A Framework to Drive Technology Commercialization
Commercialization is the progression of a technology from an idea in a lab to full-scale adoption in the market. This requires actively moving technologies across the research, development, demonstration, and deployment (RDD&D) continuum through close coordination and partnership among public sector organizations, private sector entities, and community stakeholders. To do this effectively, research and development, whether conducted in labs, universities, or corporations, must be done with the end-market in mind.
Commercialization is a core part of the U.S. Department of Energy’s (DOE) mission. The public dollars DOE invests in its technology portfolio can only achieve their impact when technologies traverse the RDD&D continuum to attain full-scale deployment. The Office of Technology Transitions (OTT) acts as the steward of the RDD&D continuum, helping the Department achieve its mission across this breadth of activities through a suite of tools, programs, and funding focused on commercialization activities.
Managing Risks Through the Adoption Readiness Level (ARL) Framework and the Commercial Adoption Readiness Assessment Tool (CARAT)
To get to deployment, a technology must be completely de-risked, and ecosystem economics established so that every player in the value chain has a viable economic model. This means that managing a technology portfolio solely through the well-understood and widely used Technology Readiness Levels (TRL) stage-gates is not enough.
Often, commercialization fails not because of the technology’s fundamentals, but because ecosystem economics have not been addressed or critical ecosystem players have not come onboard. The economic and business model requirements for deployment, as well as a technology’s societal license-to-operate, can and should shape the technical problem definition and development of solutions at all stages of the RDD&D continuum.
Beyond the technical risks captured by the TRL framework, effective management of a technology requires actively decreasing project risks and adoption risks. Project risks are frequently managed by applying principles of project management and creating detailed risk registers at the project level.
To describe adoption risks, OTT has developed the Adoption Readiness Level (ARL) framework to complement TRL, in partnership with other DOE and industry stakeholders. The framework assesses the adoption risks of a technology and translates this risk assessment into a readiness score, representing the readiness of a technology to be adopted by the ecosystem.
Download the Assessment
ARL represents important factors for private sector uptake beyond technology readiness,1 and can be determined by performing a qualitative, but fact-based, risk assessment across 17 dimensions of adoption risk spanning four core risk areas.
These 17 dimensions are outlined below, and the Commercial Adoption Readiness Assessment Tool (CARAT) that integrates these dimensions into an assessment of ARL can be downloaded here.
We are actively developing and refining this framework by workshopping with industry and U.S. government stakeholders. Please provide your input by contacting ott@hq.doe.gov.
Core Risk Areas
Value Proposition: Assesses the ability for a new technology to meet the functionality required by the market at a price point that customers are willing to pay, to meet the market demand (a broadened definition of "product-market fit").
Risks associated with achieving delivered cost competitiveness when produced at full scale, including amortization of incurred development and capital costs, and accounting for switching costs (if any).
| Low | Medium | High |
|---|---|---|
|
Technology solution is either:
and fundamental cost components (e.g., cost of critical inputs) are not at risk of significant market swings. |
Technology solution is more than three years away from achieving cost- parity with incumbent or competing technology but is on a clear path to be more cost effective; |
Technology solution is more expensive than the incumbent or competing technology |
Risks associated with the ability of the technology solution to meet or exceed the performance and feature-set of incumbent solutions or create new end-use markets.
| Low | Medium | High |
|---|---|---|
|
Technology solution provides sustained improved performance and / or benefits that justify a premium (if any) in an existing end-use case or value in a new end-use case. |
Technology solution provides equivalent functionality to existing products (i.e., same performance on all key parameters), or improved performance does not justify current premium, or performance differential will not be sufficiently sustained (e.g., lack of fundamental competitive advantage or weak IP protection allows incumbent or competitors to reduce differential quickly). |
Technology solution provides poorer functionality than existing solutions currently in place. |
Risks associated with operational switching costs; the ability of a new user (individual, company, system integrator) to adopt and operationalize the technology with limited training, few new requirements, or special resources (e.g., tools, workforce, contract structures).
| Low | Medium | High |
|---|---|---|
|
Technology solution is easy to use / operate and maintain by the typical user / operator (e.g., highly intuitive with little need for additional training or similar to existing systems) |
Technology solution can be operated and maintained by a typical user / operator after some training and allows for interoperability with existing infrastructure / equipment with minor adjustments. |
Technology solution deployment requires extensive operations and maintenance training of personnel and / or there are meaningful integration costs to successfully use / integrate the product. |
Market Acceptance: Captures the target market(s) demand characteristics and risks posed by existing players -- including competitors, customers, and other value chain players.
