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Project Assets

12 Months Ended

Oct. 31, 2024

Note 7. Project Assets

Project assets as of October 31, 2024 and 2023 consisted of the following (in thousands):


	October 31,		October 31,		Estimated
	2024		2023		Useful Life
Project Assets – Operating	$	308,503	$	213,753	4-20 years
Accumulated depreciation		(66,542)		(46,263)
Project Assets – Operating, net		241,961		167,490
Project Assets – Construction in progress		170		90,576	7-20 years
Project Assets, net	$	242,131	$	258,066

The estimated useful lives of these project assets are 20 years for BOP and site construction, and four to seven years for modules. Project assets as of October 31, 2024 and 2023 included twelve and nine, respectively, completed, commissioned

installations generating power with respect to which the Company has a PPA with the end-user of power and site host with a net aggregate value of $242.0 million and $167.5 million as of October 31, 2024 and 2023, respectively. Certain of these assets are the subject of sale-leaseback arrangements with Crestmark. The increase in operating project assets as of October 31, 2024, compared to October 31, 2023, is a result of the inclusion of the Toyota project and the Derby Projects, all of which became operational during the year ended October 31, 2024.

Project assets as of October 31, 2024 and 2023 also include installations with carrying values of $0.2 million and $90.6 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.

Fiscal Year 2024 Charges, Including Impairment Charges

The 250 kW Trinity College project and the 1.0 MW UConn project were included in “Construction in progress” as of October 31, 2024. The units to be installed at Trinity College and UConn are first article units of our solid oxide fuel cell (“SOFC”) product. In reviewing our project cost estimates for these PPAs during the third quarter of fiscal year 2024, it was determined that the expected project costs for these contracts would exceed the expected cash flows and therefore an impairment charge was required. As a result, the Company recorded an impairment charge of $1.3 million that represents the unrecoverable costs incurred through October 31, 2024 for the Trinity College and UConn projects, which have been expensed as generation cost of revenues.

In addition, the Company incurred additional non-recoverable costs of $3.6 million associated with work at the Toyota site for the installation of ancillary equipment. This is consistent with non-recoverable costs at the Toyota project that were expensed as generation cost of revenues, as discussed in the fiscal year 2023 and fiscal year 2022 discussions below.

Fiscal Year 2023 Charges, Including Impairment Charges

The Toyota project was included in “Construction in progress” as of October 31, 2023. 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 project was expected to generate negative cash flows and that, therefore, the carrying value of the project asset was no longer recoverable. Refer to Note 20. “Commitments and Contingencies” for more information regarding fuel risk exposure. As this project was being constructed, only inventory components that could be redeployed for alternative use were capitalized. For the year ended October 31, 2023, non-recoverable costs incurred of $22.9 million have been expensed as generation cost of revenues.

During fiscal year 2023, the Company recorded an impairment charge of $2.4 million related to a project for which a PPA was ultimately not awarded.

Fiscal Year 2022 Charges, Including Impairment Charges

In the fourth quarter of fiscal year 2022, the Company made the decision not to proceed with development of the 7.4 MW and 1.0 MW Hartford projects given the then current economic profile of these projects. As a result, the Company recorded a $0.8 million impairment charge.

Charges for the year ended October 31, 2022 relating to the Toyota project were $22.1 million, which represented the carrying value of the project asset less the carrying value of inventory components that could be redeployed for alternative use.

Impairment charges are recorded as cost of generation revenues in the Consolidated Statements of Operations and Comprehensive Loss.

Depreciation expense for project assets was $26.9 million, $19.0 million and $14.2 million for the years ended October 31, 2024, 2023 and 2022, respectively.

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 12. “Debt” for more information).