Another week, another report on EU cleantech and industrial competitiveness. This time, it’s the Cleantech Reality Check from Breakthrough Energy and Cleantech for Europe—a well-structured, concise, and data-packed assessment of where European manufacturing stands. Some solid points, some wishful thinking, and a few glaring omissions. What I Support 🔹 High energy costs are killing EU manufacturing. Europe’s industrial power prices are 2-3x higher than those in the U.S. and China. The report highlights this, but it stops short of prescribing solutions. If renewables are supposed to be cheaper than fossil fuels, why isn’t Europe proving it? 🔹 Prioritizing EU content. If you want local industry, you need policy-driven stimulus. Russia built a wind turbine manufacturing sector from scratch by tying local content requirements to lucrative tariffs. If Europe wants to scale clean manufacturing, it should set hard requirements and provide good stimuli. What I Don’t Support ❌ Electrolysers are not the key to EU manufacturing competitiveness. The EU has poured billions into hydrogen, hoping for an economy that still hasn’t materialized. This fixation is a dead end. Time to cut losses and focus on what actually works. ❌ Batteries: The demand illusion. The report claims there’s strong demand and offtakes for EU battery manufacturers. Reality check: There is no robust market outside of VW, Stellantis, and BMW—and these players are actively looking for (misguided) alternatives. What’s Missing? 🚗 Where are the EU’s pure-play EV manufacturers? The report acknowledges the lack of a vertically integrated European EV company but ignores the need to build one. 🤝 No mention of Asian partnerships. If Europe wants to scale battery manufacturing, it must collaborate with Korean and Japanese players. There’s no way around this, and yet the report sidesteps the issue entirely. Europe needs to make some hard decisions and reports like this help to fuel the discussion. Apart from batteries and electrolyzers, the report also considers the situation in steel manufacturing. I have no first-hand knowledge there, so would love to hear your thoughts! #europe #manufacturing #cleantech #competitiveness #policy

In any type of off-take, price will be the central point of negotiations. There are many pricing options available - fixed, floating, pass-through, CAPEX-based, return-based, etc. But before we go into the nitty-gritty of price structuring, let’s get the basics right. Going into the pricing negotiations, your objective is to keep the FOAK project profitable! There are a few challenges to that.  First, your FOAK is about building something solid, so you will be spending a lot of cash before you can have cash rolling back to you, and you are negotiating a price before you even know the exact amount of cash you’ll need to burn. Even if you followed all the steps and had your pilot and demo projects lined up perfectly, you still won’t know how much will your FOAK cost you.  If you think that your FOAK will be on a budget, think again. When you last did any renovations to your house, were you on a budget? I thought so. No way that’s going to happen. Suez Canal was two times over budget. Flamanville nuclear power plant was four times the initial cost. The excellent research by Bent Flyvbjerg showed that cost overruns are common across industries.   Source: How Big Things Get Done. The surprising factors behind every successful project, from home renovations to space exploration. Bent Flyvbjerg and Dan Gardner. 2023 The data is clear. Most projects are at least 30% over budget. Many are 50%+. Keep in mind that most of them are not FOAK types. Nuclear energy and the Olympic games would be closer to what we are looking for. So we are in for 2-3 times over our initial budget. And we haven’t yet started talking about our operational costs.  After Northvolt completed its first lithium-ion cell gigafactory in Sweden in 2021, it filed for bankruptcy in 2024, having spent only three years in operations. The chief reason for closing was the inability to get the so-called scrap rate, the ratio of bad output to good output, to manageable levels. By 2024 it was losing over 10 million euros a day! While you don’t know your CAPEX costs, you sure as hell don’t know what your real operational costs will be like! Such CAPEX and OPEX overruns will kill any cleantech FOAK project. So the key to surviving your FOAK is being flexible on pricing. Here are several pricing schemes to consider. Pricing schemes CAPEX-based pricing  This method directly addresses the uncertainty of CAPEX in FOAK projects. The price is determined based on the actual CAPEX expenditure, using a predetermined rate of return and term of depreciation. This method is a good fit if your final product has a low OPEX projection. For example, in wind energy projects, CAPEX is the main expenditure. It doesn’t cost much to operate a wind turbine. Thus, 70-90% of your price will be based on your CAPEX and cost of capital.  This method, while pretty straightforward, has a major drawback. You have an inherent incentive to jack up your CAPEX, as your rate of return is fixed and greater CAPEX means more cash for you. Your client will thus try to pass some of the risks of CAPEX inflation by pushing for a lower maximum CAPEX level to be fixed in the off-take agreement.   In my experience, I’ve used CAPEX-based pricing for wind energy projects. Not that I had much of a choice though. The government would set a maximum CAPEX level for a limited volume of wind energy, and the company, suggesting the lowest CAPEX level would get the off-take, with prices based on this CAPEX.  Return-based pricing You and your investors are expecting some level of return from your FOAK, so why not make it a cornerstone of your off-take pricing? In this scheme, you fix the level of return on capital and determine the final price with this return as a base. Instead of a hard price, you will have a formula, where the known component will be your rate of return.  This method protects your downside and gives you greater flexibility. However, it pushes all the commercial and merchant risks to your customer. It can be acceptable if your customer is also your shareholder or has a stake in the project. Otherwise, the scheme is rather unattractive for a customer, eliminating any kind of certainty for him. This scheme also has the drawbacks of the CAPEX-based method, as it gives you incentives to increase your CAPEX, or at least not to control it as vigorously, as you otherwise would.  Margin-based pricing This is similar to return-based pricing, but you fix your operating margin instead of return on capital. If your product’s operating costs take 70-90% of your total costs, then this method might be more relevant for your FOAK. Margin-based pricing often assumes that some or all of the merchant risk is passed through to the customer. Thus, if your product relies heavily on commodities with volatile pricing, the margin-based method is a good way to protect your operational downside.  Another benefit to this method, at least from the customer’s point of view, is the decoupling of CAPEX from pricing. As your operating margins are now protected, you have the incentive to keep your CAPEX as low as possible, freeing up your margin for your investors. This is mirrored as a drawback for you, as now you have to fully bear the CAPEX risk, which, as we’ve seen, is a major risk in all FOAK projects.  