
(3)	See Liquidity and Capital Resources within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for discussion regarding these financing arrangements.


(4)	Terra LLC is a guarantor of the indebtedness of TerraForm Power Operating, LLC (“Terra Operating LLC”).


(5)	Represents ~~total~~ borrowing capacity as of ~~June 30, 2017.~~December 31, 2018. As of ~~June 30, 2017,~~December 31, 2018, there were ~~$497.0~~$377.0 million of revolving loans and ~~$60.9~~$99.5 million of letters of credit outstanding under the Revolver, with availability of ~~$12.1~~$123.5 million as of such date.


(6)	Certain project-level holding companies are guarantors of the indebtedness of Terra Operating LLC. These project-level holding companies do not have any indebtedness.

Our Business Strategy

Our primary business strategy is to acquire, own and operate solar and wind assets in North America and Western Europe. We are the owner and operator of a 3,738 MW diversified portfolio of ~~renewable energy~~high-quality solar and wind assets, underpinned by long-term contracts. Significant diversity across technologies and locations coupled with contracts across a large, diverse group of creditworthy counterparties significantly reduces the impact of resource variability on cash available for distribution and limits our exposure to any individual counterparty. We are sponsored by Brookfield.

Our goal is to pay ~~cash~~ dividends to our ~~stockholders.~~stockholders that are sustainable on a long-term basis while retaining within our operations sufficient liquidity for recurring growth capital expenditures and general purposes. We expect to generate this return with a regular dividend, which we intend to grow ~~our portfolio over time through acquisitions in order~~at 5 to ~~increase the~~8% per annum, that is supported by a target payout ratio of 80 to 85% of cash ~~dividends we pay to~~available for distribution and our ~~stockholders.~~

We have acquired a portfolio of long-term contracted clean power generation assets from SunEdison and unaffiliated third parties that have proven technologies, creditworthy counterparties, low operating risks and stable cash flows. We ~~have focused~~expect to achieve this growth and deliver returns by focusing on the solar and wind energy segments because we believe they are currently the fastest growing segments of the clean energy industry. Solar and wind assets are also attractive because there is no associated fuel cost risk, the technologies have become highly reliable and assets generally have an estimated expected life of 20 to 30 years.

On April 21, 2016, SunEdison Inc. and certain of its domestic and international subsidiaries (the "SunEdison Debtors") voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code (the "SunEdison Bankruptcy"). In anticipation of and in response to SunEdison’s financial and operating difficulties, which culminated in the SunEdison Bankruptcy, at the direction of our Board of Directors (the "Board"), we have undertaken, and continue to undertake, a number of strategic initiatives to mitigate the adverse impacts of the SunEdison Bankruptcy on the Company. These initiatives focused on governance, operations and business performance initiatives deemed especially critical because SunEdison provided all personnel and services to the Company (other than those operational services provided by third parties). These initiatives include, among other things, developing continuity plans, establishing stand-alone information technology, accounting and other systems and infrastructure, directly hiring employees and self-performing or retaining backup or replacement service providers for the operation and maintenance ("O&M") and asset management of our wind and solar facilities.following initiatives:

Value-Oriented Acquisitions:

We focus on sourcing off-market transactions at more attractive valuations than auction processes. Our successful acquisition of Saeta provides us with a European Platform and is an example of one such opportunity. We believe that multi-faceted transactions such as take-privates and recapitalizations may enable us to acquire high quality assets at attractive relative values.

We have a right of first offer (“ROFO”) to acquire certain renewable power assets in North America and Western Europe owned by Brookfield and its affiliates. The ROFO portfolio currently stands at approximately 3,500 MW. Over time, as Brookfield entities look to sell these assets, we will have the opportunity to make offers for these assets and potentially purchase them if the proposed price (i) meets our investment objectives, and (ii) is the most favorable offered to Brookfield and the applicable Brookfield entities receive all necessary approvals from their independent directors and institutional partners. We also continue to maintain a call right over 500 MW (net) of operating wind power plants that are owned by a warehouse vehicle that was owned and arranged by our previous sponsor, SunEdison, who sold its equity interest in this warehouse vehicle to an unaffiliated third party in 2017.

Margin Enhancements:

We believe there is significant opportunity to enhance our cash flow through optimizing the performance of our existing assets. As ~~part~~our recently announced long-term service agreements (collectively, the “LTSA”) with an affiliate of ~~this overall strategic review process, we also initiated a process~~General Electric demonstrate, such agreements have the potential to lock in cost savings, provide contractual incentives for ~~the exploration~~achieving our generation targets and ~~evaluation~~increase revenue through deployment of ~~potential strategic alternatives for the Company, including potential transactions~~technology. We are currently seeking to secure a new sponsor or sell the Company. As more fully described below, on March 6, 2017, this process resulted in our entry into a definitive merger and sponsorship transaction agreement (the “Merger Agreement”) andexecute similar agreements to ~~enter into a suite~~optimize the performance of ~~support~~our North American solar and sponsorship arrangements (the "Sponsorship Transaction") with Brookfield Asset Management Inc. ("Brookfield") and certain of its affiliates and our entry into a settlement agreement (the “Settlement Agreement”) and a voting and support agreement (the “Voting and Support Agreement”) with SunEdison and the SunEdison Debtors.European wind fleets.

Organic Growth:

We continue to ~~focus~~develop a robust organic growth pipeline comprised of opportunities to invest in our existing fleet on ~~these strategic initiatives~~an accretive basis as well as add-on acquisitions across our scope of operations. We have identified a number of investment opportunities which we believe may be compelling, including asset repowerings, site expansions and ~~other near-term plans and priorities in order~~adding energy storage to better position the Company to return to its focus on growing its solar and wind portfolio and to pay and increase the cash dividends it pays to its shareholders. These initiatives, plans and priorities include:existing sites.

~~focusing~~We benefit from Brookfield’s deep operational expertise in owning, operating and developing renewable assets, as well as its significant deal sourcing capabilities and access to capital. Brookfield is a leading global alternative asset manager and has a more than 100-year history of owning and operating assets with a focus on ~~the performance~~renewable power, property, infrastructure and ~~efficiency~~private equity. Brookfield has approximately $350 billion of ~~our existing~~assets under management of which $47 billion are renewable power assets. This renewable power portfolio represents approximately 17,400 MW of generation capacity in 15 countries. It also employs over 2,500 individuals with extensive operating, development and power marketing capabilities and has a demonstrated ability to deploy capital in a disciplined manner, having developed or acquired 13,200 MW of renewable ~~energy facilities;~~

focusing on satisfying conditions to the effectiveness of the Merger Agreement and the Settlement Agreement to effectuate the transactions contemplated by the Merger Agreement and the Sponsorship Transaction;

mitigating, to the extent possible, the adverse impacts resulting from the SunEdison Bankruptcy, including ensuring the continuity of operation, maintenance and asset management of our renewable energy facilities by self-performing those activities or engaging third party providers;

creating a separate stand-alone corporate organization, including, among other things, directly hiring employees and establishing our own accounting, information technology, human resources and other systems and infrastructure;

working with project-level lenders and financing parties to cure, or obtain waivers or forbearance of, defaults that have arisen under most of our project-level debt financings as a result of the SunEdison Bankruptcy and delays in delivering corporate and project-level audited financial statements, among other things; and

seeking to optimize our portfolio and capital structure by reducing corporate-level indebtedness, financing or refinancing certain renewable energy facilities at the project level, exiting certain markets or selling certain assets if we believe the opportunity would improve stockholder value.

While we remain focused on executing our near-term objectives, we also continue to pursue our long-term business strategy, which is to own, operate and grow our portfolio with assets that have proven technologies, creditworthy counterparties, lower operating risks and stable cash flows in markets with attractive long-term power pricing dynamics and predictable regulatory environments.generation capacity since 2012.

108

~~Recent Developments~~Sponsorship Arrangements

~~Business Update~~

~~As of June 30,~~On October 16, 2017, our renewable energy generation fleet stands at 2,606.7 MW, over three times the size of our initial portfolio in July 2014. Our fleet is contracted for a weighted average (based on MW) remaining period of 14 years as of June 30, 2017 with creditworthy counterparties and provides significant ongoing cash flow.

~~Transition to Standalone Operations~~

We have been transitioning away from our historical reliance on SunEdison for management, corporate and accounting services, employees, systems and information technology infrastructure, and the operation, maintenance and asset management of our power plants. As part of this transition, as of January 1, 2017, certain employees of SunEdison who provided dedicated corporate-level services to the Company were hired directly by the Company. During the first half of 2017, we hired additional employees of SunEdison who are primarily dedicated to performing O&M, asset management and project-level accounting activities and entered into transition services agreements with SunEdison with respect to the transition of O&M and asset management services. However, we continue to depend on a substantial number of outside contractors and SunEdison employees, as well as accounting and other systems provided by SunEdison, for certain of our continuing operations. We continue to execute on the other aspects of our plan to implement a stand-alone organization and continue to evaluate our employee retention and incentive plans, as well.

~~Merger and Sponsorship Transaction~~

On March 6, 2017, TerraForm Power entered into the Merger Agreement with Orion US Holdings 1 L.P., a Delaware limited partnership (“Orion Holdings”), and BRE TERP Holdings Inc., a Delaware corporation and a wholly-owned subsidiary of Orion Holdings ~~(“Merger Sub”), which are affiliates of Brookfield. The Merger Agreement provides for the merger of Merger Sub~~merged with ~~and into~~ TerraForm Power (the “Merger”), with TerraForm Power continuing as the surviving ~~corporation in~~corporation. In connection with the ~~Merger. Orion Holdings will hold approximately 51% of the Class A shares of TerraForm Power following~~ consummation ~~of the Merger. The Merger Agreement provides that, at or prior to the effective time~~ of the Merger, TerraForm Power ~~and Orion Holdings, Brookfield and certain of their affiliates will enter~~entered into the ~~Sponsorship Transaction, a~~following suite of ~~agreements providing for the~~support and sponsorship arrangements of(the “Sponsorship Transaction”) with Brookfield and certain of its ~~affiliates of the Company as described in greater detail below.~~ affiliates:

~~The Merger~~Master Services Agreement was approved unanimously by the members of our Board voting on the matter, following the unanimous recommendation of our Corporate Governance and Conflicts Committee (“Conflicts Committee”). Completion of the Sponsorship Transaction is expected to occur, subject to satisfaction of closing conditions, in the second half of 2017.

~~Immediately prior to the effective time of the Merger, TerraForm Power will declare the payment of a special cash dividend~~ (the ~~“Special Dividend”~~“Brookfield MSA”) in the amount of $1.94 per fully diluted share, which includes the Company’s issued and outstanding Class A shares, Class A shares issued to SunEdison pursuant to the Settlement Agreement (more fully described below) and Class A shares underlying outstanding restricted stock units of the Company under the Company’s long-term incentive plan.

At the effective time of the Merger, each share of Class A common stock of TerraForm Power, issued and outstanding immediately prior to the effective time of the Merger (other than certain excluded shares) will be converted into the right to, at the holder’s election and subject to proration as described below, either (i) receive $9.52 per Class A share, in cash, without interest (the “Per Share Cash Consideration”) or (ii) retain one share of Class A common stock, par value $0.01 per share, of TerraForm Power (the “Per Share Stock Consideration,” and, together, with the Per Share Cash Consideration, without duplication, the “Per Share Merger Consideration”). Issued and outstanding shares include shares issued in connection with the SunEdison Settlement Agreement as described more fully below and shares underlying outstanding restricted stock units of the Company under the Company's long-term incentive plan. The Per Share Stock Consideration will be subject to proration in the event that the aggregate number of Class A shares for which an election to receive the Per Share Stock Consideration has been made exceeds 49% of the TerraForm Power fully diluted share count (the “Maximum Stock Consideration Shares”). Additionally, the Per Share Cash Consideration will be subject to proration in the event that the aggregate number of Class A shares for which an election to receive the Per Share Cash Consideration has been made exceeds the TerraForm Power fully diluted share count minus (i) the Maximum Stock Consideration Shares, (ii) any Class A shares currently held by affiliates of Brookfield, ~~and (iii) any shares for which the holders seek appraisal under Delaware law.~~

Concurrently with the execution and delivery of the Merger Agreement, SunEdison executed and delivered the Voting and Support Agreement. Under that agreement, SunEdison agreed to vote or cause to be voted any shares of common stock of TerraForm Power held by it or any of its controlled affiliates in favor of the Merger and to take certain other actions to support the consummation of the Merger and the Sponsorship Transaction.

The Merger Agreement includes a non-waivable condition to closing that the Merger Agreement and the transactions contemplated thereby be approved by holders of a majority of the outstanding Class A shares, excluding SunEdison, Orion Holdings, any of their respective affiliates or any person with whom any of them has formed (and not terminated) a “group” (as such term is defined in the Securities Exchange Act of 1934, as amended). The closing of the Merger is also subject to certain additional conditions, including the adoption of the Merger Agreement by the holders of a majority of the total voting power of the outstanding common shares entitled to vote on the Merger and other customary closing conditions. Certain conditions to the closing of the Merger have been satisfied, including (1) the entry of an order by the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) authorizing and approving the entry by SunEdison (and, if applicable, SunEdison’s debtor affiliates) into the Settlement Agreement and the Voting and Support Agreement (each as described more fully below) and any other agreement entered into in connection with the Merger or the Sponsorship Transaction to which SunEdison or any other debtor will be a party, (2) the expiration or early termination of the waiting period applicable to consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and (3) the closing of the sale of substantially all of our U.K. solar facilities as described below.

There is no financing condition to the consummation of the transactions contemplated by the Merger Agreement. Pursuant to the Merger Agreement, we have agreed to provide cooperation as reasonably requested by Orion Holdings in its efforts to obtain debt financing that is to be made available to us from and after the closing of the Merger. Certain lenders have committed, upon the terms and subject to the conditions set forth in debt commitment letters provided to Orion Holdings, to provide certain financing to repay, refinance, redeem, defease or otherwise repurchase certain Company indebtedness. Orion Holdings has also provided a guaranty, dated as of March 6, 2017, pursuant to whichBRP Energy Group L.P., Brookfield ~~Infrastructure Fund III-A (CR)~~Asset Management Private Institutional Capital Adviser (Canada), L.P., ~~a limited partnership organized under the laws of Delaware,~~ Brookfield Infrastructure Fund III-A, L.P., a limited partnership organized under the laws of Delaware, Brookfield Infrastructure Fund III-B, L.P., a limited partnership organized under the laws of Delaware, Brookfield Infrastructure Fund III-D, L.P., a limited partnership organized under the laws of Delaware,Global Renewable Energy Advisor Limited, Terra LLC and Brookfield Infrastructure Fund III-D (CR), L.P., a limited partnership organized under the laws of Delaware (collectively, the “Guarantors”) have guaranteed certain obligations of Orion Holdings under the Merger Agreement.

~~Orion Holdings and TerraForm Power have made customary representations and warranties in the Merger Agreement. We have also agreed~~Terra Operating LLC, pursuant to various agreements and covenants, including, subject to certain exceptions, to conduct our business in the ordinary course of business between execution of the Merger Agreement and closing of the Merger and not to engage in certain specified types of transactions during that period. In addition, we are subject to a “no change of recommendation” restriction and “no shop” restriction on our ability to solicit alternative business combination proposals from third parties and to provide information to, and engage in discussions with, third parties regarding alternative business combination transactions, except as permitted under the terms of the Merger Agreement. We may not terminate the Merger Agreement to accept an alternative business combination and are required to hold a shareholder vote on the Merger Agreement even if the Board withdraws its recommendation to vote in favor of the Merger. Orion Holdings has also made certain covenants in respect of the operation of the business of Brookfield and its affiliates in a manner that would not impair the ability of Brookfield and its affiliates to perform their sponsorship obligations under the Sponsorship Transaction from and after the effective time of the Merger.

