Accounting Issues Related to Renewable Energy Sector

Abstract

Energetic security has become an important topic in politics, business, academic environment and education as a result of geopolitical instability, high increases in gas prices and climate changes. Renewable energy sector has emerged as an alternative to conventional sources of energy. As part of their sustainability strategies, companies are increasingly looking to reduce their energy costs while maintaining continuous business process. As a result, many companies have started to use energy from renewable generation sources. The role that renewable energy plays in a company’s energy strategy is increasingly raised from an operational exercise to a strategic priority. Renewable energy strategies vary from investing directly in a generation asset, or purchasing the power from a third party’s project to buying renewable certificates. This paper seeks to explore the accounting implications of different arrangements related to renewable energy, from the perspective of producers, traders or consumer of renewable energy. This paper will highlight some of the key accounting considerations for power purchase agreement which can be quite a complex issue with a lot of challenges for professional accountants.