Risks associated with demand certainty and access to standardized sales and contracting mechanisms (if required), as well with natural (e.g., network effects, first-mover-advantages) and / or structural (e.g., existing monopolies / oligopolies) barriers to entry in the market(s) to which the technology solution can be applied.
| Low | Medium | High |
|---|---|---|
|
There is a clear pathway for the technology solution to be introduced in a target market and gain initial traction; and there is standardized off-take (e.g., long-term agreements, hedge-able commodity market, accessible consumer market). |
Technology solution would need to overcome substantial barriers to entry from competing technologies to enter the market but has clear pathway to do so; and there is a developing standardization of off- take. |
Technology solution’s ability to enter the market is limited due to incumbent advantages and market barriers to entry; or off-take is not easy / standardized and does not meet the needs of technology solution deployment. |
Risks associated with the overall size of the market that can be served by the technology, and the level of uncertainty with which it will materialize.
| Low | Medium | High |
|---|---|---|
|
Technology solution is well positioned to compete strongly in a large and existing market |
Technology solution addresses only a moderately sized existing market opportunity, and / or there is moderate uncertainty to whether the market will materialize; technology solution may be limited to select markets because of geographic or other constraints. |
Technology solution is limited to small markets, and / or relies on a market that has yet to materialize. |
Risks associated with the projected path to get the product from a producer to a customer along the value chain (e.g., considering split incentives, technology acceptance, business model changes).
| Low | Medium | High |
|---|---|---|
|
Path to market is clear; business proposition and technology solution features work within existing incentives / business models, |
Path to market requires realigning of value chain; business model and technology acceptance level are not clear for one or more participants in current value chain. |
Value chain is non-existent, highly fragmented, and / or technology solution benefits do not accrue to critical decision makers / gate keepers across value chain. |
Resource Maturity: Determines risks standing in the way of inputs that are needed to produce the technology solution.
Risks associated with the availability of capital needed to move the technology solution from its current state to production at scale, including total investment required, availability of willing investors, availability of associated financial and insurance products, and the speed of capital flow.
| Low | Medium | High |
|---|---|---|
|
Institutional investors confirm return profile in this technology solution is commercially competitive with their broader portfolio. Deal flow / risk profile is sufficient to develop regular equity and debt approval processes at relevant investment institutions and ratings agencies. Major risks are insurable. |
There exist one or more “valleys of death” along the required capital stack to full deployment, but hurdles can be overcome, and capital flow and financial and insurance availability is beginning to increase. |
Significant additional investment from sources of concessionary / patient / high risk pools of capital (e.g., public sector, philanthropic, and catalytic venture capital) required to achieve deployment. |
Risks associated with the existence of processes and capabilities to successfully and repeatably execute projects using the technology solution.
| Low | Medium | High |
|---|---|---|
|
Mature processes and capabilities exist (e.g., within engineering, procurement, and construction contractors) to develop, integrate, and manage full projects using the technology solution; demonstrated by a track record of on-budget, on-time projects using the technology solution or comparable projects. |
Some processes and capabilities exist to develop, integrate, and manage full projects using the technology solution; but these are as-yet unproven. |
Deployment of the technology solution requires building new or significantly improved project development, integration, and management processes and capabilities as compared with the industry status quo; demonstrations and deployments at scale face substantial budget and timeline risks as a result. |
Risks associated with the physical and digital large-scale systems that need to be in place to support, enable, or facilitate deployment at full scale (e.g., pipelines, transmission lines, roads and bridges, etc.).
| Low | Medium | High |
|---|---|---|
|
Technology solution can be broadly deployed within existing large-scale physical and digital infrastructure. |
Technology solution can be broadly deployed with minimal investment in large-scale infrastructure (i.e., existing infrastructure can be adapted to use with new technology solution) or there exists a clear and economic pathway for investors and developers to build required infrastructure. |
Technology solution can be broadly deployed only with additional significant investments in new largescale infrastructure and pathway to required infrastructure remains unclear. |
Risks associated with all the entities and processes that will produce the end-product, including integrators, component, and sub-component manufacturers and providers.
| Low | Medium | High |
|---|---|---|
|
Technology solution deployment relies on off-the-shelf or simple adaptation of existing supply base products and existing manufacturing capabilities. |
Technology solution deployment requires new components or products that are aligned with existing supply base capabilities but that may require minor upgrades or retooling of manufacturing and other processes. |
Technology solution deployment requires creation of new manufacturing processes or supply chain components that are not currently in place, or deployment will overwhelm existing supply chain capacities. |
Risks associated with the availability of critical materials required by the technology (e.g., rare earth and other limited availability materials).
| Low | Medium | High |
|---|---|---|
|
Technology solution relies on materials that are readily available in a competitive and distributed market and can be procured off the shelf with little to no geopolitical risk. |
Technology solution relies on materials that are abundantly available but may face some risks (e.g., rely on new processing methods to make suitable for the application, geographic concentration). |
Technology solution relies on materials that are limited in supply relative to the needed demand, may be difficult to obtain, may face geopolitical risks, or are very costly to produce in the needed quantities. |
Risks associated with the human capital and capabilities required to design, produce, install, maintain, and operate the technology solution at scale.
| Low | Medium | High |
|---|---|---|
|
Existing workforce has the necessary skills to manufacture and deploy technology solution with little additional training or significant scale-up. |
Existing workforce requires additional training to either manufacture or deploy/install technology solution and pipelines exist to provide workforce training, but may need to be scaled. |
Workforce is nearly non-existent, significant training is required for initial technology solution introduction and scale-up. |
License to Operate: Identifies the societal (national, state, and local), non-economic risks that can hinder the deployment of a technology.