The Merger Agreement contains specified termination rights, including the right for each of us or Orion Holdings to terminate the Merger Agreement if the Merger is not consummated by December 6, 2017, subject to extension until March 6, 2018 to obtain required regulatory approvals. The Merger Agreement also provides for other customary termination rights for both us and Orion Holdings, as well as a mutual termination right in the event that the Settlement Agreement is terminated in accordance with its terms. In the event the Merger Agreement is terminated by either us or Orion Holdings due to the failure to obtain the requisite stockholder approvals or the termination of the Settlement Agreement, and the Board did not change its recommendation to our stockholders to approve the Merger, we will pay to Orion Holdings all reasonable and documented out-of-pocket expenses incurred in connection with the Merger Agreement and the Sponsorship Transaction, in an amount not to exceed $17.0 million. The Merger Agreement further provides that upon termination of the Merger Agreement under certain other specified circumstances, we will be required to pay Orion Holdings a termination fee of $50.0 million. Our obligation to pay any combination of out-of-pocket expenses or termination fees shall not in any event exceed $50.0 million.

In addition, the Merger Agreement provides that, at or prior to the effective time of the Merger, we will enter into the following suite of documents that comprise the Sponsorship Transaction and that provides the basis of the arrangements under which Brookfield and certain of its affiliates ~~will act as~~provide certain management and administrative services, including the ~~new sponsor~~provision of ~~the Company. These agreements include: (a) a~~

~~master services agreement (the “Merger MSA”) by~~strategic and ~~among TerraForm Power, Terra LLC, Terra Operating LLC, Brookfield and certain affiliates of Brookfield (collectively, the “MSA Providers”) pursuant to which the MSA Providers will provide certain~~investment management services, to TerraForm Power and its ~~subsidiaries commencing at the effective time~~subsidiaries.

Relationship Agreement (the “Relationship Agreement”) with Brookfield, Terra LLC and Terra Operating LLC, which governs certain aspects of the ~~Merger, (b) a revolving credit line agreement, substantially consistent with the term sheet as agreed~~relationship between ~~Orion Holdings~~Brookfield and TerraForm Power asand its subsidiaries. Pursuant to the Relationship Agreement, during the term of the ~~date of the Merger Agreement, (the “Sponsor Line Agreement”) by and among~~agreement, TerraForm Power and ~~Brookfield or~~ its affiliates pursuant to which Brookfield or its affiliates will commit up to a $500 million secured revolving credit line to TerraForm Power for use to acquire renewable energy assets or for profit improving capital expenditures, (c) a relationship agreement (the “Relationship Agreement”) by and among TerraForm Power, Terra LLC, Terra Operating LLC and Brookfield, pursuant to which, among other things, Brookfield agrees that the Company willsubsidiaries serve as the primary vehicle through which Brookfield and ~~certain of~~ its affiliates will ~~own~~acquire operating solar and wind ~~and solar~~ assets in certain countries in North America and ~~certain other~~ Western ~~European nations~~Europe, and ~~that~~ Brookfield ~~will provide, subject to certain terms and conditions,~~grants TerraForm Power ~~and its subsidiaries with~~ a right of first offer on any proposed transfer of certain existing projects and all future operating solar and wind ~~and solar assets that are owned by Brookfield and certain of its affiliates and are~~projects located in ~~those~~such countries developed by, persons sponsored by or under the control of Brookfield, subject to certain exceptions and consent rights set out therein. See Item 1A. Risk Factors. Risks Related to our Relationship with Brookfield.

Governance Agreement (the ~~“ROFO Pipeline”) and (d) a registration rights agreement (the “Registration Rights~~“Governance Agreement”) bywith Orion Holdings and ~~among~~any controlled affiliate of Brookfield (other than TerraForm Power and ~~Orion Holdings providing Orion Holdings~~its controlled affiliates) (such controlled affiliates together with ~~registration~~Brookfield, the “Sponsor Group”) that by the terms of the Governance Agreement from time to time becomes a party thereto. The Governance Agreement establishes certain rights ~~with respect to its shares in~~and obligations of TerraForm Power ~~after~~and members of the ~~Merger (together with~~Sponsor Group that own voting securities of TerraForm Power relating to the ~~IDR Transfer Agreement (as defined below), Merger MSA,~~governance of TerraForm Power and the relationship between such members of the Sponsor ~~Line Agreement, Relationship Agreement~~Group and ~~Registration Rights Agreement, collectively, the “New Sponsorship Agreements”~~TerraForm Power and ~~individually, each a “New Sponsorship Agreement”).~~ its controlled affiliates.

~~As consideration for the services provided or arranged for by Brookfield~~Terra LLC is also party to an amended and ~~its affiliates pursuant to the master services agreement, the Company will pay a base management fee on a quarterly basis that will be paid in arrears and calculated as follows:~~

for each of the first four quarters following the closing date of the Merger, a fixed component of $2.5 million per quarter (subject to proration for the quarter including the closing date of the Merger) plus 0.3125% of the market capitalization value increase for such quarter;

~~for each of the next four quarters, a fixed component of $3.0 million per quarter plus 0.3125% of the market capitalization value increase for such quarter; and~~

~~thereafter, a fixed component of $3.75 million per quarter plus 0.3125% of the market capitalization value increase for such quarter.~~

For purposes of calculating the quarterly payment of the base management fee, the term market capitalization value increase means, for any quarter, the increase in value of the Company’s market capitalization for such quarter, calculated by multiplying the number of outstanding shares of Class A common stock as of the last trading day of such quarter by the difference between (x) the volume-weighted average trading price of a share of Class A common stock for the trading days in such quarter and (y) $9.52. If the difference between (x) and (y) in the market capitalization value increase calculation for a quarter is a negative number, then the market capitalization value increase is deemed to be zero.

~~Affiliates of Brookfield will hold the IDRs of Terra LLC. At the closing of the Merger, the~~restated limited liability company agreement ~~of Terra LLC will be amended and restated to, among other things, reset the~~with Brookfield IDR ~~thresholds of Terra LLC to establish a first distribution threshold of $0.93 per share of Class A common stock~~Holder and a ~~second distribution threshold~~$500.0 million sponsor line of ~~$1.05 per share~~credit with Brookfield and one of ~~Class A common stock. As~~its affiliates as discussed in Liquidity and Capital Resources within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. See also a ~~result of this amendment and restatement, amounts distributed from Terra LLC would be distributed on a quarterly basis as follows:~~

~~first, to the Company in an amount equal to the Company’s outlays and expenses for such quarter;~~

second, to holders of Class A units, until an amount has been distributed to such holders of Class A units that would result, after taking account of all taxes payable by the Company in respect of the taxable income attributable to such distribution, in a distribution to holders of shares of Class A common stock of $0.93 per share (subject to adjustment for distributions, combinations or subdivisions of shares of Class A common stock) if such amount were distributed to all holders of shares of Class A common stock;

~~third, 15% to the holders~~discussion of the IDRs ~~and 85% to the holders of Class A units until a further amount has been distributed to holders of Class A units~~ in such quarter that would result, after taking account of all taxes payable by the Company in respect of the taxable income attributable to such distribution, in a distribution to holders of shares of Class A common stock of an additional $0.12 per share (subject to adjustment for distributions, combinations or subdivisions of shares of Class A common stock) if such amount were distributed to all holders of shares of Class A common stock; and

~~thereafter, 75% to holders of Class A units and 25% to holders of the IDRs.~~

The Merger Agreement also requires TerraForm Power to issue to Orion Holdings additional Class A shares in respect of any losses to TerraForm Power arising out of certain specified litigation matters upon the final resolution of such matters.

Further, at the effective time of the Merger, the governing documents of TerraForm Power, including its by-laws and certificate of incorporation, will be amended and restated to be substantially consistent with the governance terms agreed to between Orion Holdings and TerraForm Power as of the date of the Merger Agreement.

~~Settlement Agreement and Voting and Support Agreement with SunEdison~~

As part of our strategic alternatives process, we entered into the Settlement Agreement and the Voting and Support Agreement with SunEdison on March 6, 2017 to resolve intercompany claims in connection with the SunEdison Bankruptcy, to obtain SunEdison's support of, and to facilitate the closing of, the Merger and the Sponsorship Transaction in light of SunEdison's controlling stake in the Company and to facilitate a complete transition away from SunEdison as our sponsor and as a provider of services to us. The Bankruptcy Court authorized and approved the entry by SunEdison (and its applicable debtor affiliates) into the Settlement Agreement and the Voting and Support Agreement on June 6, 2017. The mutual releases and certain other terms and conditions of the Settlement Agreement will become effective upon the consummation of the Merger or other transaction jointly supported by the Company and SunEdison and certain other conditions. Those provisions of the Settlement Agreement would also become effective upon a "Stand-Alone Conversion" as defined in the last paragraph of this section below.

Upon its effectiveness, the Settlement Agreement will resolve claims between TerraForm Power and SunEdison, including among other things, alleged claims of SunEdison against the Company for alleged fraudulent and preferential transfers and claims of the Company against SunEdison, including those outlined in the initial proof of claim filed by the Company in the SunEdison Bankruptcy on September 25, 2016 and on October 7, 2016. Under the Settlement Agreement, all such claims will be mutually released, and, subject to certain exceptions, any agreements between SunEdison Debtors and SunEdison parties to the Settlement Agreement on the one hand and the Company on the other hand will be rejected and no party will be deemed to have liability under those rejected agreements.

Under the Settlement Agreement, SunEdison will exchange, effective as of immediately prior to the record time for the Special Dividend, all of the Class B units of Terra LLC held by it or any of its controlled affiliates for 48,202,310 Class A shares of TerraForm Power (the “Exchange Shares” and the “Exchange,” as applicable). As a result of and following completion of the Exchange, all of the issued and outstanding shares of Class B common stock of TerraForm Power will be redeemed and retired. Immediately prior to the effective time of the Merger, TerraForm Power will also authorize and issue to SunEdison a number of additional Class A shares (the “Additional SunEdison Shares,” together with the Exchange Shares, the “SunEdison Shares”), such that, immediately prior to the effective time of the Merger, SunEdison will hold an aggregate number of Class A shares equal to 36.9% of TerraForm Power’s fully diluted share number. In addition, also as part of the settlement, SunEdison agreed to deliver the outstanding IDRs of Terra LLC held by SunEdison or certain of its affiliates to TerraForm Power or its designee and in connection therewith, concurrently with the execution and delivery of the Merger Agreement, TerraForm Power, Terra LLC, BRE Delaware, Inc. (the “Brookfield IDR Holder”) and SunEdison and certain of its affiliates have entered into an Incentive Distribution Rights ~~Transfer Agreement (the “IDR Transfer Agreement”), pursuant to which certain SunEdison affiliates will transfer all~~ within Item 7. Management's Discussion and Analysis of ~~the IDRs to Brookfield IDR Holder at the effective time~~Financial Condition and Results of the Merger on the terms and conditions set forth in the IDR Transfer Agreement. Our Board approved the Settlement Agreement upon the recommendation of the Conflicts Committee, each member of which is independent (pursuant to applicable NASDAQ rules) and does not also serve on the Board of Directors of TerraForm Global, Inc.

The Settlement Agreement would also become effective under certain circumstances if the Merger Agreement is terminated as a result of the failure to obtain the approval of the holders of a majority of the Class A common stock of TerraForm Power (as described above) and SunEdison elects to exchange its Class B units in Terra LLC and its Class B shares in TerraForm Power for newly issued Class A common stock constituting 36.9% of the aggregate issued and outstanding Class A common stock on a fully diluted basis (a “Stand-Alone Conversion”). In connection with a Stand-Alone Conversion, SunEdison would be required to deliver a customary voting agreement and an irrevocable proxy in customary form and substance reasonably acceptable to the Company and the holder of the Class A common stock issued to SunEdison, which may be SunEdison or a third party that receives the Class A common stock as part of a distribution in connection with SunEdison's plan of reorganization. This voting agreement would require the applicable stockholder, for a period of one year from the date of the Stand-Alone Conversion, to vote one-half of its voting power in the same proportion of the votes cast by stockholders not a party to a similar voting agreement, which would effectively reduce the voting power of the applicable stockholder.

~~Transition Services Agreements~~

In the first half of 2017, we entered into certain transition services agreements with SunEdison with respect to project-level operations and maintenance and asset management services provided by SunEdison. These transition services agreements allow the Company, among other things, to hire employees of SunEdison that are currently performing these project-level

services for the Company. These transition services agreements also allow the Company to terminate project-level asset management and operations and maintenance services on 10 days advance notice. Under these agreements, the Company agreed to indemnify SunEdison for certain losses and liabilities to the extent SunEdison failed to perform services under existing services contracts as a result of the transition of SunEdison employees to the Company. SunEdison will also continue to provide certain project related services for a transitional period. The Company is also in the process of negotiating a corporate-level transition services agreement with SunEdison. The Company expects that under this agreement, SunEdison would agree to continue to provide certain corporate-level services, including tax and information technology support services through the end of the third quarter of 2017. At this time, we cannot give firm assurances that we will enter into any such corporate-level transition services agreement with SunEdison.Operations.

Corporate Governance ~~Changes~~and Management

~~Resignation~~We have a single class of ~~Mr. David Springer from~~shares outstanding worth one vote each. The size of our Board of Directors (the “Board”) is currently set at seven members, of whom four are designated by Brookfield and three are independent. Under the ~~Board~~

~~On December 20, 2016, Mr. David Springer resigned from his position as a director~~terms of the Board. The resignation was contingent upon, and effective immediately prior to, the election of Mr. David Pauker as a director of the Board. Mr. Springer’s resignation was not the result, in whole or in part, of any disagreement with the Company.

~~Election of Mr. David Pauker to the Board~~

On December 20, 2016, the Board voted to elect Mr. David Pauker to be a member of the Board effective immediately. We believe that Mr. Pauker qualifies as an independent director under applicable stock exchange rules. In connection with the election of Mr. Pauker to the Board, the Board consulted with various parties, including SunEdison, Inc.,Sponsorship Transaction, Brookfield appoints our ~~controlling shareholder, which suggested Mr. Pauker as a board candidate.~~

~~Resignation of Mr. David Ringhofer from the Board~~

On February 12, 2017, Mr. David Ringhofer resigned from his position as a director of the Board. The resignation was contingent upon, and effective immediately prior to, the election of Mr. Christian S. Fong as a director of the Board. Mr. Ringhofer’s resignation was not the result, in whole or in part, of any disagreement with the Company.

~~Resignation of Mr. Gregory Scallen from the Board~~

On February 12, 2017, Mr. Gregory Scallen resigned from his position as a director of the Board. The resignation was contingent upon, and effective immediately prior to, the election of Mr. Christian S. Fong as a director of the Board. Mr. Scallen’s resignation was not the result, in whole or in part, of any disagreement with the Company.

