Balance Sheet Components

Inventories

The components of inventory consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018

Raw materials	$	42,996	$	53,273
Work-in-progress	28,313		22,303
Finished goods	33,625		56,900
	$	104,934	$	132,476

Prepaid Expense and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018

Government incentives receivable	$	956	$	1,001
Prepaid expenses and other current assets	24,132		32,741
	$	25,088	$	33,742

Property, Plant and Equipment, Net

Property, plant and equipment, net consisted of the following (in thousands):



	June 30,			December 31,
	2019			2018

Energy Servers	$	431,444		$	511,485
Computers, software and hardware	19,516			16,536
Machinery and equipment	102,532			99,209
Furniture and fixtures	8,986			4,337
Leasehold improvements	36,092			18,629
Building	40,512			40,512
Construction in progress	9,324			29,084
	648,406			719,792
Less: Accumulated depreciation	(241,796		)	(238,378		)
	$	406,610		$	481,414

Our construction in progress decreased $19.8 million, as compared to December 31, 2018, primarily due to our capitalization of leasehold improvements and furniture and fixtures placed in service during the period related to our move to our new corporate headquarters.

Our PPA Entities' property, plant and equipment under operating leases was $397.5 million and $397.5 million as of June 30, 2019 and December 31, 2018, respectively. The accumulated depreciation for these assets was $90.2 million and $77.4 million as of June 30, 2019 and December 31, 2018, respectively. Depreciation expense related to our property, plant and equipment under operating leases was $6.4 million and $6.4 million for the three months ended June 30, 2019 and 2018, respectively, and $12.7 million and $12.7 million for the six months ended June 30, 2019 and 2018, respectively.

During the three months ended June 30, 2019, there was a decommissioning in PPA II, including the replacement and scheduled future replacement during 2019 of installed Energy Servers, resulting in: (i) charges related to the decommissioning of PPA II Energy Servers of $8.1 million recognized in cost of electricity revenue in our condensed consolidated statement of operations; (ii) decommissioning and write-off 10 megawatts of PPA II Energy Servers at net book value of $25.6 million recognized in cost of product revenue in our condensed consolidated statement of operations; and (iii) deconsolidation of our remaining interest in DSGP, primarily related to the Energy Server assets held in PPA II of $27.8 million, and recognition as an equity investment included in other long-term assets on our condensed consolidated balance sheet. See Note 12 - Power Purchase Agreement Programs - PPA II Upgrade of Energy Servers for additional information.

Customer Financing Leases, Receivable

The components of investment in sales-type financing leases consisted of the following (in thousands):



	June 30,			December 31,
	2019			2018

Total minimum lease payments to be received	$	96,417		$	100,816
Less: Amounts representing estimated executing costs	(23,862		)	(25,180		)
Net present value of minimum lease payments to be received	72,555			75,636
Estimated residual value of leased assets	1,051			1,051
Less: Unearned income	(3,643		)	(4,011		)
Net investment in sales-type financing leases	69,963			72,676
Less: Current portion	(5,817		)	(5,594		)
Non-current portion of investment in sales-type financing leases	$	64,146		$	67,082

The future scheduled customer payments from sales-type financing leases were as follows as of June 30, 2019 (in thousands):



	Remainder of 2019		2020		2021		2022		2023		Thereafter

Future minimum lease payments, less interest	$	2,882	$	6,022	$	6,415	$	6,853	$	7,310	$	39,430

Other Long-Term Assets

Other long-term assets consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018

Prepaid and other long-term assets	$	25,364	$	27,086
Equity investment in PPA II assets	27,809		—
Equity-method investments	6,026		6,046
Long-term deposits	1,776		1,660
	$	60,975	$	34,792

Equity investment in PPA II assets

On June 14, 2019, we entered into a transaction with SPDS for the PPA II upgrade of Energy Servers. In connection with the closing of this transaction, SPDS was admitted as a member of DSGP. DSGP, an operating company, was a wholly owned subsidiary of DSGH prior to June 14, 2019. As a result of the PPA II Project, we determined that we no longer retain a controlling interest in PPA II and therefore DSGP will no longer be consolidated as a VIE into our condensed consolidated financial statements as of June 30, 2019. We determined that we have retained significant influence over DSGP and consequently recognize our remaining interest in DSGP as an equity investment included in other long-term assets on our condensed consolidated balance sheet as of June 30, 2019. See Note 12 - Power Purchase Agreement Programs - PPA II Upgrade of Energy Servers.

Equity-method investments

In May 2013, we entered into a joint venture with Softbank Corp. and established Bloom Energy Japan limited which is accounted for as an equity-method investment. Under this arrangement, we sell Energy Servers and provide maintenance services to the joint venture. Accounts receivable from this joint venture was $9,800 and $3.3 million as of June 30, 2019 and December 31, 2018, respectively.

Accrued Warranty

Accrued warranty liabilities consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018

Product warranty	$	9,808	$	10,935
Operations and maintenance services agreements	2,585		8,301
	$	12,393	$	19,236

Changes during the current period in the standard product warranty liability were as follows (in thousands):



Balances at December 31, 2018	$	10,935
Accrued warranty, net	3,202
Warranty expenditures during period	(4,329		)
Balances at June 30, 2019	$	9,808

Accrued Other Current Liabilities

Accrued other current liabilities consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018

Liabilities recorded for mandatorily redeemable noncontrolling interest¹	$	36,994	$	—
Compensation and benefits	18,180		16,742
Current portion of derivative liabilities	4,848		3,232
Managed services liabilities	4,922		5,091
Accrued installation	6,595		6,859
Sales tax liabilities	1,525		1,700
Interest payable	6,136		4,675
Other	30,522		31,236
	$	109,722	$	69,535

¹During June 30, 2019, we entered into a PPA II upgrade transaction which included a commitment to mandatorily redeem the noncontrolling interest in DSGH by March 31, 2020 of certain installed PPA II Energy Servers, resulting in the reclassification of mandatorily redeemable noncontrolling interest into accrued other current liabilities on the condensed consolidated balance sheet as of June 30, 2019. See Note 12 - Power Purchase Agreement Programs - PPA II Upgrade of Energy Servers.

Other Long-Term Liabilities

Accrued other long-term liabilities consisted of the following (in thousands):



	June 30,		December 31,
	2019		2018

Delaware grant	$	10,469	$	10,469
Managed services liabilities	29,498		30,362
Other	18,450		15,106
	$	58,417	$	55,937

We have entered into managed services agreements that provide for the payment of property taxes and insurance premiums on behalf of customers. These obligations are included in each agreements' contract value and are recorded as short-term or long-term liabilities based on the estimated payment dates. The long-term managed services liabilities accrued were $29.5 million and $30.4 million as of June 30, 2019 and December 31, 2018, respectively.