimation techniques and their limitations. It requires a software developer’s mindset to bring all things together in a useful, usable, and testable way. Most engineers have no experience building techno-economic models, and even those that do, typically have only done a handful. By using a seasoned expert, one is assured that the modeling is at the highest professional standard.
Efficiency: With expertise also comes efficiency, especially in biotechnology projects. Good TEA experts, like those at Lee Enterprises Consulting, have developed templates, built software tools, and curated resources over years of practice. With the ability to call upon a wide variety of specialists in any given area, efficiency is maximized. The combined “knowledge” of many inputs is invaluable.
Objectivity: Omissions are unequivocally the major source of errors in process cost estimates. Sometimes, this is a result of incomplete information, but often it is due to the natural bias any developer will have toward their own project. It is common for developers to assign greater value to areas they are most familiar with, often to the neglect of others. An impartial third party has less difficulty in evaluating the bigger picture and in a more neutral manner. Quite often, this helps bring the “unknown unknowns” to light early, avoiding unpleasant surprises later.
Credibility: Receiving promising results from a credible third party can considerably strengthen the business case for any new technology. However, there is more to credibility than this. By willingly exposing ideas to the critique from outside experts, and by stress-testing these ideas, one clearly demonstrates to investors and employees that they are serious about building a technology to succeed in real-world situations. Outsourcing techno-economic analysis and modeling to credible, third-party professionals is always the best way to maximize chances for success.
For over 25 years, Lee Enterprises Consulting has been assisting companies and investors with issues relating to sustainability, bioenergy, biomaterials and chemicals, biotechnologies, and feedstocks. With over 150 consultants, we have the diverse expertise and geographical reach to assist in virtually any bioeconomy project worldwide. These seasoned professionals average over 30 years each in their industry experience. Our ability to assemble these professionals into multidisciplinary teams allows us to fully integrate the technical, scientific, and regulatory aspects of a project, and combine them with years of hands-on experience. Take a look at our experts and the services we provide. You will note that most of our experts are also available for ancillary engagements and advice, for specialty engagements like serving as expert witnesses in litigation matters. A good overview of our group is found in this video. Call us at 1+ (501) 833-8511 or email us for more information.
