On Dec. 18, 2024, IASB issued revised accounting standards for nature-dependent electricity contracts, to help companies better reflect these in the financial statements.
Revisions to IFRS 9financial instruments and IFRS 7 financial instruments: disclosures aim to support reporting of financial effects of such contracts, often structured as power purchase agreements (PPAs); amendments respond to their increased use.
Changes include: clarifying use of own-use requirements; permitting hedge accounting if contracts are used as hedging instruments; disclosure requirements to help investors to understand effects of contracts on company financial performance and cash flows.
Amendments to be applied for annual reporting periods starting on/after Jan. 1, 2026.
In Dec. 2024, EFRAG issued draft endorsement advice IFRS 9, IFRS 7, see #238498.
On Apr. 30, IASB announced it is expecting to publish exposure draft.
IASB announced that it expects to publish the exposure draft contracts for renewable electricity on May 8, 2024, which will be available via its open for commentsection.
On May 8, 2024, IASB announced that it had published the exposure draft entitled Contracts for renewable electricity: proposed amendments to IFRS 9 and IFRS 7.
Exposure draft amends IFRS 9 Financial instruments and IFRS 7 Financial instruments: disclosures in response to the rapidly growing global market for these contracts.
Aims to better reflect the impact of renewable electricity contracts on companies.
Renewable electricity contracts are intended to ensure stability of/access to renewable electricity sources but being dependent on nature, supply cannot be guaranteed.
May require buyers to take/pay for electricity produced even if it does not match need.
Creates challenges in applying current accounting requirements, especially for long-term contracts; targeted changes to accounting for such contracts aim to address this.
Proposals would: address own-use requirements application; permit hedge accounting if contracts are used as hedging instruments; add disclosure requirement for investors to understand impact of contracts on company financial performance/future cashflows.
IASB aims to finalize changes by end of 2024, and make new requirements available to apply as soon as possible, in recognition of the urgent need for these amendments,
Also reduced the feedback period to 90 days with comments invited until Aug. 7, 2024.
On May 8, 2024, GE DRSC highlighted IASB consultation on contracts, see #211480.
Aug. 12, 2024 Proposed Taxonomy Update
On Aug. 12, 2024, IASB said it expects to publish IFRS Accounting Taxonomy 2024 - Proposed Update 2 Contracts for Renewable Electricity for consultation on Aug. 15.
Proposed Taxonomy Update is based on proposed amendments to IFRS Accounting Standards, proposed changes to IFRS 9 and IFRS 7 may change based on feedback.
Proposals in Proposed Taxonomy Update will change to reflect amendments issued.
The Taxonomy Update document will be available to download from IASB website.
Proposed changes reflect the disclosure requirements proposed by Exposure Draft Contracts for Renewable Electricity, published in May 2024.
Proposed IFRS Taxonomy update based on proposed amendments to IFRS accounting standards, which might change; proposed taxonomy update would reflect any change.
The deadline for submitting comments, via comment letter or survey, is Oct. 14, 2024.
Dec. 18, 2024 Updated Standards Published
On Dec. 18, 2024, IASB issued revised accounting standards for nature-dependent electricity contracts, to help companies better reflect these in the financial statements.
Revisions to IFRS 9financial instruments and IFRS 7 financial instruments: disclosures aim to support reporting of financial effects of such contracts, often structured as power purchase agreements (PPAs); amendments respond to their increased use.
Changes include: clarifying use of own-use requirements; permitting hedge accounting if contracts are used as hedging instruments; disclosure requirements to help investors to understand effects of contracts on company financial performance and cash flows.
Amendments to be applied for annual reporting periods starting on/after Jan. 1, 2026.
In Dec. 2024, EFRAG issued draft endorsement advice IFRS 9, IFRS 7, see #238498.
