Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Description Of Business [Policy Text Block]

Business

Ormat Technologies, Inc. (the “Company”) is primarily engaged in the geothermal and recovered energy business, including the supply of equipment that is manufactured by the Company and the design and construction of power plants for projects owned by the Company or for

third

parties. The Company owns and operates geothermal and recovered energy-based power plants in various countries, including the United States of America (“U.S.”), Kenya, and Guatemala. The Company

’s equipment manufacturing operations are located in Israel.

Most of the Company

’s domestic power plant facilities are Qualifying Facilities under the Public Utility Regulatory Policies Act of

1978

(“PURPA”). The power purchase agreements (“PPAs”) for certain of such facilities are dependent upon their maintaining Qualifying Facility status. Management believes that all of the facilities located in the U.S. were in compliance with Qualifying Facility status requirements as of

December

31,

2016.

Dividend Declared [Policy Text Block]

Cash dividends

During the years ended

December

31,

2016,

2015,

and

2014,

the Company’s Board of Directors declared, approved, and authorized the payment of cash dividends in the aggregate amount of

$25.7

million

($0.52

per share),

$12.7

million

($0.26

per share), and

$9.6

million

($0.21

per share), respectively. Such dividends were paid in the years declared.

Rounding [Policy Text Block]

Rounding

Dollar amounts, except per share data, in the notes to these financial statements are rounded to the closest

$1,000,

unless otherwise indicated

Basis of Accounting, Policy [Policy Text Block]

Basis of presentation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and of all majority-owned subsidiaries in which the Company exercises control over operating and financial policies, and variable interest entities in which the Company has an interest and is the primary beneficiary. Intercompany accounts and transactions have been eliminated in consolidation

Investments in less-than-majority-owned entities or other entities in which the Company exercises significant influence over operating and financial policies are accounted for using the equity method of accounting or consolidated if they are a variable interest entity in which the Company has an interest and is the primary beneficiary. Under the equity method, original investments are recorded at cost and adjusted by the Company

’s share of undistributed earnings or losses of such companies. The Company’s earnings or losses in investments accounted for under the equity method have been reflected as “equity in income (losses) of investees, net” on the Company’s consolidated statements of operations and comprehensive income (loss).

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and cash equivalents

The Company considers all highly liquid instruments, with an original maturity of

three

months or less, to be cash equivalents

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block]

Restricted cash, cash equivalents

, and marketable securities

Under the terms of certain long-term debt agreements, the Company is required to maintain certain debt service reserves, cash collateral and operating fund accounts that have been classified as restricted cash and cash equivalents. Funds that will be used to satisfy obligations due during the next

twelve

months are classified as current restricted cash and cash equivalents, with the remainder classified as non-current restricted cash and cash equivalents. Such amounts were invested primarily in money market accounts and commercial paper with a minimum investment grade of “AA”.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentration of credit risk

Financial instruments which potentially subject the Company to concentration of credit risk consist principally of temporary cash investments and accounts receivable

The Company places its temporary cash investments with high credit quality financial institutions located in the U.S. and in foreign countries. At

December

31,

2016

and

2015,

the Company had deposits totaling

$72.5

million and

$19.0

million, respectively, in

seven

U.S. financial institutions that were federally insured up to

$250,000

per account. At

December

31,

2016

and

2015,

the Company

’s deposits in foreign countries of approximately

$166.2

million and

$181.0

million, respectively, were not insured.

December

31,

2016

and

2015,

accounts receivable related to operations in foreign countries amounted to

approximately

$53.3

million and

$27.8

million, respectively. At

December

31,

2016,

and

2015,

accounts receivable from the Company’s major customers (see Note

20)

amounted to approximately

60%

and

66%,

respectively, of the Company’s accounts receivable.

The Company has historically been able to collect on substantially all of its receivable balances, and accordingly, no provision for doubtful accounts has been made.

Inventory, Policy [Policy Text Block]

Inventories

Inventories consist primarily of raw material parts and sub-assemblies for power units, and are stated at the lower of cost or market value, using the weighted-average cost method. Inventories are reduced by a provision for slow-moving and obsolete inventories. This provision was

not

material at

December

31,

2016

and

2015.

