Quarterly report [Sections 13 or 15(d)]

Our Portfolio (Tables)

v3.25.1
Our Portfolio (Tables)
 3 Months Ended
Mar. 31, 2025
Investments [Abstract]  
Schedule of Analysis of Portfolio Performance Ratings
The following is an analysis of the Performance Ratings of our Portfolio as of March 31, 2025, which is assessed quarterly:
Portfolio Performance
1 (1)
2 (2)
3 (3)
Total
Commercial Government Commercial Commercial
Receivable vintage (4)
(dollars in millions)
2025 $ 2  $ —  $ —  $ —  $ 2 
2024 66  —  —  —  66 
2023 997  —  —  —  997 
2022 965  —  —  —  965 
2021 296  —  —  —  296 
2020 175  —  —  —  175 
Prior to 2020
 481  33  —  —  514 
Total receivables held-for-investment 2,982  33  —  —  3,015 
Less: Allowance for loss on receivables
 (54) —  —  —  (54)
Net receivables held-for-investment
 2,928  33  —  —  2,961 
Receivables held-for-sale 54  38  —  —  92 
Investments 5  2  —  —  7 
Real estate 3  —  —  —  3 
Equity method investments (5)
3,960  —  33  —  3,993 
Total
 $ 6,950  $ 73  $ 33  $ —  $ 7,056 
Percent of Portfolio 99  % 1  % —  % —  % 100  %

