Expanded Technology Readiness Level (TRL) Definitions for the Bioeconomy
By Dave Humbird, Ph.D., Member, Lee Enterprises Consulting, Inc.
Special to The Digest
For new technologies in the bioeconomy (and in the chemical process industry more broadly), the putative path to commercialization is some form of: lab, pilot, demonstration, commercial. The Technology Readiness Level (TRL) scale is often proposed to track this progression, effectively ranking the maturity of a technology. For a new chemical process technology, TRLs 1-3 may represent fundamental R&D, TRLs 4-6 scale-up and integration, and TRLs 7-9 demonstration and commercial deployment. TRL definitions for specific industries have generally been produced by funding or regulatory entities [1], and in most cases are simply a list of expected R&D activities that help these entities identify a technology’s current TRL. Technology developers, however, tend to find the definitions less useful because they lack guidance on how to exit a TRL and progress to the next. Put simply, however, this progression requires funding; funding that must come from investors, whether internal, private, or public. In process technology development, TRLs 1-2 are typically achieved with government or academic grants, TRLs 3-4 with seed rounds, and TRLs 5-7 with Series A/B/C funding rounds. Reaching the final TRLs 8 and 9 (building large plants) generally requires a bank loan for capital equipment and construction.
In this article, we present an expanded set of TRL definitions, combining elements of DOE-BETO’s definitions (2015 and earlier), which are well suited for the bioeconomy [2], with elements of the startup-to-VC “Investment Readiness Level” framework proposed by Steve Blank [3]. Along with expected R&D activities, we discuss appropriate conceptual process design and production cost estimation activities (otherwise known as techno-economic analysis or TEA) that should be performed concurrently to ensure process scalability. We also discuss TRL exit criteria and deliverables that technology developers should expect to provide to investors when looking to secure the additional funding needed to progress. We use the expanded definitions in our consulting practice as a roadmap and a common terminology to help bioeconomy technology developers and their investors progress to commercialization harmoniously. We would like to note, however, that these definitions of course remain open for debate, and we welcome feedback from all interested parties.
TRL 1: Basic research, elevator pitch
In TRL 1, initial scientific research begins. Principles and phenomena of a new technology (e.g., molecule or process) are identified. First-principles modeling and simulation may complement physical experiments. To exit TRL 1, the basic science should be validated through peer-reviewed publications. With this fundamental but possibly qualitative understanding, the technology may be ready to transition to applied research in TRL 2. Developers in TRL 1 should therefore identify a need within the bioeconomy and begin to articulate their technology’s potential to satisfy that need. This includes activities like finding a customer segment, understanding those customers’ pain points, and explaining how they will benefit from the new technology under development. This knowledge can be turned into an elevator pitch for securing TRL 2 funds and used to develop the applied research plan. Developers who are unable to articulate their potential to satisfy such a need should be content with their publications and refocus elsewhere.
TRL 2: Applied research, business plan
TRL 2 activities will confirm the technical and business potential of the technology to satisfy the need identified in TRL 1. Ongoing R&D should corroborate the basic observations made previously, and the experimental plan should be organized with an eye toward the ultimate practical application(s). This deeper understanding is intended to reduce scientific risk to a level where external investors can be approached. Securing the funding to move past TRL 2 requires a sound business plan around a well-defined value proposition. Technology developers should assess commercial opportunities using market studies that examine the expected market size and competitive landscape. In the bioeconomy, competitive advantage over existing technologies may come in the form of lower production costs, higher purity, increased yield, and/or better sustainability. Early exploration of these opportunities, such as discussions with potential customers, should be documented. Developers should also start assessing the intellectual property value of the R&D to date, in case the opportunity survey indicates that the technology is perhaps better suited for implementation in the future.
TRL 3: Technical proof of concept, confirmed value proposition
In TRL 3, applied research continues and early-stage process development begins. Laboratory experiments are designed with repeatability and quality control in mind, to quantitatively verify that the concept works as expected.
Techno-economic analysis (TEA) activities begin around TRL 3. While TEA can be performed at varying levels of detail, developers and investors should understand that TEA sophistication needs to be consistent with the maturity of its core technology. Process concepts that have been thoroughly researched in the lab with no consideration given to scale-up challenges should be viewed as insufficiently de-risked. Conversely, a highly detailed process design with an unproven core element should be dismissed as fantasy.A preliminary TEA in TRL 3 should bound the minimum contribution of feedstock and other significant chemical inputs to the final product cost, using assumed yields informed by R&D and projected input price informed by market studies. As a starting point, the inset discussion of this article demonstrates how to compute a theoretical product yield and cost contribution from a given feedstock, using degrees of reduction.