~~Election of Mr. Christian S. Fong to the Board~~

On February 12, 2017, effective upon the resignations of Messrs. Ringhofer and Scallen from their positions as directors of the Board, Mr. Christian S. Fong became a member of the Board pursuant to a previous vote by the Board. We believe that Mr. Fong qualifies as an independent director under applicable stock exchange rules. In connection with the election of Mr. Fong to the Board, the Board consulted with various parties, including SunEdison, Inc., our controlling shareholder, which suggested Mr. Fong as a board candidate.

~~Reconstitution of the Conflicts Committee~~

On February 3, 2017, the Board appointed Ms. Kerri L. Fox and Messrs. Edward “Ned” Hall, Marc S. Rosenberg and David Pauker to the Conflicts Committee, effective immediately upon the resignation of Messrs. Christopher Compton, Hanif “Wally” Dahya and John F. Stark from the Conflicts Committee. Messrs. Compton, Dahya and Stark resigned from the Conflicts Committee on February 3, 2017. On February 26, 2017, Mr. Fong was appointed to the Conflicts Committee. As a result of these changes, the Conflicts Committee consists of five members, Ms. Fox and Messrs. Hall, Rosenberg, Pauker and Fong. Mr. Hall serves as the Chairperson of the Conflicts Committee.

Additionally, on February 3, 2017, the members of the Conflicts Committee of Terra LLC (the “LLC Conflicts Committee”) appointed Ms. Fox and Messrs. Hall, Rosenberg and Pauker to the LLC Conflicts Committee, effective immediately upon the resignation of Messrs. Compton, Dahya and Stark from the LLC Conflicts Committee. Messrs. Compton, Dahya and Stark resigned from the LLC Conflicts Committee on February 3, 2017. Mr. Fong was appointed to the LLC Conflicts Committee on February 27, 2017. As a result of these changes, the LLC Conflicts Committee consists of five

~~members, Ms. Fox and Messrs. Hall, Rosenberg, Pauker and Fong. Mr. Hall serves as the Chairperson of the LLC Conflicts Committee.~~

~~Creation of Compensation Committee~~

For purposes of the applicable stock exchange rules, the Company is a “controlled company.” As a controlled company, we rely upon certain exceptions, including with respect to establishing a compensation committee or nominating committee. While we remain able to rely upon such exceptions, on February 3, 2017, the Board created a Compensation Committee of the Board (the “Compensation Committee”) and appointed Messrs. Stark, Hall and Compton as its members. Mr. Stark serves as the Chairperson of the Compensation Committee.

~~The Compensation Committee is responsible for, among other matters: (i) reviewing and approving corporate goals and objectives relevant to the compensation of the Company’s~~ Chief Executive Officer, ~~(ii) determining, or recommending to the Board for determination, the~~ Chief ~~Executive Officer’s compensation level based on this evaluation, (iii) determining, or recommending to the Board for determination, the compensation of directors~~Financial Officer and ~~all other~~General Counsel. These three executive officers (iv) discharging the responsibility of the Board with respect to the Company’s incentive compensation plans and equity-based plans, (v) overseeing compliance with respect to compensation matters, (vi) reviewing and approving severance or similar termination payments to any current or former executive officerare not employees of the Company and ~~(vii) preparing an annual Compensation Committee Report, if required by applicable Securities and Exchange Commission ("SEC") rules.~~their services are provided pursuant to the Brookfield MSA.

~~Notification Letters from NASDAQ~~

~~NASDAQ Listing Rule 5620(a) (the "Annual Meeting Rule") requires the Company to hold~~Our Board has established an ~~annual meeting of shareholders within twelve months of the end~~Audit Committee and a Conflicts Committee, each consisting entirely of our ~~fiscal year. We did not hold an annual meeting during 2016,~~independent directors. The Conflicts Committee considers, among other things, matters in which a conflict of interest exists between our Company and ~~therefore, we~~Brookfield. Our Board has also established a Nominating and Governance Committee, which consists of three directors, one of whom is a director designated by Brookfield and two of whom are not in compliance with the Annual Meeting Rule. On January 4, 2017, we received a notification letter from a Senior Director of NASDAQ Listing Qualifications, which stated that our failure to hold our annual meeting by December 31, 2016 serves as an additional basis for delisting the Company's securities and that the hearings panel will consider this matter in their decision regarding our continued listing on the NASDAQ Global Select Market. On January 11, 2017, we submitted a response requesting an extension to hold an annual meeting and regain compliance with the Annual Meeting Rule.

On March 6, 2017, we received a notification letter from a Director of NASDAQ Listing Qualifications informing us that because we had not yet filed this Form 10-K for the year ended December 31, 2016, the Company was not in compliance with NASDAQ Listing Rule 5250(c)(1), which requires timely filing of periodic reports with the SEC. The letter noted that on February 24, 2017, we filed our Form 10-Q for the period ended September 30, 2016, and as a result regained compliance with Listing Rule 5250(c)(1). The Notification Letter also noted that, per listing Rule 5815(c)(1)(F), the NASDAQ Hearings Panel may grant us an exception period not to exceed 360 days from the due date of the Form 10-K for the year ended December 31, 2016, or February 26, 2018. The notification letter had no immediate effect on the listing of our common stock on the NASDAQ Global Select Market.

On March 20, 2017, we received a notification letter from a Hearings Advisor from the NASDAQ Office of General Counsel informing us that the hearings panel granted us an extension until June 30, 2017 to regain compliance with NASDAQ’s continued listing requirements with respect to this Form 10-K for the year ended December 31, 2016, our Form 10-Q for the first quarter of 2017 and our delinquency in holding our annual meeting during the year ended December 31, 2016. On May 12, 2017, we received a notification letter from a Senior Director of NASDAQ Listing Qualifications stating that because we had not yet filed our Form 10-Q for the first quarter of 2017, this served as an additional basis for delisting the Company's securities from the NASDAQ Global Select Market.

On June 29, 2017, we received a notification letter from a Hearings Advisor from the NASDAQ Office of General Counsel informing us that the hearings panel granted us further extensions to regain compliance with NASDAQ's continued listing requirements. Under these extensions, the Company's Class A common stock will remain listed on the NASDAQ Global Select Market, subject to the requirement that this Form 10-K for the year ended December 31, 2016 be filed with the SEC by July 24, 2017, our annual meeting of stockholders be held by August 24, 2017, our Form 10-Q for the first quarter of 2017 be filed with the SEC by August 30, 2017 and our Form 10-Q for the second quarter of 2017 be filed with the SEC by September 30, 2017. The hearings panel also requested certain additional information, which the Company provided on July 10, 2017. The hearings panel reserved the right to reconsider the terms of the extension and the NASDAQ Listing and Hearing Review Council may determine to review the hearing panel's decision. This Form 10-K for the year ended December 31, 2016 was filed with the SEC prior to July 24, 2017. We have not yet held our annual meeting for 2016 or filed our Form 10-Q for the first quarter of 2017.independent directors.

~~Delayed Filing of First Quarter 2017 Form 10-Q~~

Due mainly to the failure of SunEdison to provide adequate project-level accounting services to us subsequent to the SunEdison Bankruptcy and the time and resources required to complete our delayed SEC periodic reports, including our Form 10-K for the year ended December 31, 2015, our Forms 10-Q for the first, second and third quarters of 2016, and this Form 10-K for the year ended December 31, 2016, we have experienced delays in our ongoing efforts to complete all steps and tasks necessary to finalize financial statements and other disclosures required to be in our Form 10-Q for the first quarter of 2017 and were not able to file our report by the SEC filing deadline in May 2017. On May 11, 2017, we filed a Form 12b-25 Notification of Late Filing with the SEC with respect to our Form 10-Q for the first quarter of 2017. We continue to work to complete, as soon as practicable, all steps and tasks necessary to finalize our financial statements and other disclosures required to be included in our periodic filings with the SEC. There can be no assurance that our future periodic reports will not be delayed for similar reasons. Continued delays in the filing of our periodic reports with the SEC could have a material adverse effect on the Company. See ~~"Continued delays in the filing of our reports with the SEC, as well as further delays in the preparation of audited financial statements at the project level, could have a material adverse effect,"~~ in ~~Item 1A. Risk Factors~~ ~~for additional information, including certain of the risks associated with these delays.~~

~~Sale of substantially all of the Company's U.K. Portfolio~~

On May 11, 2017, we announced that Terra Operating LLC completed its previously announced sale of a portfolio of 24 operating solar projects in the United Kingdom representing 365.0 MW (the "U.K. Portfolio") to Vortex Solar UK Limited, a renewable energy platform managed by the private equity arm of EFG Hermes, an investment bank. Terra Operating LLC received approximately $211 million of proceeds from the sale, net of transaction expenses and distributions taken from the U.K. Portfolio after announcement and before closing of the sale, which is expected to be used for the reduction of the Company's indebtedness. The sale also resulted in a reduction in the Company's non-recourse project debt by approximately GBP 301 million at the U.K. Portfolio level. We have retained 11.1 MW of solar assets in the United Kingdom.

~~Residential Portfolio Sale~~

We began exploring a sale of substantially all of our portfolio of residential rooftop solar assets located in the United States through a strategic sales process in 2016, and these assets were determined to meet the criteria to be classified as held for sale during the fourth quarter of 2016. Our analysis indicated that the carrying value of the assets exceeded the fair value less costs to sell, and as a result, an impairment charge of $15.7 million was recognized within impairment of renewable energy facilities in the consolidated statement of operations for the year ended December 31, 2016. We also recorded a $3.3 million charge within impairment of renewable energy facilities for the year ended December 31, 2016 due to the decision to abandon certain residential construction in progress assets that were not completed by SunEdison as a result of the SunEdison Bankruptcy.

On March 14, 2017, Enfinity SPV Holdings 2, LLC, a subsidiary of the Company, entered into a membership interest purchase and sale agreement with Greenbacker Residential Solar II, LLC for the sale of 100% of the membership interests of Enfinity Colorado DHA 1, LLC, a Colorado limited liability company that owns and operates 2.5 MW of solar installations situated on the roof of public housing units located in Colorado and owned by the Denver Housing Authority. We received net proceeds of $1.1 million upon the closing of this transaction on March 31, 2017. In addition, the Company entered into a membership interest purchase and sale agreement with Greenbacker Residential Solar II, LLC on June 12, 2017 for the sale of 100% of the membership interests of TerraForm Resi Solar Manager, LLC, a subsidiary of the Company, which owns and operates 8.9 MW of rooftop solar installations. The transaction closed on June 30, 2017; we received net proceeds of $5.4 million upon closing and expect to receive an additional $0.6 million in the third quarter of 2017.

~~Upsize to Canada project-level financing~~

On November 2, 2016, certain of our subsidiaries entered into a new non-recourse loan financing in an aggregate principal amount of $120.0 million Canadian dollars (“CAD”) (including a CAD $6.9 million letter of credit) secured by approximately 40 MW(ac) of utility scale solar power plants located in Canada that are owned by our subsidiaries. On February 28, 2017, we increased the principal amount of the credit facility by an additional CAD $113.9 million (including an additional CAD $6.7 million letter of credit), increasing the total facility to CAD $233.9 million. The proceeds of this additional financing are expected to be used for general corporate purposes and were used to pay down an additional $5.0 million on the Revolver per the terms of the consent agreement and ninth amendment to the Revolver entered into on September 27, 2016. The revolving commitments and borrowing capacity for the Revolver were also reduced by $5.0 million.

~~Revolver Amendments~~

The terms of the Revolver require the Company to provide audited annual financial statements within 90 days after the end of the fiscal year, with a 10-business day cure period. On April 5, 2017, we entered into a tenth amendment to the terms of the Revolver, which provided that the date on which we must deliver to the Administrative Agent and other parties to the Revolver our annual financial statements and accompanying audit report with respect to fiscal year 2016 and our financial plan for fiscal year 2017 would be extended to April 28, 2017.

On April 26, 2017, we entered into an eleventh amendment to the terms of the Revolver, which further extended the due date for delivery of our 2016 annual financial statements and accompanying audit report to the earlier of (a) July 15, 2017 and (b) the tenth business day prior to the date on which the failure to deliver such financial statements would constitute an event of default under our Indentures. As discussed below, an event of default would not have occurred under our Indentures until July 31, 2017. This Form 10-K for the year ended December 31, 2016 was filed within the 10-business day cure period that commenced on July 15, 2017, and consequently no event of default occurred under the Revolver with respect to this filing. The eleventh amendment also extended the due date for delivery to the Administrative Agent and other parties to the Revolver for our financial statements and accompanying information with respect to the fiscal quarter ended March 31, 2017 to July 31, 2017 and with respect to the fiscal quarters ending June 30, 2017 and September 30, 2017 to the date that is 75 days after the end of each such fiscal quarter, with a 10-business day cure period for each quarterly deliverable.

The eleventh amendment amends the Debt Service Coverage Ratio (as defined in the Revolver credit and guaranty agreement) applicable to the fourth quarter of 2016, and first, second and third quarters of 2017 from 1.75:1.00 to 1.50:1.00. The amendment also amends the Leverage Ratio (as defined therein) applicable to the fourth quarter of 2016 from 6.00:1.00 to 6.50:1.00 and applicable to the first, second and third quarters of 2017 from 5.75:1.00 to 6.50:1.00. In addition, the amendment amends the definitions of Debt Service Coverage Ratio and Leverage Ratio to provide for, in each case, certain pro forma treatment of the repayment or refinancing of Non-Recourse Project Indebtedness (as defined therein) net of any new Non-Recourse Project Indebtedness incurred in connection with any such refinancing. Per the terms of the eleventh amendment, we agreed to prepay $50.0 million of revolving loans outstanding under the Revolver and permanently reduce the revolving commitments and borrowing capacity by such amount. This amount was repaid on May 3, 2017. After giving effect to this reduction, the total borrowing capacity under the Revolver is now $570.0 million.

~~Senior Notes Default Notices~~

The Senior Notes due 2023 and the Senior Notes due 2025 require the Company to timely file with the SEC, or make publicly available, audited annual financial statements and unaudited quarterly financial statements no later than 60 days following the date required by the SEC's rules and regulations (including extensions thereof). The Company has a 90-day grace period from the date a notice of default is deemed to be duly given to Terra Operating LLC in accordance with the Senior Notes due 2023 and the Senior Notes due 2025. On May 2, 2017, Terra Operating LLC received a notice from the trustee of an event of default for failure to deliver 2016 audited annual financial statements and thus had until July 31, 2017 to deliver its 2016 audited financial statements before an event of default would occur under the Indentures. However, this Form 10-K for the year ended December 31, 2016 was filed with the SEC within the grace period for delivery, and consequently no event of default occurred with respect to this filing.

On July 11, 2017, Terra Operating LLC received a notice from the trustee of an event of default for failure to comply with its obligation to timely furnish the Company's Form 10-Q for the first quarter of 2017. However, an event of default will not occur under the Indentures with respect to the Form 10-Q for the first quarter of 2017 unless such Form 10-Q is not filed within the 90-day grace period that commenced on July 11, 2017.

