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Portfolio Financings
 12 Months Ended
Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Portfolio Financings Portfolio Financings
Overview
We have developed various financing options that enable customers' use of the Energy Servers through third-party ownership financing arrangements.
In some cases, similar to direct purchases and leases, the standard one-year warranty and performance guaranties are included in the price of the product. The Operating Company also enters into a master services agreement with us following the first year of service to extend the warranty services and guaranties over the term of the PPA. In other cases, the master services agreements including performance warranties and guaranties are billed on a quarterly basis starting in the first quarter following the placed-in-service date of the Energy Server(s) and continuing over the term of the PPA. The first of such arrangements was considered a sales-type lease and the product revenue from that agreement was recognized upfront in the same manner as direct purchase and lease transactions. Substantially all of our subsequent PPAs have been accounted for as operating leases with the related revenue under those agreements recognized ratably over the PPA term as electricity revenue. We recognize the cost of revenue, primarily product costs and maintenance service costs, over the shorter of the estimated useful life of the Energy Server or the term of the PPA.
We and our third-party equity investors (together "Equity Investors") contribute funds into a limited liability investment entity ("Investment Company") that owns and is parent to the Operating Company (together, the "PPA Entities"). These PPA Entities constitute VIEs under U.S. GAAP. We have considered the provisions within the contractual agreements which grant us power to manage and make decisions affecting the operations of these VIEs. We consider that the rights granted to the Equity Investors under the contractual agreements are more protective in nature rather than participating. Therefore, we have determined under the power and benefits criterion of ASC 810, Consolidations that we are the primary beneficiary of these VIEs. As the primary beneficiary of these VIEs, we consolidate in our consolidated financial statements the financial position, results of operations and cash flows of the PPA Entities, and all intercompany balances and transactions between us and the PPA Entities are eliminated in the consolidated financial statements.
In accordance with our Portfolio Financings, the Operating Company acquires Energy Servers from us for cash payments that are made on a similar schedule as if the Operating Company were a customer purchasing an Energy Server from us outright. In the consolidated financial statements, the sale of Energy Servers by us to the Operating Company are treated as intercompany transactions and as a result eliminated in consolidation. The acquisition of Energy Servers by the Operating Company is accounted for as a non-cash reclassification from inventory to Energy Servers within property, plant and equipment, net on our consolidated balance sheets. In arrangements qualifying for sales-type leases, we reduce these recorded assets by amounts received from U.S. Treasury Department cash grants and from similar state incentive rebates.
The Operating Company sells the electricity to end customers under PPAs. Cash generated by the electricity sales, as well as receipts from any applicable government incentive program, is used to pay operating expenses (including the management and services we provide to maintain the Energy Servers over the term of the PPA) and to service the non-recourse debt with the remaining cash flows distributed to the Equity Investors. In transactions accounted for as sales-type leases, we recognize subsequent customer billings as electricity revenue over the term of the PPA and amortize any applicable government incentive program grants as a reduction to depreciation expense of the Energy Server over the term of the PPA. In transactions accounted for as operating leases, we recognize subsequent customer payments and any applicable government incentive program grants as electricity revenue and service revenue over the term of the PPA.
Upon sale or liquidation of a PPA Entity, distributions would occur in the order of priority specified in the contractual agreements.
We have established six different PPA Entities to date. The contributed funds are restricted for use by the Operating Company to the purchase of our Energy Servers manufactured by us in our normal course of operations. All six PPA Entities utilized their entire available financing capacity and have completed the purchase of their Energy Servers. Any debt incurred by the Operating Companies is non-recourse to us. Under these structures, each Investment Company is treated as a partnership for U.S. federal income tax purposes. Equity Investors receive investment tax credits and accelerated tax depreciation benefits. In 2016, we purchased the tax equity investor’s interest in PPA I, which resulted in a change in our ownership interest in PPA I while we continued to hold the controlling financial interest in this company. In 2019, we bought out the then-existing tax equity investors' interest in the PPA II Investment Company, and admitted two new equity investors as a member of the PPA II Operating Company, retaining only a minor equity interest in the Operating Company. One of the new equity investors became the managing member, and as a result we determined that we no longer retained a controlling interest in the Operating Company in PPA II and therefore, the Operating Company was no longer consolidated as a VIE into our consolidated financial
statements. In 2019, we also entered into a PPA IIIb upgrade of Energy Servers transaction where we bought out the equity interest of the third-party investor, decommissioned the Energy Servers in the Operating Company and sold new Energy Servers deployed at customer sites through our Managed Services Financing option. The PPA IIIb Investment Company and Operating Company became wholly-owned by us but no longer met the definition of a VIE. We therefore continue to consolidate PPA IIIb in our consolidated financial statements.
