A Modern Framework for Energy Technology Maturity: Four Key Risks

Technology Stages

Another common method for addressing the commercialization process is through technology stages, generally R&D, development, demonstration, and deployment. These are seemingly ubiquitous but are far from standardized—the definition of each stage can vary across technology areas, sectors, and even between companies and their funders. A number of organizations have acknowledged this issue and proposed definitions for technology stages. In their 2022 report, Prime Coalition highlighted that the lack of standards from “pilot” to “proven technology” often leads to confusion for funders and lack of clarity around measures needed for successful outcomes. “Proven” for a venture capital investor’s perspective is not necessarily the same as “proven” from a project capital provider’s perspective, as each entity is set up to take on different levels of risk. Hence, technology stages are also an incomplete description of technology maturity.

Commercial Inflection Points

Often, the most common failure point in commercialization is not technology fundamentals, but rather market dynamics. Companies must consider questions such as: Is there a market for this product? What does the existing customer ecosystem look like? Are supply chains sufficiently de-risked? To incorporate these elements into technology maturation, Elemental Excelerator, a Hawai’i-based climate tech deployment and funding non-profit, developed a Commercial Inflection Point Scale to describe activities necessary for energy technology scaleup and deployment. Aspects like commercial partnerships, business models, and implications or benefits for frontline communities are incorporated into the later stages of this scale. In this model, which mirrors the thinking of many private sector funders, scaleup activities begin after a technology has reached TRL 9 (the highest TRL) and the primary concern then becomes securing market traction. Given that this scale moves beyond the TRL framework, additional context is needed to connect this framework back to federal funding programs.

Adoption Readiness Levels

The Department of Energy’s Office of Technology Transitions recognized the technology-market disconnect when it launched the Adoption Readiness Levels. Intended to complement the TRL scale, ARL considers factors required for commercial scaleup beyond just technology readiness. The 17 dimensions of an ARL assessment include criteria like product-market fit, resource maturity, and non-economic risks like permitting and regulation and mirror many of the same criteria used by the private sector. ARL acknowledges that a product must improve both technically and from a market standpoint to be commercially viable. DOE has started incorporating the ARL scale into its funding opportunity announcements, signaling that the government is serious about working with the private sector to bridge the communication gap. This is a positive sign, but the ARL method can be complicated with a multidimensional aspect that makes it difficult to describe the maturity of a technology succinctly, i.e., with a single number or phrase.

BPC’s Proposal: Risk Stages

To harmonize the conversation, the Bipartisan Policy Center proposes a simple way to describe technology maturity based on risk. We debuted these four key risk stages—scientific, engineering, commercial, and financing—in our report on Navigating the Stages of Commercialization to Deploy Direct Air Capture at Scale. These risk stages are defined as follows:

• Scientific risk is the risk that a process proves to be scientifically or physically impossible.
• Engineering risk is the risk that a process cannot be reproduced at-scale, operating under real-world conditions.
• Commercial risk is the risk that there is not demand for the product being offered, the product being offered is not competitive in the marketplace, or that a company is not likely to be profitable.
• Financing risk is the risk that a company cannot access capital or manage its debt.

The risk stages are intended to be flexible, as specific risks may differ across technology areas, but they offer a way to discuss the most important challenges for a company moving from concept to product. For example, a company that has validated its general idea and basic components is no longer primarily concerned with science risk, but now faces engineering risk as it begins to turn a concept into a product.

Using these four risk stages as a framework, it becomes easier to translate between public and private sector funding.

As shown in the figure below, we have mapped the risk stages (blue bars) to technology stages and valleys of death (grey arrows), DOE funding programs (green bars), and private sector funding stages (yellow bars). It is our hope that using a common terminology to describe technology maturity will help make it easier for climate tech startups to better target federal and private sector funding opportunities, and to help the government and private sector understand the commercialization challenges unlocked by each.

To bring promising energy technologies from lab to market at the speed and scale needed to meet our climate goals, increase U.S. global competitiveness, and bolster economic growth, we need effective coordination and collaboration between the government and the private sector. The Bipartisan Infrastructure Law and Inflation Reduction Act  will help support technology advancement through these risk stages. However, some gaps still remain despite this significant progress. Looking ahead, public-private partnerships and enhanced coordination over the next decade will be essential to ensure the successful commercialization of innovative technologies at scale. Common language for technology maturity is at the heart of making sure these partnerships are built upon a strong foundation.