UK-Adopted International Accounting StandardsAdoption Status Report
UK-Adopted International Accounting StandardsAdoption Status Report

Power Purchase Agreements

Background

In June 2023 the IFRS Interpretations Committee received a submission relating to the application of certain requirements of IFRS 9 Financial Instruments (IFRS 9) to contracts for renewable energy. Consequently, the International Accounting Standards Board (IASB) added a narrow-scope standard setting project to its workplan.

In May 2024 the IASB published its Exposure Draft: Contracts for Renewable Electricity (ED). The UKEB’s Final Comment Letter on the ED was submitted in August 2024. Further details on the UKEB’s influencing project on this ED can be found on the project webpage.

On 18 December 2024 the IASB published Amendments to IFRS 9 and IFRS 7 – Contracts Referencing Nature-dependent Electricity.

Main requirements in the Amendments

  • The Amendments extend the “own-use” exception as set out in paragraph 2.4 of IFRS 9 to certain contracts to purchase nature-dependent electricity.
  • The Amendments allow an entity to apply cash flow hedge accounting to hedging relationships in which the hedged item is a variable amount of forecast electricity transactions, and the hedging instrument is a contract referencing nature-dependent electricity.
  • Entities are required to disclose information about their contracts referencing nature-dependent electricity.

UKEB outreach 

The UKEB outreach on this project will include discussions with UKEB advisory groups and public consultation.

Subscribe to stay up to date on UKEB news and events, including project updates. 

UKEB meetings

Meeting(s) related to the endorsement of the Amendments are as follows:

Title
Date
Size
Document type
Project Initiation Plan - Power Purchase Agreements
13 December 2024
156Kb
PDFinsert_drive_file