189

Changes within Our Portfolio

The following table provides an overview of the changes within our portfolio from December 31, ~~2015~~2017 through December 31, ~~2016 and June 30, 2017:~~2018:

Net Nameplate Capacity (MW)¹
Weighted Average Remaining Duration of PPA (Years)²
Facility Type Number of Sites
Description Source
Total Portfolio as of December 31, 2015 2,966.9
3,054
16
Additions to the Blackhawk Solar portfolio SunEdison Solar 18.0
1
19
Additions to the SUNE XVIII portfolio SunEdison Solar 1.2
3
19
Additions to the MPI portfolio Third Party Solar 0.9
3
16
Resi 2015 Portfolio I terminations SunEdison Solar (4.0 ) (560 ) N/A
Adjustment to Duke Operating sites³
N/A Solar —
2
N/A
Total Portfolio as of December 31, 2016 2,983.1
2,503
15
Sale of U.K. Utility Solar Portfolio N/A Solar (208.4 ) (14 ) (13 )
Sale of Fairwinds & Crundale N/A Solar (55.9 ) (2 ) (12 )
Sale of Stonehenge Q1 N/A Solar (41.2 ) (3 ) (12 )
Sale of Stonehenge Operating N/A Solar (23.6 ) (3 ) (11 )
Sale of Says Court N/A Solar (19.8 ) (1 ) (12 )
Sale of Crucis Farm N/A Solar (16.1 ) (1 ) (12 )
Sale of Resi 2015 Portfolio I N/A Solar (8.9 ) (1,246 ) (18 )
Sale within Resi 2014 Portfolio 1 N/A Solar (2.5 ) (666 ) (15 )
Total Portfolio as of June 30, 2017 2,606.7
567
14



			Nameplate Capacity (MW)
	Facility Type			Number of Sites	Weighted Average Remaining Duration of PPA (Years)¹
Description	Facility Type			Number of Sites	Weighted Average Remaining Duration of PPA (Years)¹
Total Portfolio as of December 31, 2017			2,698	533	14
Acquisition of Saeta	Solar and Wind	��	1,027	32	14
Acquisition of TEG assets	Solar		6	6	11
Acquisition of Tinkham Hill Expansion assets²	Solar		3	1	20
Acquisition of IFM assets	Solar		4	3	19
Total Portfolio as of December 31, 2018			3,738	575	13

~~———~~———

(1)

~~Net nameplate capacity represents the maximum generating capacity at standard test conditions~~Represents weighted-average remaining term of ~~a facility multiplied by the Company's percentage of economic ownership of that facility after taking into account any redeemable preference shares~~power purchase agreements (“PPAs”) and ~~stockholder loans the Company holds. Our percentage of economic ownership is subject to change in future periods for certain facilities. Further note the total amount~~calculated as of December 31, ~~2016 within the table above does not foot due to rounding.~~2017 and December 31, 2018, respectively.


(2)	~~Calculated as~~This asset is expected to achieve its commercial operation date during the second quarter of ~~December 31, 2015~~, ~~December 31, 2016 and June 30, 2017, respectively.~~ 2019.


~~(3)~~	~~Reflects an adjustment to number of sites.~~

Our Portfolio

Our current portfolio consists of renewable energy facilities located in the United States (including Puerto Rico), Canada, Spain, Chile, ~~and~~Portugal, the United Kingdom and Uruguay with a combined nameplate capacity of ~~2,606.7~~3,738 MW as of ~~June 30, 2017.~~December 31, 2018. These renewable energy facilities generally have long-term PPAs with creditworthy counterparties. ~~Our PPAs have~~As of December 31, 2018, on a weighted average basis (based on MW), our PPAs had a remaining life of 1413 years ~~as of June 30, 2017.~~and our counterparties to our PPAs had, on average, an investment grade credit rating.

The following table lists the renewable energy facilities that comprise our portfolio as of ~~June 30, 2017:~~December 31, 2018:


Facility Category / Portfolio	Location	Nameplate Capacity (MW)	Net Nameplate Capacity (MW)¹	Number of Sites	Weighted Average Remaining Duration of PPA (Years)²	Counterparty Credit Rating³		Location	Nameplate Capacity (MW)	Number of Sites	Weighted Average Remaining Duration of PPA (Years)¹
Solar Distributed Generation:							Solar Distributed Generation:
CD DG Portfolio	U.S.	77.8	77.8	42	16	A- / A1		U.S.²	77.8	42	14
DG 2015 Portfolio 2	U.S.	48.1	48.1	30	19	AA- / Aa2		U.S.²	48.1	30	17
U.S. Projects 2014	U.S.	45.4	45.4	41	17	AA- / A1		U.S.²	45.4	41	16
DG 2014 Portfolio 1	U.S.	44.0	44.0	46	18	AA- / Aa2		U.S.²	44.0	46	16
TEG	U.S.	33.8	32.0	56	13	AA- / Aa2		U.S.²	39.9	62	10
HES	U.S.	25.2	25.2	67	12	AA / Aa2
Hudson Energy Solar								U.S.²	25.2	67	11
MA Solar	U.S.	21.1	21.1	4	24	AA / Aaa		Massachusetts	21.1	4	25
Summit Solar Projects	U.S.	19.6	19.6	50	10	AA+ / Aa1		U.S.²	19.6	50	8
U.S. Projects 2009-2013	U.S.	15.2	15.2	73	13	A / A1		U.S.²	15.2	73	17
SUNE XVIII	U.S.	16.1	16.1	21	19	AAA / Aaa		U.S.²	16.1	21	11
California Public Institutions	U.S.	13.5	7.0	5	17	AA- / Aa3		California	13.5	5	14
Enfinity	U.S.	13.2	13.2	15	15	A- / A2		U.S.²	13.2	15	15
MA Operating	U.S.	12.2	12.2	4	16	AA+ / Aa2		Massachusetts	12.2	4	12
Duke Operating	U.S.	10.0	10.0	3	13	A- / A1		North Carolina	10.0	3	13
SunE Solar Fund X	U.S.	8.8	8.8	12	14	AA+ / Aa1		U.S.²	8.8	12	15
Summit Solar Projects	Canada	3.8	3.8	7	15	NR / Aa2		Ontario	3.8	7	15
MPI	Canada	4.7	4.7	13	17	NR / Aa2		Ontario	4.7	13	13
Resi 2014 Portfolio 1	U.S.	0.3	0.3	34	14	NR / NR
Total Solar Distributed Generation		412.8	404.5	523	16	AA- / Aa3

Solar Utility:
Mt. Signal	U.S.	265.8	265.8	1	22	A+ / Aa2
Regulus Solar	U.S.	81.6	81.6	1	17	BBB+ / A3
Blackhawk Solar Portfolio	U.S.	72.8	72.8	10	20	AA+ / Aa2
North Carolina Portfolio	U.S.	26.4	26.4	4	12	A / Aa2
Atwell Island	U.S.	23.5	23.5	1	21	BBB / A3
Nellis	U.S.	14.0	14.0	1	10	NR / NR
Alamosa	U.S.	8.2	8.2	1	10	A- / A3
CalRENEW-1	U.S.	6.3	6.3	1	13	BBB / A3
Northern Lights	Canada	25.4	25.4	2	16	NR / Aa2
Marsh Hill	Canada	18.5	18.5	1	18	NR / Aa2
SunE Perpetual Lindsay	Canada	15.5	15.5	1	17	NR / Aa2
Norrington	U.K.	11.1	11.1	1	12	A- / Baa1
CAP	Chile	101.6	101.6	1	17	BB+ / NR
Total Solar Utility		670.7	670.7	26	19	A / Aa3

Tinkham Hill Expansion								Massachusetts	2.5	1	20

Decreases in the retail prices of electricity supplied by utilities or other clean energy sources would harm our ability to offer competitive pricing and could harm our ability to sign PPAs with new customers. The price of electricity from utilities could decrease for a number of reasons, including:20

~~the construction of a significant number of new power generation plants, including nuclear, coal, natural gas or renewable energy facilities;~~

~~the construction of additional electric transmission and distribution lines;~~

~~a reduction in the price of natural gas, including as a result of new drilling techniques or a relaxation of associated regulatory standards;~~

~~energy conservation technologies and public initiatives to reduce electricity consumption; and~~

~~the development of new clean energy technologies that provide less expensive energy.~~

A shift in the timing of peak rates for utility-supplied electricity to a time of day when solar energy generation is less efficient could make solar energy less competitive and reduce demand. If the retail price of energy available from utilities were to decrease, we would be at a competitive disadvantage in negotiating new PPAs and therefore we may be unable to attract new customers and our growth would be limited, and the value of our renewable energy facilities may be impaired or their useful life may be shortened.

We may not be able to replace expiring PPAs with contracts on similar terms. If we are unable to replace an expired distributed generation PPA with an acceptable new contract, we may be required to remove the renewable energy facility from the site or, alternatively, we may sell the assets to the site host.

We may not be able to replace an expiring PPA with a contract on equivalent terms and conditions, including at prices that permit operation of the related facility on a profitable basis. If we are unable to replace an expiring PPA with an acceptable new revenue contract, ~~the affected site may temporarily or permanently cease operations or~~ we may be required to sell the power produced by the facility at wholesale prices which ~~are~~may cause a significant reduction in CAFD and be exposed to market fluctuations and ~~risks.~~risks, or the affected site may temporarily or permanently cease operations. In the case of a distributed generation solar facility that ceases operations, the PPA terms generally require that we remove the assets, including

fixing or reimbursing the site owner for any damages caused by the assets or the removal of such assets. The cost of removing a significant number of distributed generation solar facilities could be material. Alternatively, we may agree to sell the assets to the site owner, but the ~~terms and conditions, including price, that we would receive in any sale, and the~~ sale price may not be sufficient to replace the revenue previously generated by the solar generation facility.

~~Our renewable energy facilities are exposed to curtailment risks, which may reduce~~A material drop in the ~~return to us on those investments and adversely impact our business, financial condition, and results of operations.~~

~~Certain of our renewable energy facilities’ generation~~retail price of electricity ~~may be curtailed without compensation due to transmission limitations~~generated by traditional utilities or ~~limitations on the~~ electricity ~~grid’s ability to accommodate intermittent electricity generating~~from other sources ~~reducing our revenues and impairing our ability to capitalize fully on a particular assets potential.~~

We are also experiencing curtailment with respect to other of our solar and wind power plants. Solutions to ameliorate or eliminate curtailment with respect to our power plants may not be available or may not be effective or may be cost prohibitive to undertake and implement. Curtailment at levels above our expectations could ~~have a material adverse effect on our business, financial condition and results of operations and cash flows and our ability to pay dividends to holders of our Class A common stock.~~

The growth of our business depends on locating and acquiring interests in attractive renewable energy facilities at favorable prices and with favorable financing terms. Additionally, even if we consummate such acquisitions and financings on terms that we believe are favorable, such acquisitions may in fact result in a decrease in cash available for distribution per Class A common share.

Our primary business strategy is to acquire renewable energy facilities that are operational at the time of acquisition. We may also, in limited circumstances, acquire renewable energy facilities that are pre-operational. We have not changed our long-term strategy which is to pursue opportunities to acquire renewable energy facilities and grow our portfolio. The following factors, among others, could affect the availability of attractive renewable energy facilities to grow our business and dividend per Class A common share:

~~competing bids for a renewable energy facility, including from companies that may have substantially greater capital and other resources than we do;~~

fewer third party acquisition opportunities than we expect, which could result from, among other things, available renewable energy facilities having less desirable economic returns or higher risk profiles than we believe suitable for our business plan and investment strategy;

~~risk relating to our ability to successfully acquire projects from the ROFO Pipeline pursuant to the Sponsorship Transaction with Brookfield; and~~

~~our access to the capital markets for equity and debt (including project-level debt) at a cost and on terms that would be accretive to our shareholders.~~

We will not be able to increase our dividend per share unless we are able to acquire additional renewable energy facilities at favorable prices, optimize our portfolio and capital structure. Even if we consummate acquisitions that we believe will be accretive to our dividends per share, those acquisitions may in fact result in a decrease in dividends per share as a result of incorrect assumptions in our evaluation of such acquisitions, unforeseen consequences or external events beyond our control.

~~Our acquisition strategy exposes us to substantial risk.~~

The acquisition of renewable energy facilities is subject to substantial risk, including the failure to identify material problems during due diligence (for which we may not be indemnified post-closing), the risk of over-paying for assets (or not making acquisitions on an accretive basis), the ability to obtain or retain customers and, if the renewable energy facilities are in new markets, the risks of entering markets where we have limited experience. While we perform due diligence on prospective acquisitions, we may not be able to discover all potential operational deficiencies in such renewable energy facilities. In addition, our expectations for the operating performance of newly constructed renewable energy facilities as well as those under construction are based on assumptions and estimates made without the benefit of operating history. However, the ability of these renewable energy facilities to meet our performance expectations is subject to the risks inherent in newly constructed renewable energy facilities and the construction of such facilities, including, but not limited to, degradation of equipment in excess of our expectations, system failures and outages. Future acquisitions may not perform as expected or the returns from such acquisitions may not support the financing utilized to acquire them or maintain them. Furthermore, integration and consolidation of acquisitions requires substantial human, financial and other resources and may divert management’s attention from our existing business concerns, disrupt our ongoing business or not be successfully integrated. As a result, the

~~consummation of acquisitions may have a material adverse effect on our business, financial condition, results of operations and cash flows.~~

We may not be able to effectively identify or consummate any future acquisitions. Additionally, even if we consummate acquisitions, such acquisitions may in fact result in a decrease in cash available for distribution to holders of our Class A common stock. In addition, we may engage in asset dispositions or other transactions that result in a decrease in our cash available for distribution.

Future acquisition opportunities for renewable energy facilities are limited. While Brookfield and its affiliates will grant us a right of first offer with respect to the projects in the ROFO Pipeline following consummation of the Merger, there is no assurance we will be able to acquire or successfully integrate any such projects. We will compete with other companies for future acquisition opportunities from Brookfield and its affiliates and third parties.

This may increase our cost of making acquisitions or cause us to refrain from making acquisitions at all. Some of our competitors are much larger than us with substantially greater resources. These companies may be able to pay more for acquisitions and may be able to identify, evaluate, bid for and purchase a greater number of assets than our resources permit. If we are unable to identify and consummate future acquisitions, it will impede our ability to execute our growth strategy and limit our ability to ~~increase the amount of dividends paid to holders of~~attract new customers and adversely affect our Class A common stock. In addition, as we continue to manage our liquidity profile, we may engage in asset dispositions, or incur additional project-level debt, which may result in a decrease in our cash available for distribution.growth.

~~The substantial decline~~Decreases in the retail prices of our stock price has significantly increased the difficulty of identifying acquisitions that we believe will be accretive to cash available for distribution to shareholders per unit. Even if we consummate acquisitions that we believe will be accretive to such cash per unit, those acquisitions may in fact result in a decrease in such cash per unit as a result of incorrect assumptions in our evaluation of such acquisitions, unforeseen consequenceselectricity supplied by traditional utilities or other external events beyond our control. Furthermore, if we consummate any future acquisitions, our capitalization and results of operations may change significantly, and stockholders will generally not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and other resources. As a result of the negative impact on our business from these developments, we no longer expect to achieve the growth rate in our dividend per Class A common share that we had been targeting. If our stock price continues to trade at current levels, we may not be able to consummate transactions that are accretive to such cash per unit or increase our dividend per share of Class A common stock.

