It is most common in power generation projects where the "off-taker" or the purchaser of the power is often a government owned enterprise that distributes electricity. As the purchase needs to pay for the services regardless of whether the purchaser actually uses it, this is also regarded as a "take-or-pay" arrangement. Other examples include the project to build the Channel Tunnel, where long term user agreements were established with the national railroads of France and the United Kingdom.32
Assuming that the "off-taker" is a credit worthy organisation, the presence of a long-term supply agreement would significantly increase the bankability of a project because it represents a contractual entitlement to a revenue stream.
A typical off-take agreement in the power sector contains two types of fees payable; a "capacity fee" which is payable as long as the project company demonstrates that the facility operates at minimum capacity (to be determined in the agreement) and an "energy fee" which is usually calculated on the basis of variable marginal costs of producing electricity with a profit factor. The "capacity fee" means that the government is in effect guaranteeing a minimum revenue.
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32 Ibid 215