This is another post in my series of posts on the tactics of scaling-up climatetech. Off-take contracts are often cited as a key to successfully raising funds for your First-of-a-Kind (FOAK) project.  Last week I shared a long post on the framework for setting a price for your off-take. This week, I go briefly into the key factors behind determining the term of your off-take.  Off-take agreements have two key timeframes: 1️⃣  How long until you start shipping?  (Term of Delivery) 2️⃣  How long will your customer keep buying?  (Total Off-Take Term) Getting both right is crucial for securing financing and ensuring your FOAK project doesn’t collapse under unrealistic commitments. 1️⃣  Term of Delivery: The Hardest Part Your delivery timeline depends entirely on how long it takes to build and commission your FOAK . And if there’s one thing we know, it’s this: FOAKs always take longer than expected . 🔹  Demos ≠ FOAKs  – You can reference your demo project timeline, but scaling up brings unpredictable construction and commissioning delays. 🔹  Expect Delays  – Even in mature industries, commissioning takes longer than planned. In FOAKs, double or triple your initial estimate  to be safe. 🔹  Negotiate Flexibility  – European battery makers have all missed their commissioning deadlines - by years. Your off-take must allow for delays  without breaching the contract. 2️⃣  Total Off-Take Term: How Long Will They Buy? This depends on market conditions, customer risk appetite, and regulatory involvement . ✅  Longer Off-Takes (10-20 years) 🔹  Regulated Markets  – If your product is tied to government-regulated services (electricity, heating, transport), long-term contracts are common (e.g., public-private partnerships). 🔹  Geographically Locked Services  – If you supply a single buyer in a fixed location (e.g., industrial heat), expect 10-20 year  agreements. ⚠️  Shorter Off-Takes (5-6 years max) 🔹  Commodities  – If you’re in clean cement, steel, or any actively traded material , long-term contracts are rare. Customers hedge their risks in the open market. 🔹  Still, Avoid 1-2 Year Deals  – These make it impossible to structure pricing that satisfies investors. You need an off-take term long enough to demonstrate a stable payback period . Key Takeaway Delivery timelines require flexibility —commissioning always takes longer than planned. Long-term off-takes (10-20 years) are possible in regulated or geographically fixed markets . Shorter off-takes (5-6 years) work for commodity-based industries, but anything shorter kills investor confidence . The term of the off-take is as much about securing your future cashflows as it is about the flexibility of your FOAK. Keep both goals in mind, and reach out if you are negotiating your off-take!

Batteries have brought me to Korea once again. The last time I was here was just before the COVID lockdown, and now, I’m back—this time in Eumseong, the heartland of Korea’s battery industry —at the factory of JR Energy Solution . I’ve mentioned JR in my posts before, and there’s an hour-long interview with its founder and CEO, Duke Oh , on my podcast . JR is my client, and I’m thrilled to be helping them scale! Who is JR Energy Solution? Founded in 2022 , JR Energy Solution is redefining lithium-ion battery manufacturing with a Manufacturing-as-a-Service (MaaS) model —think of it as the TSMC of batteries . The company specializes in manufacturing electrodes and pouch cells , serving two key types of clients: 👨🏻‍🔬  Battery startups  looking to scale beyond lab production 🏭  Established players  supplying niche customers A Walk Through the 500 MWh Factory Spending the morning on the production floor, I got a firsthand look at: 🧪  Multi-chemistry production —how JR keeps its equipment contamination-free while switching between different chemistries for various clients. ✅  Quality control —ensuring uniformity across batches and minimizing scrap. 🌏  Global shipping —specialized packing equipment that safely transports electrodes across the world. Beyond Manufacturing: A Bridge to Scale What makes JR unique isn’t just its ability to produce electrodes and cells—it’s how they help battery startups scale . The company connects its clients with Korean equipment and material suppliers  and provides hands-on training in electrode and cell manufacturing . In just one year of operation, JR has already attracted serious attention in Korea and the US . Visits such as this make it all the clearer that Korea is an untapped goldmine for battery scale-up expertise . If you’re a battery startup  looking to scale or an investor exploring cooperation with Korean companies for know-how transfer , let’s talk! 🇰🇷🤝🌍 #korea #batteries #lithiumion #gigafactory #scaleup #manufacturing #supplychain

