Electricity – contract evolution

Offtake and fuel-supply contracts have always been an important component of electricity sector M&A transactions. However, with the liberalisation of electricity markets across Europe and the rapid commoditisation of the wholesale marketplace, there has been a fundamental shift in the contract structures that are being used. Long-term, asset-focused contracts have given way to standardised commodity contracts as markets have become deeper and more liquid, writes David Warren, Allen & Overy.