Offtake Agreements:
What a WtE or Biogas Project Needs
8 min read · Dec 2, 2025 · By Alex
When it comes to offtake agreements, the details below decide whether a project gets financed. FortisBC signed a 20-year biomethane purchase agreement with Fraser Valley Biogas, now in effect. It buys renewable natural gas from anaerobic digestion of dairy manure and other agricultural waste. In Thailand, ADB coordinated 16.6 billion baht of financing, about 512 million dollars, across 12 industrial waste-to-energy plants. Those plants belong to Gulf Waste to Energy. Together they hold 96 MW of contracted capacity, diverting over 600,000 tons a year from landfill by 2029. Neither deal looks like a SAF offtake agreement, because both the buyer and the commodity differ. However, the underlying discipline is the same: a contracted, creditworthy counterparty taking a defined volume over a defined term.
In short: waste-to-energy and biomethane developers in Southeast Asia need an offtake structure built around their actual buyer. That buyer may be a utility, a gas distributor or an industrial off-taker. It is never a copy of the SAF playbook built around airlines and book-and-claim certificates. This article sets out what that structure looks like, using two financed international examples as reference points.
In this article
Offtake agreements: two different commodities, two different buyers
A waste-to-energy plant typically sells electricity, sometimes heat, to a grid operator or a utility. Occasionally it sells to a single industrial consumer next door. For example, the Thailand plants financed through ADB’s deal with Gulf Waste to Energy show the pattern. They hold a combined 96 MW of contracted capacity ([ADB](https://www.adb.org/news/adb-gwte-sign-16-6-billion-baht-deal-advance-industrial-waste-management-thailand)). As a result, a power purchase structure already covers their output; it is the standard mechanism for this asset class.
A biomethane plant sells renewable natural gas, usually injected directly into an existing gas distribution network. For example, FortisBC’s 20-year biomethane purchase agreement with Fraser Valley Biogas is the clearest recent case of that structure. A gas utility buys RNG from an anaerobic digester processing dairy manure. The long-term contract gives the project a predictable revenue stream for the life of the financing ([Business Wire](https://www.businesswire.com/news/home/20260116164186/en/EverGen-Infrastructure-Announces-New-20-Year-Offtake-Agreement-with-FortisBC-Energy-Inc.-Now-in-Effect)). So neither structure needs a book-and-claim certificate registry. The physical product, power or gas, goes straight into an existing grid the buyer already operates.
Offtake agreements: what makes each type of offtake bankable
| Waste-to-energy (power) | Biomethane (gas) | |
|---|---|---|
| Typical buyer | Grid operator, utility, or adjacent industrial consumer | Gas distribution utility injecting into its existing network |
| Contract type | Power purchase agreement, often with a capacity payment plus energy charge | Biomethane or gas purchase agreement, volume and price over a fixed term |
| Typical tenor | 15 to 25 years, matched to asset life and debt tenor | 20 years in the FortisBC example, long enough to anchor project debt |
| What a lender checks | Feedstock security (waste supply agreements), grid connection certainty, counterparty credit of the offtaker | Feedstock security (manure or organic waste supply), pipeline injection capacity, counterparty credit of the utility |
| Common weak point | Waste supply agreements with no volume guarantee, leaving plant utilisation exposed | Feedstock contracts with farms that are informal or short-term, undermining a 20-year revenue claim |
Offtake agreements: where this breaks in practice
The most common mistake I see with waste-to-energy and biogas developers here is treating feedstock as an afterthought. That mistake appears once the offtake is signed. A power purchase agreement only produces the revenue a lender assumes if the plant receives enough waste or manure. So does a biomethane purchase agreement. In practice, several waste-to-energy projects have signed strong offtake agreements and still underperformed. The reason: municipal waste supply agreements had no enforceable volume guarantee. The plant then runs short of feedstock. As a result, ADB’s financing for Gulf Waste to Energy pairs contracted power capacity with an annual landfill diversion target. The target: 600,000 tons by 2029. That makes the feedstock commitment as concrete as the offtake.
The second mistake is assuming a single industrial buyer is as bankable as a utility. An industrial offtaker, a factory buying your plant’s steam or power directly, can offer a strong commercial rate. However, its own credit risk and operating continuity become the project’s risk, which a regulated utility does not create. So lenders price that difference. A developer negotiating directly with an industrial buyer should therefore expect more scrutiny. Lenders will examine that buyer’s own financial standing more closely than in a utility-facing deal.
Offtake agreements: a four-step method to secure a bankable deal
- Identify the right buyer type for your commodity first. A WtE plant’s natural counterparty is a grid operator or utility; a biomethane plant’s is a gas distribution utility with existing injection infrastructure nearby. Starting with the wrong buyer type wastes months of negotiation.
- Secure the feedstock agreement with the same rigor as the offtake. A municipal waste contract or a set of farm supply agreements needs enforceable volume commitments, not informal arrangements, matched in tenor to the offtake itself.
- Match the contract tenor to your financing, not the other way around. FortisBC’s 20-year term and the typical 15 to 25 year WtE power purchase tenor both exist because that is roughly how long the debt needs to be serviced; negotiate the tenor with that in mind from the start.
- Underwrite your buyer’s credit as carefully as a lender will. A regulated utility carries materially lower counterparty risk than a single industrial consumer; know which you are dealing with and structure guarantees or security accordingly if it is the latter.
Common mistakes
- Copying a SAF-style book-and-claim structure onto a project whose buyer takes physical delivery directly, where it adds cost and complexity with no benefit.
- Signing an offtake agreement before the feedstock supply agreement has an enforceable volume commitment.
- Treating an industrial offtaker’s commercial interest as equivalent to a utility’s contracted, regulated demand.
- Negotiating contract tenor independently of the financing tenor, then discovering the mismatch once lenders get involved.
Checklist before approaching a lender
- Is your offtake buyer the natural counterparty for your commodity (utility, grid operator, gas distributor), or a less bankable industrial consumer?
- Does your feedstock supply agreement include an enforceable volume commitment, not just an indicative tonnage?
- Does the offtake tenor match what your financing will require?
- Have you assessed your offtaker’s credit independently, the way a lender will?
- If your buyer is an industrial consumer rather than a utility, have you structured guarantees or security to cover that additional risk?
Sources
FAQ
Next step:
if you are developing a waste-to-energy, biomethane, or other feedstock-based low-carbon fuel project in Southeast Asia and need the right offtake counterparty identified or the feedstock side structured properly, that is the conversation I have. Book a 30-minute call or see how I work on structuring an offtake and feedstock supply.
Not sure your project would survive a credit conversation?
A short call is usually enough to see where your project stands against what a lender or an equity investor will ask for. Tell me where your project is today, and I will tell you what the next conversation needs to look like.
I do not provide investment advice or arrange investments. I act as a strategic advisor and facilitator.
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