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Leases (Notes)
 3 Months Ended
Mar. 31, 2024
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 obligations 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, recognized in Revenue on the Condensed Consolidated Statements of Operations for the periods indicated (in millions):
Three Months Ended March 31,
Operating Lease Revenue20242023
Total lease revenue$115 $121 
Less: Variable lease revenue(13)(8)
Total Non-variable lease revenue$102 $113 
The following table presents the underlying gross assets and accumulated depreciation of operating leases included in Property, plant and equipment on the Condensed Consolidated Balance Sheets as of the periods indicated (in millions):
Property, Plant and Equipment, NetMarch 31, 2024December 31, 2023
Gross assets$1,178 $1,227 
Less: Accumulated depreciation(190)(182)
Net assets$988 $1,045 
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, 2024. 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, 2024 for the remainder of 2024 through 2028 and thereafter (in millions):
Future Cash Receipts for
Sales-Type Leases
Operating Leases
2024$25 $292 
202533 390 
202633 279 
202733 183 
202833 60 
Thereafter461 490 
Total$618 $1,694 
Less: Imputed interest(307)
Present value of total lease receipts$311 
Battery Storage Lease Arrangements — The Company constructs and operates projects consisting only of a stand-alone BESS facility, as well as projects that pair a BESS with solar energy systems. These projects allow 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 typically constituting a sales-type lease. The Company recognized lease revenue on sales-type leases through interest income of $4 million for both the three months ended March 31, 2024 and March 31, 2023.
The Company recorded a gain at commencement of sales-type leases of $5 million for the three months ended March 31, 2024. No gains were recorded for the three months ended March 31, 2023. This amount is recognized in Other income in the Condensed Consolidated Statement of Operations. See Note 15—Other Income and Expense for further information.