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SEC Filings
10-K
TERRAFORM POWER, INC. filed this Form 10-K on 03/15/2019
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Costs of Operations

Costs of operations for the years ended December 31, 2017 and 2016 were as follows:
 
 
Year Ended December 31,
 
 
(In thousands)
 
2017
 
2016
 
Change
Cost of operations:
 
 
 
 
 
 
Solar
 
$
54,766

 
$
27,934

 
$
26,832

Wind
 
95,967

 
85,368

 
10,599

Cost of operations - affiliate:
 
 
 
 
 
 
Solar
 
10,542

 
22,851

 
(12,309
)
Wind
 
7,059

 
3,832

 
3,227

Total cost of operations
 
$
168,334

 
$
139,985

 
$
28,349


Cost of operations for our Solar and Wind segments increased by $26.8 million and $10.6 million, respectively, during the year ended December 31, 2017, compared to the same period in 2016, primarily resulting from transitioning away from SunEdison for O&M and asset management services. Costs for asset management and O&M services provided by SunEdison are reported as cost of operations - affiliate, which decreased by $12.3 million for our Solar segment and increased by $3.2 million for our Wind segment, compared to the same period in the prior year. The increase in affiliate costs for our Wind segment was driven by higher inventory and repairs and maintenance costs. Total cost of operations, including cost of operations - affiliate, increased $28.3 million, and was driven by a $5.8 million loss on disposals of property and equipment resulting from the replacement of major components at certain of our wind power plants, higher costs for asset management and O&M services provided by unaffiliated third parties and higher costs for project-level accounting services. During 2016, SunEdison provided project-level accounting services to us pursuant to asset management agreements and the costs were recognized as cost of operations - affiliate. Due to the transition away from SunEdison, project accounting was brought in-house during 2017, and we incurred significantly higher costs for these services due to our reliance on an hourly-based contractor workforce combined with the increased level of effort involved with filing our past due annual and quarterly reports and regaining compliance with Nasdaq listing requirements.

General and Administrative Expenses

General and administrative expenses for the years ended December 31, 2017 and 2016 were as follows:
 
 
Year Ended December 31,
 
 
(In thousands)
 
2017
 
2016
 
Change
General and administrative expenses:
 
 
 
 
 
 
Solar
 
$
2,973

 
$
15,353

 
$
(12,380
)
Wind
 
2,276

 
2,387

 
(111
)
Corporate
 
134,625

 
72,255

 
62,370

Total general and administrative expenses
 
$
139,874

 
$
89,995

 
$
49,879

General and administrative expenses - affiliate:
 
 
 
 
 
 
Corporate
 
$
13,391

 
$
14,666

 
$
(1,275
)

General and administrative expenses increased by $49.9 million during the year ended December 31, 2017, compared to the same period in 2016, driven by a $62.4 million increase in corporate general and administrative expenses. The increase in corporate general and administrative expenses is primarily due to the incurrence of $27.0 million of success based advisory fees paid upon the consummation of the Merger, a $24.8 million increase in employee compensation costs, and an increase in professional fees for legal, accounting and advisory services resulting from transition to standalone operations and the Merger. The increase in employee compensation was driven by a $9.3 million increase in annual incentive and retention bonuses to retain key employees, a $7.9 million increase in stock-based compensation expense due to the vesting of all previously unvested restricted stock units (“RSUs”) triggered by the change in control upon the consummation of the Merger, a $3.7 million increase for severance and transition bonus costs incurred as a result of our restructuring plan subsequent to the Merger and a $3.2 million increase in salaries and benefits costs due to directly hiring and retaining former employees of SunEdison.



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