Accounting for Renewable Energy: Top 5 Challenges and how to overcome them

 

Research Team

Pentagon Global Finance, London – As renewable energy sources become increasingly popular, accounting for them has become a challenge for many businesses. From tracking the production of renewable energy sources to understanding the tax implications of green investments, there are several key challenges that businesses must face when accounting for renewables.

To help businesses better understand these challenges and how to overcome them, we have identified the top five challenges in accounting for renewables and outlined strategies to address them.

 

Pentagon Global Finance is a global professional services firm helping some of the fastest growing companies and SMEs in the world work efficiently and differently whilst reducing risk and delivering value at all times. My name is Luke Clack and I work within the research team here at Pentagon Global Finance (UK).

We’re focused on enabling transformations through systems, re-organisation and people solutions, powered by analytics and insight to drive sustainable change. Whether you’re navigating regulatory changes, managing through a crisis, going public, or experiencing some other major shift in technology, we help put in place Change and Transformation strategies that are built with business results in mind.

 

1. Tracking Production:

   One of the biggest challenges in accounting for renewables is tracking production. To ensure accurate reporting and compliance with regulations, businesses must be able to track their production from renewable energy sources such as solar panels or wind turbines. This can be done by using monitoring systems that measure power output in real-time or by manually recording data on a periodic basis.

 

2. Understanding Tax Implications:

   Investing in renewable energy sources can provide significant tax benefits but understanding these implications can be difficult due to constantly changing regulations. Businesses should consult with a qualified accountant who specializes in green investments to ensure they are taking advantage of all available tax incentives and deductions related to their renewable energy investments.

 

3. Monitoring Costs:

   Accounting for renewables requires an understanding of both costs associated with installation as well as ongoing maintenance costs over time. Businesses should track these costs carefully so they can accurately report their expenses related to green initiatives on their financial statements each year.

 

4. Calculating ROI:  When investing in new technology such as solar panels or wind turbines, it is important for businesses to calculate the return on investment (ROI) before making any decisions about implementation or expansion of green initiatives within their organization. By calculating ROI ahead of time, businesses will be better equipped when making decisions about future investments into renewable energy sources and other sustainability projects within their business operations .

 

5 . Reporting & Compliance :

Lastly , another challenge faced when accounting for renewables is ensuring compliance with reporting standards set forth by governing bodies such as The International Financial Reporting Standards (IFRS) . To stay compliant, companies should regularly review applicable laws and regulations, create internal processes that adhere to those guidelines, and audit those processes regularly.

 

 

By addressing these five key challenges associated with accounting for renewables, companies will be better equipped when it comes time to make decisions about investing in sustainable technologies within their business operations

For more information, please contact our CFO Advisory team on ft@pentagonfinance.com

Tel: +44(0)203 290 8500