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Leases (Notes)
 3 Months Ended
Mar. 31, 2022
Lessor, Lease, Description [Line Items]  
Lessor, Operating Leases LEASES
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 receipts 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 receipts from such contracts are recognized as lease revenue on a straight-line basis over the lease term, whereas variable lease receipts 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):
Three Months Ended March 31,
Operating Lease Revenue20222021
Total lease revenue$134 $143 
Less: Variable lease revenue(7)(14)
Total Non-variable lease revenue$127 $129 
The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, plant and equipment, net for the periods indicated (in millions):
Property, Plant and Equipment, NetMarch 31, 2022December 31, 2021
Gross assets$2,403 $2,423 
Less: Accumulated depreciation(780)(765)
Net assets$1,623 $1,658 
The option to extend or terminate a lease is based on customary early termination provisions in the contract, such as payment defaults, bankruptcy, and lack of performance on energy delivery. The Company has not recognized any early terminations as of March 31, 2022. 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 March 31, 2022 for the remainder of 2022 through 2026 and thereafter (in millions):
Future Cash Receipts for
Sales-Type Leases
Operating Leases
2022$19 $339 
202320 393 
202421 394 
202521 394 
202621 281 
Thereafter289 747 
Total$391 $2,548 
Less: Imputed interest(173)
Present value of total lease receipts$218 
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. Prior to January 1, 2022, upon commencement of the lease, the book value of the leased asset was removed from the balance sheet and a net investment in a sales-type lease was 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 a loss at commencement of sales-type leases of $13 million for the three months ended March 31, 2021. This amount is recognized in Other expense in the Consolidated Statement of Operations. See Note 14—Other Income and Expense for further information. Effective January 1, 2022, the Company adopted ASU 2021-05 in which lessors classify and account for certain leases with variable lease payments as operating leases. The Company adopted this standard on a prospective basis. See Note 1—Financial Statement Presentation for further information. The Company recognized lease income on sales-type leases through interest income of $3 million and $4 million for the three months ended March 31, 2022 and March 31, 2021, respectively