Deposit Contracts, Policy [Policy Text Block]

Deposits and other

Deposits and other consist primarily of performance bonds for construction projects, long-term insurance contract and receivables, and derivative instruments.

Deferred Charges, Policy [Policy Text Block]

Deferred charges

Deferred charges represent prepaid income taxes on intercompany sales. Such amounts are amortized using the straight-line method and included in income tax provision over the life of the related property, plant and equipment.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, plant and equipment, net

Property, plant and equipment are stated at cost. All costs associated with the acquisition, development and construction of power plants operated by the Company are capitalized. Major improvements are capitalized and repairs and maintenance (including major maintenance) costs are expensed. Power plants operated by the Company, which include geothermal wells and exploration and resource development costs, are depreciated using the straight-line method over their estimated useful lives, which range from

years. The other assets are depreciated using the straight-line method over the following estimated useful lives of the assets:

Buildings (in years)		25
Leasehold improvements (in years)	15	-	20
Machinery and equipment — manufacturing and drilling (in years)		10
Machinery and equipment — computers (in years)	3	-	5
Office equipment — furniture and fixtures (in years)	5	-	15
Office equipment — other (in years)	5	-	10
Automobiles (in years)	5	-	7

The cost and accumulated depreciation of items sold or retired are removed from the accounts. Any resulting gain or loss recognized currently and is recorded in the accompanying statements of operations.

The Company capitalizes interest costs as part of constructing power plant facilities. Such capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset

’s estimated useful life. Capitalized interest costs amounted to

$3.3

million,

$4.1

million, and

$3.2

million for the years ended

December

31,

2016,

2015,

and

2014,

respectively.

Cash Grant [Policy Text Block]

Cash Grants

From

2009

2014,

the Company was awarded cash grants from the U.S. Department of the Treasury (“U.S. Treasury”) for Specified Energy Property in Lieu of Tax Credits under Section

1603

of the American Recovery and Reinvestment Act of

2009

(“ARRA”). The Company recorded the cash grant as a reduction in the carrying value of the related plant and amortized the grants as a reduction in depreciation expense over the plant’s estimated useful life.

Exploratory Drilling Costs Capitalization and Impairment, Policy [Policy Text Block]

Exploration and development costs

The Company capitalizes costs incurred in connection with the exploration and development of geothermal resources once it acquires land rights to the potential geothermal resource. Prior to acquiring land rights, the Company makes an initial assessment that an economically feasible geothermal reservoir is probable on that land. The Company determines the economic feasibility of potential geothermal resources internally, with all available data and external assessments vetted through the exploration department and occasionally using outside service providers. Costs associated with the initial assessment are expensed and included in cost of electricity revenues in the consolidated statements of operations and comprehensive income (loss). Such costs were immaterial during the years ended

December

31,

2016,

2015,

and

2014.

It normally takes

two

three

years from the time active exploration of a particular geothermal resource begins to the time a production well is in operation, assuming the resource is commercially viable. However, in certain sites the process

may

take longer due to permitting delays, transmission constrains or any other commercial milestones that are required to be reached in order to pursue the development process.

In most cases, the Company obtains the right to conduct the geothermal development and operations on land owned by the Bureau of Land Management (“BLM”), various states or with private parties. In consideration for certain of these leases, the Company

may

pay an up-front bonus payment which is a component of the competitive lease process. The up-front bonus payments and other related costs, such as legal fees, are capitalized and included in construction-in-process. The annual land lease payments made during the exploration, development and construction phase are expensed as incurred and included in “electricity cost of revenues” in the consolidated statements of operations and comprehensive income (loss). Upon commencement of power generation on the leased land, the Company begins to pay to the lessors long-term royalty payments based on the utilization of the geothermal resources as defined in the respective agreements. Such payments are expensed when the related revenues are earned and included in “electricity cost of revenues” in the consolidated statements of operations and comprehensive income (loss).

