Fernandez: Startups lock in offtake prices before engineering reveals 2x CapEx
Mario Fernandez · FOAK tales · Jan 16, 2025 · at 24:12
Mario Fernandez, head of Breakthrough Energy Catalyst, explains the major structural mistake climate tech startups make when negotiating FOAK offtake contracts.
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“We find that many times off-takes are priced in a way before engineering, you know, failed one, failed two, engineering have been done, and it's based on optimistic CapEx assumptions. Now, when the companies go through the engineering process and they actually get to a feed, they find out that CapEx is twice as much. Unfortunately, they've already signed an off-take agreement based on half the CapEx, and that's when they get into trouble, because there's no way they can go back to the cost and say, hey, can we double the price, right?”
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