FOAK tales

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Jan 16, 2025

Mario Fernandez leads Breakthrough Energy's FOAK finance program, specializing in infrastructure investment for climate technologies. He explores the challenges in funding first-of-a-kind projects, explaining why investors seek multiple repeatable projects. The discussion includes strategies for scaling, like the pilot-demo-FOAK path, and the difficulties of innovative commercial contracts. Mario also highlights the balance needed in financing structures and offtake agreements to attract cautious investors and reduce risks, showcasing successful models like Rondo's 'Steam as a Service'.

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INSIGHT

Proven vs. De-risked

Proven technologies often lack the de-risking needed for infrastructure investment.
This gap between proven and de-risked is a key challenge in climate tech.

ADVICE

Scaling Up Projects

Scale up projects in single order of magnitude increments (e.g., 10x).
Aim for a modular design where unit scale is numbered up, not scaled up, to reduce risk.

ADVICE

Parallel Development

Begin first-of-a-kind project development before demo operation completes.
This parallel approach saves time compared to sequential development.

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First-of-a-kind projects need infrastructure investment, the kind of money that costs less than venture capital and usually comes in the form of deals worth tens or hundreds of millions of dollars. But infrastructure investors are notoriously conservative and convincing them to bite can be challenging.

So what do infrastructure investors really want?

In this episode, Shayle talks to Mario Fernandez, head of Breakthrough Energy’s FOAK finance program. It has worked with companies like Rondo, Form Energy, and Lanzajet to overcome challenges on the path to infrastructure investment. Coincidentally, the program is also called Catalyst (no relation to our show). Mario and Shayle talk about the journey from lab-proven technology to a fully de-risked infrastructure investment, covering topics like:

Why investors want to see a path to multiple, repeatable projects
Mario’s prescription for a scale-up path: pilot, demo, and FOAK project
The difficulty of following that path on a limited financial runway
The commercial construct and the tension between negotiating a flexible offtake and securing a customer
Developing the right capital stack and accurately estimating capital needs

Recommended resources

The Green Blueprint: Rondo Energy’s complicated path to building heat batteries

CTVC: Venture to Project Finance Duolingo

Catalyst: Financing first-of-a-kind climate assets

Catalyst is brought to you by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform, by visiting energyhub.com.

Catalyst is brought to you by Antenna Group, the public relations and strategic marketing agency of choice for climate and energy leaders. If you're a startup, investor, or global corporation that's looking to tell your climate story, demonstrate your impact, or accelerate your growth, Antenna Group's team of industry insiders is ready to help. Learn more at antennagroup.com.