4.3.1 The Technology Readiness and Performance Level
Recent work to provide ways of measuring the progress and the value of technology R&D processes has focused on adapting the TRL to specific wave energy terms and the introduction of a new TPL scale.
ESBI and Vattenfall  have prepared the wave energy TRL scale focusing on functional readiness and lifecycle readiness. While, Weber [1, 13] has prepared the TPL scale focusing on an all-round performance assessment with heavy emphasis on innovation and assessing economic viability. Additional wave farm TRL scales have been published  and a complimentary scale of Commercial Readiness Levels (CRL) has been defined to extend beyond the R&D phase .
Functional readiness means the readiness to convert ocean wave energy and export it to grid in addition to other related and essential functions such as station keeping and remote monitoring. The TRL scale gives indications of how these should be demonstrated at different TRL levels. Lifecycle readiness means readiness in non-functional areas that are important to utilities; these include operational readiness, supply chain readiness, risk reduction and also cost estimation and reduction. Inherent to the TRL scale is a focus on certification and a related expectation for the end user to be required to insure against certain risks (Table 4.2).
The TPL scale is focused on performance as a combination of social, environmental and legal acceptability, power absorption and conversion, system availability, capital expenditure (CapEx) and operational expenditure (OpEx). Inherent to the TPL scale is a focus on Cost of Energy (CoE) and on improving this through innovation at low TRL. A further focus of the TPL is on formulation and automation of the performance assessments. An important component of the performance assessment is techno-economic simulation and optimisation; this ideally combines simulation of the physical processes in wave energy absorption with operational simulation, financial assessment and numerical optimisation techniques [16–18] (Table 4.3).
4.3.2 The WEC Development Stages and the TRL Scale
The five technical development stages (see Sect. 4.2) are specific to the wave energy sector while the TRL scale, which rates the technical maturity (see Sect. 4.3.1), is widely used in other industries.
Although these two systems are in some aspects very different, they can still be combined and compared as they both follow the development of a new product. This is presented in the following Table 4.4.
4.3.3 The TRL-TPL R&D Matrix
As mentioned before, The TPL scale (from 1 to 9) presents the economic potential of a WEC while the TRL scale (from 1 to 9) presents the technical maturity level of a technology. These two evaluation scales can be combined in the TRL-TPL matrix, also called the Weber R&D matrix. This TRL-TPL matrix allows the status of a wave energy technology R&D programme to be represented as a point on the TRL-TPL plane and the history of the R&D progress up to that point as well as projections of future progress to be charted as lines.
A TRL-TPL matrix is presented in Fig. 4.2, in which the horizontal axis of the diagram is the TRL and the vertical axis is the TPL.
The right edge of the matrix is marked with indicative LCoE, which represents the TPL. Higher TPL levels are associated with more competitive cost of energy.
The top edge of the matrix is marked with indicative R&D spend or “burn rate”. Higher TRL levels are associated with higher capital “burn rates” as the R&D expenditures and the project risks also increase dramatically with the TRL.
All technology developments enter the process at the left of the diagram and, if all goes well, proceed along a rightward and upward trajectory towards market entry. Successful market entry requires a fully developed WEC (TRL 9) that is commercially viable, meaning a TPL between 7 and 9 (with or without financial support).
The grey area represents the “graveyard”. This area indicates the TRL-TPL combinations at which further developments should probably be ceased as it is very unlikely that from that point on the product will ever become economically viable. If the developer would, however, decide to proceed with the development, significant changes will have to be made to the basics of the concept, thereby returning to an earlier TRL in the hope to raise the TPL (see Sect. 4.4).
During the technical development of the WEC—in the form of experimental tests, numerical models and analysis—design decisions are made concerning the fundamentals of the concept. These WEC fundamentals are numerous and very flexible at an early stage as everything is still open for discussion while they are being addressed and, thereby, being fixed together with the development. Thereby, it is of great importance not to fix fundamental parameters of the WEC as long as the TPL is not at least 7 or above. Figure 4.3 presents the different domains of the TRL-TPL matrix.
While system fundamentals are flexible (left half of the diagram), the primary R&D goal should be to increase TPL with an emphasis on analysis, innovation and assessment of many alternatives and where this is facilitated by low cost and low risk activities. After a concept with sufficiently high TPL has been identified, the system fundamentals should be fixed and the R&D should progress to the right-hand side of the Weber diagram. In the right half of the diagram, the primary R&D goal is to increase TRL; in this domain the emphasis is on demonstration and risk reduction. In the right-hand domain, innovation must be much more cautiously managed to reduce risk in large projects and must be limited to improving subsystems. Ideas for entire system improvements must be tested at lower TRL and treated as new projects.
4.3.4 Uncertainty Related to the TRL-TPL Matrix
As stipulated before, the LCoE for a commercially-operated power plant, based on a particular WEC, should be estimated at the end of each development stage. During the development of a WEC, the numerous assumptions and unknowns related to the cost and power production are addressed systematically. Thereby, the uncertainty related to the LCoE, which is a function of the cost and power production of a WEC, gets gradually reduced with the development phases. Table 4.5 presents EPRI attempt to quantify the level of uncertainty related to the estimated cost based on the technology’s design maturity.
The values in the Table 4.5 are unlikely to be generally applicable. However, they give a probable indication of the uncertainty linked to the estimated cost of a WEC project. The overall uncertainty related to a WEC project will even be greater as there is also a fair level of uncertainty linked to the power production, which depends on the environmental conditions and availability of the WECs.
Figure 4.4 gives an example of possible LCoE estimations that have been re-evaluated all along the technical development of a WEC. The optimistic and pessimistic LCoE estimations illustrate the uncertainty related to the mean LCoE estimation.
The average LCoE estimation is the average between the optimistic and pessimistic LCoE estimation. Besides the uncertainty on the estimation, a different result might be obtained depending on who makes the calculation (e.g. developer or independent third-party). It is unfortunately difficult to estimate the fully correct LCoE in any case before a commercially operated power plant based on a particular WEC is built and operated over its full lifetime. So, it is of great importance that the LCoE estimation is transparent where (possible) assumptions are disclosed.
4.3.5 Valuation of R&D Companies
A further use of the Weber R&D matrix is as a guide for assessing the technology companies which are half-way through an R&D programme. For example, consider the different R&D programmes represented by a TRL = 7 and TPL = 3 and another case with a TRL = 3 and TPL = 6 (see dots in Fig. 4.2); imagine that the companies conducting these R&D programmes are raising equity. Which is more investible?
Conventional wisdom might argue that the higher TRL programme is closer to market readiness and, therefore, that the additional investment needed to bring the R&D to completion is less than in the case of the lower TRL programme. If an assessment is done purely on the basis of the TRL, then the dark blue dot would appear to represent the more advanced R&D programme. However, as already established in the previous sub-section, this programme is likely to stall or at least to have to go back to the drawing board: it finds itself in the “R&D graveyard”. Conversely, the light blue dot, although at a lower TRL, is at a much higher TPL and crucially is much closer to the green trajectory. A valid relative measure of an R&D programme is, therefore, how close it is to a trajectory that will result in successful (affordable) market entry.