Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Our effective income tax rate is 0%, (3)% and 0% for the years ended December 31, 2023, 2022 and 2021, respectively. Total income tax differs from the amounts computed by applying the statutory income tax rate to loss before income tax primarily as a result of our valuation allowance. The sources of these differences are as follows:

	Year Ended   December 31,
	2023			2022			2021
	(in thousands)
Loss before income tax	$	(503,449)		$	(126,390)		$	(147,250)
Statutory federal tax rate	21		%	21		%	21		%
Tax benefit computed at statutory rate	(105,724)			(26,542)			(30,923)
State income tax, net of federal benefit	14,804			(3,167)			(2,399)
Adjustments from permanent differences:
ITC sales	(15,893)			—			—
Redeemable noncontrolling interests and noncontrolling interests	17,738			(6,587)			1,970
ITC recapture	—			101			82
Other	4,179			1,992			1,054
Increase in valuation allowance, net	83,873			38,089			30,476
Total income tax (benefit) expense	$	(1,023)		$	3,886		$	260

State, federal and foreign income tax (benefit) expense is $(1.0) million, $3.9 million and $260,000 for the years ended December 31, 2023, 2022 and 2021, respectively. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) are as follows:

	As of December 31,
	2023		2022
	(tax effected, in thousands)
Federal net operating loss carryforward	$	238,447	$	261,837
State net operating loss carryforward	60,980		61,141
ITC carryforward	309,693		285,614
Foreign tax credit carryforward	18,087		—
Federal unused interest deduction carryforward	49,979		45,750
Equity-based compensation	22,935		16,701
Deferred revenue	7,433		6,123
Unrealized loss on derivatives	(17,119)		(32,459)
Investment in certain financing arrangements	150,476		154,635
Amortization of intangible assets	—		12,730
Other deferred tax assets	48,619		30,606
Deferred tax assets	889,530		842,678
Fixed asset basis difference	(627,290)		(394,082)
Intangible asset basis difference	(30,921)		(54,196)
Investment in certain financing arrangements	—		(135,181)
Other deferred tax liabilities	(4,259)		(7,095)
Deferred tax liabilities	(662,470)		(590,554)
Valuation allowance	(227,414)		(252,124)
Net deferred tax liability	$	(354)	$	—

A valuation allowance of $227.4 million and $252.1 million was recorded against our net deferred tax assets as of December 31, 2023 and 2022, respectively. We believe it is not more likely than not that future taxable income and the reversal of deferred tax liabilities will be sufficient to realize our net deferred tax assets. Our estimated federal tax net operating loss carryforward as of December 31, 2023 is approximately $1.1 billion, which will begin to expire in 2035 if not utilized. We also generated $28.2 million of Section 48(a) ITCs in 2023 for a net $309.7 million through December 31, 2023, which will begin to expire in 2033 if not utilized.

We assessed whether we had any significant uncertain tax positions taken in a filed tax return, planned to be taken in a future tax return or claim, or otherwise subject to interpretation and determined there were none not more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position, or prospectively approved when such approval may be sought in advance. Should a provision for any interest or penalties relative to unrecognized tax benefits be necessary, it is our policy to accrue for such in our income tax accounts. There were no such accruals as of December 31, 2023 and 2022 and we do not expect a significant change in gross unrecognized tax benefits in the next twelve months. Our tax years after 2012 remain subject to examination by the IRS and by the taxing authorities in the states and territories in which we operate.

Under the provisions of the Internal Revenue Code and similar state provisions, our net operating loss carryforwards and tax credit carryforwards are subject to review and possible adjustment by the IRS and state tax authorities. Under Sections 382 and 383 of the Internal Revenue Code, as well as similar state provisions, our net operating loss and tax credit carryforwards may be subject to an annual limitation in the event of certain cumulative changes in the ownership interest of certain significant shareholders over a three-year period in excess of 50%. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of our company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. We experienced an ownership change in August 2020 as defined by Sections 382 and 383 of the Internal Revenue Code, which limits our future ability to utilize NOLs and tax credits generated before the "ownership change". However, these

limitations do not prevent the use of our NOLs to offset certain built-in gains, including deemed gains with respect to our cost recovery deductions, recognized by us within five years after the ownership change with respect to assets held by us at the time of the ownership change, or the use of our tax credits to offset related tax liabilities, to the extent of our "net unrealized built-in gain" at the time of the ownership change. We have determined that, based upon the size of our net unrealized built-in gain at the time of our 2020 ownership change and our projected recognition of deemed built-in gains in the five years following the ownership change, there is no impact on the balances for deferred taxes or valuation allowance.

We conduct operations in the U.S. territories of Puerto Rico, Guam and the Commonwealth of the Northern Mariana Islands. As a result, our income tax expense includes the effects of taxes incurred in such jurisdictions where the tax code for the respective jurisdiction may have separate tax-reporting requirements.

In August 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into law. Among other things, the IRA expanded and extended the tax credits available to solar energy projects in an effort to achieve President Biden's non-binding target of net-zero emissions by 2050. The IRA extends the investment tax credit for eligible solar energy projects through at least 2033 and, depending on the location of a particular project, its size, its ability to satisfy certain labor and domestic content requirements and the category of consumers it serves, the investment tax credit percentage can range between 6% and 70%.