Leases

12 Months Ended

Dec. 31, 2020

Leases [Abstract]

Leases

Leases

Facilities, Office Buildings, and Vehicles

We lease most of our facilities, office buildings and vehicles under operating leases that expire at various dates through July 2029. We lease various manufacturing facilities in Sunnyvale, Fremont, and Mountain View, California. Our lease for our Sunnyvale manufacturing facilities was entered into in April 2005 and expired in December 2020. In January 2021, we extended this lease to December 2023. In June 2020, we signed a lease in Fremont that will expire in 2027 to replace the manufacturing facility in Sunnyvale. Our current lease for our manufacturing facilities at Mountain View was entered into in December 2011, and expired in December 2019, but it extended on a month-to-month basis. The existing plants together comprise approximately 370,601 square feet of space. We lease additional office space as field offices in the United States and around the world including in India, the Republic of Korea, China, and Taiwan.

Certain of these arrangements have free rent periods or escalating rent payment provisions. We recognize lease cost under such arrangements on a straight-line basis over the life of the leases. During the year ended December 31, 2020, rent expense for all occupied facilities was $9.9 million. During the years ended December 31, 2019 and 2018, prior to our adoption of ASC 842, rent expense for all occupied facilities was $7.8 million and $6.3 million, respectively.

At inception of the contract, we assess whether a contract is a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease classification, measurement, and recognition are determined at lease commencement, which is the date the underlying asset is available for use by us. The accounting classification of a lease is based on whether the arrangement is effectively a financed purchase of the underlying asset (financing lease) or not (operating lease). Our operating leases are comprised primarily of leases for facilities, office buildings, and vehicles, and our financing leases are comprised primarily of vehicles.

Our leases have remaining lease terms ranging from less than 1 year to 9 years, some of which include options to extend the leases. The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised.

Lease liabilities are measured at the lease commencement date as the present value of future lease payments. Lease right-of-use assets are measured as the lease liability plus initial direct costs and prepaid lease payments less lease incentives. In measuring the present value of the future lease payments, the discount rate for the lease is the rate implicit in the lease unless that rate cannot be readily determined. In that case, the lessee is required to use its incremental borrowing rate. In computing our lease liabilities, we use the incremental borrowing rate based on the information available on the commencement date using an estimate of company-specific rate in the United States on a collateralized basis and consistent with the lease term for each lease. The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised.

Operating and financing lease right-of-use assets and lease liabilities for facilities, office buildings, and vehicles as of December 31, 2020 were as follows (in thousands):

	December 31, 2020
Assets:
Operating lease right-of-use assets, net 1, 2	$	35,621
Financing lease right-of-use assets, net 3, 4	334
Total	$	35,955
Liabilities:
Current:
Operating lease liabilities	$	7,899
Financing lease liabilities 5	74
Total current lease liabilities	7,973
Non-current:
Operating lease liabilities	41,849
Financing lease liabilities 6	267
Total non-current lease liabilities	42,116
Total lease liabilities	$	50,089

1 At December 31, 2020, these assets primarily include leases for facilities, office buildings, and vehicles.

2 Net of accumulated amortization.

3 At December 31, 2020, these assets primarily include leases for vehicles.

4 Included in property, plant and equipment, net, in the consolidated balance sheets, net of accumulated amortization.

5 Included in accrued expenses and other current liabilities in the consolidated balance sheets.

6 Included in other long-term liabilities in the consolidated balance sheets.

The components of our facilities, office buildings, and vehicles' lease costs for the year ended December 31, 2020 were as follows (in thousands):

	December 31, 2020
Operating lease costs	$	9,804
Financing lease costs:
Amortization of financing lease right-of-use assets	51
Interest expense for financing lease liabilities	16
Total financing lease costs	67
Short-term lease costs	613
Total lease costs	$	10,484

Weighted average remaining lease terms and discount rates for our facilities, office buildings, and vehicles as of December 31, 2020 were as follows:

	December 31, 2020
Remaining lease term (years):
Operating leases	6.7 years
Finance leases	4.2 years
Discount rate:
Operating leases	8.7	%
Finance leases	7.0	%