Following the acquisition of land rights to the potential geothermal resource, the Company conducts further studies and surveys, including water and soil analyses among others, and augments its database with the results of these studies. The Company then initiates a suite of geophysical surveys to assess the resource and determine drilling locations. If the results of these activities support the initial assessment of the feasibility of the geothermal resource, the Company then proceeds to exploratory drilling and other related activities which

may

include drilling of temperature gradient holes, drilling of slim holes, building access roads to drilling locations, drilling full size production and/or injection wells and flow tests. If the slim hole supports a conclusion that the geothermal resource will support a commercially viable power plant, it

may

be converted to a full-size commercial well, used either for extraction or re-injection or geothermal fluids, or be used as an observation well to monitor and define the geothermal resource. Costs associated with these activities and other directly attributable costs, including interest once physical exploration activities begin and permitting costs are capitalized and included in “construction-in-process”. If the Company concludes that a geothermal resource will not support commercial operations, capitalized costs are expensed in the period such determination is made.

When deciding whether to continue holding lease rights and/or to pursue exploration activity, we diligently prioritize our prospective investments, taking into account resource and probability assessments in order to make informed decisions about whether a particular project will support commercial operations

. As a result, write-off of unsuccessful activities for the year ended

December

31,

2016,

2015

and

2014,

was

$3.0

million,

$1.6

million, and

$15.4

million. In

2016

and

2015,

the write-offs included the exploration costs related to the Company’s exploration activities primarily in the Twilight site in Oregon and the Maui site in Hawaii of

$1.0

million, respectively. In

2014,

the write-offs included the exploration costs related to the Company’s exploration activities in the Wister site in California of

$8.1

million and the Mount Spur site in Alaska of

$7.3

million.

Grants received from the U.S. Department of Energy (“DOE”) are offset against the related exploration and development costs. Such grants amounted to

$0.3

million,

$0.8

million, and

$1.7

million for the years ended

December

31,

2016,

2015,

and

2014,

respectively.

All exploration and development costs that are being capitalized, including the up-front bonus payments made to secure land leases, will be depreciated over their estimated useful lives when the related geothermal power plant is substantially complete and ready for use. A geothermal power plant is substantially complete and ready for use when electricity generation commences.

Asset Retirement Obligations, Policy [Policy Text Block]

Asset retirement obligation

The Company records the fair value of a legal liability for an asset retirement obligation in the period in which it is incurred. The Company

’s legal liabilities include plugging wells and post-closure costs of power producing sites. When a new liability for asset retirement obligations is recorded, the Company capitalizes the costs of the liability by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. At retirement, the obligation is settled for its recorded amount at a gain or loss.

Deferred Financing And Lease Transaction Costs [Policy Text Block]

Deferred financing and lease transaction costs

Deferred financing costs are amortized over the term of the related obligation using the effective interest method. Amortization of deferred financing costs is presented as interest expense in the consolidated statements of operations and comprehensive income (loss). Accumulated amortization related to deferred financing costs amounted to

$31.1

million and

$37.2

million at

December

31,

2016

and

2015,

respectively. Amortization expense for the years ended

December

31,

2016,

2015,

and

2014

amounted to

$6.9

million,

$8.8

million, and

$6.5

million, respectively. During the years ended

December

31,

2016,

2015

and

2014

amounts of

$0.1

million,

$0.5

million and

$0.7

million, respectively, were written-off as a result of the extinguishment of liability.

Deferred transaction costs relating to the Puna operating lease (see Note

13)

in the amount of

$4.2

million are amortized using the straight-line method over the

-year term of the lease. Amortization of deferred transaction costs is presented in cost of revenues in the consolidated statements of operations and comprehensive income (loss). Accumulated amortization related to deferred lease costs amounted to

$2.1

million and

$2.0

million at

December

31,

2016

and

2015,

respectively. Amortization expense for each of the years ended

December

31,

2016,

2015,

and

2014

amounted to

$0.2

million.

Goodwill and Intangible Assets, Goodwill, Policy [Policy Text Block]

Goodwill

Goodwill represents the excess of the fair value of consideration transferred in the Guadeloupe business combination transaction over the fair value of tangible and intangible assets acquired net of the fair value of liabilities assumed and the fair value of any noncontrolling interest in the acquisition. Goodwill is not amortized but rather subject to periodic impairment testing on an annual basis or if an event occurs or circumstances change that would more likely than not reduce the fair value of reporting unit below its carrying amount.

