Burk Engineering LLC,
Keywords: economic evaluation, sensitivity analysis, new technology development, tornado, Monte Carlo
Summary:Techno-economic modeling (TEM) is a valuable tool for connecting R&D, engineering, and business. By linking process parameters to financial metrics, businesses can better understand the factors affecting the profitability of their projects. TEM is useful throughout the technology development lifecycle. While considering new ideas, innovators and investors can use TEM to assess economic feasibility and potential. At the bench scale, scientists can use TEM to identify the process parameters that have the greatest effect on profitability. During process development, engineers can use TEM to compare the financial impact of different process conditions and configurations. TEM incorporates information from all these stages of development, and thereby offers a basis for making objective decisions. A techno-economic model might also be called an integrated process and economic model, since one typically includes a material balance, capital cost model, operating cost model, and cash flow analysis. When combined, these components allow us to efficiently explore process economics. Through sensitivity analysis we can learn even more: We can optimize process parameters using univariate sensitivity analysis. We can highlight important process parameters using tornado diagrams, and then direct R&D efforts to address them. And, we can quantify risk due to uncertainty using Monte Carlo analysis. Though not a new concept, TEM is still widely underutilized in new technology development. Developers and investors alike would benefit from awareness and earlier adoption of economic analysis. This presentation will address the techniques used in techno-economic analysis and their specific application to evaluating and developing new chemical-related technologies.