There’s a lot of buzz around the Climate Bricks  framework—billed as the missing manual for scaling climate tech. If you’re raising funds, it’s a must-read. But if you think it’s a roadmap for scaling successfully? Think again. Here’s the hard truth: Climate Bricks is not about how  to scale; it’s about how  to raise money. That’s not a critique—VCs wrote it, and their job is to allocate capital. And they’ve done an impressive job, analyzing 3,000 companies and 12,000 data points to define seven “bricks” (business models) for scaling climate tech. It’s insightful for fundraising. But let me break down where its advice can steer you right—and where it might leave you stranded on the factory floor. What Is Climate Bricks? Climate Bricks identifies seven ways to scale climate businesses, from gigafactories to software. For each brick, they outline three things critical to show investors. These recommendations help you cross the valley of death  and secure funding. But here’s the rub: getting funded doesn’t mean you’ll succeed in scaling.  Once the money is in the bank, you’ll need to rethink the playbook. Let’s unpack the bricks—and their blind spots. 1. Gigascaling: Building Big, Fast Think batteries, EVs, or green steel. Climate Bricks’ advice: Show a roadmap to cost competitiveness. Build FOAK (first-of-a-kind) and scale rapidly. Secure take-or-pay agreements. What works:  Offtakes reassure investors. FOAK signals ambition. What doesn’t:  Execution matters more than roadmaps. And “Scale rapidly” ignores the value of starting small, mastering processes, and training your team. Just ask Northvolt. Their roadmap was impeccable. Execution? Not so much. Also, good luck securing take-or-pay agreements—customers prefer conditional offtakes and will out-negotiate you almost every time. 2. Green Deployment: Operating Assets Solar parks and wind farms fit here. Climate Bricks says: Build a scalable organization to out-execute peers. Ramp up value, sales, and assets. Deliver profitable unit economics. What works:  All of the above, but none really matters. What doesn’t:  Green deployment is a financial game.  The cost of capital is king. Unless your capital is dirt cheap, no amount of operational excellence will save you from someone with a 0.5% lower borrowing rate. 3. Asset-as-a-Service: Selling the Outcome Think heat-as-a-service or shared EV fleets. Climate Bricks recommends: Demonstrate product-market fit. Secure profitable unit economics. Scale rapidly with offtakes. What works:  Sure, you need product-market fit. What doesn’t:  Scaling rapidly while ballooning your balance sheet with assets is risky. Most asset-as-a-service businesses are capital businesses,  dependent on low borrowing costs. Scaling here is more about financial engineering. In operations, you need to make sure that your product works and doesn’t break. Faulty products mean services are delayed.  4. Product Disruption: Making Green Products Electric aircraft, hydrogen trucks, or green construction equipment. Climate Bricks advises: Build an IP moat. Show a prototype/demo. Establish partnerships. What works:  Partnerships are key. What doesn’t:  IP moats might wow investors, but they don’t run factories. Scaling products means getting your supply chain right, hiring skilled teams, and ensuring your shiny tech doesn’t break in the real world. 5. New Technologies: Science Projects Think breakthrough materials or carbon capture. Climate Bricks focuses on: Building an IP moat. Mapping cost competitiveness. Proving high technology readiness levels (TRL). What works:  IP to get anyone to take you seriously. What doesn’t:  Betting on markets that might never materialize (hello, CCS) is a gamble. Your tech needs to be 10x better  and have a viable market today—not someday. Public funding also helps more than anything.  6. Moonshots: Sci-Fi Stuff Fusion, quantum computing, or geoengineering. Climate Bricks suggests: Secure offtakes (wait, what?). Find government funding. Build a TRL pathway. What works:  Impact funds and government grants are your best bet here. What doesn’t:  Asking for offtakes at this stage is a stretch. Most customers won’t commit to something they’ve never seen work. Get an LOI, and focus on proving your concept first. 7. Companion Software: Code for Climate Apps or platforms that complement green tech. Climate Bricks emphasizes: Develop an MVP with tech advantages. Prove scalability with ARR and low churn. Target rapid growth. What works:  I’ve no idea. Software scales differently, and I’ve never done a software project. You’ll have to figure this out yourself) What Climate Bricks Gets Right If you’re fundraising, follow this manual to the letter. VCs wrote it. It’s tailored to what they want to see. Play their game to get their money. What Climate Bricks Misses Scaling isn’t just about impressing investors. It’s about execution.  None of Climate Bricks’ highlighted companies are proven scale-up successes. They’re fundraising successes. Northvolt raised billions but couldn’t deliver. Freyr hasn’t scaled yet. AtlasArgo isn’t even a builder—it’s a trader. ZeroAvia hasn’t passed certification yet.  What’s Next? Scaling climate tech is hard, and there’s no manual for it yet. But I’m writing one. It’s based on my experience and those founders, who succeeded in scaling multiple green tech companies—and learning from what worked (and what didn’t). Want to follow the journey? Check out my blog and podcast, where I’ll share insights for founders and operators trying to scale climate tech. And remember: the real test starts after  you’ve raised the money. #ClimateTech #ScaleUp #Fundraising #Cleantech #StartupLessons #ExecutionMatters

