|TERRAFORM POWER, INC. filed this Form 10-K on 07/21/2017|
6. RENEWABLE ENERGY FACILITIES
Renewable energy facilities, net consists of the following:
December 31, 2016
December 31, 2015
Renewable energy facilities in service, at cost
Less accumulated depreciation - renewable energy facilities
Renewable energy facilities in service, net
Construction in progress - renewable energy facilities
Total renewable energy facilities, net
Depreciation expense related to renewable energy facilities was $209.2 million, $135.7 million and $37.3 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Construction in progress represents costs incurred to complete the construction of the facilities in the Company's current portfolio that were acquired from SunEdison. When renewable energy facilities are 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 facility at inception of the construction (see Note 3. Transactions Between Entities Under Common Control). All construction in progress costs are stated at SunEdison's historical cost. These costs include capitalized interest costs and amortization of deferred financing costs incurred during the asset's construction period, which totaled $1.6 million, $22.7 million and $37.3 million for the years ended December 31, 2016, 2015 and 2014, respectively.
As of December 31, 2016, the Company reclassified $548.7 million from renewable energy facilities, net to non-current assets held for sale in the consolidated balance sheet (see Note 4. Assets Held for Sale). There was no amount classified as assets held for sale as of December 31, 2015.
7. ASSET RETIREMENT OBLIGATIONS
Activity in asset retirement obligations for the years ended December 31, 2016, 2015 and 2014 was as follows:
Year Ended December 31,
Balance as of the beginning of the year
Additional obligations from renewable energy facilities achieving commercial
Revisions in estimates for current obligations1
Adjustment related to change in accretion period2
Assumed through acquisition
Acquisition accounting adjustments related to prior year acquisitions
Reclassification to non-current liabilities related to assets held for sale
Currency translation adjustment
Balance as of the end of the year
As discussed in Note 2. Summary of Significant Accounting Policies, effective December 31, 2016, the Company revised its original estimates of the costs and related amount of cash flows for certain of its asset retirement obligations.
As discussed in Note 2. Summary of Significant Accounting Policies, the Company revised the accretion period for its asset retirement obligations from the term of the related PPA agreement to the remaining useful life of the corresponding renewable energy facility, consistent with the period over which depreciation expense is recorded on the corresponding asset retirement cost recognized within renewable energy facilities and with its estimate of the future timing of settlement.