~~Our ability to grow and make acquisitions with cash on hand may be limited by our cash dividend policy.~~

~~Although we believe it is prudent to defer any decision on paying dividends to our stockholders for the time being given the limitations on~~clean energy sources would harm our ability to ~~access the capital markets~~offer competitive pricing and the other risks that we face, in the future we intend to continue our dividend policy of causing Terra LLC to distribute an appropriate portion of cash to unitholders in order to permit TerraForm Power to pay dividends to its shareholders each quarter and to rely primarily upon external financing sources, including the issuance of debt and equity securities and to fund our acquisitions and growth capital expenditures. We may be precluded from pursuing otherwise attractive acquisitions if the projected short-term cash flow from the acquisition or investment is not adequate to service the capital raised to fund the acquisition or investment. As such, our growth may not be as fast as that of businesses that reinvest their available cash to expand ongoing operations.

~~Our indebtedness~~ could ~~adversely affect our financial condition and ability to operate our business, including restricting~~harm our ability to ~~pay cash dividends~~sign PPAs with customers. The price of electricity from traditional utilities could decrease for a number of reasons, including:

the construction of a significant number of new power generation plants, including nuclear, coal, natural gas or ~~react to changes~~renewable energy facilities;

the construction of additional electric transmission and distribution lines;

a reduction in the ~~economy or our industry.~~

~~Our substantial debt could have important negative consequences on our financial condition and we may incur substantial indebtedness in the future. These negative consequences may include:~~

~~increasing our vulnerability to general economic and industry conditions and to the consequences~~price of ~~the SunEdison Bankruptcy and to our delayed financial statements;~~

requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to pay dividends to holders of our Class A common stock or to use our cash flow to fund our operations, capital expenditures and future business opportunities;

~~limiting our ability to enter into or receive payments under long-term power sales which require credit support;~~

~~limiting our ability to fund operations or future acquisitions;~~

restricting our ability to make certain distributions with respect to our capital stock and the ability of our subsidiaries to make certain distributions to us, in light of restricted payment and other financial covenants in our credit facilities and other financing agreements;

~~exposing us to the risk of increased interest rates because certain of our borrowings, which may include borrowings under our Revolver, are at variable rates of interest;~~

limiting our ability to obtain additional financing for working capital, including collateral postings, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes; and

~~limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our competitors who have less debt.~~

Our Revolver, Senior Notes due 2023 and Senior Notes due 2025 contain financial and other restrictive covenants that limit our ability to return capital to stockholders or otherwise engage in activities that may be in our long-term best interests. Our inability to satisfy certain financial covenants could prevent us from paying cash dividends, and our failure to comply with those and other covenants could result in an event of default which, if not cured or waived, may entitle the related lenders to demand repayment and accelerate the indebtedness or, in the case of the Revolver, enforce their security interests, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Limitations on our ability to distribute cash from our project-level subsidiaries to the Company,natural gas, including as a result of ~~defaults on our project-level indebtedness, will negatively impact our ability to satisfy financial tests under our Revolver~~new drilling techniques or otherwise meet financial tests under our Senior Notes due 2023 and Senior Notes due 2025. As described above, on April 26, 2017, Terra Operating LLC entered into an amendment to the Revolver amending the financial tests under our Revolver. There can be no assurance that we will be able to comply with the amendment financial tests.a relaxation of associated regulatory standards;

~~Our existing agreements governing~~energy conservation technologies and sustained public initiatives to reduce electricity consumption; and

the development of new clean energy technologies that provide less expensive energy.

A shift in the timing of peak rates for electricity supplied by traditional utilities to a time of day when solar energy generation is less efficient could make solar energy less competitive and reduce demand. If the retail price of energy available from traditional utilities were to decrease, we would be at a competitive disadvantage in negotiating new PPAs and therefore we might be unable to attract new customers and our ~~non-recourse financing also contain financial and other restrictive covenants that limit our project subsidiaries’ ability to make distributions to us or otherwise engage in activities that may~~growth would be in our long-term best interests. We expect any future project financings that we incur or assume will contain similar provisions. The non-recourse financing agreements generally prohibit distributions from the project entities to us unless certain specific conditions are met, including the satisfaction of certain financial ratioslimited, and the absence of defaults or events of default. As described above, during the course of 2016 most of our projects that have project-level debt financing were in default. While we have cured most of those defaults, we have experienced, or expect to experience, additional defaults in most of these same project-level debt financings as a result in delays in delivering our 2016 corporate and project-level audited financial statements. Our inability to satisfy certain financial covenants or cure these or other defaults or events of default may prevent cash distributions by the particular project(s) to us. The risks with respect to the SunEdison Bankruptcy on our project financings is further detailed in ~~"Because SunEdison is a party to a material project agreement or a guarantor thereof, the SunEdison Bankruptcy could result in a material adverse effect on many of our projects"~~ above. Our failure to obtain such waivers or forbearance agreements with respect to defaults or to comply with those and other covenants has resulted in (or could result in future) events of default which, if not cured or waived may entitle the related lenders to demand repayment or enforce their security interests, which could have a material adverse effect on our business, results of operations and financial condition. If we are unable to make distributions from our project-level subsidiaries, it would likely have a material adverse effect on our ability to meet corporate-level debt service obligations, as well as pay dividends to holders of our Class A common stock.

If our subsidiaries default on their obligations under their non-recourse indebtedness or voluntarily or involuntarily commence bankruptcy proceedings, this may constitute an event of default under our Revolver, and we may be required to make payments to lenders to avoid such default or to prevent foreclosure on the collateral securing the non-recourse debt. If we are unable to or decide not to make such payments, we would lose certainvalue of our renewable energy facilities ~~upon foreclosure.~~

Our subsidiaries incur, and we expect will in the future incur, various types of non-recourse indebtedness. Non-recourse debt is repayable solely from the applicable renewable energy facility’s revenues and is secured by the facility’s physical assets, major contracts, cash accounts and, in many cases, our ownership interest in the project subsidiary. We may incur non-recourse indebtedness with respect to a single asset or with respect to a portfolio of assets. Limited recourse debt is debt where a limited guarantee is provided, and recourse debt is debt where a full corporate guarantee is provided, which means if our subsidiaries default on these obligations, we would be liable directly to those lenders, although in the case of limited recourse debt only to the extent of our limited recourse obligations. To satisfy these obligations, we may be required to use amounts distributed by our other subsidiaries as well as other sources of available cash, reducing our cash available to execute our business plan and pay dividends to holders of our Class A common stock. In addition, if our subsidiaries default onimpaired or their obligations under any limited recourse financing agreements or voluntarily or involuntarily commence bankruptcy proceedings, this may, under certain circumstances if Terra LLC or Terra Operating LLC were to guarantee such obligations and the amounts guaranteed exceeded $75 million, individually or in the aggregate, result in an event of default under our Revolver, allowing our lenders to foreclose on their security interests in our ownership interests in our subsidiaries.

Even if that is not the case, we may decide to make payments to prevent the lenders of these subsidiaries from foreclosing on the relevant collateral. Such a foreclosure could result in us losing our ownership interest in the subsidiary or in

some or all of its assets. The loss of our ownership interest in one or more of our subsidiaries or some or all of their assets could have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~If we are unable to renew letter of credit facilities, our business, financial condition, results of operations and cash flows~~useful life may be ~~materially adversely affected.~~

Our Revolver includes a letter of credit facility to support project-level contractual obligations. This letter of credit facility will need to be renewed as of January 27, 2020 and we are required to satisfy the applicable financial ratios and covenants throughout the term of the letter of credit facility. In the event that we consummate the Merger and the Sponsorship Transaction we will need to secure a replacement letter of credit facility. If we are unable to renew our letters of credit as expected or if we are only able to replace them with letters of credit under different facilities on less favorable terms, we may experience a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, the inability to provide letters of credit could constitute a default under certain non-recourse financing arrangements, restrict the ability of the project-level subsidiary to make distributions to us and/or reduce the amount of cash available at such subsidiary to make distributions to us.

~~Our ability to raise additional capital to fund our operations may be limited.~~

Our primary business strategy is to own, operate and acquire operational clean power generation assets. We do not always expect to have sufficient amounts of cash on hand to fund all such future acquisition costs. As a result, we will need to arrange additional financing to fund a portion of such acquisitions, potential contingent liabilities and other aspects of our operations. Our ability to arrange additional financing, either at the corporate-level or at a non-recourse project-level subsidiary, may be limited. Additional financing, including the costs of such financing, will be dependent on numerous factors, including:

~~general economic and capital market conditions;~~

~~credit availability from banks and other financial institutions;~~

investor confidence in us, our partners, SunEdison or Brookfield (assuming the consummation of the Sponsorship Transaction), as our principal stockholder (on a combined voting basis), manager under the MSA and frequently as asset and O&M manager for our projects, and the regional wholesale power markets;

~~the impact of the SunEdison Bankruptcy and the Sponsorship Transaction;~~

~~our financial performance and the financial performance of our subsidiaries;~~

~~our level of indebtedness and compliance with covenants in debt agreements;~~

~~when we file our Forms 10-Q for the quarters ended March 31, 2017 and June 30, 2017 and future quarters and obtain audited project-level financial statements;~~

~~maintenance of acceptable credit ratings or credit quality, including maintenance of the legal and tax structure of the project-level subsidiary upon which the credit ratings may depend;~~

~~our cash flows; and~~

~~provisions of tax and securities laws that may impact raising capital.~~

We may not be successful in obtaining additional financing for these or other reasons. Furthermore, we may be unable to refinance or replace non-recourse financing arrangements or other credit facilities on favorable terms or at all upon the expiration or termination thereof. Our failure, or the failure of any of our renewable energy facilities, to obtain additional capital or enter into new or replacement financing arrangements when due may constitute a default under such existing indebtedness and may have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~Credit ratings downgrades have resulted in a negative perception of our creditworthiness, and will adversely affect our ability to raise additional financing.~~

Credit ratings agencies have issued corporate and issuer credit ratings with respect to us and our Senior Notes due 2023 and Senior Notes due 2025. These ratings are used by investors (including debt investors) and other third parties in evaluating our credit risk. Credit ratings are continually revised. Our credit ratings have declined as a result of the SunEdison Bankruptcy and other risks that we face. This decline in our credit ratings will have a material negative impact on our ability to raise additional equity or indebtedness in the capital markets or could adversely affect the trading prices of our Class A common stock or Senior Notes due 2023 and Senior Notes due 2025. These declines could also negatively impact the perception of our counterparties and other stakeholders regarding our ability to meet our obligations. These perceptions and concerns may also cause our existing or potential new counterparties to be less likely to enter into new agreements or to demand more expensive or onerous terms, credit support, security or conditions. Further declines in our credit ratings may materially and negatively impact our business, financial condition and results of operations.

shortened.

Our ability to generate revenue from certain utility-scale solar and wind power plants depends on having interconnection arrangements and ~~services.~~services and the risk of curtailment of our renewable energy facilities may result in a reduced return on our investments and adversely impact our business, financial condition, and results of operations.

The operation of our utility scale renewable energy facilities depends on having interconnection arrangements with transmission providers and depends on a reliable electricity grid. If the interconnection or transmission agreement of a ~~clean power generation asset~~renewable energy facility we own or acquire is terminated for any reason, we may not be able to replace it with an interconnection or transmission arrangement on terms as favorable as the existing arrangement, or at all, or we may experience significant delays or costs in securing a replacement. IfMoreover, if a transmission network to which one or more of our existing power plants or a power plant we acquire is connected experiences “down time,” the affected ~~clean power generation asset~~renewable energy facility may lose revenue and be exposed to non-performance penalties and claims from its customers. ~~The~~Curtailment as a result of transmission system down time can arise from the need to prevent damage to the transmission system and for system emergencies, force majeure, safety, reliability, maintenance or other operational reasons. Under our PPAs, our offtake purchasers are not generally required to compensate us for energy and ancillary services we could have delivered during these periods of curtailment had our facilities not been curtailed. Further, the owners of the transmission network will not usually compensate electricity generators for lost income due to ~~down time.~~curtailment. These factors could materially affect our ability to forecast operations and negatively affect our business, results of operations, financial condition and cash flows. One of our transmission providers, a public utility company based in California, filed for federal bankruptcy protection in January 2019. While we believe the financial impact to our business will be limited, there can be no assurance of the actual impact of the bankruptcy, or any future bankruptcies of any of our transmission providers (including other public utility companies in California to which

we have exposure), on our business, financial condition, results of operations or cash flows. Moreover, seeking to enforce the obligations of our counterparties under our interconnection agreements could be time consuming or costly and could involve little certainty of success.

In addition, we cannot predict whether transmission facilities will be expanded in specific markets to accommodate or increase competitive access to those markets. ~~In addition, certain~~Expansion of the transmission system by transmission providers is costly, time consuming and complex. To the extent the transmission system is not adequate in an area, our operating facilities’ generation of electricity may be physically or economically curtailed without compensation due to transmission capacity limitations, reducing our revenues and impairing our ability to capitalize fully on a particular facility’s generating potential. Such curtailments could have a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, economic congestion on the transmission grid (for instance, a positive price difference between the location where power is put on the grid by a clean power generation asset and the location where power is taken off the grid by the facility’s customer) in certain of the bulk power markets in which we operate may occur and we may be deemed responsible for those congestion costs. If we were liable for such congestion costs, our financial results could be adversely affected.

We face competition from traditional utilities and renewable energy companies.

The solar and wind energy industries, and the broader clean energy industry, are highly competitive and continually evolving, as market participants strive to distinguish themselves within their markets and compete with large incumbent utilities and new market entrants. We believe that our primary competitors are the traditional incumbent utilities that supply energy to our potential customers under highly regulated rate and tariff structures. We compete with these traditional utilities primarily based on price, predictability of price and the ease with which customers can switch to electricity generated by our renewable energy facilities. If we cannot offer compelling value to our customers based on these factors, then our business will not grow. Traditional utilities generally have substantially greater financial, technical, operational and other resources than we do, and as a result may be able to devote more resources to the research, development, promotion and sale of their products or respond more quickly to evolving industry standards and changes in market conditions than we can. Traditional utilities could also offer other value-added products or services that could help them to compete with us even if the cost of electricity they offer is higher than ours. In addition, the source of a majority of traditional utilities’ electricity is non-renewable, which may allow them to sell electricity more cheaply than electricity generated by our solar generation facilities and wind power ~~plants, and other types of clean power generation assets we may acquire.~~plants.

We also face risks that traditional utilities could change their volumetric-based (i.e., cents per kWh) rate and tariff structures to make distributed solar generation less economically attractive to their retail customers. Currently, net metering programs are utilized in 43the majority of states to support the growth of distributed generation solar facilities by requiring traditional utilities to reimburse certain of their retail customers for the excess power they generate at the level of the utilities’ retail rates rather than the rates at which those utilities buy power at wholesale. InCertain states, such as Arizona, ~~the state has allowed~~allow its ~~largest~~ traditional ~~utility, Arizona Public Service,~~utilities to assess a surcharge on customers with solar generation facilities for their use of the utility’s grid, based on the size of the customer’s solar generation facility. This surcharge ~~will reduce~~reduces the economic returns for the excess electricity that the solar generation facilities produce. These types of ~~changes or other types of changes that could~~charges, which reduce or eliminate the economic benefits of net metering could be implemented in other states, which could significantly change the economic benefits of solar energy as perceived by traditional utilities’ retail customers.

We also face competition ~~in the~~from other renewable energy ~~efficiency evaluation~~companies who may offer different products, lower prices and ~~upgrades market and we expect~~other incentives, which may impact our ability to ~~face competition in additional markets as we introduce new energy-related products and services.~~maintain our customer base. As the solar and wind industries grow and evolve, we will also face new competitors who are not currently in the market, such as an emerging storage market. Our failure to adapt to changing market conditions and to compete successfully with existing or new competitors ~~will~~could limit our growth and ~~will~~could have a material adverse effect on our business and prospects.