Scenario-based pricing In 2021 I signed a conditional off-take with KAMAZ for up to four GWh of lithium-ion batteries. The particular chemistry we were going to make was nickel-manganese-cobalt, or NMC. At that time, there was a generally accepted view on the price of NMC by the time our factory would be in operation. Our agreement had a couple of tables attached, and each table had three columns - year, price, and volume. Each table represented a specific scenario of the demand of KAMAZ for batteries. In every table, prices for the first year of delivery were up to 50% higher, than market prices, projected at the moment. The volumes were correspondingly small. Then, as volumes were projected to increase, after several years of operations, the price would match the projected average for the market. This is just one example of how to build flexibility into the pricing of your off-take. In scenario-based pricing, you draw up several scenarios of demand levels and corresponding prices. In my case, KAMAZ wasn’t sure whether it would be able to make electric cars in a few years but was quite certain that it would continue manufacturing electric buses. So we had two scenarios - one with demand for electric cars, and one without, and the scenario with electric cars assumed lower prices. Importantly, we did not rely on our CAPEX estimations. Instead, we benchmarked our prices to what was currently available in the market and what was projected for the next ten years.  Your five-step framework to negotiate the best price for the off-take Pricing negotiations are rarely clear-cut. You are dealing with a whole lot of uncertainty here. So, how do you approach it? How do you make sure that you get the best deal? Here is a five-step framework for you, based on my experience and those of negotiators and founders I know.  Step 1. Know your customer’s motivation Run-of-a-mill customers do not sign off-takes with FOAKs. It’s too risky. They want predictable quality, prices, and delivery dates. If something from this list isn’t to their liking, they will look elsewhere. Your customer is talking to you for a reason. They might need your technology in their next best-selling product. They might need it to avoid regulatory penalties. Other startups might be in too early stage. The list goes on.  When I was on the buy side in the wind energy business, I had a pressing need for a technology that I could scale locally. That is why, Lagerwey, the Dutch startup with a wind turbine technology, was able to charge us much more than GE. The US giant had comparable technology and was arguably less risky to deal with. Their pass to localization, however, was uncertain and left our team out of key technologies.  The Dutch on the other hand allowed full localization and were ready to provide next-generation turbine design as well. They were able to charge us several times more for the license and we also paid handsomely for parts, that were to be manufactured by them during the transition period.  Find out why your customer is talking to you. What exactly motivates them to take this extra risk. This will be your best leverage in price negotiations.  Step 2. Determine if you are CAPEX or OPEX-intensive What type of business are you in? Are you CAPEX-intensive like wind and solar, or are you OPEX-intensive, like green cement? Look at the price structure. If more than 80% of your price is return on capital, then you are CAPEX-intensive. If your OPEX is of greater share of your price, then this is what you need to protect.  A CAPEX-intensive business will do well with a CAPEX-based or return-based pricing. The OPEX-based will be better off with the margin-based scheme, or even a reduced version of - merchant pricing, accounting just for fluctuations in the prices of underlying commodities. Step 3. Determine how competitive your market In the case of the KAMAZ off-take that I’ve described above, the battery markets were already quite competitive. This ruled out CAPEX-based or even margin-based pricing schemes. In an already competitive market, a scenario pricing tied to specific off-take milestones might work best. This way, you will be able to match your competitors in a gradual way. In less contested markets, you can rely more on pricing mechanisms based on your actual costs or required return.  Step 4. Determine how much you depend on commodity prices Often your FOAK will rely on an extensive chain of suppliers, and some of them will set the price based on the market rates for their goods. If you can secure your supplier's prices, you will have much more control over your OPEX. For example, a green hydrogen producer may secure a long-term power purchase agreement with a renewable energy supplier at a fixed price, or a battery manufacturer may secure a long-term fixed-price agreement for lithium, cobalt, or graphite. If these options are available, you will be able to focus on protecting your CAPEX via CAPEX or return-based pricing, or, even agree on a fixed price, if your CAPEX share is not large. If, on the other hand, it is not possible for you to fix your suppliers' prices, then full or partial pass-through pricing with a fixed operating margin will be the way to go.  Step 5. Determine if a buy-out is possible Sometimes, it is extremely hard to negotiate a good price for your FOAK. If that is the case, then offering your customer a buy-out option could give you some leverage. A buy-out clause allows your customer to buy your FOAK facility at some point in the future. Normally, such a balance sheet transaction will not be on the cards. After all, FOAKs are built by startups for a reason. Still, there may be some instances when a customer might consider transferring the FOAK facility to its balance sheet.  This might allow the customer to integrate your product more tightly into its supply chain and somewhat reduce costs. At the same time, a buy-out does not necessarily mean that your participation in the project is over. More likely that after the buy-out your team will stay on and continue running the facility for a fee.  Final remarks You won’t be negotiating prices only during your binding off-take negotiations. Your price negotiations will start the moment you meet your customer for the first time. They will drag along your off-take process from MOU to Term Sheet. They will be muted during the MOU’s and LOI’s. They will become much more pronounced during the Term Sheet phase. And they’ll be (almost) fixed when you sign an off-take.  The key to negotiating a good price for your off-take is knowing your weaknesses and unknowns and knowing the reasons why your customer is willing to take the risk of contracting a FOAK. The former is needed to protect your downside. The latter allows you to get the best terms. Your final price scheme is likely to be a blend of several methods. It will depend on the nature of your technology, current market conditions, and how badly your customer needs your product.  So, start negotiating early by learning the true motivations of your customers. Learn about your own risks as much as possible, by gradual scaling through pilot and demo stages. Slowly fix the main principles of cooperation in LOIs and MOUs and then agree on the general pricing mechanism in the term sheet, before legally finalizing it in the fine details in the off-take. In the end, remember, that the pricing mechanism is a balance of covering your and customers’ risks.

