Cloudberry Clean Energy Annual report 2020

93 Cloudberry Annual report 2020 Financial statements The table below summarizes the fair value for each class of financial instrument recognised the fair value hierarchy. NOK 1 000 Non-current financial investments Derivative financial instrument (asset) Derivative financial instrument (liability) Total fair value Fair value based on quoted prices in an active market (Level 1) - - - - Fair value based on price inputs other that quoted prices (Level 2) - 1 322 -173 1 149 Fair value based on unobservable inputs (Level 3) - - - - Total fair value at 31 December 2020 - 1 322 -173 1 149 The contracts at level 2 as of 31 December are the Groups interest rate derivatives. The fair value of interest rate swaps is determined by discount- ing expected future cash flows to present value through the use of observed market interest rates. Cloudberry’s interest rate derivatives are held for hedging purposes, reference to note 11 Hedge accounting. Purchase Price Agreements (PPA) Cloudberry has in some cases entered into PPA agreement for the sale of electric power and el certificates at a fixed price. A characteristic to these agreements is that they can be accounted for as a financial instrument or as a contract with customer, depending on the terms and conditions. “Own use” contracts Energy contracts that are entered into and continue to be held for the purpose of the receipt or delivery of the power in accordance with Cloudberry’s expected purchase, sale or usage requirements are accounted for as own use contracts. These con- tracts do not qualify for recognition in the statement of financial position in accordance with IFRS 9 but are accounted for as contracts with customers after IFRS 15 and energy purchase. “Own use” contracts will typically have a stable customer base e.g. bilat- eral industry contracts, and are settled by physical delivery. The PPA agreement at Røyrmyra was in 2019 agreed terminated from 31 December 2021. A financial liability of NOK 4.6 million is recognised in the bal- ance sheet and will be due in February 2022. See note 24 Provisions, guarantees and other contractual obligations.