Climate tech startups need strong techno-economic analysis (TEA)

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This might be our wonkiest topic yet: Techno-economic analysis, or TEA. 

Before a startup has proven that its technology is commercially viable, it models how its technology would work. These TEAs include things like assumptions about inputs, prices, and market landscape. They help investors and entrepreneurs answer the question, will this technology compete?

TEAs are important to the success of an early-stage climate-tech company. And a lot of startups get them wrong. As an investor at Energy Impact Partners (EIP), Shayle and his team see a lot of TEAs—and have some pet peeves.

What can startups do to improve their TEAs?

In this episode, Shayle talks to his colleagues Dr. Greg Thiel, EIP’s director of technology, and Dr. Melissa Ball, EIP’s associate director of technology. They cover topics like:

• Bad assumptions about things like levelized cost of production 
• Focusing on a component instead of a system
• Focusing on unhelpful metrics
• Using false precision—something Shayle calls “modeling theater”

Recommended Resources:

• Activate: Techonomics: Establishing best practices in early stage technology modeling
• Department of Energy: Techno-economic, Energy, & Carbon Heuristic Tool for Early-Stage Technologies (TECHTEST) Tool
• National Renewable Energy Laboratory: Techno-Economic Analysis

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