For players in the electricity market, the benefits of AAEs include ways to finance investments in new electricity generation capacity, long-term price security, the guarantee of renewable energy or the reduction of risks when buying and selling electricity. First, the AAE must be reviewed to determine whether or not it meets all the characteristics of an embedded derivative. A controversial point in this context could be considered a criterion for contract performance on the basis of a “subliminal” value, since the final purchase volume is often only fully measured after actual production. Of course, it is not possible to accurately predict this volume for a wind farm, so an appropriate determination of the volume of the contract in the past has generally been considered unmet. However, IFRS 9 contains implementation guidelines (IFRS 9.IG. B.8), which now contain an example in which the amount of a derivative is not determined from the outset. In the case of an AAE, it is therefore possible to use the expected values, which are generally available for wind performance. In the absence of significant acquisition payments, an AEA should be able to meet all the criteria for an IFRS 9 derivative. As governments no longer guarantee compensation for powering renewable energy networks, renewable energy generators increasingly need to find new ways to finance their wind turbines. Because these depend on weather conditions, this means fluctuating volumes and therefore volatile trade, forcing operators and their buyers to reduce their price and level risks.
This makes bilateral agreements between generators and users increasingly popular. Power Purchase Agreements or PPAs are medium- to long-term electricity supply contracts between generators and buyers, which can be flexible. This article highlights the different forms of agreements that highlight the risks and opportunities that each party must take into account when setting up and implementing the agreement. In short, AAEs have the potential to become important instruments in the energy market. They allow not only the transfer of energy, but also risks between the parties, so that the market benefits from improved deliveries and better risk allocation.