Energy Assets |
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Dec. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Energy Assets |
ENERGY ASSETS
Energy assets consist of the following:
Included in energy assets are financing lease assets and accumulated depreciation of financing lease assets. Financing lease assets consist of the following:
Depreciation and amortization expense on the above energy assets, net of deferred grant amortization, for the years ended December 31, 2019, 2018 and 2017 was $35,543, $27,305 and $21,648, respectively, and is included in cost of revenues in the accompanying consolidated statements of income. Included in these depreciation and amortization expense totals are depreciation and amortization expense on financing lease assets of $2,129, $2,090, and $1,305 for the years ended December 31, 2019, 2018 and 2017, respectively.
The Company capitalizes interest costs relating to construction financing during the period of construction. Capitalized interest is included in energy assets, net in the Company’s consolidated balance sheets. Capitalized interest is amortized to cost of revenues in the Company’s consolidated statements of income on a straight line basis over the useful life of the associated energy asset. There was $2,966 and $3,817 of interest capitalized for the twelve months ended December 31, 2019 and 2018, respectively.
As of December 31, 2019 and 2018, there are three ESPC asset projects which are included within energy assets, net on the Company’s consolidated balance sheets. The Company controls and operates the assets as well as obtains financing during the construction period of the assets. As the Company has an obligation to the customer for performance of the asset, the Company records a liability associated with these energy assets, although, the customer is responsible for payments to the lender based on the energy asset’s production. As of December 31, 2019 and 2018, the liabilities recognized in association with these assets were $10,243 and $9,863, respectively, of which $827 and $354, respectively, has been classified as the current portion and is included in accrued expenses and other current liabilities and the remainder is included in other liabilities in the accompanying consolidated balance sheets.
For the year ended December 31, 2019, in order to expand its portfolio of energy assets, the Company acquired nine energy projects, which did not constitute businesses under the new guidance. The Company acquired and closed on nine solar projects from two developers for a total purchase price of $8,519. The purchase price included deferred consideration of $6,059, included in accrued expenses and other current liabilities on the accompanying consolidated balance sheets, will be paid upon final completion of the respective projects throughout 2020. As of December 31, 2019, the Company has paid $2,460 to the developers of the projects. The Company also has a definitive agreement to purchase an additional ten solar projects from a developer for a total purchase price of $13,902, of which, the Company has paid $366 to the developers of the projects.
For the year ended December 31, 2018, in order to expand its portfolio of energy assets, the Company acquired and closed on twelve solar projects from two developers for a total purchase price of $72,921. The purchase price included deferred consideration of $5,437 that will be paid upon final completion of the respective projects and throughout 2019. As of December 31, 2018, the Company has paid $62,116 to the developers of the projects. As of December 31, 2019, deferred purchase price consideration of $1,178, included in accrued expenses and other current liabilities on the accompanying consolidated balance sheets, remains outstanding on the projects previously closed in 2018.
As of December 31, 2019, the Company had $852 in ARO assets recorded in project assets, net of accumulated depreciation, and $941 in ARO liabilities recorded in accrued expenses and other current liabilities and other liabilities. During the year end December 31, 2019, the Company recorded $45 of depreciation expense related to the ARO assets and $44 in accretion expense to the ARO liability, which is reflected in the accretion of ARO and contingent consideration on the consolidated statements of cash flows. As of December 31, 2018, the Company had $897 in ARO assets recorded in project assets, net of accumulated depreciation, and $897 in ARO liabilities recorded in accrued expenses and other current liabilities and other liabilities. During the year end December 31, 2018, the Company recorded $0 of depreciation expense related to the ARO assets and $0 in accretion expense to the ARO liability. The Company’s current ARO liabilities relate to the removal of equipment and pipelines at certain renewable gas projects and obligations related to the decommissioning of certain solar facilities.
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