Your First-of-a-Kind (FOAK) project is where your climate tech startup is a startup no more. Investors, customers, and even your own team won’t fully believe in your technology until they see it in action at scale. So, how do you get it right? 𝟭. 𝗘𝘅𝗽𝗲𝗰𝘁 𝘁𝗵𝗲 𝗨𝗻𝗲𝘅𝗽𝗲𝗰𝘁𝗲𝗱 Murphy’s Law is real. FOAK projects never go as planned - delays, supplier failures, site issues, regulatory holdups. How do you prepare? • Use real-world data: Look at similar completed projects to estimate timelines realistically. • Double-check your CAPEX assumptions: Costs will be higher than you expect - factor that in from the start. • Stress-test everything: Bring in external experts to challenge your assumptions and uncover hidden risks. 💡 𝘍𝘭𝘢𝘮𝘢𝘯𝘷𝘪𝘭𝘭𝘦’𝘴 𝘯𝘶𝘤𝘭𝘦𝘢𝘳 𝘱𝘭𝘢𝘯𝘵? 𝘖𝘷𝘦𝘳 4,500 𝘥𝘦𝘴𝘪𝘨𝘯 𝘤𝘩𝘢𝘯𝘨𝘦𝘴 𝘮𝘪𝘥-𝘤𝘰𝘯𝘴𝘵𝘳𝘶𝘤𝘵𝘪𝘰𝘯. 𝘖𝘶𝘳 “𝘴𝘪𝘮𝘱𝘭𝘦” 𝘸𝘪𝘯𝘥 𝘵𝘶𝘳𝘣𝘪𝘯𝘦 𝘧𝘢𝘤𝘪𝘭𝘪𝘵𝘺 𝘵𝘰𝘰𝘬 𝘵𝘸𝘪𝘤𝘦 𝘢𝘴 𝘭𝘰𝘯𝘨 𝘢𝘴 𝘱𝘭𝘢𝘯𝘯𝘦𝘥! 𝟮. 𝗣𝗶𝗰𝗸 𝘁𝗵𝗲 𝗥𝗶𝗴𝗵𝘁 𝗘𝗣𝗖 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁𝗼𝗿 Your EPC partner is either your biggest asset or your biggest liability. • Cheap will cost you more. Prioritize experience and execution capability over the lowest bid. • Look for aligned incentives. Top EPC firms want to expand their portfolio - if your project can be a flagship, they’ll be more motivated. • Negotiate a fixed-price contract (if you can). EPCs will try to leave room for cost overruns - don’t let them. 💡 𝘑𝘙 𝘌𝘯𝘦𝘳𝘨𝘺 𝘚𝘰𝘭𝘶𝘵𝘪𝘰𝘯 𝘣𝘶𝘪𝘭𝘵 𝘢 500 𝘔𝘞𝘩 𝘦𝘭𝘦𝘤𝘵𝘳𝘰𝘥𝘦 𝘧𝘢𝘤𝘵𝘰𝘳𝘺 𝘪𝘯 𝘫𝘶𝘴𝘵 𝘯𝘪𝘯𝘦 𝘮𝘰𝘯𝘵𝘩𝘴 𝘸𝘪𝘵𝘩 𝘵𝘩𝘦 𝘳𝘪𝘨𝘩𝘵 𝘌𝘗𝘊. 𝘔𝘦𝘢𝘯𝘸𝘩𝘪𝘭𝘦, 𝘙𝘰𝘴𝘢𝘵𝘰𝘮’𝘴 𝘒𝘢𝘭𝘪𝘯𝘪𝘯𝘨𝘳𝘢𝘥 𝘣𝘢𝘵𝘵𝘦𝘳𝘺 𝘱𝘭𝘢𝘯𝘵 𝘪𝘴 𝘴𝘵𝘪𝘭𝘭 𝘥𝘦𝘭𝘢𝘺𝘦𝘥 𝘣𝘺 𝘵𝘸𝘰 𝘺𝘦𝘢𝘳𝘴 - 𝘣𝘢𝘥 𝘌𝘗𝘊 𝘤𝘩𝘰𝘪𝘤𝘦. 𝟯. 𝗦𝘁𝗿𝗲𝗮𝗺𝗹𝗶𝗻𝗲 𝗗𝗲𝗰𝗶𝘀𝗶𝗼𝗻-𝗠𝗮𝗸𝗶𝗻𝗴 FOAK failures are never about just tech or budgets - they collapse under complexity. • Simplify reporting. Have clear, standardized, regular updates - no bloated reports. • Avoid siloed teams. Functional divisions lead to finger-pointing. Instead, create cross-functional execution squads. • Empower team leads. They should solve problems - not wait for your approval at every turn. 💡 𝘈𝘵 𝘰𝘶𝘳 𝘸𝘪𝘯𝘥 𝘵𝘶𝘳𝘣𝘪𝘯𝘦 𝘍𝘖𝘈𝘒, 𝘸𝘦 𝘪𝘮𝘱𝘭𝘦𝘮𝘦𝘯𝘵𝘦𝘥 𝘢 𝘵𝘩𝘳𝘦𝘦-𝘴𝘭𝘪𝘥𝘦 𝘳𝘦𝘱𝘰𝘳𝘵𝘪𝘯𝘨 𝘴𝘺𝘴𝘵𝘦𝘮, 𝘵𝘩𝘢𝘵 𝘬𝘦𝘱𝘵 12 𝘵𝘦𝘢𝘮𝘴 𝘢𝘭𝘪𝘨𝘯𝘦𝘥 𝘢𝘯𝘥 𝘩𝘦𝘭𝘱𝘦𝘥 𝘳𝘦𝘴𝘰𝘭𝘷𝘦 𝘪𝘴𝘴𝘶𝘦𝘴 𝘣𝘦𝘧𝘰𝘳𝘦 𝘵𝘩𝘦𝘺 𝘦𝘴𝘤𝘢𝘭𝘢𝘵𝘦𝘥. 𝗙𝗢𝗔𝗞 𝗶𝘀 𝗡𝗼𝘁 𝗮 𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 𝗥𝗶𝘀𝗸 - 𝗜𝘁’𝘀 𝗮𝗻 𝗘𝘅𝗲𝗰𝘂𝘁𝗶𝗼𝗻 𝗥𝗶𝘀𝗸! Most investors shy away from FOAKs because they fear technology risk. But the real risk is execution. If you’re planning a FOAK and want to discuss the above framework in depth and detail, let’s connect! #foak #scaleup #framework #howto #technologyrisk #execution #energytransition #valleyofdeath #epc

I’ve been waiting for a solid analysis of the new US climate policy, and it finally arrived. Yesterday, my phone pinged with a new episode of The Green Blueprint  podcast. What caught my attention? Jigar Shah - now the former director of the US Department of Energy Loan Programs Office - was one of the guests. I hit play. Three Key Takeaways: 💰  Money Talks, But Who Pays More? The US clean energy industry invests $500 billion a year  but spends just $200 million on lobbying . Meanwhile, the fossil fuel industry invests $200 billion annually  yet pours $4 billion into lobbying . That’s a 20x influence gap. 