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Project Assets

6 Months Ended

Apr. 30, 2023

Note 7. Project Assets

Project assets as of April 30, 2023 and October 31, 2022 consisted of the following (in thousands):


	April 30,		October 31,		Estimated
	2023		2022		Useful Life
Project Assets – Operating	$	210,211	$	154,736	4-20 years
Accumulated depreciation		(36,081)		(29,546)
Project Assets – Operating, net		174,130		125,190
Project Assets – Construction in progress		63,021		107,696
Project Assets, net	$	237,151	$	232,886

The estimated useful lives of these project assets are 20 years for balance of plant (“BOP”) and site construction, and four to seven years for modules. Project assets as of April 30, 2023 and October 31, 2022 included nine and eight, 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 $174.1 million and $125.2 million as of April 30, 2023 and October 31, 2022, respectively. As of April 30, 2023, certain of these assets were the subject of sale-leaseback arrangements with PNC Energy Capital, LLC (“PNC”) and Crestmark Equipment Finance (“Crestmark”). The increase in operating project assets at April 30, 2023, compared to October 31, 2022, is a result of the inclusion of the Groton Project which became operational during the six months ended April 30, 2023.

Project assets as of April 30, 2023 and October 31, 2022 also include installations with carrying values of $63.0 million and $107.7 million, respectively, which are being developed and constructed by the Company in connection with projects for which we have entered into PPAs or projects for which we expect to secure PPAs or otherwise recover the asset value 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 17. “Commitments and Contingencies” for more information regarding fuel risk exposure. 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 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 15. “Debt” for more information).