Annual report pursuant to Section 13 and 15(d)

Leases

v3.22.4
Leases
 12 Months Ended
Dec. 31, 2022
Leases [Abstract]  
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2032. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance, and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates through fiscal 2050. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances, but will be recorded to the consolidated statements of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers, and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses were as follows:
Year Ended December 31,
2022 2021 2020
Rent and related expenses $ 9,199  $ 9,740  $ 8,891 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2022 2021
Operating Leases
Operating lease assets $ 38,224  $ 41,982 
Current portion of operating lease liabilities $ 5,829  $ 6,276 
Long-term operating lease liabilities, net of current portion 31,703  35,135 
Total Operating lease liabilities $ 37,532  $ 41,411 
Weighted-average remaining lease term 13 years 12 years
Weighted-average discount rate 6.0  % 5.7  %
Financing Leases (1)
Energy assets, net $ 29,365  $ 31,876 
Current portions of financing lease liabilities $ 1,992  $ 3,125 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 14,068  16,101 
Total financing lease liabilities $ 16,060  $ 19,226 
Weighted-average remaining lease term 14 years 15 years
Weighted-average discount rate 12.1  % 12.1  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019.
The costs related to our leases were as follows:
Year Ended December 31,
2022 2021 2020
Operating Leases
Operating lease costs $ 8,372  $ 8,780  $ 7,970 
Financing Leases
Amortization expense 2,104  2,129  2,129 
Interest on lease liabilities 2,147  2,541  3,019 
Total financing lease costs 4,251  4,670  5,148 
Total lease costs $ 12,623  $ 13,450  $ 13,118 

Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2022 2021
Cash paid for amounts included in the measurement of operating lease liabilities $ 7,978  $ 11,385 
Right-of-use assets obtained in exchange for new operating lease liabilities $ 4,872  $ 10,007 
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2023 $ 7,769  $ 3,627 
2024 6,585  2,565 
2025 5,319  2,213 
2026 3,233  2,054 
2027 2,631  1,922 
Thereafter 29,383  17,891 
Total minimum lease payments $ 54,920  $ 30,272 
Less: interest 17,388  14,212 
Present value of lease liabilities $ 37,532  $ 16,060 
We have future lease commitments for four leases, which do not yet meet the criteria for recording ROU assets or ROU liabilities as the leases have not commenced. The net present value of these commitments total $12,560 as of December 31, 2022 which relate to lease payments to be made over a range of five to 20 years.
Non-recourse Sale-leasebacks and Financing Leases
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2022 2021
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,455  1,571 
Total deferred loss $ 1,570  $ 1,686 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 4,430  4,775 
Total deferred gain $ 4,775  $ 5,120 
Net gains from amortization expense in cost of revenues related to deferred gains and losses were $383, $230 and $228 for the years ended December 31, 2022, 2021, and 2020, respectively.
August 2018 Master Sale-leaseback
We enter into amendments to our August 2018 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2022, we entered into amendments to this facility which extended the current maturity date to June 30, 2023.
We sold and leased back four energy assets for $23,905 in cash proceeds under this facility during the year ended December 31, 2022. The agreements have low interest rates ranging from 0% to 1.17%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2022, approximately $204,664 remained available under this lending commitment.
December 2020 Master Sale-leaseback
We enter into amendments to our December 2020 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2022, we entered into amendments to increase our maximum commitment by $23,559 and the extended the current maturity date to December 31, 2022. We sold and leased back eight energy assets for $18,254 in cash proceeds under this facility during the year ended December 31, 2022. As of December 31, 2022, no funding is available under this lending commitment.
See Note 9 for additional information on these financing facilities.
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2032. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance, and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates through fiscal 2050. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances, but will be recorded to the consolidated statements of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers, and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses were as follows:
Year Ended December 31,
2022 2021 2020
Rent and related expenses $ 9,199  $ 9,740  $ 8,891 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2022 2021
Operating Leases
Operating lease assets $ 38,224  $ 41,982 
Current portion of operating lease liabilities $ 5,829  $ 6,276 
Long-term operating lease liabilities, net of current portion 31,703  35,135 
Total Operating lease liabilities $ 37,532  $ 41,411 
Weighted-average remaining lease term 13 years 12 years
Weighted-average discount rate 6.0  % 5.7  %
Financing Leases (1)
Energy assets, net $ 29,365  $ 31,876 
Current portions of financing lease liabilities $ 1,992  $ 3,125 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 14,068  16,101 
Total financing lease liabilities $ 16,060  $ 19,226 
Weighted-average remaining lease term 14 years 15 years
Weighted-average discount rate 12.1  % 12.1  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019.
The costs related to our leases were as follows:
Year Ended December 31,
2022 2021 2020
Operating Leases
Operating lease costs $ 8,372  $ 8,780  $ 7,970 
Financing Leases
Amortization expense 2,104  2,129  2,129 
Interest on lease liabilities 2,147  2,541  3,019 
Total financing lease costs 4,251  4,670  5,148 
Total lease costs $ 12,623  $ 13,450  $ 13,118 

Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2022 2021
Cash paid for amounts included in the measurement of operating lease liabilities $ 7,978  $ 11,385 
Right-of-use assets obtained in exchange for new operating lease liabilities $ 4,872  $ 10,007 
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2023 $ 7,769  $ 3,627 
2024 6,585  2,565 
2025 5,319  2,213 
2026 3,233  2,054 
2027 2,631  1,922 
Thereafter 29,383  17,891 
Total minimum lease payments $ 54,920  $ 30,272 
Less: interest 17,388  14,212 
Present value of lease liabilities $ 37,532  $ 16,060 
We have future lease commitments for four leases, which do not yet meet the criteria for recording ROU assets or ROU liabilities as the leases have not commenced. The net present value of these commitments total $12,560 as of December 31, 2022 which relate to lease payments to be made over a range of five to 20 years.
Non-recourse Sale-leasebacks and Financing Leases
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2022 2021
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,455  1,571 
Total deferred loss $ 1,570  $ 1,686 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 4,430  4,775 
Total deferred gain $ 4,775  $ 5,120 
Net gains from amortization expense in cost of revenues related to deferred gains and losses were $383, $230 and $228 for the years ended December 31, 2022, 2021, and 2020, respectively.
August 2018 Master Sale-leaseback
We enter into amendments to our August 2018 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2022, we entered into amendments to this facility which extended the current maturity date to June 30, 2023.
We sold and leased back four energy assets for $23,905 in cash proceeds under this facility during the year ended December 31, 2022. The agreements have low interest rates ranging from 0% to 1.17%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2022, approximately $204,664 remained available under this lending commitment.
December 2020 Master Sale-leaseback
We enter into amendments to our December 2020 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2022, we entered into amendments to increase our maximum commitment by $23,559 and the extended the current maturity date to December 31, 2022. We sold and leased back eight energy assets for $18,254 in cash proceeds under this facility during the year ended December 31, 2022. As of December 31, 2022, no funding is available under this lending commitment.
See Note 9 for additional information on these financing facilities.
Leases LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2032. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance, and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates through fiscal 2050. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances, but will be recorded to the consolidated statements of income as part of our operating lease costs.
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers, and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.
Rent and related expenses were as follows:
Year Ended December 31,
2022 2021 2020
Rent and related expenses $ 9,199  $ 9,740  $ 8,891 
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
December 31,
2022 2021
Operating Leases
Operating lease assets $ 38,224  $ 41,982 
Current portion of operating lease liabilities $ 5,829  $ 6,276 
Long-term operating lease liabilities, net of current portion 31,703  35,135 
Total Operating lease liabilities $ 37,532  $ 41,411 
Weighted-average remaining lease term 13 years 12 years
Weighted-average discount rate 6.0  % 5.7  %
Financing Leases (1)
Energy assets, net $ 29,365  $ 31,876 
Current portions of financing lease liabilities $ 1,992  $ 3,125 
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs 14,068  16,101 
Total financing lease liabilities $ 16,060  $ 19,226 
Weighted-average remaining lease term 14 years 15 years
Weighted-average discount rate 12.1  % 12.1  %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019.
The costs related to our leases were as follows:
Year Ended December 31,
2022 2021 2020
Operating Leases
Operating lease costs $ 8,372  $ 8,780  $ 7,970 
Financing Leases
Amortization expense 2,104  2,129  2,129 
Interest on lease liabilities 2,147  2,541  3,019 
Total financing lease costs 4,251  4,670  5,148 
Total lease costs $ 12,623  $ 13,450  $ 13,118 

Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2022 2021
Cash paid for amounts included in the measurement of operating lease liabilities $ 7,978  $ 11,385 
Right-of-use assets obtained in exchange for new operating lease liabilities $ 4,872  $ 10,007 
The table below sets forth our estimated minimum future lease obligations under our leases:
  Operating Leases Financing Leases
Year ended December 31,  
2023 $ 7,769  $ 3,627 
2024 6,585  2,565 
2025 5,319  2,213 
2026 3,233  2,054 
2027 2,631  1,922 
Thereafter 29,383  17,891 
Total minimum lease payments $ 54,920  $ 30,272 
Less: interest 17,388  14,212 
Present value of lease liabilities $ 37,532  $ 16,060 
We have future lease commitments for four leases, which do not yet meet the criteria for recording ROU assets or ROU liabilities as the leases have not commenced. The net present value of these commitments total $12,560 as of December 31, 2022 which relate to lease payments to be made over a range of five to 20 years.
Non-recourse Sale-leasebacks and Financing Leases
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2022 2021
Deferred loss, short-term, net 115  115 
Deferred loss, long-term, net 1,455  1,571 
Total deferred loss $ 1,570  $ 1,686 
Deferred gain, short-term, net 345  345 
Deferred gain, long-term, net 4,430  4,775 
Total deferred gain $ 4,775  $ 5,120 
Net gains from amortization expense in cost of revenues related to deferred gains and losses were $383, $230 and $228 for the years ended December 31, 2022, 2021, and 2020, respectively.
August 2018 Master Sale-leaseback
We enter into amendments to our August 2018 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2022, we entered into amendments to this facility which extended the current maturity date to June 30, 2023.
We sold and leased back four energy assets for $23,905 in cash proceeds under this facility during the year ended December 31, 2022. The agreements have low interest rates ranging from 0% to 1.17%, as a result of tax credits which were transferred to the counterparty. As of December 31, 2022, approximately $204,664 remained available under this lending commitment.
December 2020 Master Sale-leaseback
We enter into amendments to our December 2020 master lease and participation agreement from to time to time, which may extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2022, we entered into amendments to increase our maximum commitment by $23,559 and the extended the current maturity date to December 31, 2022. We sold and leased back eight energy assets for $18,254 in cash proceeds under this facility during the year ended December 31, 2022. As of December 31, 2022, no funding is available under this lending commitment.
See Note 9 for additional information on these financing facilities.