Quarterly report pursuant to Section 13 or 15(d)

Energy Assets, Net

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Energy Assets, Net
 9 Months Ended
Sep. 30, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
ENERGY ASSETS, NET ENERGY ASSETS, NET
Energy assets, net consisted of the following:
  September 30, 2023 December 31, 2022
Energy assets (1)
$ 2,012,528  $ 1,493,913 
Less - accumulated depreciation and amortization (355,943) (312,388)
Energy assets, net $ 1,656,585  $ 1,181,525 
(1) Includes financing lease assets (see Note 7), capitalized interest and asset retirement obligations (“ARO”) assets (see tables below). Also includes the energy asset project acquired in August 2023. See section below for additional information.
August 2023 Purchase and Sale Agreement
On August 4, 2023, we entered into a purchase and sale agreement to acquire an energy asset project and to acquire 100% of the stock of Bright Canyon Energy Corporation (“BCE”) in a two-phased transaction. Phase 1, the purchase of the energy asset project, closed on August 4, 2023 and did not constitute a business in accordance with ASC 805-50, Business Combinations.
The adjusted purchase price for phase 1, net of cash acquired of $11,206, was $76,758, of which $5,000 was paid in cash, $46,694 was financed by the seller, and we assumed a construction loan on the energy asset project for $36,270. In September 2023, we paid $12,500 in principal on the sellers note. As of September 30, 2023, the balance of the seller’s note was $34,194. See Note 8 for additional information about these loans. We also assumed a land lease for the energy asset project. See Note 7. for additional information on the lease.
In the second phase, we plan to acquire BCE, including its interest in a consolidated joint venture and its interests in project subsidiaries developing or with rights to develop solar, battery, and microgrid assets for a purchase price of $39,100. The completion of the second phase is subject to a number of conditions and third-party consents and is targeted to close late in 2023 or early 2024.
Depreciation and Amortization Expense
The following table sets forth our depreciation and amortization expense on energy assets, net of deferred grant amortization:
Three Months Ended September 30, Nine Months Ended September 30,
Location 2023 2022 2023 2022
Cost of revenues (2)
$ 15,122  $ 12,933  $ 42,847  $ 36,911 
(2) Includes depreciation and amortization on financing lease assets (see Note 7).
Capitalized Interest
The following table presents the interest costs relating to construction financing during the period of construction, which were capitalized as part of energy assets, net:
Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Capitalized interest $ 12,824  $ 3,877  $ 28,842  $ 7,785 
The following tables sets forth information related to our ARO assets and ARO liabilities:
Location September 30, 2023 December 31, 2022
ARO assets, net Energy assets, net $ 3,499  $ 2,359 
ARO liabilities, non-current Other liabilities $ 4,541  $ 3,052 

Three Months Ended September 30, Nine Months Ended September 30,
2023 2022 2023 2022
Depreciation expense of ARO assets $ 53  $ 37  $ 161  $ 110 
Accretion expense of ARO liabilities $ 64  $ 36  $ 194  $ 108