Risks associated with local, state, and federal regulations or other requirements / standards that must be met to deploy the technology at scale.
| Low | Medium | High |
|---|---|---|
|
Technology solution can be broadly deployed within existing regulatory framework and standards, and those frameworks and standards are applied in a well-understood and fast-moving process with minimal risk of delays. |
Technology solution can be broadly deployed with minor changes to regulations and standards, |
Technology solution can be broadly deployed only with major changes to regulations and standards or entirely new regulations and standards; |
Risks associated with local, state, and federal government policy actions that support or hinder the adoption of the technology at scale.
| Low | Medium | High |
|---|---|---|
|
Technology solution requires little in the way of additional policy intervention to encourage adoption as a preferred solution; policymakers well aligned with any changes needed to encourage adoption. |
Technology solution requires moderate policy intervention to achieve broad deployment and is well aligned with current governmental policy positions. |
Technology solution requires significant policy intervention to achieve and / or sustain broad deployment; and / or policymakers are not aligned with implementing required intervention to encourage adoption. |
Risks associated with the process to secure approvals to site and build equipment and infrastructure associated with deploying the technology at scale.
| Low | Medium | High |
|---|---|---|
|
Permitting and siting process is easy, well-understood, timely, and repeatable. |
Permitting and siting can be time- consuming, but jurisdiction is clear, and complexity is low. Speed can be achieved with repetition. |
Permitting and siting is highly complex and time-consuming, with multiple overlapping jurisdictions in play. |
Risks associated with the potential for hazardous side effects or adverse events inherent to the production, transport, or use of the technology solution or end product in the absence of sufficient controls.
| Low | Medium | High |
|---|---|---|
|
Technology solution has minimal inherent environmental or safety risk; results in net zero carbon or negative carbon solution. |
Technology solution has potential for environmental degradation |
Technology solution has potential to create significant environmental degradation or increases carbon emissions over currently fielded solutions, and / or poses significant safety concerns that are challenging to mitigate. |
Risks associated with the general perception by global and local communities of the technology solution and its risks or impact, whether founded or unfounded.
| Low | Medium | High |
|---|---|---|
|
Technology solution is likely to be positively received by the public with a strong level of support. |
Technology solution may create pockets of public resistance |
Technology solution is likely to create controversy that could derail or significantly delay deployment. |
Once the ARL assessment is completed for the technology solutions in a (set of) portfolio(s), ARL can be used in a complementary manner with TRL assessments to manage the maturation of a technology portfolio across the RDD&D continuum. The below graphic provides an illustrative example of such a portfolio visualization.
Who Should Use ARL?
Organizations with large, diversified technology portfolios that may span multiple types and scales of technology solutions can benefit from using the ARL framework. DOE offices use ARL to inform program design, investment, and risk management decisions.
Although there are existing frameworks2 that capture the various elements of ARL, ARL attempts to gather commercial adoption risks in a comprehensive and structured way that is applicable to a wide range of technology types – from small consumer applications to large-scale infrastructure deployments – and allows for comparisons across different portfolios. DOE’s technology portfolio, for example, has an expansive range that includes consumer-facing software at one end to clean hydrogen hubs at the other.
Using CARAT allows organizations to apply the industry best practice of managing technology risk alongside adoption risk. This can be used to gain a strategic view of an existing technology portfolio, or to design and set goals for a new program. The tool is not intended to be a rigorous and quantitative analysis across each dimension of adoption risk, though detailed risk registers can be developed using the ARL framework as a starting point.
The tool is deliberately simple to allow for easy adoption and extensibility. The power of CARAT is to quickly identify where there may be critical barriers in a technology’s pathway to market that need to be addressed for full-scale deployment to happen and the movement required to have the technology reach the next stage of the RDD&D continuum.
Researchers, Technical Subject Matter Experts, And Project Managers
For those who may typically be focused on driving technology readiness for earlier stage technologies, the assessment process itself can spur important conversations about how their technology solution can be applied in commercial settings, and how areas of non-technical risk may stand in the way of adoption.
While these individuals may not be experts in non-technical risk areas, such conversations can spur early identification of risk mitigation opportunities, R&D design changes or re-prioritizations, and even early commercial partnerships that can all improve the technology’s ultimate value.
Portfolio Managers And Organizational Leaders
For managers and leaders, assessments can inform investment decisions across their technology portfolio over time. It can also create a taxonomy of technologies and suggest useful key performance indicators to track to assess the progress and health of their portfolios.
The assessment process facilitates discussions with technical staff around areas of risk and potential mitigation strategies, and identifies blind spots where additional investment, frequently in the form of research, deeper market analysis, or policy action, is needed.
1 Note: ARL encompasses key business risks associated with a technology solution, but does not address other project- and company-specific risk factors, such as the composition of the leadership team.
2For example, the Department of Defense’s Manufacturing Readiness Levels specifically address manufacturability in detail, which is one of the dimensions of the ARL framework. ARPA-E’s Commercial Readiness Level scale breaks down sequential steps in bringing a tech to market.