There are a limited number of purchasers of utility-scale quantities of electricity, which exposes us and our utility-scale facilities to additional risk.

Since the transmission and distribution of electricity is either monopolized or highly concentrated in most jurisdictions, there are a limited number of possible purchasers for utility-scale quantities of electricity in a given geographic location, including transmission grid operators, state and investor-owned power companies, public utility districts and cooperatives. As a result, there is a concentrated pool of potential buyers for electricity generated by our renewable energy facilities, which may restrict our ability to negotiate favorable terms under new PPAs and could impact our ability to find new customers for the electricity generated by our renewable energy facilities should this become necessary. Furthermore, if the financial condition of these utilities and/or power purchasers deteriorated or the RPS programs, climate change programs or other regulations to which they are currently subject and that compel them to source renewable energy supplies change, demand for electricity produced by our utility-scale facilities could be negatively impacted.

In addition, provisions in our power sale arrangements may provide for the curtailment of delivery of electricity for various operational reasons at no cost to the power purchaser, including preventing damage to transmission systems and for system emergencies, force majeure, safety, reliability, maintenance and other operational reasons. Such curtailment would reduce revenues earned by us at no cost to the purchaser including, in addition to certain of the general types noted above, events in which energy purchases would result in costs greater than those which the purchaser would incur if it did not make such purchases but instead generated an equivalent amount of energy (provided that such curtailment is due to operational reasons and does not occur solely as a consequence of purchaser’s filed avoided energy cost being lower than the agreement rates or purchasing less expensive energy from another facility). In Hawaii, where several of our wind power plants are located, purchasers are required to take reasonable steps to minimize the number and duration of curtailment events, and that such curtailments will generally be made in reverse chronological order based upon Hawaii utility commission approval (which is beneficial to older facilities such as our Kaheawa Wind Power I, or “KWP I”), such curtailments could still occur and reduce revenues to our Hawaii wind power plants. If we cannot enter into power sale arrangements on terms favorable to us, or at all, or if the purchaser under our power sale arrangements were to exercise its curtailment or other rights to reduce purchases or payments under such arrangements, our revenues and our decisions regarding development of additional renewable energy facilities may be adversely affected. The risks discussed above under “~~The SunEdison Bankruptcy may adversely affect our relationships with current or potential counterparties” may be increased by our dependence on a limited number of purchasers.~~

A ~~significant deterioration in the financial performance of the brick and mortar retail industry could materially adversely affect our distributed generation business.~~

The financial performance of our distributed generation business depends in part upon the continued viability and financial stability of our customers in the retail industry with physical locations, such as medium and large independent retailers and distribution centers. If the retail industry is materially and adversely affected by an economic downturn, increase in inflation, increase in online competition, or other factors, one or more of our largest customers could encounter financial difficulty, and possibly, bankruptcy. If one or more of our largest customers were to encounter financial difficulty or declare bankruptcy, they may reduce their PPA payments to us or stop them altogether.

Our hedging activities may not adequately manage our exposure to commodity and financial risk, which could result in significant losses or require us to use cash collateral to meet margin requirements, each of which could have a material adverse effect on our business, financial condition, results of operations and liquidity, which could impair our ability to execute favorable financial hedges in the future.

Certain of our wind power plants are party to financial swaps or other hedging arrangements. We may also acquire additional assets with similar hedging arrangements in the future. Under the terms of the existing financial swaps, certain wind power plants are not obligated to physically deliver or purchase electricity. Instead, they receive payments for specified quantities of electricity based on a fixed-price and are obligated to pay the counterparty the market price for the same quantities of electricity. These financial swaps cover quantities of electricity that we estimated are highly likely to be produced. As a result, gains or losses under the financial swaps are designed to be offset by decreases or increases in a facility’s revenues from spot sales of electricity in liquid markets. However, the actual amount of electricity a facility generates from operations may be materially different from our estimates for a variety of reasons, including variable wind conditions and wind turbine availability. If a wind power plant does not generate the volume of electricity covered by the associated swap contract, we could incur significant losses if electricity prices in the market rise substantially above the fixed-price provided for in the swap. If a wind power plant generates more electricity than is contracted in the swap, the excess production will not be hedged and the related revenues will be exposed to market price fluctuations. In some power markets, including the ERCOT market in Texas where we own two wind power plants with hedges with a gross nameplate capacity of approximately 407 MWs, at times we have experienced negative power prices with respect to merchant energy sales. In these situations, we must pay grid operators to take our power. Because our tax investors receive production tax credits from the production of energy from our wind plants, it may be economical for the plant to continue to produce power at negative prices, which results in our wind

facility paying for the power it produces. Moreover, certain of these financial or hedging arrangements are financially settled with reference to energy prices (or locational marginal prices) at a certain hub or node on the transmission system in the relevant energy market. At the same time, revenues generated by physical sales of energy from the applicable facility may be determined by the energy price (or locational marginal price) at a different node on the transmission system. This is an industry practice used to address the lack of liquidity at individual facility locations. There is a risk, however, that prices at these two nodes differ materially, and as a result of this so called “basis risk,” we may be required to settle our financial hedges at prices that are higher than the prices at which we are able to sell physical power from the applicable facility, thus reducing the effectiveness of the swap hedges.

~~We are exposed to foreign currency exchange risks because certain of our renewable energy facilities are located in foreign countries.~~

~~We generate a~~ portion of our revenues and incur a portion of our expenses in currencies other than U.S. dollars. Changes in economic or political conditions in any of the countries in which we operate could result in exchange rate movement, new currency or exchange controls or other restrictions being imposed on our operations or expropriation. As our financial results are reported in U.S. dollars, if we generate revenue or earnings in other currencies, the translation of those results into U.S. dollars can result in a significant increase or decrease in the amount of those revenues or earnings. To the extent that we are unable to match revenues received in foreign currencies with costs paid in the same currency, exchange rate fluctuations in any such currency could have a negative impact on our profitability. Our debt service requirements are primarily in U.S. dollars even though a percentage of our cash flow is generated in other foreign currencies and therefore significant changes in the value of such foreign currencies relative to the U.S. dollar could have a material negative impact on our financial condition and our ability to meet interest and principal payments on debts denominated in U.S. dollars. In addition to currency translation risks, we incur currency transaction risks whenever we or one of our facilities enter into a purchase or sales transaction using a currency other than the local currency of the transacting entity.

Given the volatility of exchange rates, we cannot assure you that we will be able to effectively manage our currency transaction and/or translation risks. It is possible that volatility in currency exchange rates will have a material adverse effect on our financial condition or results of operations. We expect to experience economic losses and gains and negative and positive impacts on earnings as a result of foreign currency exchange rate fluctuations, particularly as a result of changes in the value of the Canadian dollar, the British pound and other currencies.

Additionally, although a portion of our revenues and expenses are denominated in foreign currency, we will pay dividends to holders of our Class A common stock in U.S. dollars. The amount of U.S. dollar denominated dividends paid to our holders of our Class A common stock will therefore be exposed to currency exchange rate risk. Although we have entered into certain hedging arrangements to help mitigate some of this exchange rate risk, these arrangements may not be sufficient. Changes in the foreign exchange rates could have a material negative impact on our results of operations and may adversely affect the amount of cash dividends paid by us to holders of our Class A common stock.

~~A substantial portion of our revenues are~~ attributable to the sale of renewable energy credits and solar renewable energy credits, which are renewable energy attributes that are created under the laws of individual states of the United States, and our failure to be able to sell such RECs or SRECs at attractive prices, or at all, could materially adversely affect our business, financial condition and results of operation.

A ~~substantial~~ portion of our revenues ~~(23% for fiscal 2016) are~~is attributable to ~~our~~the sale of RECs and other environmental attributes of our ~~facilities which~~facilities. These RECs and other environmental attributes are created under the state laws, ofgenerally in the state ofwhere the ~~United States where the~~renewable energy facility is located. We sometimes seek to sell forward a portion of our RECs or other environmental attributes under contracts having terms in excess of one year to fix the revenues from those attributes and hedge against future declines in prices of RECs or other environmental attributes. These programs have a finite life and our revenues may decline if and when we are unable to generate a sufficient number of RECs. If our renewable energy facilities do not generate the amount of electricity required to earn the RECs or other environmental attributes sold under such forward contracts or if for any reason the electricity we generate does not produce RECs or other environmental attributes for a particular state, we may be required to make up the shortfall of RECs or other environmental attributes under such forward contracts through purchases on the open market or make payments of liquidated damages. We have from time to time provided guarantees of Terra LLC as credit support for these obligations. Additionally, forward contracts for REC sales often contain adequate assurances clauses that allow our counterparties to require us to provide credit support in the form of parent guarantees, letters of credit or cash collateral. In the months following the SunEdison Bankruptcy, we received requests for adequate assurance from several of our REC agreement counterparties. To date, despite these requests, we have not been required to provide such additional credit support.

~~We are currently limited in our~~Our ability to hedge ~~sufficient volumes of~~forward our anticipated volume of RECs or other environmental attributes is limited by market conditions, leaving us exposed to the risk of falling prices for RECs or other environmental attributes. ~~RECs~~Utilities in many states are ~~created through~~

~~state~~required by law ~~requirements for utilities~~or regulation to purchase a portion of their energy from renewable energy ~~sources and changes~~sources. Changes in state laws or ~~regulation~~regulations relating to RECs may adversely affect the demand for, or availability of, RECs or other environmental attributes and the future prices for ~~RECs or other environmental attributes, which~~such products. This could have an adverse effect on our business, financial condition and results of operations.

We are involved in costly and time-consuming litigation, regulatory proceedings and other disputes, which require significant attention from our management, which involve exposure to legal liability and may result in significant damage awards and which may relate to the operations of our renewable energy facilities.

We have been subject to claims arising out of our acquisition activities with respect to certain payments in connection with the acquisition of First Wind Holdings, LLC by SunEdison, as more fully described in Note 18. Commitments and Contingencies to our consolidated financial statements, included in this Annual Report on Form 10-K. D.E. Shaw Composite Holdings, L.L.C. and Madison Dearborn Capital Partners IV, L.P., as the representatives of the sellers (the “First Wind Sellers”) pursuant to the Purchase and Sale Agreement, dated as of November 17, 2014 (the “FW Purchase Agreement”) between, among others, SunEdison, the Company and Terra LLC and the First Wind Sellers have alleged a breach of contract with respect to the FW Purchase Agreement and that Terra LLC and SunEdison became jointly obligated to make $231.0 million in earn-out payments in respect of certain development assets SunEdison acquired from the First Wind Sellers under the FW Purchase Agreement, when those payments were purportedly accelerated by SunEdison’s bankruptcy and by the resignations of two SunEdison employees. The First Wind Sellers have also alleged that the Company, as guarantor of certain Terra LLC obligations under the FW Purchase Agreement, is liable for this sum. We filed a motion to dismiss the amended complaint on July 5, 2016, which was denied on February 6, 2018. In January 2019, a pre-trial schedule was agreed between Terra LLC and the plaintiffs and approved by the Court that provided for fact discovery and depositions. We believe the First Wind Sellers’ allegations are without merit and will contest the claim and allegations vigorously. However, we cannot predict with certainty the ultimate resolution of any proceedings brought in connection with such a claim.

We also have been and continue to be involved in legal proceedings, administrative proceedings, claims and other litigation that arise in the ordinary course of business, including proceedings related to the operation of our renewable energy facilities. For example, individuals or groups have in the past and may in the future challenge the issuance of a permit for a renewable energy facility or may make claims related to alleged impacts of the operation of our renewable energy facilities on adjacent properties. In addition, we are named as defendants from time to time in other lawsuits and regulatory actions relating to our business, some of which may claim significant damages.

Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings. Unfavorable outcomes or developments relating to these proceedings, or new proceedings involving similar allegations or otherwise, such as monetary damages or equitable remedies or potential negative publicity associated with such legal actions, could have a material adverse impact on our business and financial position, results of operations or cash flows or limit our ability to engage in certain of our business activities. Settlement of claims could adversely affect our financial condition, results of operations and cash flows. In addition, regardless of the outcome of any litigation or

regulatory proceedings, such proceedings are often expensive, lengthy and disruptive to normal business operations and require significant attention from our management. We are currently and/or may in the future be subject to claims, lawsuits or arbitration proceedings related to matters in tort or under contracts, employment matters, securities class action lawsuits, stockholder derivative actions, breaches of fiduciary duty, conflicts of interest, tax authority examinations or other lawsuits, regulatory actions or government inquiries and investigations.

In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We have been the target of such securities litigation in the past and we may become the target of additional securities litigation in the future, which could result in substantial costs and divert our management’s attention from other business concerns, and have a material adverse effect on our business.

We may not be able to successfully integrate the operations, technologies and personnel of our European Platform, and to establish appropriate accounting controls in respect of our European Platform, which could result in a material adverse impact on our business.

We believe the acquisition of Saeta, which established our European Platform, will be accretive to cash available for distribution to our stockholders on a per share basis. However, to realize the anticipated benefits of our acquisition, our business and our European Platform’s business must be successfully combined. We may fail to realize these anticipated benefits as a result of our inability to successfully integrate the operations, technologies and personnel of our European Platform into our business for a variety of reasons, including the following:

failure to successfully manage relationships with existing Saeta counterparties;

failure to leverage the increased scale of the combined company quickly and effectively;

the loss of key employees; and

potential difficulties integrating and harmonizing financial reporting systems and establishing appropriate accounting controls, reporting procedures and regulatory compliance procedures.

We may not realize the expected benefits of our framework agreement and LTSAs with General Electric.

In August 2018, we executed an 11-year framework agreement with an affiliate of General Electric to provide us with long-term service agreements (collectively, the “LTSAs”) for turbine operations and maintenance as well as other balance of plant services for our 1.6 GW North American wind fleet. The LTSAs are expected to improve and optimize turbine performance in order to increase production from our wind fleet, as well as provide cost savings to us. However, we may not fully realize these anticipated benefits or at all. For example, we may not achieve increased production from our wind fleet or realize any of the expected cost savings from the LTSAs. We also may not receive the support of our stakeholders, some of whom must provide consents in connection with the implementation of the LTSAs.

Maintenance, expansion and refurbishment of renewable energy facilities involve significant risks that could result in unplanned power outages or reduced output.

Our facilities may require periodic upgrading and improvement. Any unexpected operational or mechanical failure, such as the failure of a single faulty blade which caused the collapse of a tower at our Raleigh wind facility in 2018, or other failures associated with breakdowns and forced outages generally, and any decreased operational or management performance, could reduce our facilities’ generating capacity below expected levels, reducing our revenues and jeopardizing our ability to pay dividends to holders of our Class A common stock at forecasted levels or at all. Incomplete performance by us or third parties under O&M agreements may increase the risks of operational or mechanical failure of our facilities. Degradation of the performance of our renewable energy facilities provided for in the related PPAs may also reduce our revenues. Unanticipated capital expenditures associated with maintaining, upgrading or repairing our facilities may also reduce profitability.