(1)This category includes our assets where based on our credit criteria and performance to date we believe that our risk of not receiving our invested capital remains low.
(2)This category includes our assets where based on our credit criteria and performance to date we believe there is a moderate level of risk to not receiving some or all of our invested capital.
(3)This category includes our assets where based on our credit criteria and performance to date, we believe there is substantial doubt regarding our ability to recover some or all of our invested capital. Receivables or investments in this category are placed on non-accrual status.
(4)Receivable vintage refers to the period in which the relevant agreement is signed, and a given vintage may contain advances made in periods subsequent to the period in which the agreement was signed.
(5)Some of the individual projects included in portfolios that make up our equity method investments have government off-takers. As they are part of large portfolios, they are not classified separately.
Schedule of Carrying Value, Expected Loan Funding Commitments, and Allowance by Type of Receivable
Below is a summary of the carrying value of our receivables held-for-investment, loan funding commitments, and allowance by type of receivable or “Portfolio Segment”, as defined by Topic 326, as of March 31, 2025 and December 31, 2024:
March 31, 2025 December 31, 2024
Gross Carrying Value Loan Funding Commitments Allowance Gross Carrying Value Loan Funding Commitments Allowance
(in millions)
Commercial (1)
2,982  418  54  2,911  545  50 
Government (2)
$ 33  $ —  $ —  $ 35  $ —  $ — 
Total $ 3,015  $ 418  $ 54  $ 2,946  $ 545  $ 50 
(1)As of March 31, 2025, this category of assets includes $1.5 billion of mezzanine loans made on a non-recourse basis to bankruptcy-remote special purpose subsidiaries of residential solar companies which hold residential solar assets where we rely on certain limited indemnities, warranties, and other obligations of the residential solar companies or their other subsidiaries. These residential solar assets typically contain back-up servicer provisions to allow for continuity of operations in the event the project sponsor is unable to fulfill its duties in that capacity.
Risk characteristics of our commercial receivables include a project’s operating risks, which include the impact of the overall economic environment, the sectors in which we invest, the effect of local, industry, and broader economic factors, the impact of any variation in weather and trends in interest rates. We use assumptions related to these risks to estimate an allowance using a discounted cash flow analysis or the PD/LGD method as discussed in Note 2 to our financial statements in this Form 10-Q. All of our commercial receivables are included in Performance Rating 1 in the Portfolio Performance table above. For those assets in Performance Rating 1, the credit worthiness of the obligor combined with the various structural protections of our assets cause us to believe we have a low risk we will not receive our invested capital, however we recorded a $54 million allowance on these $3.0 billion in assets as a result of lower probability assumptions utilized in our allowance methodology.
(2)As of March 31, 2025, our government receivables include $6 million of U.S. federal government transactions and $27 million of transactions where the ultimate obligors are state or local governments.
Risk characteristics of our government receivables include the energy savings or the power output of the projects and the ability of the government obligor to generate revenue for debt service, via taxation or other means. Transactions may have guarantees of energy savings or other performance support from third-party service providers, which typically are entities, directly or whose ultimate parent entity is, rated investment grade by an independent rating agency. All of our government receivables are included in Performance Rating 1 in the Portfolio Performance table above. Our allowance for government receivables is primarily calculated by using PD/LGD methods as discussed in Note 2 to our financial statements in this Form 10-Q. Our expectation of credit losses for these receivables is immaterial given the high credit-quality of the obligors.
The following table reconciles our beginning and ending allowance for loss on receivables by Portfolio Segment:
Three months ended March 31, 2025 Three months ended March 31, 2024
Government Commercial Government Commercial
(in millions)
Beginning balance $ —  $ 50  $ —  $ 50 
Provision for loss on receivables —  4  —  2 
Ending balance $ —  $ 54  $ —  $ 52 
Schedule of Anticipated Maturity Dates of Receivables and Investments and Weighted Average Yield
The following table provides a summary of our anticipated maturity dates of our receivables and the weighted average yield for each range of maturities as of March 31, 2025:
Total Less than 1
year		 1-5 years 5-10 years More than 10
years
  (dollars in millions)
Maturities by period (excluding allowance) $ 3,015  $ 43  $ 1,122  $ 761  $ 1,089 
Weighted average yield by period 8.7  % 6.4  % 8.9  % 9.2  % 8.2  %
Schedule of Equity Method Investments
As of March 31, 2025, we held the following equity method investments:
Investee Carrying Value
  (in millions)
Jupiter Equity Holdings LLC $ 629 
CarbonCount Holdings 1 LLC 506 
Daggett Renewable HoldCo LLC 417 
Lighthouse Renewable HoldCo 2 LLC 353 
Other equity method investments 2,088 
Total equity method investments $ 3,993 
The following is a summary of the consolidated balance sheets and income statements of the entities in which we have a significant equity method investment. These amounts are presented on the underlying investees’ accounting basis. In certain instances, adjustment to these equity values may be necessary in order to reflect our basis in these investments, for reasons including but not limited to the investees reporting to us being on a cost basis rather than a fair value basis or due to our allocations under HLBV differing from our purchase price of the investment. As described in Note 2, any difference between the amount of our investment and the amount of our share of underlying equity is generally amortized over the life of the assets and liabilities to which the differences relate. Certain of our equity method investments have the unrealized mark-to-market losses on energy hedges at the project level that do not qualify for hedge accounting. These unrealized mark-to-market losses, which resulted from rising energy prices, are recorded in the revenue line of the projects’ statements of operations. As these swaps are settled, the projects will sell power at the higher market price, offsetting the loss recognized on the energy hedges. Certain of the projects in which we have equity method investments also have interest rate swaps which are designated as cash flow hedges, and we recognize the portion of the gain or loss allocated to us related to those instruments through other comprehensive income. As of March 31, 2025 and December 31, 2024, we have accumulated other comprehensive income net of tax effect of $41 million and $23 million respectively, related to the interest rate swaps designated as cash flow hedges by our investees.
Palmetto HASI Holdings LLC
Other Investments (1)
Total
(in millions)
Balance Sheet
As of December 31, 2024
Current assets $ 113  $ 938  $ 1,051 
Total assets 1,367  20,675  22,042 
Current liabilities 5  1,409  1,414 
Total liabilities 393  8,934  9,327 
Members' equity 974  11,741  12,715 
As of December 31, 2023
Current assets —  965  965 
Total assets 44  18,392  18,436 
Current liabilities 1  904  905 
Total liabilities 9  8,505  8,514 
Members' equity 35  9,887  9,922 
Income Statement
For the year ended December 31, 2024
Revenue 15  1,186  1,201 
Income (loss) from continuing operations 1  (325) (324)
Net income (loss) 1  (325) (324)
For the year ended December 31, 2023
Revenue —  1,184  1,184 
Income (loss) from continuing operations (1) (60) (61)
Net income (loss) (1) (60) (61)
(1)Represents aggregated financial statement information for investments not separately presented.
Schedule of Related Party Transactions
The following table provides additional detail on our transactions with related party equity method investees:
Three Months Ended March 31, 2025 Three Months Ended March 31, 2024
(in millions)
Interest income from related party loans $ 19  $ 21 
Additional investments made in related party loans
 46  61 
Principal collected from related party loans 10  17 
Interest collected from related party loans 17  17