To solidify the business plan, this minimum product cost (with some reasonable inflation to account for conversion costs) can be used in additional market research. Potential customers and partners should be polled for interest, to quantify potential market share. If it turns out that the minimum cost is already unacceptable, additional work must be done to identify a different feedstock or negotiate a lower feedstock price. Credits and subsidies (e.g., RINs) can affect the outcome of these studies. This effort validates the technology’s value proposition and commercial viability and gives confidence to investors that it is ready for scale-up.
Discussion: Theoretical yield and minimum product costA simple way to estimate theoretical yield is to use the degree of reduction (γ), a measure of the number of electrons available for reaction in a compound. For a molecule with formula CxHyOz, the degree of reduction is given by γ = 4x + y – 2z. For conversion of one molecule to another (say, glucose to ethanol), the ratio of γfeedstock/γproduct gives the best possible molar yield obtainable; the yield will not be better than this without additional electrons (e.g., hydrogen). For most such conversions, feedstock cost dominates overall production costs, so this theoretical cost contribution can be considered a minimum cost of production, i.e., the cost of production if capital, labor, and all other operating expenses were free. Consider the following example molecules, produced from glucose syrup (C6H12O6, γ=24) at a spot price of $0.55/kg [4]. Using degrees of reduction, we can compute theoretical yields and the minimum feedstock contribution to product cost:
Most of these feedstock contributions are unacceptable compared to the current spot price of each product—one would not buy spot glucose to make them! Rather, one would negotiate a lower price, or produce one’s own glucose from starch. Refined starch, however, is not traded as a commodity on the same scale as glucose syrup, so we travel up the supply chain to corn and biomass. The current price of corn is about $3.50/bu ($125/US ton) [5]. If we assume corn is 60% starch (monomer C6H10O5, γ=24), then the price of starch is $0.23/kg. The cost and availability of lignocellulosic feedstock are more speculative, but DOE currently targets $84/US ton of herbaceous material with 60% carbohydrate, comprising about 40% cellulose and 20% xylan [6]. The price of the convertible fraction (average formula C1H1.6O0.8, γ=4) is thus $0.15/kg. The costs of ethanol production can be compared:
We see that $84 biomass indeed offers some economic advantage over corn at $125, an advantage that vanishes near price parity and probably significantly lower, given the relative difficulty of converting biomass to fermentable sugars. More detailed TEA is required to accurately determine this point. In such further analysis, government credits or ‘soft’ market factors favoring cellulosic products over corn could also be considered. |
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TRL 4: Development of the minimum viable process
TRLs 4-6 represent the bridge from development to demonstration and the reduction of engineering risk. TRL 4 is the first step in determining whether the individual components of a technology (for instance, fermentation and recovery) can be integrated as a process. In the lab, process components are validated individually, and may be integrated in an ad hoc manner. We call this the minimum viable process—the cheapest experiments that test the whole idea.
TRL 4 is generally where conceptual process design begins. An integrated process model is developed that includes core technology as well as upstream and downstream operations (feedstock handling, product separation). Performance specifications for individual components are obtained from lab experiments; in this way, the TEA model may be leveraged to prioritize research targets according to economic impact. In TRL 4, TEA can be performed in spreadsheets if flowsheet simulation software is not available [7], but it must provide an overall material balance for the proposed process at scale. An energy balance may be elusive at this stage, due to uncertainties surrounding process externalities like utility demands in downstream processing. Developers should use the material balance to (1) understand the production costs associated with all material inputs (e.g., fermentation media, solvent makeup, catalysts, hydrogen) and (2) confirm that demand for these process inputs and any byproducts can be served by the existing market. (An example that comes to mind is organic acid production being limited by gypsum offtake.) In subsequent TRLs, developers will perform more and longer integrated experiments and will look to design and procure pilot-scale equipment. Exiting TRL 4 thus requires a significant funding commitment to support additional technical labor and capital equipment. Above all, the TEA efforts in TRL 4 should present a compelling story to investors, ideally resulting in a Series A investment round.
TRL 5: Integrated validation of the minimum viable process
TRL 5 traditionally marks the end of bench-scale work and final reduction of scientific risk. Continuous, integrated tests should be designed to produce small lots of the end-product, from its intended feedstock and with its intended formulation and specifications. These test lots can be provided to offtake partners or regulatory agencies. Some developers in the food, biomaterials, and personal-care spaces may have the opportunity in TRL 5 to provide samples to the public. (Be aware, however, that attempting to make a profit on R&D lots can have unwanted tax implications.)
There is generally no sharp transition between TRL 5 and TRL 6, which focuses on the design and operation of a pilot-scale testing unit (nominally 1/100th of commercial scale). Pilot development may still take place in a laboratory, but experiments are carried out at engineering scale, rather than bench scale. Pilot-scale unit operations may be designed and procured while bench-scale work continues, with the larger units replacing smaller units as they are brought online and validated.
