Long-term offtake commitments are required to support project bankability. Lenders want to see a minimum of 5 years, preferably 10+ year offtake term. Most projects take 1–3 years to build out, anything below 5 years is unrealistic in meeting the supplier timeline.

Companies do not normally lock themselves into long-term purchasing commitments of ~10 years when the availability and price of the product remains uncertain.

Offtake agreements set out terms associated with volume. Suppliers need to enter contracts to sell sufficient volumes of the clean technology solution they produce to cover their fixed costs of production and provide a steady revenue stream for bankability. Volume certainty is core to a corporate buyer’s business with shortfalls likely to cause material issues. In some instances, there can be a mismatch between the buyer’s desire for flexibility to accommodate operational and market cycles and the demand profile certainty suppliers require to design and develop a capital-intensive project.

Offtake agreements set out terms associated with volume. Suppliers need to enter contracts to sell sufficient volumes of the clean technology solution they produce to cover their fixed costs of production and provide a steady revenue stream for bankability.

Volume certainty is core to a corporate buyer’s business with shortfalls likely to cause material issues. In some instances, there can be a mismatch between the buyer’s desire for flexibility to accommodate operational and market cycles and the demand profile certainty suppliers require to design and develop a capital-intensive project.

Suppliers seek robust termination terms to address the risk of a lack of alternative offtakers. Offtakers often require flexibility to reduce volumes or terminate due to strategic business decisions.

Low-carbon products lack commonly accepted standards and certification schemes. Alignment is needed between the supplier and offtaker on product specification, i.e., what constitutes ‘near/net-zero emissions’ and whether the agreed definition aligns with relevant regulatory/market access definitions.