Future lease payments under lease agreements for our facilities, office buildings, and vehicles as of December 31, 2020, were as follows (in thousands):

	Operating Leases		Finance Leases
2021	$	11,388	$	95
2022	8,211		95
2023	8,292		90
2024	8,472		84
2025	8,330		28
Thereafter	19,863		—
Total minimum lease payments	64,556		392
Less: amounts representing interest or imputed interest	(14,808)		(51)
Present value of lease liabilities	$	49,748	$	341

As of December 31, 2020, we had additional operating leases related to facilities that will commence during 2021 with future lease payments of $5.2 million. These operating leases will commence in fiscal year 2021 with lease terms of up to 3 years.

Prior to adoption of ASC 842, at December 31, 2019, future minimum lease payments under operating leases were as follows (in thousands):

	Operating Leases
2020	$	7,250
2021	5,495
2022	4,168
2023	4,230
2024	4,357
Thereafter	17,913
Total lease payments	$	43,413

Managed Services and Portfolio Financings Through PPA Entities

As described above under Accounting Guidance Implemented in 2020, certain of our customers enter into Managed Services or Portfolio Financings through a PPA Entity to finance their lease of Bloom Energy Servers. Prior to the adoption of ASC 842, such arrangements with customers that qualified as leases were classified as either sales-type leases or operating leases. For all pre-existing Managed Services arrangements or Portfolio Financings through PPA Entities, we have carried over the accounting classifications for those transactions and continue to account for such transactions as either sales-type leases or operating leases under ASC 842. Customer arrangements under Managed Services and Portfolio Financings through PPA Entities do not contain a lease under ASC 842 and are accounted for under ASC 606 as revenue arrangements.

Lease agreements under our Managed Services arrangements and Portfolio Financings through PPA Entities include non-cancellable lease terms, during which terms the majority of our investment in Energy Servers under lease are typically recovered. The Company mitigates remaining residual value risk of its Energy Servers through its provision of maintenance on the Energy Servers during the lease term and through insurance whose proceeds are payable in the event of theft, loss, damage, or destruction.

Managed Services Financings - Our Managed Services arrangements with financiers are accounted for as financing transactions. Payments received from the financier are recognized as financing obligations in our consolidated balance sheets. These financing obligations are included in each agreements' contract value and are recognized as short-term or long-term liabilities based on the estimated payment dates. The lease agreements expire on various dates through 2034 and there was no recorded rent expense for the year ended December 31, 2020.

At December 31, 2020, future lease payments under the Managed Services financing obligations and the sublease payments from the customers under the related operating leases were as follows (in thousands):

	Financing Obligations		Sublease Payments1
2021	$	40,589	$	(40,589)
2022	41,584		(41,584)
2023	42,526		(42,526)
2024	40,429		(40,429)
2025	39,379		(39,379)
Thereafter	87,623		(87,623)
Total lease payments	292,130		$	(292,130)
Less: imputed interest	(172,860)
Total lease obligations	119,270
Less: current obligations	(12,745)
Long-term lease obligations	$	106,525

1 Sublease Payments primarily represents the fees received by the bank from our customer for the electricity generated by our Energy Servers leased under our Managed Services and other similar arrangements, which also pay down our financing obligation to the bank.

The long-term financing obligations, as reflected in our Consolidated Balance Sheets, were $460.0 million and $446.2 million as of December 31, 2020 and 2019, respectively. The difference between these obligations and the principal obligations in the table above will be offset against the carrying value of the related Energy Servers at the end of the lease and the remainder recognized as a gain at that point.

Portfolio Financings through PPA Entities - Customer arrangements entered into prior to January 1, 2020 under Portfolio Financing arrangements through a PPA Entity that qualified as leases are accounted for as either sales-type leases or operating leases. We have not entered into any new PPAs with customers under such arrangements during 2020.

