Leases

3 Months Ended

Mar. 31, 2021

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 February 2036. 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 and in March 2021, we signed leases in Fremont that will expire in 2027 and 2036, respectively, to replace our manufacturing facilities in Sunnyvale and Mountain View. The existing plants together comprise approximately 534,894 square feet of space. We lease additional office space as field offices in the United States and around the world including in Dubai, 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 quarters ended March 31, 2021 and 2020, rent expense for all occupied facilities was $3.1 million and $2.1 million, respectively.

Our leases have remaining lease terms ranging from less than 1 year to 15 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.

Operating and financing lease right-of-use assets and lease liabilities for facilities, office buildings and vehicles as of March 31, 2021 and December 31, 2020 were as follows (in thousands):

	March 31, 2021		December 31, 2020
Assets:
Operating lease right-of-use assets, net 1, 2	$	55,165	$	35,621
Financing lease right-of-use assets, net 3, 4	1,685		334
Total	$	56,850	$	35,955
Liabilities:
Current:
Operating lease liabilities	$	7,219	$	7,899
Financing lease liabilities 5	544		74
Total current lease liabilities	7,763		7,973
Non-current:
Operating lease liabilities	61,714		41,849
Financing lease liabilities 6	1,184		267
Total non-current lease liabilities	62,898		42,116
Total lease liabilities	$	70,661	$	50,089

1 These assets primarily include leases for facilities, office buildings, and vehicles.

2 Net of accumulated amortization.

3 These assets primarily include leases for vehicles.

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

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

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

The components of our facilities, office buildings and vehicles' lease costs for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Operating lease costs	$	3,018	$	2,069
Financing lease costs:
Amortization of financing lease right-of-use assets	708		4
Interest expense for financing lease liabilities	199		2
Total financing lease costs	907		6
Short-term lease costs	168		139
Total lease costs	$	4,093	$	2,214

Weighted average remaining lease terms and discount rates for our facilities, office buildings and vehicles as of March 31, 2021 and December 31, 2020 were as follows:

	March 31, 2021		December 31, 2020
Remaining lease term (years):
Operating leases	8.5 years		6.7 years
Finance leases	3.3 years		4.2 years
Discount rate:
Operating leases	9.2	%	8.7	%
Finance leases	8.2	%	7.0	%

Future lease payments under lease agreements for our facilities, office buildings, and vehicles as of March 31, 2021, were as follows (in thousands):

	Operating Leases		Finance Leases
Remainder of 2021	$	10,324	$	538
2022	11,397		481
2023	12,184		476
2024	10,762		363
2025	10,995		104
Thereafter	50,098		18
Total minimum lease payments	105,760		1,980
Less: amounts representing interest or imputed interest	(36,826)		(253)
Present value of lease liabilities	$	68,934	$	1,727

Managed Services and Portfolio Financings Through PPA Entities

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 our adoption of ASC 842 as of January 1, 2020, 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 entered into after January 1, 2021 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. We mitigate 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 condensed 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 three months ended March 31, 2021 and 2020.

At March 31, 2021, 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
Remainder of 2021	$	30,901	$	(30,901)
2022	42,067		(42,067)
2023	43,004		(43,004)
2024	40,901		(40,901)
2025	39,859		(39,859)
Thereafter	88,742		(88,742)
Total lease payments	285,474		$	(285,474)
Less: imputed interest	(167,747)
Total lease obligations	117,727
Less: current obligations	(13,330)
Long-term lease obligations	$	104,397

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 condensed consolidated balance sheets, were $461.5 million and $460.0 million as of March 31, 2021 and December 31, 2020, 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. Since January 1, 2020, we have not entered into any new PPAs with customers under such arrangements.

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

	March 31, 2021		December 31, 2020
Lease payment receivables, net1	$	48,505	$	49,806
Estimated residual value of leased assets (unguaranteed)	890		890
Net investment in sales-type leases	49,395		50,696
Less: current portion	(5,515)		(5,428)
Non-current portion of net investment in sales-type leases	$	43,880	$	45,268

1 Net of current estimated credit losses of approximately $0.1 million and $0.1 million as of March 31, 2021 and December 31, 2020, respectively.

As of March 31, 2021, the future scheduled customer payments from sales-type leases were as follows (in thousands):

	Future minimum lease payments
Remainder of 2021	$	4,399
2022	6,110
2023	6,435
2024	6,797
2025	7,125
Thereafter	19,176
Total undiscounted cash flows	50,042
Less: imputed interest	(1,486)
Present value of lease payments1	$	48,556
1 Amount comprises a current and long-term portion of lease receivables of $5.5 million and $43.9 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 condensed consolidated statement of financial position as customer financing receivables.

