Leases Leases

12 Months Ended

Dec. 31, 2021

LESSEE — Right-of-use assets are long-term by nature. The following table summarizes the amounts recognized on the Consolidated Balance Sheets related to lease asset and liability balances as of the periods indicated (in millions):


	Consolidated Balance Sheet Classification	December 31, 2021		December 31, 2020
Assets
Right-of-use assets — finance leases	Electric generation, distribution assets and other	$	125	$	74
Right-of-use assets — operating leases	Other noncurrent assets	278		275
Total right-of-use assets		$	403	$	349
Liabilities
Finance lease liabilities (current)	Non-recourse debt (current liabilities)	$	6	$	4
Finance lease liabilities (noncurrent)	Non-recourse debt (noncurrent liabilities)	128		77
Total finance lease liabilities		134		81
Operating lease liabilities (current)	Accrued and other liabilities	20		17
Operating lease liabilities (noncurrent)	Other noncurrent liabilities	294		293
Total operating lease liabilities		314		310
Total lease liabilities		$	448	$	391

The following table summarizes supplemental balance sheet information related to leases as of the periods indicated:


Lease Term and Discount Rate	December 31, 2021		December 31, 2020
Weighted-average remaining lease term — finance leases	32 years		31 years
Weighted-average remaining lease term — operating leases	23 years		23 years
Weighted-average discount rate — finance leases	4.65	%	4.11	%
Weighted-average discount rate — operating leases	6.70	%	6.81	%

The following table summarizes the components of lease expense recognized in Cost of Sales on the Consolidated Statements of Operations for the years ended (in millions):


	Twelve Months Ended December 31,
Components of Lease Cost	2021		2020

Operating lease cost	$	36	$	36
Finance lease cost:
Amortization of right-of-use assets	4		3
Interest on lease liabilities	4		4
Short-term lease costs	21		13
Variable lease cost	1		—

Total lease cost	$	66	$	56

Operating cash outflows from operating leases included in the measurement of lease liabilities were $39 million and $41 million for the twelve months ended December 31, 2021 and 2020, respectively, and operating cash outflows from finance leases were $2 million for each of the twelve months ended December 31, 2021 and 2020. Right-of-use assets obtained in exchange for new operating lease liabilities were $37 million for the twelve months ended December 31, 2020.

The following table shows the future lease payments under operating and finance leases for continuing operations together with the present value of the net lease payments as of December 31, 2021 for 2022 through 2026 and thereafter (in millions):


	Maturity of Lease Liabilities
	Finance Leases		Operating Leases
2022	$	8	$	32
2023	9		30
2024	7		29
2025	6		27
2026	7		26
Thereafter	240		488
Total	277		632
Less: Imputed interest	(143)		(318)
Present value of lease payments	$	134	$	314

Lessor, Operating Leases [Text Block]

LESSOR — The Company has operating leases for certain generation contracts that contain provisions to provide capacity to a customer, which is a stand-ready obligation to deliver energy when required by the customer. Capacity payments are generally considered lease elements as they cover the majority of available output from a facility. The allocation of contract payments between the lease and non-lease elements is made at the inception of the lease. Lease payments from such contracts are recognized as lease revenue on a straight-line basis over the lease term, whereas variable lease payments are recognized when earned.

The following table presents lease revenue from operating leases in which the Company is the lessor for the periods indicated (in millions):


	Twelve Months Ended December 31,
Lease Income		2021		2020
Total lease revenue		$	595	$	580
Less: Variable lease revenue		75		66
Total non-variable lease revenue		$	520	$	514

The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, Plant and Equipment for the periods indicated (in millions):


	Twelve Months Ended December 31,
Lease Assets	2021		2020
Gross assets	$	2,423	$	3,103
Accumulated depreciation	765		1,011
Net assets	$	1,658	$	2,092

The option to extend or terminate a lease is based on customary early termination provisions in the contract, such as payment defaults, bankruptcy, or lack of performance on energy delivery. The Company has not recognized any early terminations as of December 31, 2021. Certain leases may provide for variable lease payments based on usage or index-based (e.g., the U.S. Consumer Price Index) adjustments to lease payments.

The following table shows the future lease receipts as of December 31, 2021 for 2022 through 2026 and thereafter (in millions):


	Future Cash Receipts for
	Sales-Type Leases		Operating Leases
2022	$	20	$	460
2022	20		398
2023	21		398
2024	21		399
2026	21		282
Thereafter	315		747
Total	418		$	2,684
Less: Imputed interest	(198)
Present value of total lease receipts	$	220

Battery Storage Lease Arrangements — The Company is constructing and operating projects that pair BESS with solar energy systems, which allows the project more flexibility on when to provide energy to the grid. The Company will enter into PPAs for the full output of the facility that allow customers the ability to determine when to charge and discharge the BESS. These arrangements include both lease and non-lease elements under ASC 842, with the BESS component constituting a sales-type lease. Upon commencement of the lease, the book value of the leased asset is removed from the balance sheet and a net investment in sales-type lease is recognized based on the present value of fixed payments under the contract and the residual value of the underlying asset. Due to the variable nature of lease payments under these contracts, the Company recorded losses at commencement of sales-type leases of $13 million for the year ended December 31, 2021. No losses were recorded for the year ended December 31, 2020. These amounts are recognized in Other expense in the Consolidated Statement of Operations. See Note 21—Other Income and Expense for further information. The Company recognized lease income on sales-type leases through variable payments of $3 million and $5 million and interest income of $15 million and $2 million for the years ended December 31, 2021 and 2020, respectively.