Techno-Economic Analysis (TEA) Notes
Techno-economic analysis (TEA) is a systematic evaluation framework used to assess the technical
performance and economic feasibility of technologies, processes, or systems.
1. Definition and Objectives
- Purpose: To evaluate whether a technology is viable from a technical and economic perspective.
- Goals:
- Understand the cost structure.
- Analyze technical performance.
- Identify areas for improvement.
- Aid decision-making for investments or scaling.
2. Key Components of TEA
a. Technical Analysis
- Process Design: Define scope, process flow diagrams (PFDs), key equipment/material
requirements.
- Performance Metrics: Efficiency, output quality, environmental impact.
- Technology Readiness Level (TRL): Assess maturity of the technology.
b. Economic Analysis
- Cost Estimation:
- Capital Expenditures (CAPEX): Initial investments like equipment, installation.
- Operational Expenditures (OPEX): Raw materials, utilities, labor, maintenance.
- Revenue Estimation: Market analysis for pricing and demand.
- Profitability Metrics: Net Present Value (NPV), Internal Rate of Return (IRR), Payback period.
c. Sensitivity Analysis
- Examine changes in input variables like material costs or product price.
- Identify critical factors influencing feasibility.
d. Environmental and Sustainability Analysis (optional):
- Life Cycle Assessment (LCA) to measure environmental impacts.
- Carbon footprint and energy use evaluations.
3. Steps to Conduct a TEA
1. Define Scope: Specify objectives, boundaries, stakeholders, and audience.
2. Gather Data: Collect technical and economic data (e.g., material costs, efficiency, market
trends).
3. Develop Models: Create process simulation models using tools like Aspen Plus, MATLAB, or
Excel.
4. Calculate Costs and Revenue: Break down CAPEX and OPEX; analyze market trends.
5. Evaluate Performance: Compare economic metrics against benchmarks; identify risks.
6. Perform Sensitivity and Risk Analysis: Identify parameters with greatest impact.
7. Interpret Results: Summarize insights and recommend next steps.
4. Tools and Techniques for TEA
- Software: Aspen Plus, Aspen HYSYS, MATLAB, Python, MS Excel.
- Economic Models: Discounted cash flow (DCF) analysis, Break-even analysis, Sensitivity
analysis.
5. Applications of TEA
- Evaluating new technologies (e.g., renewable energy systems, carbon capture).
- Assessing chemical processes (e.g., biofuels, green hydrogen).
- Feasibility studies for manufacturing and infrastructure projects.
- Policy and decision-making support.
6. Limitations of TEA
- Data Quality: Results depend on accuracy and reliability of data.
- Uncertainty: Future market conditions and technological advancements can affect outcomes.
- Simplifications: May not fully capture real-world complexities.
By combining technical and economic insights, TEA serves as a critical tool for optimizing
performance,
reducing costs, and achieving sustainable development.