We may also choose to refurbish or upgrade our facilities based on our assessment that such activity will provide adequate financial returns and key assumptions underpinning a decision to make such an investment may prove incorrect, including assumptions regarding construction costs, timing, available financing and future power prices. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Moreover, spare parts for wind turbines and solar facilities and key pieces of equipment may be hard to acquire or unavailable to us. Sources of some significant spare parts and other equipment are located outside of North America and the

other jurisdictions in which we operate. Suppliers of some spare parts have filed, or will in the future file for, bankruptcy protection, potentially reducing the availability of parts that we require to operate certain of our power generation facilities. Other suppliers may for other reasons cease to manufacture parts that we require to operate certain of our power generation facilities. If we were to experience a shortage of or inability to acquire critical spare parts we could incur significant delays in returning facilities to full operation, which could negatively impact our business financial condition, results of operations and cash flows.

Developers of renewable energy facilities depend on a limited number of suppliers of solar panels, inverters, module turbines, towers and other system components and turbines and other equipment associated with wind and solar power plants. Any shortage, delay or component price change from these suppliers could result in construction or installation delays, which could affect the number of renewable energy facilities we are able to acquire in the future.

In addition, potential acquisition of solar projects could be more challenging as a result of increases in the cost of solar panels or tariffs on imported solar panels imposed by the U.S. government. The U.S. government has imposed tariffs on imported solar cells and modules manufactured in China. If project developers purchase solar panels containing cells manufactured in China, our purchase price for renewable energy facilities may reflect the tariff penalties mentioned above. While solar panels containing solar cells manufactured outside of China are not subject to these tariffs, the prices of these solar panels are, and may continue to be, more expensive than panels produced using Chinese solar cells, before giving effect to the tariff penalties.

The declining cost of solar panels and the raw materials necessary to manufacture them has been a key driver in the pricing of solar energy systems and customer adoption of this form of renewable energy. With the stabilization or increase of solar panel and raw materials prices, our growth could slow. Although we do not purchase solar panels directly, higher cost solar panels could make future purchases of solar assets more difficult.

We may incur unexpected expenses if the suppliers of components in our renewable energy facilities default in their warranty obligations.

The solar panels, inverters, modules and other system components utilized in our solar generation facilities are generally covered by manufacturers’ warranties, which typically range from 5 to 20 years. When purchasing wind turbines, the purchaser will enter into warranty agreements with the manufacturer which typically expire within two to five years after the turbine delivery date. In the event any such components fail to operate as required, we may be able to make a claim against the applicable warranty to cover all or a portion of the expense associated with the faulty component. However, these suppliers could cease operations and no longer honor the warranties, which would leave us to cover the expense associated with the faulty component. For example, a portion of our solar power plants utilize modules made by SunEdison and certain of its affiliates that were debtors in the SunEdison Bankruptcy (as defined in Note 1. Nature of Operations and Organization to our consolidated financial statements). Our business, financial condition, results of operations and cash flows could be materially adversely affected if we cannot make claims under warranties covering our renewable energy facilities.

Concentrated solar facilities use technology that differs from traditional solar photovoltaic technology and is subject to known and unknown risks.

Our concentrated solar facilities located in Spain consist primarily of parabolic troughs that concentrate reflected light onto receiver tubes. The receiver tubes are filled with a working fluid which is heated by the concentrated sunlight and then used to heat water for a standard steam power generation system. This technology differs from that used in more common solar photovoltaic (“PV”) facilities and concentrated solar technology is much less widely used worldwide and is subject to known and unknown risks that differ from those associated with solar PV facilities. For example, the temperatures used in concentrated solar facilities can be extremely high. Fires at any of our these facilities could result in a loss of generating capacity and could require us to expend significant amounts of capital and other resources. Such failures could result in damage to the environment or damages and harm to third parties or the public, which could expose us to significant liability. Repairing any such failure could require us to expend significant amounts of capital and other resources.

Operation of renewable energy facilities involves significant risks and hazards that could have a material adverse effect on our business, financial condition, results of operations and cash flows. We may not have adequate insurance to cover these risks and hazards.

The ongoing operation of our facilities involves risks that include the breakdown or failure of equipment or processes or performance below expected levels of output or efficiency due to wear and tear, latent defect, design error or operator error or force majeure events, among other things. ~~Operation of our facilities also involves risks that we will be unable to transport our product to our customers in an efficient manner due to a lack of transmission capacity.~~ Unplanned outages of generating units, including extensions of scheduled outages, occur from time to time and are an inherent risk of our business. Unplanned outages typically increase our operation and maintenance expenses and may reduce our revenues as a result of generating and selling less power or require us to incur significant costs as a result of obtaining replacement power from third parties in the open market to satisfy our forward power sales obligations.

Our inability to efficiently operate our renewable energy facilities, manage capital expenditures and costs and generate earnings and cash flow from our ~~asset-based businesses~~assets could have a material adverse effect on our business, financial condition, results of operations and cash flows. While we maintain insurance, obtain warranties from vendors and obligate contractors to meet certain performance levels, the proceeds of such insurance, warranties or performance guarantees may not cover our lost revenues, increased expenses or liquidated damages payments should we experience equipment breakdown or non-performance by contractors or vendors.

Power generation involves hazardous activities, including delivering electricity to transmission and distribution systems. In addition to natural risks such as earthquake, flood, lightning, hurricane and wind, other hazards, such as fire, structural collapse and machinery failure are inherent risks in our operations. These and other hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment and contamination of, or damage to, the environment and suspension of operations. The occurrence of any one of these events may result in our being named as a defendant in lawsuits asserting claims for substantial damages, including for environmental cleanup costs, personal injury and property damage and fines and/or penalties. We maintain an amount of insurance protection that we consider adequate but we cannot provide any assurance that our insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which we may be subject. Furthermore, our insurance coverage is subject to deductibles, caps, exclusions and other limitations. A loss for which we are not fully insured could have a material adverse effect on our business, financial condition, results of operations or cash flows. Further, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available. Any losses not covered by insurance could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Moreover, in some power markets, at times we have experienced negative power prices with respect to merchant energy sales. In these situations, we must pay grid operators to take our power. Because our tax investors receive production tax credits from the production of energy from our wind plants, it may be economical for the plant to continue to produce power at negative prices, which results in the applicable facility paying for the power it produces. In addition, certain of these financial or hedging arrangements are financially settled with reference to energy prices (or locational marginal prices) at a certain hub or node on the transmission system in the relevant energy market. At the same time, revenues generated by physical sales of

energy from the applicable facility may be determined by the energy price (or locational marginal price) at a different node on the transmission system. This is an industry practice used to address the lack of liquidity at individual facility locations. There is a risk, however, that prices at these two nodes differ materially, and as a result of this so called “basis risk,” we may be required to settle our financial hedges at prices that are higher than the prices at which we are able to sell physical power from the applicable facility, thus reducing the effectiveness of the swap hedges.

We are exposed to foreign currency exchange risks because certain of our renewable energy facilities are located outside of the United States.

We generate a portion of our revenues and incur a portion of our expenses in currencies other than U.S. dollars. The portion of our revenues generated in currencies other than U.S. dollars increased substantially upon our acquisition of our European Platform and may also increase in the future if we acquire additional assets outside of the United States. Changes in economic or political conditions in any of the countries in which we operate now or in the future could result in exchange rate movement, expropriation, new currency or exchange controls or other restrictions being imposed on our operations. As our financial results are reported in U.S. dollars, if we generate revenue or earnings in other currencies, the translation of those results into U.S. dollars can result in a significant increase or decrease in the amount of those revenues or earnings. To the extent that we are unable to match revenues received in foreign currencies with costs paid in the same currency, exchange rate fluctuations in any such currency could have a negative impact on our profitability. Our debt service requirements are primarily in U.S. dollars even though a percentage of our cash flow is generated in other foreign currencies and therefore significant changes in the value of such foreign currencies relative to the U.S. dollar could have a material negative impact on our financial condition and our ability to meet interest and principal payments on debts denominated in U.S. dollars. In addition to currency translation risks, we incur currency transaction risks whenever we or one of our facilities enter into a purchase or sales transaction using a currency other than the local currency of the transacting entity.

Given the volatility of exchange rates, there can be no assurance that we will be able to effectively manage our currency transaction and/or translation risks. It is possible that volatility in currency exchange rates will have a material adverse effect on our financial condition or results of operations. We expect to experience economic losses and gains and negative and positive impacts on earnings as a result of foreign currency exchange rate fluctuations, particularly as a result of changes in the value of the Euro, Canadian dollar, British pound sterling and other currencies.

Additionally, although a portion of our revenues and expenses are denominated in foreign currency, any dividends we pay will be denominated in U.S. dollars. The amount of U.S. dollar denominated dividends paid to our holders of our Class A common stock will therefore be exposed to a certain level of currency exchange rate risk. Although we have entered into certain hedging arrangements to help mitigate some of this exchange rate risk, these arrangements may not be sufficient to eliminate the risk. Changes in the foreign exchange rates could have a material negative impact on our results of operations and may adversely affect the amount of cash dividends paid by us to holders of our Class A common stock.

Political instability, changes in government policy, or unfamiliar cultural factors could adversely impact the value of our investments.

We are subject to geopolitical uncertainties in all jurisdictions in which we operate. We make investments in businesses that are based outside of the United States, and we may pursue investments in unfamiliar markets, which may expose us to additional risks not typically associated with investing in the Unites States. We may not properly adjust to the local culture and business practices in such markets, and there is the prospect that we may hire personnel or partner with local persons who might not comply with our culture and ethical business practices; either scenario could result in the failure of our initiatives in new markets and lead to financial losses. There are risks of political instability in several of the jurisdictions in which we conduct business, including, for example, from factors such as political conflict, tariffs, income inequality, refugee migration, terrorism, the potential break-up of political-economic unions (or the departure of a union member, e.g., Brexit) and political corruption. The materialization of one or more of these risks could negatively affect our financial performance. For example, although the long-term impact on economic conditions is uncertain, Brexit may have an adverse effect on the rate of economic growth in the U.K. and continental Europe.

Unforeseen political events in markets where we own and operate assets and may look to for further growth of our businesses may create economic uncertainty that has a negative impact on our financial performance. Such uncertainty could cause disruptions to our businesses, including affecting the business of and/or our relationships with our customers and suppliers, as well as altering the relationship among tariffs and currencies. Disruptions and uncertainties could adversely affect our financial condition, operating results and cash flows. In addition, political outcomes in the market in which we operate may also result in legal uncertainty and potentially divergent national laws and regulation, which can contribute to general economic

uncertainty. Economic uncertainty impacting us and our operations and investments could be exacerbated by near-term political events, including those in the markets in which we operate and elsewhere.

Our business is subject to substantial governmental regulation and may be adversely affected by changes in laws or regulations, as well as liability under, or any future inability to comply with, existing or future regulations or other legal requirements.

Our business is subject to extensive federal, state and local laws in the U.S. and regulations in the foreign countries in which we operate. Compliance with the requirements under these various regulatory regimes may cause us to incur significant costs, and failure to comply with such requirements could result in the shutdown of the non-complying facility or, the imposition of liens, fines and/or civil or criminal liability.

With the exception of certain of our utility scale plants, our renewable energy facilities located in the United States in our portfolio are QFs as defined under PURPA. Depending upon the power production capacity of the facility in question, our QFs and their immediate project company owners may be entitled to various exemptions from ratemaking and certain other regulatory provisions of the FPA, from the books and records access provisions of PUHCA, and from state organizational and financial regulation of electric utilities.

~~Certain~~The immediate owners of certain of our utility scale plants ~~and the owners of the EWG Projects (each, an “EWG Project Co”)~~ are ~~an EWG~~EWGs, as defined under PUHCA, which exempts iteach EWG and us (for purposes of our ownership of each such company) from the federal books and access provisions of PUHCA. Certain of the ~~EWG Projects are~~EWGs also own QFs. EWGs ~~and their owners~~ are often subject to regulation for most purposes as “public utilities” under the FPA, including regulation of their rates and their issuances of securities. Each of our ~~EWG~~

~~ProjectCos~~EWGs (except Evergreen Gen Lead, LLC) has obtained “market based rate authorization” and associated blanket authorizations and waivers from FERC under the FPA, which allows it to sell electricity, capacity and ancillary services at wholesale at negotiated, market based rates, instead of cost-of-service rates, as well as waivers of, and blanket authorizations under, certain FERC regulations that are commonly granted to market based rate sellers, including blanket authorizations to issue securities.

The failure of our QFs to maintain QF status may result in their and their owners becoming subject to significant additional regulatory requirements. In addition, the failure of the ~~EWG ProjectCos,~~EWGs, or our QFs to comply with applicable regulatory requirements may result in the imposition of civil penalties ~~as discussed further in "Business - Regulatory Matters"~~.or other sanctions.

In particular, the ~~EWG ProjectCos,~~EWGs, and any project companies that own or operate our QFs that obtain market based rate authority from FERC under the FPA are ~~or will be~~ subject to certain market behavior and anti-manipulation rules as established and enforced by FERC, and if they are determined to have violated those rules, will be subject to potential disgorgement of profits associated with the violation, penalties, and suspension or revocation of their market-based rate authority. If such entities were to lose their market-based rate authority, they would be required to obtain FERC’s acceptance of a cost-of-service rate schedule for wholesale sales of electric energy, capacity and ancillary services and could become subject to significant accounting, record-keeping, and reporting requirements that are imposed on FERC regulated public utilities with cost-based rate schedules.

Substantially all of our assets are also subject to the rules and regulations applicable to power generators generally, in particular the NERC Reliability Standards ~~of NERC~~ or similar standards in ~~Canada, the United Kingdom and Chile.~~jurisdictions in which we operate. If we fail to comply with these mandatory Reliability Standards, we could be subject to sanctions, including substantial monetary penalties, increased compliance obligations and disconnection from the grid.

The regulatory environment for electricity generation in the United States has undergone significant changes in the last several years due to state and federal policies affecting the wholesale and retail power markets and the creation of incentives for the addition of large amounts of new renewable energy generation and demand response resources. These changes are ongoing and we cannot predict the ultimate effect that the changing regulatory environment will have on our business. In addition, in some of these markets, interested parties have proposed material market design changes, as well as made proposals to re-regulate the markets or require divestiture of power generation assets by asset owners or operators to reduce their market share. If competitive restructuring of the power markets is reversed, discontinued or delayed, our business prospects and financial results could be negatively impacted.

Revenues in our solar and wind assets in Spain are mainly defined by regulation and some of the parameters defining the remuneration are subject to review every three and six years.

In 2013, the Spanish government modified regulations applicable to renewable energy assets, including solar and wind power. According to Royal Decree 413/2014, renewable electricity producers in Spain receive: (i) the pool price for the power they produce and (ii) a return on investment payment based on the standard investment cost for each type of plant (without any

relation whatsoever to the amount of power they generate). This payment based on investment (in €/MW of installed capacity) is supplemented, in the case of solar plants, by a return on operations payment (in €/MWh produced).

The principle driving this economic regime is that the payments received by a renewable energy producer should be equivalent to the costs that they are unable to recover on the electricity pool market where they compete with non-renewable technologies. This economic regime seeks to allow a “well-run and efficient enterprise” to recover the costs of building and running a plant, plus a reasonable return on investment (project investment rate of return) over a regulated standard investment cost for each type of plant defined by the government.

The reasonable return is calculated as the average yield on Spanish government 10-year bonds on the secondary market in a 24-month period preceding the new regulatory period, plus a premium based on the financial condition of the Spanish electricity system and prevailing economic conditions.

