The U.S. has long been a leader in early-stage basic research and in recent years made efforts to support the commercialization of these ideas. New clean energy technologies are needed at scale to meet U.S. decarbonization goals and supporting innovative clean energy entrepreneurs and startups is a key part of this equation. Supporting the transition of U.S. basic research to commercial product also contributes to energy security and global competitiveness by keeping these groundbreaking ideas – and the minds behind them – in the U.S.
There are many ways to characterize the maturity of a technology as it transitions from lab to market. Private investors may consider a company’s funding stage (seed, Series A, etc.) while the federal government has traditionally relied on technology readiness levels (a scale from 1 to 9) to describe growth. Technology stage (R&D, demonstration, etc.) is another framing that is often used, but it is difficult to apply this framing universally without more specific benchmarks to differentiate between stages.
Given that startups often rely on a combination of private capital and government funding to get to market, it is useful to have a shared language for technology maturity to translate between public and private sector funding opportunities. Using common terminology can help address critical funding gaps across the entire investment landscape that may otherwise prevent promising technology solutions from reaching a meaningful scale. In this blog, we summarize a few key frameworks that have been used to describe technology maturity and propose a new way to discuss technology maturity based on risk.
Technology Readiness Level (TRL)
The technology readiness levels (TRL) were developed by NASA amid the Space Race in the 1970s to assess technological maturity for use in complex systems – like the Apollo 11 mission that put a man on the moon. TRL tracks a product’s development from basic scientific discovery, through demonstration in various settings, and ending when the technology is validated at full scale in an operational environment. This approach is the most common terminology used by the federal government to describe technology maturity but its focus on technology rather than market adoption means it is not always the best fit for private sector funders to assess the maturity of a technology.
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.
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