Intangible Assets, Finite-Lived, Policy [Policy Text Block]

Intangible assets

Intangible assets consist of allocated acquisition costs of PPAs, which are amortized using the straight-line method over the

-year terms of the agreements (see Note

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Impairment of long-lived assets and long-lived assets to be disposed of

The Company evaluates long-lived assets, such as property, plant and equipment and construction-in-process for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not be recoverable. Factors which could trigger an impairment include, among others, significant underperformance relative to historical or projected future operating results, significant changes in the Company

’s use of assets or its overall business strategy, negative industry or economic trends, a determination that an exploration project will not support commercial operations, a determination that a suspended project is not likely to be completed, a significant increase in costs necessary to complete a project, legal factors relating to its business or when it concludes that it is more likely than not that an asset will be disposed of or sold.

The Company tests its operating plants that are operated together as a complex for impairment at the complex level because the cash flows of such plants result from significant shared operating activities. For example, the operating power plants in a complex are managed under a combined operation management generally with

one

central control room that controls all of the power plants in a complex and

one

maintenance group that services all of the power plants in a complex. As a result, the cash flows from individual plants within a complex are not largely independent of the cash flows of other plants within the complex. The Company tests for impairment its operating plants which are not operated as a complex as well as its projects under exploration, development or construction that are not part of an existing complex at the plant or project level. To the extent an operating plant becomes part of a complex, the Company will test for impairment at the complex level.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset. The significant assumptions that the Company uses in estimating its undiscounted future cash flows include: (i) projected generating capacity of the complex or power plant and rates to be received under the respective PPA(s)

and expected market rates thereafter

and (ii) projected operating expenses of the relevant complex or power plant. Estimates of future cash flows used to test recoverability of a long-lived asset under development also include cash flows associated with all future expenditures necessary to develop the asset.

If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. Management believes that no impairment exists for long-lived assets; however, estimates as to the recoverability of such assets

may

change based on revised circumstances. If actual cash flows differ significantly from the Company

’s current estimates, a material impairment charge

may

be required in the future.

Derivatives, Policy [Policy Text Block]

Derivative instruments

Derivative instruments (including certain derivative instruments embedded in other contracts) are measured at their fair value and recorded as either assets or liabilities unless exempted from derivative treatment as a normal purchase and sale. All changes in the fair value of derivatives are recognized in earnings unless specific hedge criteria are met, which requires a company to formally document, designate and assess the effectiveness of transactions that receive hedge accounting.

The Company maintains a risk management strategy that incorporates the use of swap contracts and put options on oil and natural gas prices, forward exchange contracts, interest rate swaps, and interest rate caps to minimize significant fluctuation in cash flows and/or earnings that are caused by oil and natural gas prices, exchange rate or interest rate volatility. Gains or losses on contracts that initially qualify for cash flow hedge accounting, net of related taxes, are included as a component of other comprehensive income or loss and accumulated other comprehensive income or loss are subsequently reclassified into earnings when the hedged forecasted transaction affects earnings. Gains or losses on contracts that are not designated as a cash flow hedge are included currently in earnings.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

Foreign currency translation

The U.S. dollar is the functional currency for all of the Company

’s consolidated operations and those of its equity affiliates except for the Guadeloupe power plant. For those entities, all gains and losses from currency translations are included within the line item “Derivatives and foreign currency transaction gains (losses)” within the consolidated statements of operations and comprehensive income (loss). The Euro is the functional currency of the Guadeloupe power plant and thus gains and losses from currency translation adjustments related to Guadeloupe are included as currency translation adjustments in accumulated other comprehensive income in the consolidated statements of equity and in comprehensive income.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive income (loss) reporting

Comprehensive income (loss) includes net income or loss plus other comprehensive income (loss), which for the Company consists of changes in unrealized gains or losses in respect of the Company

’s share in derivatives instruments of unconsolidated investment, foreign currency translation adjustments and the mark-to-market gains or losses on derivative instruments designated as a cash flow hedge. For the years ended

December

31,

2016,

2015

and

2014,

the Company reclassified

thousand,

$27

thousand and

$141

thousand, respectively, from other comprehensive income, of which

$12.0

thousand,

$44

thousand and

$228

thousand, respectively, were recorded to reduce interest expense and

$3.0

thousand,

$17

thousand and

$87

thousand, respectively, were recorded against the income tax provision, in the consolidated statements of operations and comprehensive income (loss).