🏛️  IRA's Silent Republican Support Despite calls to scrap the Inflation Reduction Act (IRA), every single provision has at least three Republican supporters . They won’t say it out loud, but they’re backing it behind closed doors. ⚡  Conflicting Energy Goals The new administration has two stated objectives: Make oil, coal, and nuclear  the foundation of American energy independence. Cut energy costs for Americans by half . There’s just one problem: solar power, even without subsidies, is already twice as cheap as gas.  These goals directly contradict each other. The Real Impact: Paralyzing Uncertainty The confusion coming from Washington is freezing business activity. The White House signals a total rollback of the clean energy transition, while industry facts on the ground say otherwise. No one knows what’s coming next, and as a result, everything is on hold. Listening to the podcast was surreal for me. Having spent most of my life in Russia, I recognized the pattern instantly. Before every government shake-up, business activity in Russia would grind to a halt. Not because we didn’t know who was in charge, that was always 100% certain, but because no one knew who  in the new cabinet would control what, which industries (read: which firms ) would benefit, and who would be left in the cold. Musk’s “Competent Government” Comment Then, I remembered Elon Musk’s now-infamous post: 📌  “This is what a competent government looks like.” The photo? Russian officials arriving in Saudi Arabia to negotiate with the US over Ukraine. At that moment, it all clicked. In Russia, uncertainty isn’t a bug - it’s a feature . Keeping people in the dark about the government’s next move consolidates control over resources and provides plausible deniability when things go wrong. With total control over police, courts, and media, this strategy becomes an iron grip on power. And that’s what Musk meant by “competence.” That’s the ideal  the new US administration seems to aspire to. Tell me who your friends are, and I’ll tell you who you are. But Here’s the Good News The US is not  Russia. This administration doesn’t have : 🔸 Total media control - as much as they try, X (formerly Twitter) is nowhere near as dominant in the US as Russian state media in Russia. 🔸 A grip on the courts - Jigar Shah noted that waiting 10 days before reacting to news helps filter out noise, especially as US courts push back against government overreach. 🔸 A police force that can be weaponized into a full-time Gestapo. In Musk’s eyes, the US still has a lot to learn from Russia. Thankfully, it’s not there yet, and hopefully, it will never be. Ignore the DDoS Attack This administration’s tactics remind me of Denial-of-Service (DDoS) attacks —flooding a system with bogus requests until it crashes. The flood of political noise is designed to confuse, distract, and paralyze decision-making. Chaos is strategy.  But, as The Green Blueprint  episode made clear, the facts on the ground tell a different story. So, stick to the facts, ignore the noise, and carry on.

