Note 14. Revenue from Contracts with Customers (Notes)

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers [Text Block]

14. Revenue from Contracts with Customers

The following table presents the disaggregation of revenue from contracts with customers for the years ended December 31, 2021, 2020, and 2019 along with the reportable segment for each category (in thousands):

Category	Segment	2021		2020		2019
Solar modules	Modules	$	2,331,380	$	1,736,060	$	1,460,116
Solar power systems	Other	513,362		794,797		1,148,856
O&M services	Other	43,060		115,590		107,705
Energy generation (1)	Other	37,614		61,948		54,539
EPC services (2)	Other	(2,039)		2,937		291,901
Net sales		$	2,923,377	$	2,711,332	$	3,063,117

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(1)During the year ended December 31, 2020, the majority of energy generated and sold by our PV solar power systems was accounted for under ASC 840 consistent with the classification of the associated PPAs.

(2)For certain of our EPC agreements, we provide an energy performance test during the first or second year of a system’s operation to demonstrate that the actual energy generation for the applicable period meets or exceeds the modeled energy expectation, after certain adjustments. If there is an underperformance event with regard to these tests, we may incur liquidated damages as specified in the applicable EPC agreement. During the year ended December 31, 2021, we accrued liquidated damages for certain of these agreements, which we recognized as a reduction to revenue. See Note 13. “Commitments and Contingencies” to our consolidated financial statements for discussion of our performance guarantee arrangements.

We recognize revenue for module sales at a point in time following the transfer of control of the modules to the customer, which typically occurs upon shipment or delivery depending on the terms of the underlying contracts. Such contracts may contain provisions that require us to make liquidated damage payments to the customer if we fail to ship or deliver modules by scheduled dates. We recognize these liquidated damages as a reduction of revenue in the period we transfer control of the modules to the customer.

For EPC services provided in prior periods, or sales of solar power systems with EPC services provided in prior periods, we recognized revenue over time using cost based input methods, which required significant judgment to evaluate assumptions including the amount of net contract revenues and the total estimated costs to determine our progress toward contract completion. The cumulative effect of revisions to estimates related to net contract revenues or costs to complete contracts are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. Changes in estimates for sales of systems and EPC services occur for a variety of reasons, including but not limited to (i) changes in estimates of variable consideration, (ii) construction plan accelerations or delays, or (iii) changes in information used to estimate costs. Changes in estimates may have a material effect on our consolidated statements of operations.

The following table outlines the revenue impact of net changes in estimated transaction prices and input costs (both increases and decreases) for project related sales contracts for the years ended December 31, 2021, 2020, and 2019 as well as the number of projects that comprise such changes. For purposes of the table, we only include projects with changes in estimates that have a net impact on revenue of at least $1.0 million during the periods presented. Also included in the table is the net change in estimate as a percentage of the aggregate revenue for such projects.

	2021			2020			2019
Number of projects	10			9			3
Increase (decrease) in revenue from net changes in transaction prices (in thousands) (1)	$	71,310		$	(16,954)		$	(3,642)
Increase (decrease) in revenue from net changes in input cost estimates (in thousands)	—			7,487			(23,103)
Net increase (decrease) in revenue from net changes in estimates (in thousands)	$	71,310		$	(9,467)		$	(26,745)
Net change in estimate as a percentage of aggregate revenue	2.1		%	(0.5)		%	(4.6)		%

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(1)During the year ended December 31, 2021, we recorded revenue of $65.1 million associated with the settlement of an outstanding indemnification arrangement associated with the sale of one of our projects. See Note 13. “Commitments and Contingencies” to our consolidated financial statements for discussion of our indemnification arrangements.

The following table reflects the changes in our contract assets, which we classify as “Accounts receivable unbilled, net” and our contract liabilities, which we classify as “Deferred revenue,” for the year ended December 31, 2021. As of December 31, 2020, these balances excluded any assets or liabilities classified as held for sale (in thousands):

	2021		2020		Change
Accounts receivable unbilled, net (1)	$	46,113	$	49,092	$	(2,979)	(6)	%
Deferred revenue (2)	$	297,811	$	233,732	$	64,079	27	%

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(1)Includes $20.8 million and $22.7 million of noncurrent accounts receivable unbilled, net classified as “Other assets” on our consolidated balance sheets as of December 31, 2021 and 2020, respectively.

(2)Includes $95.9 million and $44.9 million of noncurrent deferred revenue classified as “Other liabilities” on our consolidated balance sheets as of December 31, 2021 and 2020, respectively.

During the year ended December 31, 2021, our contract assets decreased by $3.0 million primarily due to final billings for certain project sales, offset by unbilled receivables associated with the sale of the Sun Streams 4 and Sun Streams 5 projects in the current year. During the year ended December 31, 2021, our contract liabilities increased by $64.1 million primarily due to advance payments received for sales of solar modules in the current year, partially offset by the recognition of revenue for sales of solar modules for which payment was received in 2020. During the years ended December 31, 2021 and 2020, we recognized revenue of $182.0 million and $316.1 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods.

As of December 31, 2021, we had entered into contracts with customers for the future sale of 21.9 GWDC of solar modules for an aggregate transaction price of $5.9 billion, which we expect to recognize as revenue through 2025 as we transfer control of the modules to the customers. Such aggregate transaction price excludes estimates of variable consideration for certain contracts with customers that are associated with future module technology improvements, including new product designs and enhancements to certain energy related attributes. Certain other price adjustments associated with the proposed extension of the U.S. investment tax credit and sales freight have also been excluded. While our contracts with customers typically represent firm purchase commitments, these contracts may be subject to amendments made by us or requested by our customers. These amendments may increase or decrease the volume of modules to be sold under the contract, change delivery schedules, or otherwise adjust the expected revenue under these contracts.