Revenue Recognition, Policy [Policy Text Block]

Revenues and cost of revenues

Revenues are primarily related to: (i) sale of electricity from geothermal and recovered energy-based power plants owned and operated by the Company and (ii) geothermal and recovered energy-based power plant equipment engineering, sale, construction and installation, and operating services.

Revenues related to the sale of electricity from geothermal and recovered energy-based power plants and capacity payments are recorded based upon output delivered and capacity provided at rates specified under relevant contract terms. For PPAs agreed to, modified, or acquired in business combinations on or after

July

2003,

the Company determines whether such PPAs contain a lease element requiring lease accounting. Revenue from such PPAs are accounted for in electricity revenues. The lease element of the PPAs is also assessed in accordance with the revenue arrangements with multiple deliverables guidance, which requires that revenues be allocated to the separate earnings processes based on their relative fair value. PPAs with minimum lease rentals which vary over time are generally recognized on the straight-line basis over the term of the PPAs. PPAs with contingent rentals are recognized when earned.

Revenues from engineering, operating services, and parts and product sales are recorded upon providing the service or delivery of the products and parts and when collectability is reasonably assured. Revenues from the supply and/or construction of geothermal and recovered energy-based power plant equipment and other equipment to

third

parties are recognized using the percentage-of-completion method. Revenue is recognized based on the percentage relationship that incurred costs bear to total estimated costs. Costs include direct material, labor, and indirect costs. Selling, marketing, general, and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions and final contract settlements,

may

result in revisions to costs and revenues and are recognized in the period in which the revisions are determined

In specific instances where there is a lack of dependable estimates or inherent risks cause forecast to be doubtful, then the completed-contract method is followed. Revenue is recognized when the contract is substantially complete and when collectability is reasonably assured. Costs that are closely associated with the project are deferred as contract costs and recognized similarly to the associated revenues.

Standard Product Warranty, Policy [Policy Text Block]

Warranty on products sold

The Company generally provides a

one

-year warranty against defects in workmanship and materials related to the sale of products for electricity generation. Estimated future warranty obligations are included in operating expenses in the period in which the related revenue is recognized. Such charges are immaterial for the years ended

December

31,

2016,

2015,

and

2014

Research and Development Expense, Policy [Policy Text Block]

Research and development

Research and development costs incurred by the Company for the development of existing and new geothermal, recovered energy and remote power technologies are expensed as incurred. Grants received from the DOE are offset against the related research and development expenses. Such grants amounted to

million,

million, and

$0.6

million for the years ended

December

31,

2016,

2015,

and

2014,

respectively

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Stock-based compensation

The Company accounts for stock-based compensation using the fair value method whereby compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant). Prior to

2016,

the Company used the Black-Scholes formula to estimate the fair value of the stock-based compensation. In

2016,

the Company used the Exercise Multiple-Based Lattice SAR-Pricing Model to value the stock-based compensation awards to reflect accumulated historic data retained of behavioral parameters.

Tax Monetization Transactions Policy [Policy Text Block]

Tax monetization Transactions

The Company has

three

tax monetization transactions, OPC, ORTP and Opal, as described in Note

14.

The purpose of these transactions is to form tax partnerships, whereby investors provide cash in exchange for equity interests that provide the holder a right to the majority of tax benefits associated with a renewable energy project. We account for a portion of the proceeds from the transaction as debt under ASC

470.

Given that a portion of these transactions is structured as a purchase of an equity interest we also classify a portion as noncontrolling interest consistent with guidance in ASC

810.

The portion recorded to noncontrolling interest is initially measured as the fair value of the discounted Tax Attributes and cash distributions which represents the partner's residual economic interest. The residual proceeds is recognized as the initial carrying value of the debt which is classified as a liability associated with sale tax benefits. We apply the effective interest rate method to the liability component as described by ASC

835

and CON

The tax benefits and cash distributions realized by the partner each period are treated as the debt servicing amounts, giving rise to income attributable to the sale of tax benefits. The deferred transaction costs have been capitalized and amortized using the effective interest method.