Another week, another report on the state of the EU auto industry—this time from Allianz Research. But compared to the hard-hitting Dunne report I covered last week, this one misses three elephants in the room. What the Report Recommends: The Allianz report offers a familiar playbook to restore the EU auto industry's edge: Smaller EV Line-ups:  Focus on 5-6 models with hybrid and electric versions. Vertical Integration:  Invest in mining, battery supply chains, and charging infrastructure. Software Investment:  Build software-defined vehicles and pursue autonomous driving. IRA-style Subsidies:  Implement major incentives to drive the transition. There are more recommendations, but these are the big ones. Yet, the report fails to confront three massive realities: 🐘 #1: Incumbent OEMs Can’t Execute This Plan The first elephant is the complete inability of legacy OEMs to implement these recommendations. Why? They lack both the cash and the will. No Cash:  OEMs are bleeding from collapsing ICE margins and rising EV losses. The report ignores the fact that executing its plan would mean gutting their ICE operations, shedding 80% of their workforce, and facing mass bankruptcies. No Will:  Boards are paralyzed by short-termism, fearing shareholder revolts and labor unrest. This isn’t a pivot - it’s a bloodbath. And it won’t happen. 🐘  #2: Massive Subsidies Aren’t Coming The subsidies the report calls for are pure fantasy. Political Dysfunction:  EU governments are gridlocked and focused on defense spending, not auto bailouts. No Appetite for More Spending:  With government incomes stalling, there is much less room to launch an IRA-style package. 🐘  #3: The EU Already Has a Pure-Play EV Maker - Just Not in the EU The third elephant: The report claims Europe has no pure-play EV manufacturer. Wrong. TOGG in Turkey:  While not technically in the EU, TOGG is the closest thing to a pure European EV player.  Cooperation, rather than integration:  Repeating the Tesla and BYD model is out of the question - there is just no time and no capability. TOGG is a case in point; it is not vertically integrated, sourcing its batteries from Farasis Energy. What’s More Likely to Happen: New OEMs from the South and East:   I’d expect Middle Eastern and North African players to emerge, partnering with Chinese and Korean battery firms. EU firms might catch up, but I see no signs to support that.  Software-Led Disruption:  New players will focus on EV software - not just hardware - to win consumers and address cybersecurity concerns. The EU Will Miss Its Moment:  Without bold action, the EU risks ceding the future of its auto industry to players beyond its borders. And there is just no  The Allianz report is well-meaning, but these three elephants make its roadmap unrealistic. Europe's auto future may be forged outside its borders. Read the full report here: #ev #batteries #europe #eu #china #strategy #gigafactory

According to Sifted , one of the main exit strategies for European climate tech startups is selling to Big Oil. Is this a smart way to convert the 'Evil Empire' to the light side or just a way for oil majors to bury the competition under a fossilized rug? The Reality of Corporate Acquisitions: Regardless of industry, large corporations have an impressive track record of suffocating startups - even when they mean well. A former Engie executive once told me: “Every time we acquired a startup, our biggest headache was how to not accidentally kill it.” This fully resonates with my own experience working with startups in Rosatom, a Russian state nuclear corporation.   Why? Because corporate culture and procedures designed for stability and control are the exact opposite of a startup’s agile, fast-moving environment. When a startup is absorbed into a corporate structure, 9 out of 10 times, it dies a slow “death-by-a-thousand-cuts” from bureaucracy. What Makes an Acquisition Work? The only startups that survive inside corporations are those that have already evolved beyond the 'scrappy' phase into solid, process-driven businesses. Their culture and operations begin to mirror that of a corporation - with structure, systems, and scalable processes. I saw this firsthand at Rosatom, when it acquired a carbon fiber manufacturing "startup" that didn’t just survive - it thrived. Why? Maturity:  The company already ran its own factories - it was a startup by name, but a business by operations. Autonomy:  Rosatom kept the existing management team intact and let them run the show without micromanagement. Can Big Oil Really Change Its Spots? I struggle to believe Big Oil genuinely intends to profit from energy transition technologies unless those technologies help them extract more oil (hello, CCS). It's not cynicism; it's capitalism. Boardrooms answer to shareholders, and shareholders demand returns. Bees don’t fight against honey. Neither do oil companies work against their core business. Even if there are true believers in the C-suite, they still face the same internal integration issues that kill most acquisitions. So, Should You Sell to Big Oil? If you’re an early-stage startup hoping for impact, your chances of survival post-acquisition are slim. But then, if you are in it for money, exit to Big Oil may seem very enticing.  If you’ve built a resilient, process-driven company and can negotiate operational autonomy, you might make it. But if you believe that Big Oil is buying you to "save the planet," think twice. Their shareholders likely don’t share your vision. What’s your take? Would you sell your climate tech startup to Big Oil? #oil #drillbabydrill #energytransition #startups #climatetech #acquisitions

I have no idea. Still, the question has been popping up in my head now and again for the last year. Every time I see some “hydrogen mobility” startup raising money or investors piling in some EV-charging solutions business, I hope that it's just me being wrong about the industry's future rather than hype-guided investors throwing cash at the most charismatic founder whose only plan is to spend investor’s cash.  Viktor Pelevin, in his cult classic “Generation π,” colorfully depicts this business model. Gangsters take a huge loan from a bank, presumably for some business project. They spend 95% of it on jeeps, prostitutes, and vodka. When the time comes to return the money to the bank, they use the rest of the cash to hire a PR agency that will explain to the bank why the “business project” is not going according to the plan and why they need refinancing. The VC model seems perfectly suited for the “Generation π” business model, as it explicitly allows for a 90%+ failure rate. If you play small, you don’t even need to hire a PR agency.  Mikhail Taver , founder of Taver Capital Partners , doesn’t invest in climate. He has been investing in AI for almost ten years now. Today, he published an article on Crunchbase about the erosion of trust in the startup and VC AI community. His conclusions resonate with what I see in the climate tech space, although I can’t pinpoint the facts like Mikhail does for his industry. Honestly, I hope that most failures are just failures of execution or, at the very worst case, stupidity, but not fraud. Climate tech isn’t as money-loaded as AI or SaaS, and founders tend to start because they genuinely care about the problem.  What is your opinion? Have you encountered fraud in climate tech? #fraud #climatetech #energytransition #ai #saas #vc #investment

