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Climate innovation is necessary. While we need to support new, better, more efficient, and more economically green technologies to address evolving adaptation, mitigation, and resilience needs, much of what is needed to prevent a climate disaster already exists. Wide-scale adoption is critically needed. The clarion call must be “Deploy! Deploy! Deploy!”
And so what is the problem?
Startup India has ~4,000 clean energy or green technology startups registered. When evaluated by both technology readiness level (TRL) and commercial readiness level (CRL), few companies exceed a TRL of 4 or 5, and most are far from CRL level 9 or commercial scale. This aligns with a significant funding gap, where philanthropy and angel investment drop off; meanwhile, impact and commercial capital still see far too much risk and no line-of-sight to market viability.
While funding is an issue, taking climate innovation from concept to commercialisation/ adoption is far from a linear journey. The pathway to scale is replete with milestones; without customer and market readiness, technologies will not achieve adoption, scale, or deliver climate impact.
In the first of a two-part series, we unpack what it will take to get climate tech companies across the two infamous Valleys of Death.
Short answer: Demonstration & Commercialisation are key to triggering the ‘diffusion of innovations’.
What exactly is Demonstration (isn’t that just another word for Pilot) and why do we need it?
Demonstration may vary by sector but is essentially the process of establishing techno-commercial validation by integrating a novel technology in real operating environments for an extended period of time.
The term Demonstration, as opposed to Pilot, calls out that it builds customer confidence by demonstrating how the technology interacts with other technologies in the system, is used by workers, influences product quality, stability or variability, safety, and reliability.
Demonstration, therefore, is quite distinct from a Pilot. Pilot projects are short-term with the objective of testing the waters of new, yet-to-be-tested technologies, while Demonstrations are larger, longer studies of later-stage innovations as they prepare for Commercialisation.
While climate innovators deeply understand their technology, many of them are first-generation entrepreneurs. They may have more theoretical perspectives of their customers' businesses and decision-making levers. At the same time, many novel climate technologies are expensive, can be dangerous if not fully stress-tested, and can cause significant damage to the systems in which they operate if they break or cause a wider malfunction.
Simply put, a battery for energy storage could explode if it's not fully tested; this is very different from an app that can put out an update if there is a bug. Seen by the market as only half-proven, potential customers of these novel, green technologies are not ready to take on this operational and business risk.
At its core, technical Demonstration can help answer some of the most critical questions a customer has when considering whether to adopt a green technology or not.
Demonstration’s point-of-use data is critical for integrated and medium-term testing. Without this, poor product quality is locked in, requiring frequent and/or high-cost servicing. This limits product adoption and once/if manufacturing-at-scale begins, it is both difficult and expensive to make design improvements, change components or modify processes.
Demonstration provides a robust response to concerns of breakage, downtime, costs, etc., and further builds a business case for product adoption based on resource efficiency and business RoI. It is also a time for the innovator to refine the offering, whether it is improving training or designing maintenance schedules. In other words, Demonstration primes the customer for technology adoption and the technology for the market.
In practice, outside of a program run by UNIDO, commercial Demonstration is generally not available to most climate entrepreneurs in India. Of course, there’s a strong urge to say therefore, that all that we need is more Demonstration to take technology to the market.
Unfortunately, we aren’t completely “there yet”. The second Valley of Death still remains to be crossed – identifying a business model, business road map, and customer financing. In other words – Commercialisation.
More on that in our next post!