We'll turn the energy transition into your growth opportunity.

Power Purchase Agreements (PPAs) have a direct impact on the revenue stability, liquidity, and risk profile of an energy project.

• Cash Flow: Long-term PPAs provide predictable revenue and improve financing capacity.
• Accounting: Depending on its structure, a PPA may be treated as a pending transaction or a derivative-like contract (e.g., under IFRS).
• Risks: Fixed prices can generate opportunity costs when market prices rise.

CFO Perspective: A PPA is not just an electricity contract, but a key management tool for risk and financing.

Typical tax risks arise from the structure, financing, and operational phase:

• Trade tax adjustments in financing models
• Loss carryforward for project companies
• Value-Added Tax treatment for direct marketing or PPAs
• Operational splits in complex structures

CFO Perspective: Structural flaws often don’t have a financial impact until years later. Early tax planning is crucial for the overall return on investment.

In addition to traditional financial metrics, industry-specific factors are crucial:

• Plausibility of revenue estimates (wind/solar forecasts)
• Sensitivity analyses (price, weather, availability)
• Contract structure (PPA, feed-in tariff, grid connection)
• Cost assumptions (OPEX, maintenance, decommissioning)

CFO’s Perspective: The greatest risk rarely lies in the numbers themselves, but rather in overly optimistic assumptions in the model.

The choice of accounting standard has a significant impact on the presentation of a company’s financial position:

• IFRS: more market-oriented, e.g., valuation of derivatives and PPAs
• HGB: prudence-oriented, less volatile
• Leasing and contract structures: can lead to balance sheet effects under IFRS that are not visible under HGB

CFO perspective: These differences have a direct impact on key metrics, covenants, and investor communications.

In practice, similar mistakes occur time and again:

• Inadequate tax planning at the start of the project
• Lack of coordination between financing and the tax strategy
• Overly optimistic cash flow projections
• Regulatory changes not taken into account

CFO’s Perspective: Structural missteps can often be corrected later only with considerable effort.

Depreciation is a key factor in return-on-investment planning for energy projects. The tax-related timing of when depreciation begins is crucial:

• Regular Depreciation: Wind and solar farms are depreciated over their economic useful life (solar: approx. 20 years; wind: 20–25 years).
• Commissioning & Acceptance: Tax depreciation often begins with formal commissioning or acceptance following a successful trial operation. Legally speaking, mere technical commissioning or a brief trial operation does not automatically trigger the start of depreciation if defects still need to be rectified.
• Downtime / Outage: Prolonged downtime can affect the depreciation period; special tax depreciation allowances may need to be adjusted accordingly.
• Special Tax Depreciation: Incentive programs or special depreciation provisions (e.g., Section 7g of the German Income Tax Act (EStG) for solar systems) can increase short-term liquidity and can be combined with regular depreciation.

CFO Perspective: Carefully review contracts, trial operations, and acceptance procedures to determine exactly when beneficial ownership transfers, in order to plan depreciation and cash flow precisely. Minor defects prior to final acceptance do not affect the start of depreciation for tax purposes but must be taken into account.