PPA Entities' Activities Summary
The table below shows the details of the three Investment Company VIEs that were active during the year ended December 31, 2021 and their cumulative activities from inception to the years indicated (dollars in thousands):
PPA IIIaPPA IVPPA V
Overview:
Maximum size of installation (in megawatts)102140
Installed size (in megawatts) 101937
Term of power purchase agreements (in years)151515
First system installedFeb-13Sep-14Jun-15
Last system installedJun-14Mar-16Dec-16
Income (loss) and tax benefits allocation to Equity Investor99%90%99%
Cash allocation to Equity Investor99%90%90%
Income (loss), tax and cash allocations to Equity Investor after the flip date5%No flipNo flip
Equity Investor 1
US BankExelon CorporationExelon Corporation
Put option date 2
1st anniversary of flip pointN/AN/A
Company cash contributions$32,223 $11,669 $27,932 
Company non-cash contributions 3
$8,655 $— $— 
Equity Investor cash contributions $36,967 $84,782 $227,344 
Debt financing$44,968 $99,000 $131,237 
Activity as of December 31, 2021:
Distributions to Equity Investor$4,897 $12,848 $26,601 
Debt repayment—principal$13,899 $25,045 $132,587 
Activity as of December 31, 2020:
Distributions to Equity Investor$4,847 $8,852 $24,809 
Debt repayment—principal$10,513 $21,163 $16,475 
Activity as of December 31, 2019:
Distributions to Equity Investor$4,803 $6,692 $70,591 
Debt repayment—principal$6,631 $18,012 $9,453 
1 Investor name represents ultimate parent of subsidiary financing the project.
2 Investor right on the certain date, upon giving us advance written notice, to sell the membership interests to us or resign or withdraw from the investment partnership.
3 Non-cash contributions consisted of warrants that were issued by us to respective lenders to each PPA Entity, as required by such entity’s credit agreements. The corresponding values are amortized using the effective interest method over the debt term.
The noncontrolling interests in PPA IIIa are redeemable as a result of the put option held by the Equity Investors as of December 31, 2021 and 2020. At December 31, 2021 and 2020, the carrying value of redeemable noncontrolling interests of $0.3 million and $0.4 million, respectively, exceeded the maximum redemption value.
PPA Entities’ Aggregate Assets and Liabilities
Generally, the assets of an operating company owned by an investment company can be used to settle only the operating company obligations, and the operating company creditors do not have recourse to us. The following are the aggregate carrying values of our VIEs' assets and liabilities in our consolidated balance sheets, after eliminations of intercompany transactions and balances, including each of the PPA Entities in the PPA IIIa transaction, the PPA IV transaction and the PPA V transaction (in thousands):
 December 31,December 31,
20212020
   
Assets
Current assets:
Cash and cash equivalents$1,541 $1,421 
Restricted cash3,078 4,698 
Accounts receivable5,112 4,420 
Customer financing receivable5,784 5,428 
Prepaid expenses and other current assets3,071 3,048 
Total current assets18,586 19,015 
Property and equipment, net228,546 252,020 
Customer financing receivable, non-current39,484 45,268 
Restricted cash, non-current23,239 15,320 
Other long-term assets2,362 37 
Total assets$312,217 $331,660 
Liabilities
Current liabilities:
Accrued expenses and other current liabilities$194 $19,510 
Deferred revenue and customer deposits662 662 
Non-recourse debt17,483 120,846 
Total current liabilities18,339 141,018 
Deferred revenue and customer deposits, non-current5,410 6,072 
Non-recourse debt, non-current217,417 102,045 
Total liabilities$241,166 $249,135 
We consolidated each PPA Entity as VIEs in the PPA IV transaction and the PPA V transaction, as we remain the minority shareholder in each of these transactions but have determined that we are the primary beneficiary of these VIEs. These PPA Entities contain debt that is non-recourse to us and own Energy Server assets for which we do not have title.
We believe that by presenting assets and liabilities separate from the PPA Entities, we provide a better view of the true operations of our core business. The table below provides detail into the assets and liabilities of Bloom Energy separate from the PPA Entities. The table provides our stand-alone assets and liabilities, those of the PPA Entities combined, and our consolidated balances as of December 31, 2021 and 2020 (in thousands):
 December 31, 2021December 31, 2020
 Bloom EnergyPPA EntitiesConsolidatedBloom EnergyPPA EntitiesConsolidated
Assets
Current assets$787,834 $18,586 $806,420 $599,589 $19,015 $618,604 
Long-term assets625,520 293,631 919,151 523,138 312,645 835,783 
Total assets$1,413,354 $312,217 $1,725,571 $1,122,727 $331,660 $1,454,387 
Liabilities
Current liabilities$315,792 $856 $316,648 $295,359 $20,172 $315,531 
Current portion of debt8,348 17,483 25,831 — 120,846 120,846 
Long-term liabilities669,759 5,410 675,169 600,489 6,072 606,561 
Long-term portion of debt283,482 217,417 500,899 168,008 102,045 270,053 
Total liabilities$1,277,381 $241,166 $1,518,547 $1,063,856 $249,135 $1,312,991