The Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) are considering amending their standards in a way that may have a significant effect on deals and financing arrangements in the renewable field.
Power purchase agreements are the typical way solar and wind developers sell power to utilities. Under the new standards it appears these transactions may be classified as a leases, and require placing the deal on the utility's balance sheet, which is not done today, as the asset is owned by a third party renewable developer. These would be considered capital leases.
According to Forbes.com, this accounting approach would deter certain energy-efficiency and renewable investments, and potential tax exposure and more disclosure requirements. FASB and IASB are still receiving comments on this approach.
