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!