A techno-economic analysis (TEA) is a very useful tool to evaluate the economic performance of an industrial process or product. The TEA can be used to study the impacts of implementing a new technology into a current process, optimize existing processes, or to evaluate the economic feasibility of a process before an investment is made. A robust TEA includes 5 key steps as detailed below and shown in Exhibit 1.
Exhibit 1. TEA workflow breakdown
In order to develop a TEA, one must first have a full understanding of the desired process/product you are evaluating. A great first step is to create a process flow diagram of the process. This diagram should show a breakdown of every key step in the process from start to finish with the equipment that will be needed in each step. Additionally, this diagram should include material streams throughout the process showing what feedstocks are entering and what is exiting such as the final product and any waste generated.
Once the process flow diagram has been finalized you can use the material stream to create a mass balance of the process to understand what percentage of the feedstocks will finalize into the desired final product. This mass balance can also aid as a tool to measure how much waste or byproducts will be created by a determined metric of feedstock input.
Now that a full understanding of the process has been achieved, a capital cost estimate can be generated. The process flow diagram that was created can be used to understand what equipment costs will be associated with the process as key equipment are already known. These costs will vary dependent on the quality and capacity of equipment desired for the process. Along with equipment costs, a facility construction cost evaluation may be needed if there is not a current facility available or if a current facility is not of adequate size for the process. If the desired path is the construction of a new facility than land costs should also be considered and evaluated by areas of interest for the new facility. With all these capital costs determined, the total capital cost can be estimated.
Next, annual utility and maintenance requirements can be estimated as it is known from the process flow diagram what type of equipment is needed and the size of equipment that is being evaluated from the capital cost. Operating hours should also be considered to help determine a more precise estimation on utility and maintenance requirements. Labor costs can also be estimated from the operating hours and knowing how many employees are needed to operate required equipment.
Using the material flow from the process flow diagram and the resulting mass balance, the required feedstocks, final product, wastes/byproducts, and resulting production ratios are known. Market costs for feedstocks and wastes/byproducts are needed to continue the evaluation. Once the respective market costs have been evaluated the next step is to calculate the annual material cost according to the desired annual production capacity that was determined for the process during the capital cost estimation and the amount of feedstocks required to create a determined metric of final product. At this point, the annual operating cost can be calculated by adding up the utility and maintenance, labor, and material costs. From here the breakeven cost, or how much it will cost to produce a singular product or tonnage, can be calculated. This is done by taking the estimated annual operating cost coupled with the amount of capital cost that is desired to be paid in a year according to a determined payout time (elapsed time till there is no debt) and dividing it by the estimated annual amount of product produced.
With a breakeven cost determined for the process, a price comparison with the market/industry that the process is in can be done. This comparison can determine how economically feasible the process that has been evaluated is relative to the market. Additionally, now that the TEA has been fully built, the user can see what areas are increasing or decreasing the process’s breakeven cost and make suitable changes. Whether that be through a new technology, a different process flow, or sourcing different feedstock options depends on a number of factors relevant to the process.
ADI Analytics has conducted several TEAs for various technologies, processes, and clients, and we can share more information over a meeting.
By Garrett Samples
