Sunday, 27 June 2010

Risk versus Reward

One of the greatest Challenges in the development of any new technology, no matter how much it has been studied or tested in laboratory conditions, is the issue of Technology Risk. It is this risk, perceived or otherwise, that allows or prevents any technology making the conversion from Laboratory to Factory.

This can be defined in many ways, but is usually limited to 3 key areas:

1) Fitness for purpose
2) Indemnification
3) Scalability


In order for a laboratory developed technology to be Commercialised, the single most important aspect is its Fitness for Purpose. In other words - it will actually do what it was designed to do.

In the case of Torrefaction technologies, this is a yet to be realised goal. Even the best research organisations in the world, have only been able to create a reactor that works at small scale. Even then - the product derived from these bench-top and lab-scale reactors isn't ideal. On top of this, NONE of the current developers are willing to offer the GUARANTEE that their technology will ACTUALLY WORK!

I suppose one could be convinced that if a process works at 10 or 100 kg per hour - it will work just as well at 1,000 kg per hour or more. Nothing could be further from the truth. One has to completely understand the mechanism of torrefaction, BEFORE you can fully appreciate the height and breadth of this hurdle. Our experience is that Investors are unwilling to back something, unless there is either a prior version (that the new developer is seeking to improve upon) or a significant guarantee from the technology owner.

As there are NO operating commercial torrefaction reactors anywhere in the world - the first to develop one takes assumption of all of the risks. Unfortunately - it doesn't necessarily follow that they benefit from all of the rewards as well. In fact - it is highly likely that other developers will benefit MORE than the pioneer. The reason for this is simple;

First to "prove" the technology will change the view of investors on it's viability. That is to say - once SOMEONE, ANYONE has successfully created a Commercial reactor - the investment industry will, as a whole, recognise and ACCEPT that it is now possible. PRIOR to that, (which is where we are today) it is only a THEORETICAL technology. I recall a comment I received about a year ago with respect to torrefaction - "It didn't work 15 years ago - and it WON'T work today". This kind of self-limiting thinking and defeatist attitude runs rampant amongst those who have no vision.

On December 13, 1903, man had never successfully achieved powered flight. On December 14th, the entire world changed when a couple of bicycle mechanics named the Wright Brothers, managed to get what appeared to be an oversize box kite into the air under it's own power. In the same way - 30 seconds AFTER the first Bio-Coal exits the first reactor - the ENTIRE world changes. Most people believe that the telephone was invented by Alexander Graham Bell; The steam engine by James Watt; the light bulb by Thomas Edison; and the radio by Marconi.In fact - here are the Inventors (NOT The ones who commercialised the devices)

TELEPHONE - In 1860, an Italian named Antonio Meucci first demonstrated the working telephone
LIGHT BULB - Heinrich Goebel was likely the first person to have actually invented it, back in 1854
STEAM ENGINE - Thomas Newcomen an English blacksmith, invented the atmospheric steam engine circa 1712
RADIO - Mahlon Loomis - He is called as the "First Wireless Telegrapher" - In 1868

In each of the above cases, the actual inventor received very little benefit from the his labours. It was the names of the person who COMMERCIALISES the invention that became the household word. I have the feeling that torrefaction will end up being very much the same. There are literally HUNDREDS of Companies right now who are "watching" torrefaction closely. Many of them are hedging their bets by contacting ALL of the developers, and gaining an understanding of what they are doing; and how they are doing it. In this way - they hope to be able to "jump in" JUST at the right time, to establish a relationship with the developer. The risk associated with this strategy, of course, is that there is no "shot to nothing". Many of the Torrefaction developers are speaking to several potential Customers (predominantly for the product - NOT the technology) leading each to believe that THEY are the "chosen" ones. Without however, some "consideration", this is all just talk. (Something about "put your MONEY - where your MOUTH is!) It will undoubtedly create some interesting dynamics as things get close to the ultimate end, and the "winners" and "losers" are revealed.


The path to commercialisation is invariably paved with many, many potholes. A major one of these is the liability associated with the design and construction of a machine that has the potential to be a rather large BOMB. (After all - a 5-tonne per hour reactor will contain some 25 tonnes of wood chips at any given time, containing a total calorific value of some 500,000 Mj of energy; operating in an anoxic atmosphere, at very close to the autothermal (exothermic runaway) reaction point; producing combustible and potentially explosive gasses in copious amounts. What could possibly go wrong?

Needless to say - next to the bean-counters (Accountants - who seem to run EVERYTHING) it is the Insurance underwriters that have the most influence on Commercialisation. There is this small matter of
Product Liability that needs to be addressed. After all; if you sell a machine and the customer fills it full of wood chips, and it Catches FIRE or explodes - this is NOT a GOOD thing. It's made even WORSE by the fact that there are people running the machine, and these types of events can ruin their WHOLE day.

SO - the underwriter types tend to be very careful about ensuring that the technology is safe and suitable.


One reactor does not an industry make. Neither does 2; or 20; or 200 for that matter. The key here is that scalability cannot be an arithmetic exercise - it needs to be an exponential exercise. The vast majority of the current technologies in development are already too expensive to be economically sensible. There are some who believe that the economies of scale will reduce this cost - however it is unlikely. The complexity of the machines, combined with the the complexity of the process, necessitates an unusually high Capital cost.

Optimisation of the system would require a whole new philosophy of operations. To that end, one needs to look at the design from a completely different perspective. here are the parameters that guide this philosophy;

Understanding the process so completely that there are no extraneous steps, and only the bare-essential components are included.
The more sophisticated a machine - the less durable and rugged it tends to be. Ideally - the reactor should resemble a 70's vintage Land Rover - rather than a new Rolls Royce.
This is ALL about Systems Integration and Process Control. Almost ALL of the existing technologies are relatively limited in their parametric control. As a consequence - the spectrum of feedstock that they can process is the narrow end of the wedge.
As SI and Process Control represent a large portion of the CapEx; it makes sense to have the ability to expand this function to 2, 3, 4 or even more reactors. Limiting the PLC to 1 reactor per computer (actually - 2 computers as redundancies are necessary for safety) unnecessarily handicaps expansion capabilities.
Undoubtedly, the technology will develop, and improvements in the process will evolve. A non-modular System would be left in the dust of "built-in obsolescence"; UNLESS serious consideration was given to "future-proofing".

It is fair to state that many of the current designs and technologies have travelled so far down a single path, that they are now past the point of no return. This is, in many ways, quite tragic, as the ultimate goal may not necessarily be where it was first anticipated to be.

The Company that can assemble all of these features, is the one that will ultimately control the market for the foreseeable future.

1 comment:

  1. Product liability is something to consider BEFORE the equipment is advertised for sale. In the litigation prone world we live in, lawyers and bean counters need to be included throughout the design, prototyping and industrial introduction process. To not include them risks losing everything.