The components of our aggregate net investment in sales-type leases under our Portfolio Financings through PPA entities consisted of the following (in thousands):

	December 31, 2020
Lease payment receivables, net1	$	49,806
Estimated residual value of leased assets (unguaranteed)	890
Net investment in sales-type leases	50,696
Less: current portion	(5,428)
Non-current portion of net investment in sales-type leases	$	45,268

1 Net of current estimated credit losses of approximately $0.1 million as of December 31, 2020.

As of December 31, 2020, the future scheduled customer payments from sales-type leases were as follows (in thousands):

	Future minimum lease payments
2021	$	5,796
2022	6,110
2023	6,435
2024	6,797
2025	7,125
Thereafter	19,176
Total undiscounted cash flows	51,439
Less: imputed interest	(1,582)
Present value of lease payments1	$	49,857
1 Amount comprises a current and long-term portion of lease receivables of $5.4 million and $44.4 million, respectively, after giving effect to a $0.1 million current expected credit loss reserve on the long-term portion, which is reflected as a component of the net investment in sales-type leases presented in our statement of financial position as customer financing receivables.

As of December 31, 2019, the components of investment in sales-type financing leases consisted of the following (in thousands):

	December 31,
	2019
Total minimum lease payments to be received	$	76,886
Less: Amounts representing estimated executory costs	(19,931)
Net present value of minimum lease payments to be received	56,955
Estimated residual value of leased assets	890
Less: Unearned income	(1,990)
Net investment in sales-type financing leases	55,855
Less: Current portion	(5,108)
Non-current portion of net investment in sales-type leases	$	50,747

As of December 31, 2019, the future scheduled customer payments from sales-type financing leases were as follows (in thousands):

	2020		2021		2022		2023		2024		Thereafter
Future minimum lease payments, less interest	$	5,108	$	5,428	$	5,784	$	6,155	$	6,567	$	25,923

Future estimated operating lease payments we expect to receive from Portfolio Financing arrangements through PPA Entities as of December 31, 2020, were as follows (in thousands):

	Operating Leases
2021	$	43,176
2022	44,258
2023	45,345
2024	46,590
2025	47,612
Thereafter	264,207
Total lease payments	$	491,188

Leases

Leases

Facilities, Office Buildings, and Vehicles

We lease most of our facilities, office buildings and vehicles under operating leases that expire at various dates through July 2029. We lease various manufacturing facilities in Sunnyvale, Fremont, and Mountain View, California. Our lease for our Sunnyvale manufacturing facilities was entered into in April 2005 and expired in December 2020. In January 2021, we extended this lease to December 2023. In June 2020, we signed a lease in Fremont that will expire in 2027 to replace the manufacturing facility in Sunnyvale. Our current lease for our manufacturing facilities at Mountain View was entered into in December 2011, and expired in December 2019, but it extended on a month-to-month basis. The existing plants together comprise approximately 370,601 square feet of space. We lease additional office space as field offices in the United States and around the world including in India, the Republic of Korea, China, and Taiwan.

Certain of these arrangements have free rent periods or escalating rent payment provisions. We recognize lease cost under such arrangements on a straight-line basis over the life of the leases. During the year ended December 31, 2020, rent expense for all occupied facilities was $9.9 million. During the years ended December 31, 2019 and 2018, prior to our adoption of ASC 842, rent expense for all occupied facilities was $7.8 million and $6.3 million, respectively.

At inception of the contract, we assess whether a contract is a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lease classification, measurement, and recognition are determined at lease commencement, which is the date the underlying asset is available for use by us. The accounting classification of a lease is based on whether the arrangement is effectively a financed purchase of the underlying asset (financing lease) or not (operating lease). Our operating leases are comprised primarily of leases for facilities, office buildings, and vehicles, and our financing leases are comprised primarily of vehicles.

Our leases have remaining lease terms ranging from less than 1 year to 9 years, some of which include options to extend the leases. The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised.

