Fuel Adjustment Factor (FAF)
Formance advises that, due to ongoing volatility in global fuel markets and the resulting impact on our supply and logistics costs, we will be introducing a temporary Fuel Adjustment Factor (FAF) from 1 May 2026.
Recent geopolitical developments in the Middle East, including disruption to shipping through the Strait of Hormuz, have led to sustained increases in fuel prices globally. This is significantly impacting our cost base, with price pressures across raw materials, manufacturing inputs, and the transportation of panels both to and from our Christchurch facility.
From 1 May 2026, a FAF of 2.5% will apply to all invoices. This will be reviewed regularly and adjusted or removed as market conditions allow.
What is FAF?
The Fuel Adjustment Factor is a variable percentage applied to the total project value (excluding GST) to account for changes in:
- Fuel pricing
- Freight and transport costs
- Logistics conditions
How it is applied
FAF is applied to the total project value (excluding GST):
- Calculated as a percentage (currently 2.5%)
- Applied across the full project value
- Included within project pricing
Example
| Project Value (excl. GST) | FAF (2.5%) | Adjusted Total |
|---|---|---|
| $100,000 | $2,500 | $102,500 |
Why FAF is used
Transport and fuel costs can fluctuate over time and are outside of our control.
Applying a Fuel Adjustment Factor allows base pricing to remain stable, while adjusting for changes in delivery-related costs. This approach provides a simple and consistent way to reflect these changes across the full project.
Review and updates
FAF is reviewed periodically and may increase or decrease in line with fuel and transport cost movements.
Any changes will be clearly communicated.
Questions?
If you have any questions about how this applies to your project, please get in touch with your Formance contact.