From TRL 5 on, TEA activities could more broadly be called “process engineering,” so companies should seek to grow their engineering departments, by hiring full-time process engineers and/or expanding relationships with engineering and consulting firms. By TRL 5, the process flowsheet and TEA model should be sophisticated enough to include all material costs, major utility costs, and rough estimates of the major capital equipment at scale. Such data needs to ideally be in place by TRL 5 to position a developer for the scrutiny they should expect when trying to obtain hundreds-of-million-dollar loans in the later TRLs. These will be further refined as pilot development reduces engineering risk.
TRL 6: Integrated pilot development
As stated above, the line between TRL 5 and 6 is somewhat blurry and developers may find themselves in TRL 6 at the point where most of their development activities center on operating the pilot plant (1/100thcommercial scale). It is important that the pilot plant include engineering-scale equivalents of all the unit operations that will be required at scale, including prototypes of any novel operations, e.g., product separation. If not adopted earlier, the process flowsheet that informs the TEA model is built with a proper chemical flowsheet simulation program, paying attention to physical limitations of equipment (pump motors, compressor discharge temperatures), materials of construction, and thermodynamic accuracy, particularly in separations. This level of detail generally requires senior process engineering staff or specialized consultants. The TEA model will be used by an EPC firm to develop construction estimates for a demonstration plant (1/10thcommercial scale), and relatively accurate capital cost estimates for the full-scale plant. These will be used to procure financing to go forward.
To the extent that there exists a valley of death for bioeconomy ventures, it is almost certainly TRL 5/6. The next TRL culminates with a demonstration of extended, continuous pilot plant operation. Careful selection and specification of pilot equipment in TRL 5, and a deep understanding of their operational nuances in TRL 6 is critical to a successful continuous run in TRL 7.
TRL 7: Integrated pilot continuous operation
TRL 7 comprises continuous, integrated operation of the pilot plant, from feedstock to product. These activities will expose engineering and manufacturing risk that may surface at larger scale. Developers should propose—and use the pilot plant to test—solutions that will apply to demonstration scale. A continuous, steady-state run of 1,000 hours is the industry standard needed to instill confidence in large investors (i.e., banks). Some developers have gone to demonstration scale with fewer, but 1,000 hours should be the threshold for new developers to bear in mind. Documentation is critical in TRL 7—developers should record which operations were running during every run, for how long, and how they performed.
Between TRL 7 and TRL 8, the demonstration plant (1/10thcommercial) will be designed and constructed—potentially a project taking tens of months and tens of millions of dollars. Developers should expect that investors will employ independent engineers (IEs) to scrutinize and validate the R&D and pilot runs to this point. To facilitate communication with IEs, the flowsheet and TEA model should be refined to near-final form, with a very high level of detail. With learning from the pilot operation, design, construction, and startup of the demonstration plant proceeds with external EPC resources. Heat and material balances from the refined model will be used to develop detailed construction estimates for a commercial plant.
TRL 8: Precommercial demonstration
Our discussion around TRLs 8 and 9 is rather brief, because we find that developers who reach TRL 8 already have a high level of competency, and the remaining problems tend to be very specific growing pains that are not of interest to a general audience.
In TRL 8, the demonstration plant is constructed, troubleshot, and operated continuously. Operating conditions are explored, to prove the process within and outside of normal parameters. TRL 8 represents the end of R&D in almost all cases. (Some definition sets omit TRL 9 because R&D is effectively complete.) By analyzing demonstration operability, true manufacturing costs will be determined. Deviations from the predictions made during the pilot stage are identified and mitigation plans are developed. The process simulation is finalized and scaled up to commercial scale.
TRL 9: Full commercial deployment
Technologies in TRL 9 are in their final form and have been proven throughout the full range of operating conditions. R&D, pilot, and demonstration resources can be directed to other commercialization targets. A full-time process engineering staff continuously verifies that operations are meeting cost, yield, and productivity targets. Frequently, operating companies continue to find value in highly specialized experts for implementing advanced process control programs, or process debottlenecking.
References
[1] https://en.wikipedia.org/wiki/Technology_readiness_level
[2] DOE Bioenergy Technologies Office, Multi-Year Program Plan, March 2015
[3] Steve Blank, https://steveblank.com/2013/11/25/its-time-to-play-moneyball-the-investment-readiness-level/
[4] IHS Chemical, PEP Yearbook, Accessed March 2018
[5] The University of Illinois, Dept of Agricultural and Consumer Economics, October 2017
[6] DOE Bioenergy Technologies Office, Multi-Year Program Plan, March 2016
[7] https://en.wikipedia.org/wiki/List_of_chemical_process_simulators
About the Author
Dr. Humbird, Principal of DWH Process Consulting LLC, is a member of Lee Enterprises Consulting, the world’s premier bioeconomy consulting group, with more than 100 consultants and experts worldwide who collaborate on interdisciplinary projects, including the types discussed in this article. The opinions expressed herein are those of the author, and do not necessarily express the views of Lee Enterprises Consulting.
Category: Thought Leadership