Lease liabilities are measured at the lease commencement date as the present value of future lease payments. Lease right-of-use assets are measured as the lease liability plus initial direct costs and prepaid lease payments less lease incentives. In measuring the present value of the future lease payments, the discount rate for the lease is the rate implicit in the lease unless that rate cannot be readily determined. In that case, the lessee is required to use its incremental borrowing rate. In computing our lease liabilities, we use the incremental borrowing rate based on the information available on the commencement date using an estimate of company-specific rate in the United States on a collateralized basis and consistent with the lease term for each lease. The lease term is the non-cancelable period of the lease and includes options to extend or terminate the lease when it is reasonably certain that an option will be exercised.

Operating and financing lease right-of-use assets and lease liabilities for facilities, office buildings, and vehicles as of December 31, 2020 were as follows (in thousands):

	December 31, 2020
Assets:
Operating lease right-of-use assets, net 1, 2	$	35,621
Financing lease right-of-use assets, net 3, 4	334
Total	$	35,955
Liabilities:
Current:
Operating lease liabilities	$	7,899
Financing lease liabilities 5	74
Total current lease liabilities	7,973
Non-current:
Operating lease liabilities	41,849
Financing lease liabilities 6	267
Total non-current lease liabilities	42,116
Total lease liabilities	$	50,089

1 At December 31, 2020, these assets primarily include leases for facilities, office buildings, and vehicles.

2 Net of accumulated amortization.

3 At December 31, 2020, these assets primarily include leases for vehicles.

4 Included in property, plant and equipment, net, in the consolidated balance sheets, net of accumulated amortization.

5 Included in accrued expenses and other current liabilities in the consolidated balance sheets.

6 Included in other long-term liabilities in the consolidated balance sheets.

The components of our facilities, office buildings, and vehicles' lease costs for the year ended December 31, 2020 were as follows (in thousands):

	December 31, 2020
Operating lease costs	$	9,804
Financing lease costs:
Amortization of financing lease right-of-use assets	51
Interest expense for financing lease liabilities	16
Total financing lease costs	67
Short-term lease costs	613
Total lease costs	$	10,484

Weighted average remaining lease terms and discount rates for our facilities, office buildings, and vehicles as of December 31, 2020 were as follows:

	December 31, 2020
Remaining lease term (years):
Operating leases	6.7 years
Finance leases	4.2 years
Discount rate:
Operating leases	8.7	%
Finance leases	7.0	%

Future lease payments under lease agreements for our facilities, office buildings, and vehicles as of December 31, 2020, were as follows (in thousands):

	Operating Leases		Finance Leases
2021	$	11,388	$	95
2022	8,211		95
2023	8,292		90
2024	8,472		84
2025	8,330		28
Thereafter	19,863		—
Total minimum lease payments	64,556		392
Less: amounts representing interest or imputed interest	(14,808)		(51)
Present value of lease liabilities	$	49,748	$	341

As of December 31, 2020, we had additional operating leases related to facilities that will commence during 2021 with future lease payments of $5.2 million. These operating leases will commence in fiscal year 2021 with lease terms of up to 3 years.

Prior to adoption of ASC 842, at December 31, 2019, future minimum lease payments under operating leases were as follows (in thousands):

	Operating Leases
2020	$	7,250
2021	5,495
2022	4,168
2023	4,230
2024	4,357
Thereafter	17,913
Total lease payments	$	43,413

Managed Services and Portfolio Financings Through PPA Entities

As described above under Accounting Guidance Implemented in 2020, certain of our customers enter into Managed Services or Portfolio Financings through a PPA Entity to finance their lease of Bloom Energy Servers. Prior to the adoption of ASC 842, such arrangements with customers that qualified as leases were classified as either sales-type leases or operating leases. For all pre-existing Managed Services arrangements or Portfolio Financings through PPA Entities, we have carried over the accounting classifications for those transactions and continue to account for such transactions as either sales-type leases or operating leases under ASC 842. Customer arrangements under Managed Services and Portfolio Financings through PPA Entities do not contain a lease under ASC 842 and are accounted for under ASC 606 as revenue arrangements.

Lease agreements under our Managed Services arrangements and Portfolio Financings through PPA Entities include non-cancellable lease terms, during which terms the majority of our investment in Energy Servers under lease are typically recovered. The Company mitigates remaining residual value risk of its Energy Servers through its provision of maintenance on the Energy Servers during the lease term and through insurance whose proceeds are payable in the event of theft, loss, damage, or destruction.