In the climate tech finance world, there is some confusion as to what constitutes a pilot project and what is a demo project. There are also different views on whether you need a demo project at all. Oftentimes, the two blend and become indistinguishable from each other.  At your Pilot stage, your objectives were to demonstrate that your technology can work outside the lab and map the problems that you will face when you build your demo. The demo is an end-to-end representative of your real-life project. Building a demo starts immediately after you’ve built your pilot. Start planning the demo the moment your pilot goes live.  The demo has two major objectives: De-risk the technology as much as possible. Demonstrate your product or process to customers. Give them “kickable tires.”  Try out project design and management and prepare for FOAK Your first objective in the demo is to make a product that can be shipped to a customer. You have to give your customers and investors something they can touch, walk around, and “kick the tires”. The demo has to prove that the product can be made to specifications in a factory environment.  After the demo, your product, not your PowerPoint or lab sample, becomes your main tool for attracting investors and customers. During this phase, it is necessary to de-risk your technology as much as possible. Demonstrate availability of components and raw materials supply chains, safety and reliability of the manufacturing process, and costs achieved at the above-lab quantities.  Your second objective is to test something new – project delivery. Your technology is tested in the Pilot. In the demo, you test the technology at a slightly bigger scale, and this is the first time you test how you will build your FOAK and NOAK. You will start building up your project team, practice site selection, and plan and execute construction. Completing the demo stage will, well, demonstrate that you are ready to go for the FOAK.  It is important not to skip your demo step, even if you do not plan to build your technology yourself in the future and your business model is licensing. According to Breakthrough Energy Catalyst, the companies that deploy their technology tend to succeed more often than companies that don’t. Many companies spend two to three years trying to license their technology and getting nowhere.  The reason is that most investors and incumbent firms do not want to take the risk of proving that the technology works in real life. I can attest to this myself. In 2015-2016, I was looking to license a wind turbine technology. There was no shortage of offers of licenses from wind turbine design companies, or even from companies that have built two to three turbines themselves. In the end, we bought a license from a Dutch startup that had over 20 turbines operating. We were looking for a de-risked technology proven to work in the field.  Here is the 4-step framework for building your demo: Find the right scale  that will demonstrate the de-risking of technology and manufacturing process Design for modularity , either at core technology or around it, that can be replicated at the FOAK level and beyond Build a project execution team -   they will be carrying you over to success with the FOAK.  Reach Technical KPIs , like the number of hours worked, chemistry stability, charge and discharge cycles, etc. Step1. Find the right scale Your first task is to demonstrate that your technology and manufacturing processes are de-risked, that is, they can work on something close to the industrial scale. Your demo has to be big enough to convince customers and investors that it will work in real life and at 10x scale, but also small enough not to break the bank.  How big should the demo be? The Breakthrough Energy Catalyst experience is that it should be 5-20x your Pilot. The exact scale will depend on your particular tech. When thinking about the right scale for Demo, think not about the product or process but about the scale that would convince someone who is risk-averse that investing in the next stage (FOAK) is safe, at least from technological and manufacturing points of view. Physically, at the minimum, it should be large enough to demonstrate end-to-end manufacturing of your product with no steps skipped. When determining the upper limit, keep in mind that your FOAK will be 10x that.  To illustrate what a 5–20x scale looks like, consider a lithium-ion cell startup with a 5-10 MWh pilot line. A 5–20x scale demo would range from 50 to 200 MWh—enough to produce small commercial batches and attract automotive or energy storage customers. For example, JR Energy Solution, a Korean startup in MaaS for cells and electrodes, built a 500 MWh line whose capacity allows other lithium-ion cell startups to make a demo version of their cells in a full factory environment. The capacity is actually 25x, but in the lithium-ion cell world, some players have Demo plants of 1-2 GWh, which is 50 to 100x.  Step 2. Design for Modularity Investors don’t like technologies whose costs have to be determined all over again every single time the technology is deployed. Compare solar and nuclear energy. Solar is the cheapest available energy at the moment. It can be deployed in six months almost anywhere in the world, and its costs are highly predictable. Contrast this with nuclear energy. Each nuclear power plant demands its own engineering and design, with costs different for each new reactor planned. Deploying nuclear power plants often takes over a decade, and the final costs are almost always several orders of magnitude higher than estimates. One of the key differences is that solar energy is modular, while nuclear energy is project-based. No wonder that among solar energy professionals, solar panels are not called “panels” but “modules”.   The demo stage lets you evaluate if your technology can be modular or not. If your demo demonstrates a single unit, of which more could be built in the future, then you have a modular design. Modular solutions reassure investors the most. Why? Because modular design lowers execution risk and costs. If you build many copies of one thing, it is less risky than planning and engineering a new approach each time. Supply chain management, logistics, engineering, and construction are all several orders of magnitude easier if you have a modular design. Having a modular design means that after the demo, you will be numbering up rather than scaling up.  Now, not every clean tech product can be designed for modularity. In nuclear energy, startups are working hard to design a modular reactor, but with little success. There is a reason for nuclear reactors to be big. Bigger reactors offer much better economies of scale. On the other hand, carbon capture can be modular, as was proven by Climeworks in their demo and FOAK/NOAK.  