Project Assets

9 Months Ended

Jul. 31, 2022

Project Assets

Project Assets

Note 7. Project Assets

Project assets as of July 31, 2022 and October 31, 2021 consisted of the following (in thousands):

	July 31,		October 31,		Estimated
	2022		2021		Useful Life
Project Assets – Operating	$	164,725	$	116,286	4-20 years
Accumulated depreciation		(28,004)		(19,844)
Project Assets – Operating, net		136,721		96,442
Project Assets – Construction in progress		109,297		126,835	7-20 years
Project Assets, net	$	246,018	$	223,277

The estimated useful lives of these project assets are 20 years from commencement date for balance of plant (“BOP”) and site construction, and four to seven years for modules. Project assets as of July 31, 2022 and October 31, 2021 included ten and nine, respectively, completed, commissioned installations generating power with respect to which the Company has a power purchase agreement (“PPA”) with the end-user of power and site host with a net aggregate value of $136.7 million and $96.4 million as of July 31, 2022 and October 31, 2021, respectively. Certain of these assets are the subject of sale-leaseback arrangements with PNC Energy Capital, LLC (“PNC”) and Crestmark Equipment Finance (“Crestmark”).

Project assets as of July 31, 2022 and October 31, 2021 also include installations with carrying values of $109.3 million and $126.8 million, respectively, which are being developed and constructed by the Company in connection with projects for which we have entered into PPAs and which have not yet been placed in service.

Included in “Construction in progress” is the 2.3 MW Toyota project. 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 carrying value of the project asset was no longer recoverable. Refer to Note 19. “Commitments and Contingencies” for more information regarding fuel risk exposure. While the Company is pursuing alternative sources of RNG, a $2.8 million charge was recorded for the fiscal year ended October 31, 2021 which represents the carrying value of the project asset less the carrying value of inventory components that could be redeployed for alternative use. Charges for the three month and nine month periods ended July 31, 2022 were $6.9 million and $14.0 million, respectively. As this project is being constructed, only inventory components that can be redeployed for alternative use are being capitalized. The balance of costs incurred are being expensed as generation cost of revenues.  

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 17. “Debt” for more information).