Managed Services Financings - Our Managed Services arrangements with financiers are accounted for as financing transactions. Payments received from the financier are recognized as financing obligations in our consolidated balance sheets. These financing obligations are included in each agreements' contract value and are recognized as short-term or long-term liabilities based on the estimated payment dates. The lease agreements expire on various dates through 2034 and there was no recorded rent expense for the year ended December 31, 2020.

At December 31, 2020, future lease payments under the Managed Services financing obligations and the sublease payments from the customers under the related operating leases were as follows (in thousands):

	Financing Obligations		Sublease Payments1
2021	$	40,589	$	(40,589)
2022	41,584		(41,584)
2023	42,526		(42,526)
2024	40,429		(40,429)
2025	39,379		(39,379)
Thereafter	87,623		(87,623)
Total lease payments	292,130		$	(292,130)
Less: imputed interest	(172,860)
Total lease obligations	119,270
Less: current obligations	(12,745)
Long-term lease obligations	$	106,525

1 Sublease Payments primarily represents the fees received by the bank from our customer for the electricity generated by our Energy Servers leased under our Managed Services and other similar arrangements, which also pay down our financing obligation to the bank.

The long-term financing obligations, as reflected in our Consolidated Balance Sheets, were $460.0 million and $446.2 million as of December 31, 2020 and 2019, respectively. The difference between these obligations and the principal obligations in the table above will be offset against the carrying value of the related Energy Servers at the end of the lease and the remainder recognized as a gain at that point.

Portfolio Financings through PPA Entities - Customer arrangements entered into prior to January 1, 2020 under Portfolio Financing arrangements through a PPA Entity that qualified as leases are accounted for as either sales-type leases or operating leases. We have not entered into any new PPAs with customers under such arrangements during 2020.

The components of our aggregate net investment in sales-type leases under our Portfolio Financings through PPA entities consisted of the following (in thousands):

	December 31, 2020
Lease payment receivables, net1	$	49,806
Estimated residual value of leased assets (unguaranteed)	890
Net investment in sales-type leases	50,696
Less: current portion	(5,428)
Non-current portion of net investment in sales-type leases	$	45,268

1 Net of current estimated credit losses of approximately $0.1 million as of December 31, 2020.

As of December 31, 2020, the future scheduled customer payments from sales-type leases were as follows (in thousands):

	Future minimum lease payments
2021	$	5,796
2022	6,110
2023	6,435
2024	6,797
2025	7,125
Thereafter	19,176
Total undiscounted cash flows	51,439
Less: imputed interest	(1,582)
Present value of lease payments1	$	49,857
1 Amount comprises a current and long-term portion of lease receivables of $5.4 million and $44.4 million, respectively, after giving effect to a $0.1 million current expected credit loss reserve on the long-term portion, which is reflected as a component of the net investment in sales-type leases presented in our statement of financial position as customer financing receivables.

As of December 31, 2019, the components of investment in sales-type financing leases consisted of the following (in thousands):

	December 31,
	2019
Total minimum lease payments to be received	$	76,886
Less: Amounts representing estimated executory costs	(19,931)
Net present value of minimum lease payments to be received	56,955
Estimated residual value of leased assets	890
Less: Unearned income	(1,990)
Net investment in sales-type financing leases	55,855
Less: Current portion	(5,108)
Non-current portion of net investment in sales-type leases	$	50,747

As of December 31, 2019, the future scheduled customer payments from sales-type financing leases were as follows (in thousands):

	2020		2021		2022		2023		2024		Thereafter
Future minimum lease payments, less interest	$	5,108	$	5,428	$	5,784	$	6,155	$	6,567	$	25,923

Future estimated operating lease payments we expect to receive from Portfolio Financing arrangements through PPA Entities as of December 31, 2020, were as follows (in thousands):

	Operating Leases
2021	$	43,176
2022	44,258
2023	45,345
2024	46,590
2025	47,612
Thereafter	264,207
Total lease payments	$	491,188