Techno-economic assessments: The energy metrics that matter

When evaluating a new technology, there are two key questions to ask: will it work, and will it be worth it? In some markets, these questions may have straightforward answers. But in an increasingly complex and interconnected energy system, the picture is more complicated. A range of technologies exist, each with merits and challenges, and their realisation is far from certain. In evolving and unpredictable markets, quantitative evaluation is vital to encouraging the right investment.

Through techno-economic assessments, developers, investors, and policymakers can project the viability of a process, system, or technology – such as Advanced Modular Reactors – compared to other options. The assessment evaluates technologies based on technical characteristics (performance, reliability, integration) and economic characteristics (CAPEX, OPEX, lifecycle costs), comparing technologies to identify the best options now and in future. A combined techno-economic perspective helps to model system requirements for different technologies under various scenario conditions, predicting the performance of each to indicate market size – and the technology’s ability to capture it. This information guides R&D, shapes commercialisation plans, and incentivises investment.

Techno-economic assessments are valuable in understanding the different value propositions that an innovative nuclear technology can contribute, demonstrating the value of moving beyond the known, accepted path. Techno-economic assessments should also account for the wider energy system implications of a technology, and consider the role of the new nuclear asset in the energy mix across various long-term scenarios or Future Worlds. This will help to clarify the multi-modal benefits that new nuclear can provide – not only generating electricity, but also providing heat for industrial or district heat uses, production of hydrogen and derivative fuels, and other use cases. Assessments should consider the extent that multi-modal operation could reduce the levelised cost of energy for new nuclear assets, thereby providing greater value for money.

How can stakeholders conduct and share robust techno-economic assessments that deliver a reliable indication of risk, reward, and investability?

Quality input = quality output

Techno-economic assessments make it possible to explore potential demand changes within different future scenarios, adjusting variables such as power and heat demand, decarbonisation ambition, renewables deployment, and technological innovation. We’ve built techno-economic models to understand factors contributing to the energy requirement of a Direct Air Capture system (such as air handling, heat integration, and pumping), considering the net and gross value of each factor to understand commercial as well as technical viability.

However, these assessments are only as good as the data that feeds them. By conducting FutureWorlds™ exercises, stakeholders can identify the right variables to assess based on different energy solutions in probable futures.

So, if a Future World assumes high deployment of nuclear in the future energy mix, analysis might show the whole-system costs of relying on low-cost but intermittent renewables and the system costs of electrifying substantial swathes of the economy – from heat to industrial production. Additional economic elements might include maintenance and labour costs, internal rate of return (IRR), and payback period. The techno-economic assessment might reveal that while nuclear technology costs are falling, grid connection and maintenance expenses remain significant, informing decisions on whether to prioritise investment in nuclear infrastructure, adjust licensing processes, or introduce nuclear subsidies to accelerate deployment.

Look beyond the techno-economic assessment

Techno-economic assessments alone won’t justify an investment decision or development choice – even if they incorporate market forecasts, financial analysis, and options analysis. Value isn’t solely financial.

Alongside techno-economic assessments, market and systems analysis help to understand adoption rates and competitive dynamics, while policy and regulatory reviews gauge legislative impact. Environmental impact assessments add sustainability perspectives, while risk and sensitivity analysis explores uncertainties such as fuel price volatility. The social and public value of clean energy solutions will be increasingly important when attracting government investment.

During techno-economic assessments and supplementary analysis, stakeholder engagement can validate assumptions and ensure alignment across developers, regulators, investors, and grid operators. This engagement can surface trade-offs between cost, reliability, and sustainability goals, helping to set deployment timelines and shared responsibilities for infrastructure and financing. Examples from the wider market show the value of this approach: the UK’s offshore wind auctions relied on collaborative modelling between industry and government to inform Contracts for Difference pricing, accelerating cost-effective deployment.

Share the outputs

Techno-economic investments provide evidence-backed projections that can build investor confidence in emerging technologies and solutions. They help to identify opportunities to make assets more investable, including bringing down the unit cost of production by identifying offtake across power, heat, data centres, and fuel. This can justify the creation of government revenue support mechanisms, and pinpoint the amount of funding required.

If analysis finds that nuclear expansion relies on government investment, both the government and developer need to conduct scenario-specific techno-economic assessments to quantify the value of underwriting a nuclear contract (from a government perspective), and the funding needed to bring solutions to the fore.

Techno-economic assessments can influence commercial arrangements by providing cost projections, risk analysis, and performance insights that shape EPC contracts, investment strategies, and public-private partnerships. Importantly, they offer evidence for regulatory and policy incentives, while forecasting the impact of these incentives. Assessments can also evaluate opportunities for unit cost reduction through integration across markets, evaluating the possible outcome of cost changes while guiding reforms in grid integration, licensing, and compliance. To speak to such a broad range of stakeholders – particularly potential investors – techno-economic assessments need to be conducted in a robust way, meaningfully accounting for multiple perspectives.

While techno-economic assessments aren’t infallible, they paint an evidence-based picture that identifies priorities and next steps. Ultimately, they help to answer the two golden questions: will it work, and will it be worth it?