Intangible Assets

Intangible Assets — The Company's intangible assets as of December 31, 2018 and 2017 primarily reflect intangible assets established from its business acquisitions and are comprised of the following:


•	PPAs — Established predominantly with the acquisitions of the Alta Wind Portfolio, Walnut Creek, Tapestry and Laredo Ridge, these represent the fair value of the PPAs acquired. These are amortized, generally on a straight-line basis, over the term of the PPA.


•	Leasehold Rights — Established with the acquisition of the Alta Wind Portfolio, this represents the fair value of contractual rights to receive royalty payments equal to a percentage of PPA revenue from certain projects. These are amortized on a straight-line basis.


•	Customer relationships — Established with the acquisition of Energy Center Phoenix and Energy Center Omaha, these intangibles represent the fair value at the acquisition date of the businesses' customer base. The customer relationships are amortized to depreciation and amortization expense based on the expected discounted future net cash flows by year.


•	Customer contracts — Established with the acquisition of Energy Center Phoenix, these intangibles represent the fair value at the acquisition date of contracts that primarily provide chilled water, steam and electricity to its customers. These contracts are amortized to revenues based on expected volumes.


•	Emission Allowances — These intangibles primarily consist of SO₂ and NOx emission allowances established with the El Segundo and Walnut Creek acquisitions. These emission allowances are held-for-use and are amortized to cost of operations, with NOx allowances amortized on a straight-line basis and SO₂ allowances amortized based on units of production.


•	Other — Consists of a) the acquisition date fair value of the contractual rights to a ground lease for South Trent and to utilize certain interconnection facilities for Blythe, as well as land rights acquired in connection with the acquisition of Elbow Creek, and b) development rights related to certain solar businesses acquired in 2010 and 2011.

The following tables summarize the components of intangible assets subject to amortization:



Year ended December 31, 2018	PPAs			Leasehold Rights			Customer Relationships			Customer Contracts			Emission Allowances			Other			Total
(In millions)
December 31, 2018	$	1,280		$	86		$	66		$	15		$	9		$	8		$	1,464
Less accumulated amortization	(269		)	(18		)	(7		)	(9		)	(2		)	(3		)	(308		)
Net carrying amount	$	1,011		$	68		$	59		$	6		$	7		$	5		$	1,156



Year ended December 31, 2017	PPAs			Leasehold Rights			Customer Relationships			Customer Contracts			Emission Allowances			Other			Total
(In millions)
January 1, 2017	$	1,286		$	86		$	66		$	15		$	9		$	9		$	1,471
Asset Impairments ^(a)	(6		)	—			—			—			—			—			(6		)
December 31, 2017	1,280			86			66			15			9			9			1,465
Less accumulated amortization	(205		)	(13		)	(5		)	(8		)	(3		)	(3		)	(237		)
Net carrying amount	$	1,075		$	73		$	61		$	7		$	6		$	6		$	1,228

^(a) $6 million of asset impairments relate to one of the November 2017 Drop Down Assets that was recorded by NRG during the quarter ended September 30, 2017, as further described in Note 9, Asset Impairments.

The Company recorded amortization expense of $71 million during the years ended December 31, 2018, 2017 and 2016. Of these amounts, $70 million for the years ended December 31, 2018, 2017 and 2016 were recorded to contract amortization expense and reduced operating revenues in the consolidated statements of operations. The Company estimates the future amortization expense for its intangibles to be $71 million for the next five years through 2023.

Out-of-market contracts — The out-of-market contract liability represents the out-of-market value of the PPAs for the Blythe solar project and Spring Canyon wind projects and the out-of-market value of the land lease for Alta Wind XI, LLC, as of their respective acquisition dates. The Blythe solar project's liability of $7 million was recorded to other non-current liabilities on the consolidated balance sheet and is amortized to revenue in the consolidated statements of income on a units-of-production basis over the twenty-year term of the agreement. Spring Canyon's liability of $3 million was recorded to other non-current liabilities and is amortized to revenue on a straight-line basis over the twenty-five year term of the agreement. The Alta Wind XI, LLC's liability of $5 million was recorded to other non-current liabilities and is amortized as a reduction to cost of operations on a straight-line basis over the thirty-four year term of the land lease. At December 31, 2018, accumulated amortization of out-of-market contracts was $4 million and amortization expense was $1 million for each of the years ended December 31, 2018 and 2017.