Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table presents the loss (income) before income taxes for the periods presented (in thousands): 

	For the Year Ended December 31,
	2024		2023		2022
Loss (income) attributable to common stockholders	$	2,872,984	$	1,617,188	$	(175,668)
Loss attributable to noncontrolling interest and redeemable noncontrolling interests	1,509,050		1,078,344		1,023,022
Loss before income taxes	$	4,382,034	$	2,695,532	$	847,354

The income tax (benefit) provision consists of the following (in thousands):

	For the Year Ended December 31,
	2024		2023		2022
Current
Federal	$	—	$	—	$	—
State	—		—		—
Foreign	—		—		—
Total current (benefit) expense	—		—		—
Deferred
Federal	(25,833)		(23,583)		1,460
State	(984)		10,892		831
Foreign	—		—		—
Total deferred (benefit) provision	(26,817)		(12,691)		2,291
Total	$	(26,817)	$	(12,691)	$	2,291

The following table represents a reconciliation of the statutory federal rate and the Company’s effective tax rate for the periods presented:

	For the Year Ended December 31,
	2024		2023		2022
Tax provision (benefit) at federal statutory rate	(21.00)	%	(21.00)	%	(21.00)	%
State income taxes, net of federal benefit	0.06		(1.11)		3.42
Foreign provision, net of federal benefit	(0.71)		—		—
Effect of noncontrolling and redeemable noncontrolling interests	7.23		8.40		25.35
Stock-based compensation	0.27		0.46		1.03
Tax credits	(1.78)		(0.63)		(1.42)
Effect of valuation allowance	(0.16)		4.06		(7.47)
Goodwill impairment	14.96		9.02		—
Other	0.52		0.33		0.36
Total	(0.61)	%	(0.47)	%	0.27	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following table represents the components of the Company’s deferred tax assets and liabilities for the periods presented (in thousands):

	December 31,
	2024		2023
Deferred tax assets
Accruals and prepaids	$	48,019	$	47,922
Deferred revenue	149,928		81,692
Net operating loss carryforwards	835,420		788,507
Stock-based compensation	16,962		12,309
Investment tax and other credits	168,623		122,317
Interest expense	188,016		125,332
UNICAP costs	73,180		110,656
Total deferred tax assets	1,480,148		1,288,735
Less: Valuation allowance	(165,000)		(174,328)
Gross deferred tax assets	1,315,148		1,114,407
Deferred tax liabilities
Interest rate derivatives	27,134		16,945
Capitalized costs to obtain a contract	486,978		375,226
Fixed asset depreciation and amortization	696,755		580,569
Deferred tax on investment in partnerships	242,221		264,537
Gross deferred tax liabilities	1,453,088		1,237,277
Net deferred tax liabilities	$	(137,940)	$	(122,870)

The Company accounts for investment tax credits as a reduction of income tax expense in the year in which the credits are recognized (i.e. the flow-through method). As of December 31, 2024, the Company has an investment tax credit carryforward of approximately $109.3 million which begins to expire in the year 2033, if not utilized. As of December 31, 2023, the Company has an investment tax credit carryforward of approximately $102.0 million and California enterprise zone credits of approximately $0.8 million.

The Company enters into ITC transfer agreements with third-party transferees to transfer to such third-parties, for cash, the ITCs generated by certain solar energy systems that have been or will be placed in service. The Company accounts for its share of ITC transfer proceeds under ASC 740, Income Taxes, as a reduction of income tax expense in the consolidated statement of operations during the year in which the credits are recognized (i.e., the flow-through method) and the tax equity investor’s share is distributed upon receipt. During the 12 months ended December 31, 2024 and December 31, 2023, the Company recognized income tax benefit to the Company of $70.0 million and $2.0 million, respectively, from such transfers.

Generally, utilization of the net operating loss carryforwards and credits may be subject to a substantial annual limitation due to the ownership change limitations provided by the Internal Revenue Code (IRC) of 1986, as amended and similar state provisions. The Company performed an analysis to determine whether an ownership change under IRC section 382 had occurred and determined that no ownership changes were identified as of December 31, 2024.

As of December 31, 2024, the Company had approximately $7.1 million of federal and $7.1 million of state capital loss carryforwards. The Company believes its capital loss carryforwards are not likely to be realized.

Valuation allowances are provided against deferred tax assets to the extent that it is more likely than not that the deferred tax asset will not be realized. The Company’s management considers all available positive and negative evidence including its history of operating income or losses, future reversals of existing taxable temporary difference, taxable income in carryback years and tax-planning strategies. The Company has concluded that it is more likely than not that the benefit from certain federal, state, and foreign tax credits and net operating loss carryforwards will not be realized. In recognition of this risk, the Company has provided a valuation allowance of

$165.0 million on certain deferred tax assets, including those relating to federal, state, and foreign tax credits and net operating loss carryforwards, which is a decrease of $9.3 million in 2024.

The Company sells solar energy systems to investment Funds. As the investment Funds are consolidated by the Company, the gain on the sale of the assets has been eliminated in the consolidated financial statements. However, this gain is recognized for tax reporting purposes. The Company accounts for the income tax consequences of these intra-entity transfers, both current and deferred, as a component of income tax expense and deferred tax liability, net during the period in which the transfers occur.

Uncertain Tax Positions

The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and local, and foreign jurisdictions, where applicable. The statute of limitations for the tax returns varies by jurisdiction.

The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company has analyzed its inventory of tax positions with respect to all applicable income tax issues for all open tax years (in each respective jurisdiction).

The Company’s policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes in the consolidated statements of operations.  

In 2018, the IRS opened an audit of one of the Company’s investors and reviewed the tax basis of the Company’s solar energy systems in the investment fund, which is covered by the Company’s 2018 insurance policy. In December 2024, this IRS audit resolved with no adverse findings involving the fair market value of the price paid by the investment fund for the Company’s solar energy systems. The Company incurred no out-of-pocket costs except the time, procedural, and administrative expenses associated with such a multi-year process. The Company does not expect increases in insurance premiums as a result of this audit.

The Company is subject to taxation and files income tax returns in the U.S., its territories, and various state and local jurisdictions. Due to the Company’s net losses, substantially all of its federal, state and local, and foreign income tax returns since inception are still subject to audit.

The following table summarizes the tax years that remain open and subject to examination by the tax authorities in the most significant jurisdictions in which the Company operates:

	Tax Years
U.S. Federal	2020-2024
State	2019-2024
Foreign	2019-2024

Net Operating Loss Carryforwards

As a result of the Company’s net operating loss carryforwards as of December 31, 2024, the Company does not expect to pay income tax, including in connection with its income tax provision for the year ended December 31, 2024. As of December 31, 2024, the Company had net operating loss carryforwards for federal, state, and foreign income tax purposes of approximately $720.7 million, $3.3 billion, and $459.9 million, respectively, which will begin to expire in 2028 for federal purposes, in 2025 for state purposes, and in 2031 for foreign purposes. In addition, federal and certain state net operating loss carryforwards generated in tax years beginning after December 31, 2017 total $2.0 billion and $334.4 million, respectively, and have indefinite carryover periods and do not expire.