Note 22 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

22.  Commitments and Contingencies

(a) Commitments

Restricted cash —At December 31, 2014 and 2013, the Company had restricted bank deposits of $497 and $400 respectively. The restricted bank deposits consist of a reserve of $160 and a guarantee deposit of $337. The $160 is reserve pursuant to our guarantees of Solar Tax Partners 1, LLC (“STP”) with the bank providing the debt financing on the Aerojet 1 solar generating facility (see below for additional details related to the Aerojet 1 development project). The $337 guarantee deposit is a reserve for bank acceptance drafts for suppliers.

Guarantee —On December 22, 2009, in connection with an equity funding of STP related to the Aerojet 1 solar development project, the Company along with STP’s other investors entered into a Guaranty (“Guaranty”) to provide the equity investor, Greystone Renewable Energy Equity Fund (“Greystone”), with certain guarantees, in part, to secure investment funds necessary to facilitate STP’s payment to the Company under the EPC. Specific guarantees made by Solar Power, Inc. include the following in the event of the other investors’ failure to perform under the operating agreement:

• Operating Deficit Loans—the Company would be required to loan Master Tenant or STP monies necessary to fund operations to the extent costs could not be covered by Master Tenant’s or STP’s cash inflows. The loan would be subordinated to other liabilities of the entity and earn no interest; and

• Exercise of Put Options—At the option of Greystone, the Company may be required to fund the purchase by Managing Member of Greystone’s interest in Master Tenant under an option exercisable for 9 months following a 63 month period commencing with operations of the Facility. The purchase price would be equal to the greater of the fair value of Greystone’s equity interest in Master Tenant or $1,000. This option has been exercised on December 30, 2014 and this guarantee has been released accordingly.

The Company has recorded on its Consolidated Balance Sheet the guarantees of $71 and $85 at December 31, 2014 and 2013, respectively, which approximates their fair value. These amounts, less related amortization, are included in accrued liabilities. These guarantees for the Aerojet 1 project are accounted for separately from the financing obligation related to the Aerojet 1 project because they are with different counterparties.

Financing Obligation —The guarantees associated with Aerojet 1 constitute a continuing involvement in the project. While the Company maintains its continuing involvement, it will apply the financing method and, therefore, has recorded and classified the proceeds received of $10,911 and $11,730 from the project in long-term liabilities within financing and capital lease obligations, net of current portion, at December 31, 2014 and 2013, respectively, in the Consolidated Balance Sheets.

Performance Guaranty — On December 18, 2009, the Company entered into a 10-year energy output guaranty related to the photovoltaic system installed for STP at the Aerojet 1 facility in Rancho Cordova, CA. The guaranty provided for compensation to STP’s system lessee for shortfalls in production related to the design and operation of the system, but excluding shortfalls outside the Company’s control such as government regulation. The Company believes that the probability of shortfalls is unlikely and if they should occur they would be covered under the provisions of its current panel and equipment warranty provisions. For the fiscal year ended December 31, 2014, there continues to be no charges against our reserves related to this performance guaranty.

Product Warranties —We offer the industry standard warranty up to 25 years for our PV modules and industry standard five to ten years on inverter and balance of system components. Due to the warranty period, we bear the risk of extensive warranty claims long after we have shipped product and recognized revenue. In our cable, wire and mechanical assemblies business, historically our warranty claims have not been material. In our solar PV business, our greatest warranty exposure is in the form of product replacement.

During the quarter ended September 30, 2007 and continuing through the fourth quarter of 2010, we installed own manufactured solar panels. Other than this period, we only installed panels manufactured by unrelated third parties as well as our principal shareholder and formerly controlling shareholder, LDK. Certain PV construction contracts entered into during the recent years included provisions under which we agreed to provide warranties to the buyer. As a result, we recorded the provision for the estimated warranty exposure on these contracts within cost of sales. Since we do not have sufficient historical data to estimate its exposure, we have looked to our own historical data in combination with historical data reported by other solar system installers and manufacturers. Due to the absence of historical material warranty claims, we have not recorded a material warranty accrual related to solar energy systems as of December 31, 2014.

The accrual for warranty claims consisted of the following, which were recorded in Accrued liabilities:

	2014		2013
Beginning balance - January 1	$	1,537	$	1,537
Provision charged to warranty expense		-		-
Less: warranty claims		-		-
Ending balance - December 31,		1,537		1,537
Current portion of warranty liability		-		200
Non-current portion of warranty liability	$	1,537	$	1,337

Operating leases — The Company leases facilities under various operating leases, some of which contain escalation clauses, which expire through 2017. The Company also leases vehicles under operating leases. Rental expenses under operating leases included in the statement of operations were both $453 and $463 for the years ended December 31, 2014 and 2013.

Future minimum payments under all of our non-cancelable operating leases are as follows as of December 31, 2014:

2015	$	1,227
2016		1,103
2017		879
Thereafter		10,323
	$	13,532

Capital commitments — As of December 31, 2014, the Company’s commitments to acquire the business and property, plant and equipment approximately $59,354 associated with the expansion of the Company’s PV solar systems business.

(b) Contingencies

From time to time, the Company is involved in various other legal and regulatory proceedings arising in the normal course of business. While the Company cannot predict the occurrence or outcome of these proceedings with certainty, it does not believe that an adverse result in any pending legal or regulatory proceeding, individually or in the aggregate, would be material to our consolidated financial condition or cash flows; however, an unfavorable outcome could have a material adverse effect on our results of operations for a specific interim period or year.