Future estimated operating lease payments we expect to receive from Portfolio Financing arrangements through PPA Entities as of March 31, 2021, were as follows (in thousands):

	Operating Leases
Remainder of 2021	$	32,655
2022	44,258
2023	45,345
2024	46,590
2025	47,612
Thereafter	264,207
Total lease payments	$	480,667

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 February 2036. 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 and in March 2021, we signed leases in Fremont that will expire in 2027 and 2036, respectively, to replace our manufacturing facilities in Sunnyvale and Mountain View. The existing plants together comprise approximately 534,894 square feet of space. We lease additional office space as field offices in the United States and around the world including in Dubai, 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 quarters ended March 31, 2021 and 2020, rent expense for all occupied facilities was $3.1 million and $2.1 million, respectively.

Our leases have remaining lease terms ranging from less than 1 year to 15 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.

Operating and financing lease right-of-use assets and lease liabilities for facilities, office buildings and vehicles as of March 31, 2021 and December 31, 2020 were as follows (in thousands):

	March 31, 2021		December 31, 2020
Assets:
Operating lease right-of-use assets, net 1, 2	$	55,165	$	35,621
Financing lease right-of-use assets, net 3, 4	1,685		334
Total	$	56,850	$	35,955
Liabilities:
Current:
Operating lease liabilities	$	7,219	$	7,899
Financing lease liabilities 5	544		74
Total current lease liabilities	7,763		7,973
Non-current:
Operating lease liabilities	61,714		41,849
Financing lease liabilities 6	1,184		267
Total non-current lease liabilities	62,898		42,116
Total lease liabilities	$	70,661	$	50,089

1 These assets primarily include leases for facilities, office buildings, and vehicles.

2 Net of accumulated amortization.

3 These assets primarily include leases for vehicles.

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

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

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

The components of our facilities, office buildings and vehicles' lease costs for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Operating lease costs	$	3,018	$	2,069
Financing lease costs:
Amortization of financing lease right-of-use assets	708		4
Interest expense for financing lease liabilities	199		2
Total financing lease costs	907		6
Short-term lease costs	168		139
Total lease costs	$	4,093	$	2,214

Weighted average remaining lease terms and discount rates for our facilities, office buildings and vehicles as of March 31, 2021 and December 31, 2020 were as follows:

	March 31, 2021		December 31, 2020
Remaining lease term (years):
Operating leases	8.5 years		6.7 years
Finance leases	3.3 years		4.2 years
Discount rate:
Operating leases	9.2	%	8.7	%
Finance leases	8.2	%	7.0	%

Future lease payments under lease agreements for our facilities, office buildings, and vehicles as of March 31, 2021, were as follows (in thousands):

	Operating Leases		Finance Leases
Remainder of 2021	$	10,324	$	538
2022	11,397		481
2023	12,184		476
2024	10,762		363
2025	10,995		104
Thereafter	50,098		18
Total minimum lease payments	105,760		1,980
Less: amounts representing interest or imputed interest	(36,826)		(253)
Present value of lease liabilities	$	68,934	$	1,727

Managed Services and Portfolio Financings Through PPA Entities

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 our adoption of ASC 842 as of January 1, 2020, 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 entered into after January 1, 2021 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. We mitigate 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 condensed 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 three months ended March 31, 2021 and 2020.

At March 31, 2021, 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
Remainder of 2021	$	30,901	$	(30,901)
2022	42,067		(42,067)
2023	43,004		(43,004)
2024	40,901		(40,901)
2025	39,859		(39,859)
Thereafter	88,742		(88,742)
Total lease payments	285,474		$	(285,474)
Less: imputed interest	(167,747)
Total lease obligations	117,727
Less: current obligations	(13,330)
Long-term lease obligations	$	104,397

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 condensed consolidated balance sheets, were $461.5 million and $460.0 million as of March 31, 2021 and December 31, 2020, 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. Since January 1, 2020, we have not entered into any new PPAs with customers under such arrangements.

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

	March 31, 2021		December 31, 2020
Lease payment receivables, net1	$	48,505	$	49,806
Estimated residual value of leased assets (unguaranteed)	890		890
Net investment in sales-type leases	49,395		50,696
Less: current portion	(5,515)		(5,428)
Non-current portion of net investment in sales-type leases	$	43,880	$	45,268

1 Net of current estimated credit losses of approximately $0.1 million and $0.1 million as of March 31, 2021 and December 31, 2020, respectively.

As of March 31, 2021, the future scheduled customer payments from sales-type leases were as follows (in thousands):

	Future minimum lease payments
Remainder of 2021	$	4,399
2022	6,110
2023	6,435
2024	6,797
2025	7,125
Thereafter	19,176
Total undiscounted cash flows	50,042
Less: imputed interest	(1,486)
Present value of lease payments1	$	48,556
1 Amount comprises a current and long-term portion of lease receivables of $5.5 million and $43.9 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 condensed consolidated statement of financial position as customer financing receivables.

Future estimated operating lease payments we expect to receive from Portfolio Financing arrangements through PPA Entities as of March 31, 2021, were as follows (in thousands):

	Operating Leases
Remainder of 2021	$	32,655
2022	44,258
2023	45,345
2024	46,590
2025	47,612
Thereafter	264,207
Total lease payments	$	480,667