Our Cleantech Resource Strategy Practice
From its beginning,
Value Proposition Analysis
Clean technology firms are challenged to assess and communicate the full market value of their products. This is often because saving resources creates benefits beyond those directly saved for the end user. Often utility systems, external and internal, save both capital and operating costs as demand for resources is reduced. These additional benefits generally do not show up on the end-consumer's books and so understanding ways to monetize these benefits can be the difference between a viable business proposition and not. Similarly, customers of Cleantech firms are challenged to properly value the risk reduction benefits of efficiency and renewable resources. The "hedge value" of known future resource costs over the typically long technology lifetime is a stark contrast to the unknown future costs of market traded commodities consumed by traditional systems. This value is typically not well understood nor quantitatively assessed by customers and can provide a key selling point for clean technologies.
The size of a potential market is crucial to every business plan. For efficiency and renewable technologies the market opportunity is typically analyzed in three steps, each a subset of the former:
- Technical opportunity
- Economic opportunity
- Achievable opportunity
Technical opportunity is defined as the total number of instances where the technology can physically be installed. The Economic opportunity is the number of the instances where operation of the technology creates economic benefit above a given hurdle rate. And finally, Achievable opportunity is a forecast of how many systems will actually be installed.
- Consumption baselines and forecasts
- Data collection audits and surveys
- Efficiency and renewable resource supply curves
- Market opportunity modeling
- Risk adjusted cost analysis
- Pro-forma plant capital and operations cost modeling
- Facility design workshops
- Product innovation programs
Challenge: Determine the value of a waste-derived fuel in the production of iron in a blast furnace.
Solution: Conduct technical research of industry practitioners and literature to develop a model for value-in-use of all competing fuels used in blast furnaces. Analyze price forecasts and market dynamics of each fuel to create a risk-adjusted value comparison and pricing formula for the alternative fuel.
Result: The business plan based on the pricing formula Point380 developed garnered significant investment by two strategic partners and cemented key relationships with the largest steelmaker and raw material supplier in the target market.
Multinational Energy Technology Manufacturer
Challenge: Determine the market opportunity for a fuel cell cogeneration technology in the U.S. food and beverage industry.
Solution: Develop a value-in-use model for the specific technology. Collect and analyze energy market and government subsidy data to determine regions where economic opportunity exists at the target price point. Then analyze industry databases to identify significant number of food and beverage facilities in these regions and conduct interviews with plant representatives to determine factors driving purchase decisions.
Result: Due to the quality of thermal output from the client's technology Point380 was able to narrow the potential market to a few specific segments, where subsequently the client found their first successful industrial application.