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Climate Tech 360

Everything you need to know about offtake agreements

40 min • 27 februari 2024

This episode explores the topic of offtake agreements in the context of climate technology projects with Kobi Weinberg. The conversation covers the challenges faced by early-stage companies in transitioning from venture capital funding to debt financing, and the role of offtake agreements in this process. We discuss the basics of offtake agreements, including their definition, key considerations for buyers and lenders, and the variability of terms across different industries. We also discuss the involvement of financiers and governments in de-risking offtake agreements and provide examples of offtake agreements in sustainable aviation fuel, hydrogen, and carbon removals. The episode concludes with a list of resources that startups can use to navigate the process of structuring off-take agreements. 

 

Takeaways

Offtake agreements play a crucial role in the transition from venture capital funding to debt financing for early-stage climate technology projects.

Buyers and lenders have different considerations when it comes to offtake agreements, including price, volume, delivery, non-delivery, and quality.

Engaging with financiers early in the process can provide valuable guidance and help align the terms of the offtake agreement with the requirements for raising debt financing.

Offtake agreements can vary significantly depending on the industry and the specific output being purchased.

Governments and nonprofit organizations can play a role in de-risking offtake agreements and supporting the development of climate technology projects. 

Challenges and risks associated with off-take agreements include pricing uncertainty, credit risk, and termination risk.

 

Mentioned on the podcast

CREO’s Introduction to Offtake Agreements

CREO’s Introduction to Risk Transfer Solutions for Climate Projects

Department of Energy

Spring Lane Capital

Munich Re

Elemental Accelerator

Prime Coalition

New Energy Risk

 

Contact Us

Guest: https://www.linkedin.com/in/kobiweinberg/

Email us: [email protected]

Host: https://www.linkedin.com/in/samiaqader/

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