IASB proposes amendments to IFRS 9 and IFRS 7 for renewable electricity contracts
IASB proposes amendments to IFRS 9 and IFRS 7 for renewable electricity contracts
The IASB has published an Exposure Draft Contracts for Renewable Electricity that proposes amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures.
Renewable electricity market has unique characteristics that have created accounting challenges in applying the current requirements of IFRS 9, especially for long-term contracts. These challenges relate mainly to applying the requirements related to the ‘own-use’ exception and the requirements for hedge accounting.
To address these challenges, the Exposure Draft proposes to amend IFRS 9:
The Exposure Draft is open for comments until 7 August 2024 and may be accessed here.
Renewable electricity market has unique characteristics that have created accounting challenges in applying the current requirements of IFRS 9, especially for long-term contracts. These challenges relate mainly to applying the requirements related to the ‘own-use’ exception and the requirements for hedge accounting.
To address these challenges, the Exposure Draft proposes to amend IFRS 9:
- to address how the ‘own-use’ requirements would be applied in case of contracts to buy and take delivery of renewable electricity where the source of production of the renewable electricity is nature-dependent and the contract exposes the purchaser to substantially all the volume risk under the contract; and
- to permit hedge accounting if these contracts are used as hedging instruments.
The Exposure Draft is open for comments until 7 August 2024 and may be accessed here.