Commitments and Contingencies

12 Months Ended

Dec. 31, 2025

Commitments and Contingencies Disclosure [Abstract]

Letters of Credit

As of December 31, 2025 and 2024, the Company had $23.0 million and $47.3 million, respectively, of unused letters of credit outstanding, which each carry fees of 0.50% - 3.75% per annum and 0.50% - 3.25% per annum, respectively.

Guarantees

Certain tax equity funds and debt facilities require the Company to maintain an aggregate amount of $35.0 million of unencumbered cash and cash equivalents at the end of each month.

Operating and Finance Leases

The Company leases real estate under non-cancellable operating leases and equipment under finance leases.

The components of lease expense were as follows (in thousands):


	For the Year Ended December 31,
	2025		2024		2023
Finance lease cost:
Amortization of right-of-use assets	$	27,072	$	29,332	$	18,827
Interest on lease liabilities	4,545		5,704		3,291
Operating lease cost	29,308		31,742		34,937
Short-term lease cost	1,933		2,857		2,025
Variable lease cost	14,075		9,828		11,516
Sublease income	(2,222)		(3,132)		(4,667)
Total lease cost	$	74,711	$	76,331	$	65,929

Other information related to leases was as follows (in thousands):


	For the Year Ended December 31,
	2025			2024			2023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	31,849		$	35,473		$	39,157
Operating cash flows from finance leases	4,352			5,588			2,952
Financing cash flows from finance leases	25,185			27,240			23,279
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	14,938			14,461			21,417
Finance leases	3,058			36,991			87,726
Weighted average remaining lease term (years):
Operating leases	4.26			4.56			4.92
Finance leases	2.59			3.48			4.07
Weighted average discount rate:
Operating leases	5.6		%	5.3		%	4.4		%
Finance leases	5.9		%	5.9		%	5.6		%

Future minimum lease commitments under non-cancellable leases as of December 31, 2025 were as follows (in thousands):


	Operating Leases		Sublease Income		Net Operating Leases		Finance leases
2026	$	28,951	$	2,594	$	26,357	$	27,365
2027	19,450		1,729		17,721		23,956
2028	12,686		837		11,849		13,066
2029	11,367		—		11,367		1,628
2030	10,287		—		10,287		98
Thereafter	7,138		—		7,138		—
Total future lease payments	89,879		5,160		84,719		66,113
Less: Amount representing interest	(9,993)		—		(9,993)		(4,648)
Present value of future payments	79,886		5,160		74,726		61,465
Less: Amount for tenant incentives	—		—		—		—
Revised Present value of future payments	79,886		5,160		74,726		61,465
Less: Current portion	(25,254)		(2,594)		(22,660)		(24,557)
Long term portion	$	54,632	$	2,566	$	52,066	$	36,908

Purchase Commitment

The Company has several purchase commitments, which have the ability to be canceled without significant penalties, with multiple suppliers to purchase $317.6 million of batteries by the end of the third quarter of 2026 and to purchase $1.7 billion of photovoltaic modules, inverters and batteries between fiscal 2026 and fiscal 2029.

Warranty Accrual

The Company accrues warranty costs as revenue is recognized for energy systems sales, based on the estimated future costs of meeting its warranty obligations. Warranty costs primarily consist of replacement costs for supplies and labor costs for service personnel since warranties for equipment and materials are covered by the original manufacturer’s warranty (other than a small deductible in certain cases). As such, the warranty reserve is immaterial in all periods presented. The Company makes and revises these estimates based on the number of energy systems under warranty, the Company’s historical experience with warranty claims, assumptions on warranty claims to occur over a systems’ warranty period and the Company’s estimated replacement costs. A warranty is provided for energy systems sold. However, for the energy systems under Customer Agreements, the Company does not accrue a warranty liability because those systems are owned by consolidated subsidiaries of the Company. Instead, any repair costs on those energy systems are expensed when they are incurred as a component of customer agreements and incentives costs of revenue.

ITC Indemnification

The Company is contractually committed to compensate its investors for any losses that they may suffer in certain limited circumstances resulting from reductions in ITCs, including any reduction in depreciable basis. Generally, such obligations would arise as a result of reductions to the value of the underlying solar energy systems as assessed by the IRS. The Company set the purchase prices and claimed values based on fair market values determined with the assistance of an independent third-party appraisal with respect to the systems that generate ITCs (and the associated depreciable basis) that are passed-through to, and claimed by, the Fund investors. In April 2018, the Company purchased an insurance policy providing for certain payments by the insurers in the event there is a final determination (including a judicial determination) that reduced the ITCs and depreciation claimed in respect of solar energy systems sold or transferred to most Funds through April 2018, or later, in the case of Funds added to the policy after such date. In general, the policy indemnifies the Company and related parties for additional taxes (including penalties and interest) owed in respect of lost ITCs, depreciation, gross-up costs and expenses incurred in defending such claim, subject to negotiated exclusions from, and limitations to, coverage. The Company purchased similar additional insurance policies in January 2021, October 2022, May 2023, March 2024, June 2024, and March 2025.

At each balance sheet date, the Company assesses and recognizes, when applicable, the potential exposure from this obligation based on all the information available at that time, including any routine audits undertaken by the IRS.

Litigation

The Company is subject to certain legal proceedings, claims, investigations and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated. The Company evaluates the adequacy of its legal reserves based on its assessment of many factors, including interpretations of the law and assumptions that ultimately may or may not be correct about the future outcome of each case based on available information. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Depending on the nature and timing of any such proceedings that may arise, an unfavorable resolution of a matter could materially affect the Company’s future consolidated results of operations, cash flows, or financial position in a particular period.

In the normal course of business, the Company has from time to time been named as a party to various legal claims, actions, or complaints. While the outcome of these matters cannot currently be predicted with certainty, the Company does not currently believe that the outcome of any of these claims will have a material adverse effect, individually or in the aggregate, on its consolidated financial position, results of operations, or cash flows.