2024 was a brutal year for hardtech climate startups. Sixteen companies—many in the e-mobility space—failed, leaving behind a stark reminder: 𝗶𝘁’𝘀 𝗲𝗮𝘀𝗶𝗲𝗿 𝘁𝗼 𝗿𝗮𝗶𝘀𝗲 𝗰𝗮𝗽𝗶𝘁𝗮𝗹 𝘁𝗵𝗮𝗻 𝗶𝘁 𝗶𝘀 𝘁𝗼 𝗺𝗮𝗻𝘂𝗳𝗮𝗰𝘁𝘂𝗿𝗲 𝗮𝘁 𝘀𝗰𝗮𝗹𝗲. Two of the casualties, Northvolt and Arrival, are stories I’ve delved into in my previous posts. But the broader trend is clear: these startups managed to impress investors but couldn’t deliver on the factory floor. So, what went wrong? Scaling hardtech isn’t just about flashy pitches or big fundraising rounds. It’s about execution—turning concepts into real, tangible products. And that requires people who’ve been there, done that. The common thread among the 16 failures? A lack of operational expertise. If there’s one takeaway from these stories, it’s this: 𝗛𝗶𝗿𝗲 𝘁𝗵𝗲 𝗿𝗶𝗴𝗵𝘁 𝗽𝗲𝗼𝗽𝗹𝗲 𝘁𝗼 𝗺𝗮𝗻𝗮𝗴𝗲 𝘆𝗼𝘂𝗿 𝘀𝗰𝗮𝗹𝗲-𝘂𝗽. Manufacturing isn’t forgiving. Processes need to be honed, supply chains secured, and quality controlled to the nth degree. It’s messy, expensive, and relentless. That’s why the right team—seasoned professionals who know how to take hardtech from lab to line—is critical. Scaling up is where dreams collide with reality. Investors might give you the runway, but without the right people to build and deliver, you’re not going anywhere. For the full list of 2024’s hardtech casualties, check out the article here: Sifted’s roundup of startups that went bust . 𝗪𝗵𝗮𝘁’𝘀 𝘆𝗼𝘂𝗿 𝗯𝗶𝗴𝗴𝗲𝘀𝘁 𝗹𝗲𝘀𝘀𝗼𝗻 𝗳𝗿𝗼𝗺 𝟮𝟬𝟮𝟰’𝘀 𝗰𝗹𝗶𝗺𝗮𝘁𝗲 𝘁𝗲𝗰𝗵 𝘀𝗵𝗮𝗸𝗲𝘂𝗽? Drop your thoughts in the comments or shoot me a message. And as always, follow me for more no-nonsense takes on scaling cleantech! #ClimateTech #Hardtech #ScaleUp #LessonsLearned #Cleantech

De-icing a frozen water tower in the middle of nowhere is not on anyone’s job description. However, this is a reality that you can come up against when you are scaling up your climate tech and building your FOAK.  Most climate podcasts focus on finance, policy, or shiny new tech. But real stories of scaling climate hardware? Rare. That’s why The Green Blueprint episode, “𝗕𝘂𝗶𝗹𝗱𝗶𝗻𝗴 𝘁𝗵𝗲 𝗪𝗼𝗿𝗹𝗱’𝘀 𝗕𝗶𝗴𝗴𝗲𝘀𝘁 𝗗𝗔𝗖 𝗙𝗮𝗰𝗶𝗹𝗶𝘁𝘆,” caught my attention. Host Lara Pierpoint sits down with Dany Chan, COO of Climeworks, to dive deep into the gritty reality of scaling up their largest Direct Air Capture (DAC) facility. Whether you see DAC as the future of climate mitigation or just another distraction, this episode is packed with practical lessons for anyone building FOAK (or in this case, fourth-of-a-kind) climate infrastructure. Here’s what you’ll get in just 30 minutes: 💰 𝗙𝗢𝗔𝗞 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗻𝗴: How to structure funding for large-scale climate projects  🧭 𝗦𝗶𝘁𝗲 𝗦𝗲𝗹𝗲𝗰𝘁𝗶𝗼𝗻: What factors drive the right location decision  🛠️ 𝗣𝗿𝗼𝗰𝗲𝘀𝘀 𝗘𝗻𝗴𝗶𝗻𝗲𝗲𝗿𝗶𝗻𝗴 & 𝗘𝗣𝗖: how are they related and how much power can you cede to EPC  ⏳ 𝗠𝗮𝗻𝗮𝗴𝗶𝗻𝗴 𝗥𝗶𝘀𝗸: How to stay on track when tech challenges threaten deadlines  👨🏻‍💼 𝗧𝗲𝗮𝗺 𝗖𝘂𝗹𝘁𝘂𝗿𝗲: Keeping motivation high when things don’t go as planned  ❄️ 𝗪𝗶𝗻𝘁𝗲𝗿 𝗖𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁𝗶𝗼𝗻 𝗪𝗼𝗲𝘀: Unexpected challenges in extreme conditions  🧩 𝗠𝗼𝗱𝘂𝗹𝗮𝗿 𝗗𝗲𝘀𝗶𝗴𝗻: Help or hindrance in construction  📈 𝗠𝗮𝗿𝗸𝗲𝘁 𝗘𝘅𝗽𝗲𝗰𝘁𝗮𝘁𝗶𝗼𝗻𝘀: How they affect your NOAK If you’re scaling a climate startup or knee-deep in operations, this episode is worth every minute. Practical, honest, and full of insights from the frontlines of cleantech scale-ups. Listen, learn, and let me know what you think. And if you’re navigating your own scale-up journey—let’s connect and talk! Listen to the episode here . If you like it, make sure to check out my podcast WattsUpWithStartups on Spotify , or watch it here, on my website ! #ClimateTech #ScaleUp #DAC #Cleantech #Startups #GreenTech #EnergyTransition #FOAK

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