Quarterly report [Sections 13 or 15(d)]

Fair Value Measurements

v3.25.1
Fair Value Measurements
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value accounting guidance provides a three-level hierarchy for classifying financial instruments. The levels of inputs used to determine the fair value of our financial assets and liabilities carried on the balance sheet at fair value and for those which only disclosure of fair value is required are characterized in accordance with the fair value hierarchy established by ASC 820, Fair Value Measurements. Where inputs for a financial asset or liability fall in more than one level in the fair value hierarchy, the financial asset or liability is classified in its entirety based on the lowest level input that is significant to the fair value measurement of that financial asset or liability. We use our judgment and consider factors specific to the financial assets and liabilities in determining the significance of an input to the fair value measurements. As of March 31, 2025 and December 31, 2024, only our residual assets related to our securitization trusts, our derivatives, and our investments were carried at fair value on the consolidated balance sheets on a recurring basis. The three levels of the fair value hierarchy are described below:
•Level 1 — Quoted prices (unadjusted) in active markets that are accessible at the measurement date.
•Level 2 — Observable prices that are based on inputs not quoted on active markets but corroborated by market data.
•Level 3 — Unobservable inputs are used when little or no market data is available.
The tables below state the estimated fair value of our financial instruments on our balance sheet. Unless otherwise discussed below, fair values for our Level 2 and Level 3 measurements are measured using a discounted cash flow model, contractual terms and inputs which consist of base interest rates and spreads over base rates which are based upon market observation and recent comparable transactions. An increase in these inputs would result in a lower fair value and a decline would result in a higher fair value. Our Senior Unsecured Notes (as defined below) and Convertible Notes are valued using a market-based approach and observable prices. The receivables held-for-sale, if any, are carried at the lower of cost or fair value, as determined on an individual asset basis.
  As of March 31, 2025
  Fair Value Carrying
Value		 Level
  (in millions)
Assets
Receivables
 $ 2,791  $ 2,961  Level 3
Receivables held-for-sale 103  92  Level 3
Investments (1)
7  7  Level 3
Securitization residual assets (2)
265  265  Level 3
Derivative assets 39  39  Level 2
Liabilities (3)
Commercial paper notes 430  430  Level 3
Term loans payable 409  409  Level 3
Non-recourse debt 128  129  Level 3
Senior unsecured notes 3,117  3,166  Level 2
Convertible Notes:
2025 Exchangeable Senior Notes 220  220  Level 2
2028 Exchangeable Senior Notes 498  404  Level 2
Total Convertible Notes 718  624 
Derivative liabilities 6  6  Level 2
(1)The amortized cost of our investments as of March 31, 2025, was $8 million.
(2)Included in securitization assets on the consolidated balance sheet. The amortized cost of our securitization residual assets net of allowance for credit losses as of March 31, 2025 was $310 million.
(3)Fair value and carrying value exclude unamortized financing costs.
  As of December 31, 2024
  Fair Value Carrying
Value		 Level
  (in millions)
Assets
Receivables
 $ 2,700  $ 2,896  Level 3
Receivables held-for-sale 79  76  Level 3
Investments (1)
7  7  Level 3
Securitization residual assets (2)
249  249  Level 3
Derivative assets 72  72  Level 2
Liabilities (3)
Credit facilities $ 1  $ 1  Level 3
Commercial paper notes 100  100  Level 3
Term loan facilities 415  415  Level 3
Non-recourse debt 132  136  Level 3
Senior unsecured notes 3,098  3,162  Level 2
Convertible Notes:
2025 Exchangeable Senior Notes 214  218  Level 2
2028 Exchangeable Senior Notes 470  408  Level 2
Total Convertible Notes 684  626 
Derivative liabilities 3  3  Level 2
(1)    The amortized cost of our investments as of December 31, 2024, was $8 million.
(2)    Included in securitization assets on the consolidated balance sheet. The amortized cost of our securitization residual assets net of allowance for credit losses as of December 31, 2024, was $301 million.
(3)    Fair value and carrying value exclude unamortized financing costs.

Securitization residual assets
The following table reconciles the beginning and ending balances for our Level 3 securitization residual assets that are carried at fair value on a recurring basis, with changes in fair value recorded through AOCI:
  For the three months ended March 31,
  2025 2024
  (in millions)
Balance, beginning of period $ 249  $ 219 
Accretion of securitization residual assets 5  4 
Additions to securitization residual assets 7  7 
Collections of securitization residual assets (3) (3)
Unrealized gains (losses) on securitization residual assets recorded in OCI 7  (7)
Provision for loss on securitization residual assets —  — 
Balance, end of period $ 265  $ 220 
We had the following securitization residual assets in an unrealized loss position:
Estimated Fair Value
Unrealized Losses (1)
Count of Assets
Assets with a loss shorter than 12 months Assets with a loss longer than 12 months Assets with a loss shorter than 12 months Assets with a loss longer than 12 months Assets with a loss shorter than 12 months Assets with a loss longer than 12 months
(in millions)
March 31, 2025 $ 46  $ 159  $ 2  $ 48  19  71 
December 31, 2024 67  152  4  52  28  69 
(1)    Other than the assets for which there is a reserve as discussed in Note 5, loss positions are due to interest rates movements and are not indicative of credit deterioration. We have the intent and ability to hold these investments until a recovery of fair value.
In determining the fair value of our securitization residual assets, we used a market-based risk-free rate and added a range of interest rate spreads based upon transactions involving similar assets of approximately 1% to 5% as of March 31, 2025 and 1% to 6% as of December 31, 2024. The weighted average discount rates used to determine the fair value of our securitization residual assets as of March 31, 2025 and December 31, 2024 were 6.9% and 7.3%, respectively.
Non-recurring Fair Value Measurements
Our financial statements may include non-recurring fair value measurements related to acquisitions and non-monetary transactions, if any. Assets acquired in a business combination, if any, are recorded at their fair value. We may use third-party valuation firms to assist us with developing our estimates of fair value.
Concentration of Credit Risk
Receivables, real estate leases and debt investments consist primarily of receivables from various projects, U.S. federal government-backed receivables, and investment grade state and local government receivables and do not, in our view, represent a significant concentration of credit risk given the large number of diverse offtakers and other obligors of the projects. Additionally, certain of our investments are collateralized by projects concentrated in certain geographic regions throughout the United States. These investments typically have structural credit protections to mitigate our risk exposure and, in most cases, the projects are insured for estimated physical loss, which helps to mitigate the possible risk from these concentrations.
We had cash deposits that are subject to credit risk as shown below:
March 31, 2025 December 31, 2024
  (in millions)
Cash deposits $ 67  $ 130 
Restricted cash deposits (included in other assets) 17  20 
Total cash deposits $ 84  $ 150 
Amount of cash deposits in excess of amounts federally insured $ 81  $ 148