Income Tax, Policy [Policy Text Block]

Income taxes

Income taxes are accounted for using the asset and liability approach, which requires the recognition of taxes payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the Company

’s financial statements or tax returns. The measurement of current and deferred tax assets and liabilities are based on provisions of the enacted tax law. The effects of future changes in tax laws or rates are not anticipated. The Company accounts for investment tax credits and production tax credits as a reduction to income taxes in the year in which the credit arises. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not, more likely than not expected to be realized. A full valuation allowance has been established to offset the Company’s U.S. deferred tax assets. Tax benefits from uncertain tax positions are recognized only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Interest and penalties assessed by taxing authorities on an underpayment of income taxes are included as a component of income tax provision in the consolidated statements of operations and comprehensive income.

Earnings Per Share, Policy [Policy Text Block]

Earnings (loss) per share

Basic earnings (loss) per share attributable to the Company

’s stockholders (“earnings (loss) per share”) is computed by dividing net income or loss attributable to the Company’s stockholders by the weighted average number of shares of common stock outstanding for the period. The Company does not have any equity instruments that are dilutive, except for stock-based awards.

The table below shows the reconciliation of the number of shares used in the computation of basic and diluted earnings per share

	Year Ended December 31,
	2016		2015		2014
	(In thousands)
Weighted average number of shares used in computation of basic earnings per share		49,469		48,562		45,508
Add:
Additional shares from the assumed exercise of employee stock options		671		625		351

Weighted average number of shares used in computation of diluted earnings per share		50,140		49,187		45,859

The number of stock-based awards that could potentially dilute future earnings per share and were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive was

102,793,

467,766,

and

3,237,593,

respectively, for the years ended

December

31,

2016,

2015,

and

2014.

Use of Estimates, Policy [Policy Text Block]

Use of estimates in preparation of financial statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of such financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant estimates with regard to the Company

’s consolidated financial statements relate to the useful lives of property, plant and equipment, impairment of long-lived assets and assets to be disposed of, revenue recognition of product sales using the percentage of completion method, asset retirement obligations, and the provision for income taxes.

New Accounting Pronouncements, Policy [Policy Text Block]

New Accounting Pronouncements

New accounting pronouncements effective in the year ended

December

31,

2016

Amendments to Fair Value Measurement

June

2015,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

2015

10,

Amendment to Fair Value Measurement, Subtopic

820

10.

The amendment provides that the reporting entity shall disclose for each class of assets and liabilities measured at fair value in the statement of financial position the following information: for recurring fair value measurements, the fair value measurement at the end of the reporting period, and for non-recurring fair value measurement, the fair value measurement at the relevant measurement date and the reason for the measurement. The amendments in this update are effective for annual reporting periods beginning after

December

15,

2015,

including interim periods within those reporting periods. The adoption of this guidance did not have a material impact on the Company

’s consolidated financial statements.

Amendments to the Consolidation Analysis

February

2015,

the FASB issued ASU

2015

02,

Amendments to the Consolidation Analysis, Topic

810.

The update provides that all reporting entities that hold a variable interest in other legal entities will need to re-evaluate their consolidation conclusions and potentially revise their disclosures. This amendment affects both variable interest entity (“VIE”) and voting interest entity (“VOE”) consolidation models. The update does not change the general order in which the consolidation models are applied. A reporting entity that holds an economic interest in, or is otherwise involved with, another legal entity (i.e. has a variable interest) should

first

determine if the VIE model applies, and if so, whether it holds a controlling financial interest under that model. If the entity being evaluated for consolidation is not a VIE, then the VOE model should be applied to determine whether the entity should be consolidated by the reporting entity. Since consolidation is only assessed for legal entities, the determination of whether there is a legal entity is important. It is often clear when the entity is incorporated, but unincorporated structures can also be legal entities and judgment

may

be required to make that determination. The update contains a new example that highlights the discretion used to make this legal entity determination. The update is effective for annual reporting periods beginning after

December

15,

2015,

including interim periods within those reporting periods. The adoption of this guidance did not have a material impact on the Company

’s consolidated financial statements.

Simplifying the Presentation of Debt Costs

April

2015,

the FASB issued ASU

2015

03,

Interest-Imputation of Interest: Simplifying the Presentation of Debt Costs, Subtopic

835

30.

The update provides that debt issuance costs related to a recognized debt liability be presented in the balance sheet as direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments in this update are effective for financial statements issued for fiscal years beginning after

December

15,

2015,

and interim periods within those fiscal years. The Company retrospectively adopted this update in its interim period beginning

January

2016.

