Project Assets

12 Months Ended

Oct. 31, 2023

Project Assets

Project Assets

Note 6. Project Assets

Project assets as of October 31, 2023 and 2022 consisted of the following (in thousands):

	October 31,		October 31,		Estimated
	2023		2022		Useful Life
Project Assets – Operating	$	213,753	$	154,736	4-20 years
Accumulated depreciation		(46,263)		(29,546)
Project Assets – Operating, net		167,490		125,190
Project Assets – Construction in progress		90,576		107,696	7-20 years
Project Assets, net	$	258,066	$	232,886

The estimated useful lives of these project assets are 20 years for BOP and site construction, and four to seven years for modules. Project assets as of October 31, 2023 and 2022 included nine and eight, respectively, completed, commissioned installations generating power with respect to which the Company has a PPA with the end-user of power and site host with a net aggregate value of $167.5 million and $125.2 million as of October 31, 2023 and 2022, respectively. Certain of these assets are the subject of sale-leaseback arrangements with Crestmark.

Project assets as of October 31, 2023 and 2022 also include installations with carrying values of $90.6 million and $107.7 million, respectively, which are being developed and constructed by the Company in connection with projects for which we have entered into PPAs or projects for which we expect to secure PPAs or otherwise recover the asset value and which have not yet been placed in service.

Fiscal Year 2023 Charges, Including Impairment Charges

The 2.3 MW Toyota project (the “Toyota Project”) was included in “Construction in progress” as of October 31, 2023. It was determined in the fourth quarter of fiscal year 2021 that a potential source of renewable natural gas (“RNG”) at favorable pricing was no longer sufficiently probable and that market pricing for RNG had significantly increased, resulting in the determination that the project is expected to generate negative cash flows and that, therefore, the carrying value of the project asset was no longer recoverable. Refer to Note 19. “Commitments and Contingencies” for more information regarding fuel risk exposure. As this project was being constructed, only inventory components that could be redeployed for alternative use were capitalized.  For the year ended October 31, 2023, non-recoverable costs incurred of $22.9 million have been expensed as generation cost of revenues.

During fiscal year 2023, the Company recorded an impairment charge of $2.4 million related to a project for which a PPA was ultimately not awarded.

Fiscal Year 2022 Charges, Including Impairment Charges

In the fourth quarter of fiscal year 2022, the Company made the decision not to proceed with development of the 7.4 MW and 1.0 MW Hartford projects given the then current economic profile of these projects. As a result, the Company recorded a $0.8 million impairment charge.

Charges for the year ended October 31, 2022 relating to the Toyota Project were $22.1 million, which represented the carrying value of the project asset less the carrying value of inventory components that could be redeployed for alternative use.

Fiscal Year 2021 Impairment Charges

In the fourth quarter of fiscal year 2021, the Company recorded project asset impairment charges for (i) the Triangle Street Project, (ii) the LIPA Brookhaven and Clare Rose Projects, and (iii) the Toyota Project, which are further described as follows:

i. Impairment charge for the Triangle Street Project:  In the fourth quarter of fiscal year 2021, based upon the carrying value of the components that could be removed and utilized to service similar project assets and due to the uncertainty as to whether the project asset would generate further cash flows, the Company recorded an impairment charge of $0.4 million. The remaining carrying value was $5.6 million as of October 31, 2021.

ii. Impairment charge for the LIPA Brookhaven and Clare Rose Projects:  As previously reported, in July 2017, the Company was awarded three projects on Long Island, New York totaling 39.8 MW by the Long Island Power Authority (“LIPA”). In December 2018, the Company executed a power purchase agreement for one of the three awards (a 7.4 MW project in Yaphank, Long Island). The other two awards, for which there are no executed power purchase agreements (and which are referred to herein as the LIPA Brookhaven and Clare Rose Projects), had been progressing through the required interconnect process while the Company worked to find a commercial resolution and enter into such agreements with LIPA. Given the passage of time without a resolution, the Company made a decision to no longer pursue the interconnection process and will no longer pursue development of the LIPA Brookhaven and Clare Rose Projects. As a result of this decision, in the fourth quarter of fiscal year 2021, the Company recorded a charge of $1.8 million to impair the carrying value of the development costs for these two projects.

iii. Impairment charge for the Toyota Project:  A $2.8 million charge was recorded in the fourth quarter of fiscal year 2021, which represented the carrying value of the project asset less the carrying value of inventory components that could be redeployed for alternative use.

Impairment charges are recorded as cost of generation revenues in the Consolidated Statements of Operations and Comprehensive Loss.

Depreciation expense for project assets was $19.0 million, $14.2 million and $13.7 million for the years ended October 31, 2023, 2022 and 2021, respectively.

Project construction costs incurred for long-term project assets are reported as investing activities in the Consolidated Statements of Cash Flows. The proceeds received from the sale and subsequent leaseback of project assets are classified as “Cash flows from financing activities” within the Consolidated Statements of Cash Flows and are classified as a finance obligation within “Current portion of long-term debt” and “Long-term debt and other liabilities” on the Consolidated Balance Sheets (refer to Note 11. “Debt” for more information).