|TERRAFORM GLOBAL, INC. filed this Form 10-K on 06/15/2017|
5. POWER PLANTS
Power plants, net consists of:
As of December 31,
Solar power plants
Wind power plants
Total power plants in service, at cost
Less accumulated depreciation
Total power plants in service, net
Construction in progress - wind power plants
Total power plants, net
The Company recorded depreciation expense related to power plants of $52.1 million, $27.6 million and $6.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. Included in the reported depreciation expense are period currency translation adjustments for each year.
Construction in progress represents costs incurred to complete the construction of the power plants in the Company’s current portfolio that were either contributed to the Company by SunEdison or acquired from SunEdison. When plants are contributed or sold to the Company after completion by SunEdison, the Company retroactively recasts its historical financial statements to present the construction activity as if it consolidated the power plants at inception of the construction. All construction in progress costs are stated at SunEdison’s historical cost.
Certain of the Company's solar power plants in India are entitled to receive viability gap funding support in an amount determined through a competitive bidding process. The viability gap funding support is funded by India’s National Clean Energy Fund and is paid by the offtake counterparty to these solar power plants, the Solar Energy Corporation of India, a not-for-profit company established by the Ministry of New and Renewable Energy to facilitate solar energy generation capacity in India. The program is expected to provide viability gap funding subsidies to the applicable solar power plants in the aggregate amount of INR 1,189.4 million, 50% of which is payable as early as three months after each power plant's commissioning, and 10% of which is payable each year for five years thereafter, subject to the plant meeting certain requirements. SECI is contractually obligated to establish an irrevocable letter of credit to secure its payment obligations.
The Company recorded the awarded viability gap funding as a reduction to the cost of power plants in service, with a $2.3 million and $10.7 million receivable included in current other assets, and $3.4 million and $7.1 million included in other assets, in the consolidated balance sheet as of December 31, 2016 and 2015, respectively. The current portion of the viability gap funding includes the initial 50% receivable following the solar power plant's commercial operation date and the 10% receivable in the first year thereafter. The initial 50% receivable, or $8.9 million, was received in cash during 2016. The remaining portion of the current receivable is expected to be received in the second quarter of 2017. It is possible that $3.1 million of the remaining receivable balance of one of the power plants will not be received due to a lower capacity utilization factor than required under the PPA. As the result, the Company has reversed this amount against property, plant and equipment.