The impact of the adoption resulted in a reclassification of debt issuance costs totaling $

17.7

million and

$19.1

million as of

December

31,

2016

and

December

31,

2015,

respectively.

August

2015,

the FASB issued ASU

2015

15,

Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements, Subtopic

835

30.

The update clarifies that given the absence of authoritative guidance within Update

2015

for debt issuance costs described below, debt issuance costs related to line-of-credit arrangements can be deferred and presented as assets and subsequently amortized ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings under the line-of-credit arrangement. The amendments in this update are effective for financial statements issued for fiscal years beginning after

December

15,

2015,

and interim periods within those fiscal years. The Company adopted this update in its interim period beginning

January

2016

and continues to present debt issuance costs related to such line-of-credit arrangements as assets amortized ratably over the respective term of the line-of credit arrangements. Debt issuance costs related to such line-of-credit arrangements as of

December

31,

2016

and

December

31,

2015,

totaled

$1.1

million and

$1.0

million, respectively.

New accounting pronouncements effective in future periods

Business Combinations

January

2017,

the FASB issued ASU

2017

01,

Business Combinations (Topic

805).

The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this update primarily provide a screen to determine when a set of assets and activities is not a business and by that reduces the number of transactions that need to be further evaluated. The amendments in this update should be applied prospectively and are effective for financial statements issued for fiscal years beginning after

December

15,

2017,

and interim periods within those fiscal years. Early adoption is permitted.

The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

Statement of Cash Flows

November

2016,

the FASB issued ASU

2016

018,

Statement of Cash Flows (Topic

230)

– Restricted Cash. The amendments in this update require that a statement of cash flows explain the changes during the period in total cash, cash equivalents, and the amounts generally described as restricted cash or cash equivalents. Therefore, amounts of restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update should be applied retrospectively for each period presented and are effective for financial statements issued for fiscal years beginning after

December

15,

2017,

and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

Intra-Entity Transfers of Assets Other than Inventory

October

2016,

the FASB issued ASU

2016

16,

Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The amendments in this update require that the entity would recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. Any deferred tax asset that arises in the buyer’s jurisdiction would also be recognized at the time of the transfer. The new guidance does not apply to intra-entity transfers on inventory. The amendments in this update should be applied for each period presented and are effective for financial statements issued for fiscal years beginning after

December

15,

2017,

and interim periods within those fiscal years. The modified retrospective approach will be required for transition to the new guidance, with cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption. Early adoption is permitted in the

first

quarter of

2017.

The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

Interests Held through Related Parties that are under Common Control

October

2016,

the FASB issued ASU

2016

17,

Consolidation (Topic

810):

Interests held through Related Parties that are under Common Control. The amendments in this update require that if a decision maker is required to evaluate whether it is the primary beneficiary of a VIE, it will need to consider only its proportionate indirect interest in the VIE held through a common control party. The amendments in this update should be applied retrospectively for each period presented and are effective for financial statements issued for fiscal years beginning after

December

15,

2016,

and interim periods within those fiscal years. The Company is currently evaluating the potential impact of the adoption of these amendments on its consolidated financial statements.

Improvement to Employee Share-Based Payment Accounting

March

2016,

the FASB issued ASU

2016

09,

Improvement to Employee Share-Based Payment Accounting, an

update to the guidance on stock-based compensation. Under the new guidance, all excess tax benefits and tax deficiencies will be recognized in the income statement as they occur. This will replace the current guidance, which requires tax benefits that exceed compensation cost (windfalls) to be recognized in equity. It will also eliminate the need to maintain a “windfall pool,” and will remove the requirement to delay recognizing a windfall until it reduces current taxes payable. The new guidance will also change the cash flow presentation of excess tax benefits, classifying them as operating inflows, consistent with other cash flows related to income taxes. Today, windfalls are classified as financing activities. Also, this will affect the dilutive effects in earnings per share, as there will no longer be excess tax benefits recognized in additional paid in capital. Today those excess tax benefits are included in assumed proceeds from applying the treasury stock method when computing diluted EPS. Under the amended guidance, companies will be able to make an accounting policy election to either

(1)

continue to estimate forfeitures or

(2)

account for forfeitures as they occur. This updated guidance is effective for annual and interim periods beginning after

December

15,

2016.