If, in your case, modularity is not possible, don’t wring your hands over it. Instead, design for modularity of balance-of-plant around your core technology. Think about how to simplify and standardize the fixtures and fittings necessary to get your technology working. How can you standardize groundworks, piping, heat exchangers, transformers, UPS, etc? This is the time to do it while your project is still small enough to handle every challenge with relatively few resources.  Step 3. Build a Team Until now, your team probably had two main groups - the R&D group, where your scientists and engineers developed your product, and your investment/marketing group, busy raising investment rounds. When you start working on your demo, you will have to include one more group - the project management group. Make no mistake - this will be the team by which you’ll either succeed or fail. Numerous startups found out about this too late, with one of the biggest examples being Northvolt. Building a demo is your best chance to lay the foundation for your project execution team. But before we go in-depth about the project management team, let's answer the obvious question: Why can’t you outsource it? After all, that’s what Engineering, Procurement, and Construction  (EPC) companies are for! There are two reasons why you can’t and shouldn’t do it at the demo stage.  First, most EPC contractors will avoid small, high-risk projects - and that’s exactly what your project is at the moment - small and high risk. The many unknowns in the demo and its minimal size will put off EPC companies. Second, if you can get an EPC to do it for your now, you will lose critical knowledge of scaling your technology to someone who might only use it once.  The general purpose of the demo is to learn how your product and technology will behave in real life. This includes learning how to build it. Don’t skip on that, and keep ownership of most elements of the demo – planning, engineering, execution, operations, etc. This will come in an enormous help during the next phase, as it will allow you to decide what to outsource while building the FOAK.  Step 4. Reach Technical KPIs No battle plan survives the first contact with the enemy. You’ll learn this Murphy’s law when you build your demo. Demonstrating how your production line or project works continuously from raw materials to finished product is hard because it has never been done before. That is why you don’t want to build a full-scale commercial project straight after the pilot. Mistakes and problems will happen. Most likely, the longer your demo operates, the more ways it can fail will surface.  And this brings us to the core reason for building a demo after the pilot, instead of immediately going for FOAK. You want to have time to tinker and optimize at a scale where you won’t be losing too much money and without pressure from your customer to deliver on time, budget, and quality. You want to make sure that when you build your FOAK, you will avoid most of the problems.  It is important to remember that your demo is there for you to learn and to lower the perceived risks for your customers and investors. You are not building a demo to earn money. In fact, your Demo will lose money. And that’s ok. Forgetting about money lets you focus on delivering top-notch technical KPIs. If you have customers waiting, you would certainly rush the Demo and aim to deliver on time and budget, even if your product is not of a target quality. There will be instances when you see a problem with your process, you’d stop it, rejig it, and launch again. This will be extremely hard to do if you have a customer waiting.  How do you know that you are ready to go for FOAK? You know it when you reach the target technical KPIs at your demo. These will be technology and project-specific, like achieved energy conversion efficiency coefficient, number of cycles of charge and discharge, energy density, uniformity, etc. The key is that these KPIs should be exactly the same as the specifications of your commercial product.  How do you prove you’ve reached your technical KPIs? Start with time. Investors at series C or D want to see at least six months of continuous operation in the factory environment. When you operate something for this long, things degrade in a way they don’t do in a pilot line. So if something has been running for six months non-stop and delivering the same results, it is likely to do the same at a larger scale.  Why Building a Demo Project Is the Bridge to Success Building a demo is more than a technical milestone - it’s a critical proof point for your technology, your business model, and your team. By the end of this phase, your demo should not only demonstrate that your technology works at scale but also that it can be built, operated, and replicated. Investors and customers will no longer be evaluating your pitch deck or your pilot results - they’ll be evaluating a real, tangible product that they can see, touch, and test. The demo stage is your opportunity to uncover and address the challenges that lie ahead before they become costly mistakes during your FOAK. It’s the time to validate your manufacturing processes, supply chains, and technical KPIs. It’s also your chance to build a project execution team that can carry your technology from demo to FOAK and beyond. Most importantly, the demo proves that you can execute, not just innovate. It shows that your technology works not only in the lab but in the real world and that you can build it at a scale that makes sense for customers and investors alike. Skipping or rushing this stage is a gamble you can’t afford to make. On the other hand, completing it with diligence will position you for success, whether your path forward is building your FOAK or licensing your technology. Your demo is the bridge from promise to proof. Cross it carefully, and you’ll be ready to tackle your FOAK with confidence.

Just circling back to some ideas from my recent post on Europe’s auto industry future (if you missed it, catch up here ). The numbers are clear: In 2023, European countries—including the UK—produced over 15% of the world’s cars, making Europe the second-largest car producer after China. Add Turkey to the mix, and that number edges close to 17%. But here’s the kicker: Failing to transition to EVs won’t just affect market share—it will jeopardize the livelihoods of over 15 million people working in Europe’s automotive sector. With that, the social stability that Europeans hold dear could be at risk. So, how could Europe respond? 🚧 Tariffs to protect against cheaper imports. 💰 Subsidies to prop up failing legacy OEMs. 💨 Or worse, pursuing hydrogen vehicles as a distraction. These are knee-jerk reactions - short-term fixes for a long-term problem. The reality is that Europe doesn’t just need to defend its automotive industry; it needs to rebuild it. It has one thing going for it and two main challenges: 🚗 Design & Manufacturing Know-How: Europe still boasts some of the world’s best car designers and has deep roots in manufacturing excellence. 🔋 Battery Tech Gap: But when it comes to battery production, Europe is miles behind. 🌐 Digital Car Ecosystem: Europe lags in the software and digital integration that defines the modern EV. What’s the Solution? Let the legacy OEMs that can’t pivot fail. Tough? Yes. But necessary. Instead of throwing good money after bad, Europe should channel venture-style funding into automotive startups. The next Tesla or BYD won’t come from a decades-old carmaker stuck in its ways - it’ll come from a nimble, innovative startup ready to disrupt the market. Europe has the talent. It has the infrastructure. Now, it just needs the vision to bet on the future instead of clinging to the past. 🔌🚘🌍 #ev #manufacturing #europe #competition #china #supplychain #batteries #gigafactory