Early adoption is permitted. The Company is currently evaluating the potential impact, if any, of the adoption of this update on its consolidated financial statements, however, any impact is not expected to be material.

Leases

February

2016,

the FASB issued ASU

2016

02,

Leases, Topic

842.

The amendment in this Update introduce a number of changes and simplifications from previous guidance, primarily the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. The Update retains the distinction between finance leases and operating leases and the classification criteria between the

two

types remain substantially similar. Also, lessor accounting remains largely unchanged from previous guidance, however, key aspects in the Update were aligned with the revenue recognition guidance in Topic

606.

Additionally, the Update defines a lease as a contract, or part of a contract, that conveys the right to control the use of identified asset for a period of time in exchange for considerations. Control over the use of the identified means that the customer has both (a) the right to obtain substantially all of the economic benefits from the use of the asset and (b) the right to direct the use of the asset. The amendments in this update are effective for annual reporting periods beginning after

December

15,

2018,

including interim periods within those reporting periods. Early adoption is permitted. The Company is currently evaluating the potential impact, if any, of the adoption of these amendments on its consolidated financial statements.

Recognition and Measurement of Financial Assets and Financial Liabilities

January

2016,

the FASB issued ASU

2016

01,

Recognition and Measurement of Financial Assets and Financial Liabilities. The update primarily requires that an entity should present separately, in other comprehensive income, the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk if the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. The application of this update should be by means of cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments in this update are effective for financial statements issued for fiscal years beginning after

December

15,

2017,

and interim periods within those fiscal years. Early adoption is permitted as of the beginning of the fiscal year of adoption. The Company is currently evaluating the potential impact, if any, of the adoption of this update on its consolidated financial statements.

Simplifying the Measurement of Inventory

July

2015,

the FASB issued ASU

2015

11,

Simplifying the Measurement of Inventory, Topic

330.

The update contains no amendments to disclosure requirements, but replaces the concept of

‘lower of cost or market’ with that of ‘lower of cost and net realizable value’. The amendments in this update are effective for annual reporting periods beginning after

December

15,

2016,

including interim periods within those reporting periods. The amendments should be applied prospectively with early adoption permitted. The Company estimates that the potential impact, if any, of the adoption of this update on its consolidated financial statements is immaterial.

Revenues from Contracts with Customers

May

2014,

the FASB issued ASU

2014

09,

Revenues from Contracts with Customers, Topic

606,

which was a joint project of the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards. The update provides that an entity should recognize revenue in connection with the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, an entity is required to apply each of the following steps:

(1)

identify the contract(s) with the customer;

(2)

identify the performance obligations in the contracts;

(3)

determine the transaction price;

(4)

allocate the transaction price to the performance obligation in the contract; and

(5)

recognize revenue when (or as) the entity satisfies a performance obligation. ASU

2014

also prescribes additional financial presentations and disclosures. The amendments in this update are effective for annual reporting periods beginning after

December

15,

2017,

including interim periods within those reporting periods. Early adoption is permitted no earlier than

2017

for calendar fiscal year entities. The Company expects the adoption of this standard to have an immaterial impact, if any, on its Electricity segment as it accounts for its PPA

’s under ASC

840,

Leases. The Company still evaluates the potential impact of the adoption of the standard on its Product segment, however, it believes that such impact, if any, will be immaterial.

March

2016,

the FASB issued ASU

2016

08,

Principal versus Agent Considerations. The amendment in this Update do not change the core principal of the guidance and are intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations. When another entity is involved in providing goods or services to a customer, an entity is required to determine if the nature of its promise is to provide the specific good or service itself (that is, the entity is a principal) or to arrange for that good or service to be provided by the other party (that is, the entity is an agent). The guidance includes indicators to assist an entity in determining whether it acts as a principal or agent in a specified transaction. The amendments in this update are effective for annual reporting periods beginning after

December

15,

2017,

including interim periods within those reporting periods. Early adoption is permitted no earlier than

2017

for calendar fiscal year entities. The Company is currently evaluating the potential impact, if any, of the adoption of these amendments on its consolidated financial statements,

however, it believes that any such impact, if any, will be immaterial.