No sugarcoating. No diplomatic cushioning. Just a stark reality check. The Dunne Report is the hardest-hitting analysis I’ve read on the state of the EU battery and EV supply chain. The title alone - Revolutionary Change or Extinction  - tells you everything you need to know about the urgency of the situation. I’ve read plenty of reports on the EU’s EV and battery industries, but this one stands out. It’s data-driven, unapologetically blunt, and refreshingly clear in its conclusions. Himanshu Bhatt did an excellent job summarizing the report, but here are the takeaways I can’t stop thinking about: 🔋 The EU’s EV and battery industry is “old, slow, and out of sync.” We’ve seen it coming. While China’s EV sector races ahead, Europe is stuck in slow gear, weighed down by legacy systems and an inability to pivot fast enough. 🔋 Developing homegrown battery technology isn’t just about climate—it’s about survival. This isn’t optional. Battery tech is a cornerstone of military strength, energy independence, and industrial competitiveness. Without it, the EU risks becoming a geopolitical lightweight in an electricity-dominated future. 🔋 Here’s what the EU needs to do. Now: Implement IRA-style government support schemes.  The U.S. has shown how aggressive government backing can turbocharge an industry. The EU needs to follow suit, like, yesterday. Partner with Korean and Japanese companies for know-how and tech transfer.  Not just the big names like LG, Samsung, or Panasonic. There’s an entire ecosystem of small and mid-sized innovators in Korea and Japan ready to collaborate. Leverage access to the EU EV market.  The EU is the largest EV market outside of China. It’s time to use that as bargaining power, especially with Chinese overcapacity posing both a challenge and an opportunity. But there’s one glaring omission in the report - legacy automakers . Can Europe’s automotive giants compete with Chinese EV manufacturers? In my opinion - no . They’re too slow, too comfortable in their old ways. The EU needs new  EV manufacturers. Apart from TOGG in Turkey, I don’t see many on the horizon. And that’s a problem. What I find particularly groundbreaking in this report is its open call for partnerships with Korean and Japanese companies. This isn’t something you usually see in EU reports or policy documents. But it’s true - Europe needs outside expertise. And not just from the big players. Take JR Energy Solution , for example. They’re a Korean manufacturer specializing in lithium-ion electrodes - the same components Northvolt struggled to produce. Companies like JR can bridge the tech and know-how gap Europe desperately needs to close. If you’re interested in how Korean companies can help the EU achieve battery independence, let’s talk. The time for half-measures is over. It’s revolutionary change - or extinction. #eu #battery #ev #electricvehicles #china #competition #korea #japan #manufacturing

Northvolt was the first to go big  - and everyone else was expected to follow. The logic seemed sound: show automakers you can deliver scale  and competitive pricing , and the investments will flow. Northvolt’s model - multiple gigafactories, vertically integrated supply chains, and recycling - became the blueprint. I can easily imagine how at every investor meeting, battery startups were grilled: “Why aren’t you doing what Northvolt is doing?” I’ve been in that hot seat myself. As CEO of Renera, a Russian gigafactory startup, I faced the same investor pressure. Names like Northvolt and Britishvolt were dropped into every conversation. We started with a modest 500 MWh line but were soon pitching an 8 GWh plant just to keep the funding conversations alive. Luckily, we had a 250 MWh electrode and cell factory in Korea already running, which gave us some confidence to scale - but not every startup had that luxury. Then, reality hit.  In November, Northvolt’s model showed its cracks. Fast forward to now: Freyr and KORE Power canceled factories last week. TotalEnergies, once bullish, is telling ACC to focus on one  gigafactory instead of three. Was it all because of the “Northvolt Effect”? I can’t say for sure. But the pattern is hard to ignore. Going big sounds good in a pitch deck. But scaling hardware isn’t just about raising money - it's about operational execution, technological readiness, and market demand. The push for aggressive scaling and vertical integration, driven by investor expectations, may have toppled more startups than it helped. Curious to hear your thoughts: How much do you think investor pressure to scale too quickly has contributed to these failures of western battery startups? Or is it just the nature of the battery industry beast? 🔋 #gigafactory #batteries #battery #ev #nmc #lfp

I was recently combing through BatteryTech Network’s list of over 700 battery companies worldwide. In 80% of cases, I had no clue what most of these companies actually  do! Here’s a typical description I stumbled upon (thanks, ChatGPT, for nailing the vibe): " [Startup Name] is an innovative company at the forefront of battery technology, specializing in advanced energy storage solutions. We aim to enhance energy density, safety, and sustainability for applications ranging from EVs and grid storage to consumer electronics. Leveraging cutting-edge science, [Startup Name] is committed to driving the next generation of battery performance while supporting a circular, eco-friendly supply chain." Sounds fancy, right? But… what do you actually do?  Are you making cells? Are you recycling cathodes? Are you selling packs or refining materials? I don’t know! And neither do your potential partners or customers. Now, recycling companies are usually clear about their role. But for others? Pinpointing their exact position in the battery value chain feels like decoding an encrypted message. And let’s be real - if you’re not selling battery packs directly to end consumers, who needs this puffed-up bla-bla-bla ? Your customers are businesses.  They don’t have time to guess whether you’re making electrodes, electrolytes, or BMS software. The battery value chain has clear segments: Mining Refining Electrode and cell manufacturing Module and pack assembly BMS  ESS solutions Software and analytics If you’re a cell maker, say it.  If you’re working on solid-state, say it.  Bonus points if you mention your chemistry (NMC? LFP? Sodium-ion?), cell format (18650? 4680? Pouch?), or pack specs. Being clear isn’t just good communication—it’s good business. It saves time, builds trust, and helps you stand out in a crowded market. So, battery startups, here’s my friendly advice: ditch the buzzwords and tell us what you actually  do.  Your future partners, customers, and maybe even investors will thank you. Have a clear, straightforward weekend! 😉 #battery #startups #energystorage #ev #gigafactory #ess #batterymanagement