This return can be revised every six years at the end of each regulatory period. The first regulatory period commenced on July 14, 2013, the date on which Royal Decree-Law 9/2013 became effective, and will end on December 31, 2019. The values of parameters used to calculate the payments can be changed at the end of each regulatory period, except for a plant’s useful life and the value of a plant’s initial investment. The Spanish government initiated its review of the rates of return on investment and return on operations with the publication of a draft of the law on December 28, 2018. This document includes several options for the plants affected by the Royal Decree-Law 9/2013, that would set the new reasonable return in between 7.09% and the existing 7.39%.

If the proposal is amended in the Spanish Parliament, and payments for renewable energy plants are revised to lower amounts in the next regulatory period starting on January 1, 2020 until December 31, 2025, this could have an adverse effect on our business, financial condition, results of operations and cash flows. As a reference, assuming our Spanish assets continue to perform as expected and assuming no additional changes of circumstances, with the information currently available we estimate that a reduction of 100 basis points in the reasonable rate of return on investment set by the Spanish government could cause a reduction in our cash available for distribution of approximately €12 million per year for the whole Spanish portfolio. This estimate is subject to certain assumptions, which may change in the future.

Additionally, the high electricity market prices experienced in recent years, which are also expected in 2019, are generating a future liability for our renewable plants in Spain, given the regulated price bands mechanism that reduces the risk of our plants from market prices fluctuations. Prices in Spain have been significantly above the regulated bands and any extra revenues received due to this situation will have to be returned through a reduction of the return on investment payment on future years. The current expected reduction in revenues due to this effect will be €7 million distributed through the life of all the assets of the Spanish portfolio.

There are other parameters, such as achieved market prices forecast, load factors and standard operational expenses, that could be updated on the regulatory review taking place in 2019, and that could therefore have a negative impact on the return on investment payment and the return on operations payment during the following years.

Revenues in our Portuguese wind farms are affected by regulation and government incentives.

Our wind farms in Portugal are operated under the remuneration scheme of Decree Law 339-C/2001, as well as the amendments to Decree Law 51/2010 and Decree Law 35/2013.

The remuneration scheme consists of a feed in tariff (expressed in €/MWh), which consists of a fixed component, variable component and an environmental component. Remuneration also depends on a “z” coefficient, which varies depending on the facility’s annual production. This remuneration is also updated according to monthly fluctuations in inflation.

The remuneration scheme of the wind farms is maintained for 15 years at a fixed price, which may be extended by an additional seven years with a variable price that has cap-and-floor system (Decree Law 35/2013).

The Portuguese government has approved charging the Energy Sector Extraordinary Contribution Tax (“CESE”) to renewable energy generators in 2019. The CESE has been in place since 2014. It was originally approved as an extraordinary tax that would remain in place for no longer than one year, and it only applied to non-renewable energy operators. Since then it has been extended every year. All of our wind farms in Portugal will be affected by the CESE tax for 2019, for an expected total negative impact of approximately €1 million.

Revenue from our concessional assets in Uruguay is significantly dependent on long-term fixed rate arrangements that restrict our ability to increase revenue from these operations.

In all of our concession agreements in Uruguay, we have a long-term PPA with UTE, or Administracion Nacional de Usinas y Transmisiones Electricas, the Republic of Uruguay’s state-owned electricity company. Under these PPAs, we are required to deliver power at a fixed rate for the contract period, in all cases inflation adjusted. In addition, during the life of a concession, the relevant government authority may unilaterally impose additional restrictions on our tariff rates, subject to the regulatory frameworks applicable in each jurisdiction. Governments may also postpone annual tariff increases until a new tariff structure is approved without compensating us for lost revenue. Furthermore, changes in laws and regulations may, in certain cases, have retroactive effect and expose us to additional compliance costs or interfere with our existing financial and business planning.

Laws, governmental regulations and policies supporting renewable energy, and specifically solar and wind energy (including tax incentives), could change at any time, including as a result of new political leadership, and such changes may materially adversely affect our business and our growth strategy.

Renewable energy generation assets currently benefit from, or are affected by, various federal, state and local governmental incentives and regulatory policies. ~~As further explained under “~~Tax provisions and policies supporting renewable energy could change at any time, and such changes may result in a material increase in our estimated future income tax liability and may limit the current benefits of solar and wind energy investment~~” below, in~~In the United States, these policies include federal ITCs, PTCs, and trade import tariff policies, as well as state RPS and integrated resource plan ~~(“IRP”)~~ programs, state and local sales and property taxes, siting policies, grid access policies, rate design, net energy metering, and modified accelerated cost-recovery system of depreciation. The growth of our wind and solar energy business ~~may~~will also be dependent on the federal and state tax and regulatory regimes generally and as they relate in particular to our investments in our wind and solar facilities. For example, future growth in the renewable energy industry in the U.S. ~~Congress further extending~~will be impacted by the ~~expiration date~~availability of ~~renewing or replacing~~the ITC and PTCs ~~without~~and accelerated depreciation and other changes to the federal income tax codes, including reductions in rates or changes that affect the ability of tax equity providers to effectively obtain the benefit of available tax credits or deductions or forecast their future tax liabilities, which may materially impair the market for tax equity financing for wind and solar power plants would likely be materially impaired or altogether cease to exist. The president of the United States has made public statements regarding overturning or modifying policies of or regulations enacted by the previous administration that placed limitations on coal and gas electric generation, mining and/or exploration.plants. Any effort to overturn federal and state laws, regulations or policies that are supportive of wind and solar power plants or that remove costs or other limitations on other types of generation that compete with wind and solar power plants could materially and adversely affect our business, financial condition, results of operations and cash flows.

~~Many~~In the U.S., many states have adopted RPS programs mandating that a specified percentage of electricity sales come from eligible sources of renewable energy. If the RPS requirements are reduced or eliminated, it could lead to fewer future power contracts or lead to lower prices for the sale of power in future power contracts, which could have a material adverse effect on our future growth prospects. Such material adverse effects may result from decreased revenues, reduced economic returns on certain project company investments, increased financing costs and/or difficulty obtaining financing.

Renewable energy sources in Canada benefit from federal and provincial incentives, such as RPS programs, accelerated cost recovery deductions allowed for tax purposes, the availability of offtake agreements through RPS and the

Ontario FIT program, and other commercially oriented incentives. Renewable energy sources in Chile benefit from an RPS program. Renewable energy sources also receive incentives from the governments of Spain and Portugal. Any adverse change to, or the elimination of, these incentives could have a material adverse effect on our business and our future growth prospects.

We are also subject to laws and regulations that are applicable to business entities generally, including local, state and federal tax laws. As discussed in Government Incentives and Legislation within Item 1. Business, on December 22, 2017, the U.S. government enacted the Tax Act, which contains several provisions that positively and negatively impact our business and operations. If any of the laws or governmental regulations or policies that support renewable energy change, or if we are subject to ~~new and burdensome~~changes to other existing laws or regulations or new laws or regulation that impact our tax position, increase our compliance costs, are burdensome or otherwise negatively impact our business, such ~~changes~~new or changed laws or regulations may have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~Maintenance, expansion~~International operations subject us to political and ~~refurbishment~~economic uncertainties.

Our portfolio consists of renewable energy facilities ~~involve~~located in the United States (including Puerto Rico), Canada, the United Kingdom, Chile, Spain, Portugal and Uruguay. In addition, we could decide to expand our presence in our existing international markets or further our expansion into new international markets. As a result, our activities are and will be subject to significant ~~risks~~political and economic uncertainties that ~~could result in unplanned power outages or reduced output.~~may adversely affect our operating and financial performance. These uncertainties include, but are not limited to:

~~Our~~the risk of a change in renewable power pricing policies, possibly with retroactive effect;

political and economic instability;

measures restricting the ability of our facilities ~~may require periodic upgrading~~to access the grid to deliver electricity at certain times or at all;

the macroeconomic climate and ~~improvement. Any unexpected operational~~ levels of energy consumption in the countries where we have operations;

the comparative cost of other sources of energy;

changes in taxation policies and/or ~~mechanical failure,~~the regulatory environment in the countries in which we have operations, including ~~failure~~reductions to renewable power incentive programs;

the imposition of currency controls and foreign exchange rate fluctuations;

high rates of inflation;

protectionist and other adverse public policies, including local content requirements, import/export tariffs, increased regulations or capital investment requirements;

changes to land use regulations and permitting requirements;

risk of nationalization or other expropriation of private enterprises and land, including creeping regulation that reduces the value of our facilities or governmental incentives associated with ~~breakdowns~~renewable energy;

difficulty in timely identifying, attracting and ~~forced outages,~~retaining qualified technical and other personnel;

difficulty competing against competitors who may have greater financial resources and/or a more effective or established localized business presence;

difficulties with, and extra-normal costs of, recruiting and retaining local individuals skilled in international business operations;

difficulty in developing any ~~decreased operational or management performance, could reduce our facilities’ generating capacity below expected levels, reducing our revenues~~necessary partnerships with local businesses on commercially acceptable terms; and ~~jeopardizing our ability~~

being subject to ~~pay dividends to holders~~the jurisdiction of our Class A common stock at forecasted levels or at all. Incomplete performance by SunEdison or third parties under O&M agreements may increase the risks of operational or mechanical failure of our facilities. Degradationcourts other than those of the ~~performance~~United States, which courts may be less favorable to us.

In addition, we may be unable to adjust our tariffs or rates as a result of ~~our renewable energy facilities provided for~~fluctuations in prices above the regulated recognized inflation of raw materials, exchange rates, labor and subcontractor costs during the operating phase of these projects, or any other variations in the ~~related PPAs~~conditions of specific jurisdictions in which our concession-type infrastructure projects are located, which may ~~also~~ reduce our ~~revenues. Unanticipated capital expenditures associated with maintaining, upgrading or repairing our facilities may also reduce~~ profitability.

~~We may also choose to refurbish or upgrade~~These uncertainties, many of which are beyond our facilities based on our assessment that such activity will provide adequate financial returns and key assumptions underpinning a decision to make such an investment may prove incorrect, including assumptions regarding construction costs, timing, available financing and future power prices. Thiscontrol, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~Moreover, spare parts~~Our international operations require us to comply with anti-corruption laws and regulations of the United States government and various non-U.S. jurisdictions.

Doing business in multiple countries requires us and our subsidiaries to comply with the laws and regulations of the United States government and various non-U.S. jurisdictions. Our failure to comply with these rules and regulations may expose us to liabilities. These laws and regulations may apply to us, our subsidiaries, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular, our non-U.S. operations are subject to United States and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”). The FCPA prohibits United States companies and their officers, directors, employees and agents acting on their behalf from corruptly offering, promising, authorizing or providing anything of value to foreign officials for ~~wind turbines~~the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and ~~solar facilities~~keep books, records and ~~key pieces~~accounts that accurately and fairly reflect transactions and dispositions of ~~equipment~~assets and to maintain a system of adequate internal accounting controls. As part of our business, TerraForm Power and its officers, directors, employees and third party agents regularly deal with government bodies and government owned and controlled businesses, the employees and representatives of which may be ~~hard~~considered foreign officials for purposes of the FCPA. As a result, business dealings between our employees and any such foreign official could expose us to ~~acquire~~the risk of violating anti-corruption laws even if such business practices may be customary or ~~unavailable~~are not otherwise prohibited between us and a private third party. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We have established policies and procedures designed to ~~us. Sources~~assist us and our personnel in complying with applicable United States and non-U.S. laws and regulations; however, there is no assurance that these policies and procedures will completely eliminate the risk of ~~some significant spare parts~~a violation of these legal requirements, and ~~other equipment are located outside of North America and the other jurisdictions in which we operate. If we were to experience~~any such violation (inadvertent or otherwise) could have a ~~shortage of or inability to acquire critical spare parts we could incur significant delays in returning facilities to full operation, which could negatively impact~~material adverse effect on our business, financial condition and results of ~~operations and cash flows.~~

Our KWP II wind power plant is required under its PPA to install and maintain a battery energy storage system, the manufacturer of which is in bankruptcy and no longer supplies batteries to any customers. If we are unable to source acceptable replacement batteries, this could result in a default under, or termination of, KWP II’s PPA.

Our Kaheawa Wind Power II (“KWP II”) wind power plant is required under its PPA to install and maintain a battery energy storage system (“BESS”). The manufacturer of the BESS is in bankruptcy and is no longer providing replacement batteries and other components for the BESS. We are sourcing replacement batteries from a new supplier, but such replacement batteries may not be sufficient for the system to operate as designed or may not be available in the quantities or at an economical price. Our Kahuku wind power plant had a similar BESS that was required to be operated under its PPA, but the BESS was destroyed in a fire. The facility installed a D-Var system as a replacement for the BESS under the Kahuku facility PPA, which has been operating as designed. If the BESS system at KWP II was damaged or could no longer operate, a D-Var could not be used at the KWP II facility as a replacement to the BESS due to technical constraints, and another replacement system may not be compatible or available at a price that would allow the facility to operate economically. Failure to maintain the battery system constitutes a default under KWP II’s PPA and could result in the termination of KWP II’s PPA, which could negatively impact our business financial condition, results of operations and cash flows.

Certain of the wind power plants use equipment originally produced and supplied by Clipper Windpower, LLC, or its affiliates (“Clipper”) which no longer manufactures, warrants or services the wind turbines it produced. If Clipper equipment experiences defects in the future, we may not be able to obtain replacement components and will need to self-fund the correction or replacement of such equipment.

The Cohocton, Kahuku, Sheffield, and Steel Winds I and II wind power plants operate 92 Liberty turbines, with a combined nameplate capacity of 230.0 MW, supplied by Clipper. Since initial deployment, Clipper has announced and remediated various defects affecting the Liberty turbines deployed by us and by other customers, which resulted in prolonged downtime for turbines at various facilities. Moreover, Clipper no longer manufactures, warrants or services the Liberty turbines or other wind equipment it produced.

Beginning in 2012, we engaged in a number of litigation and arbitration proceedings with Clipper concerning the performance of the Liberty turbines. On February 12, 2013, all such disputes were settled pursuant to a Settlement, Release and Operation and Maintenance Transition Agreement among certain of our and Clipper entities. Pursuant to this agreement, we have, among other things, released Clipper of all of its warranty obligations with respect to the equipment supplied by Clipper, and the obligations under the related operation and maintenance contracts, and we have been granted by Clipper a non-exclusive, royalty-free, perpetual, irrevocable license to make, improve and modify any equipment supplied by Clipper and to create derivative works from such equipment.

As a result, if Clipper equipment experiences defects in the future, we will not have the benefit of a manufacturer’s warranty on such original equipment, may not be able to obtain replacement components and will need to self-fund the correction or replacement of such equipment, which could negatively impact our business financial condition, results of operations and cash flows.

Developers of renewable energy facilities depend on a limited number of suppliers of solar panels, inverters, module turbines, towers and other system components and turbines and other equipment associated with wind power plants. Any shortage, delay or component price change from these suppliers could result in construction or installation delays, which could affect the number of renewable energy facilities we are able to acquire in the future.

There have been periods of industry-wide shortage of key components, including solar panels and wind turbines, in times of rapid industry growth. The manufacturing infrastructure for some of these components has a long lead time, requires significant capital investment and relies on the continued availability of key commodity materials, potentially resulting in an inability to meet demand for these components. In addition, the United States government has imposed tariffs on solar cells manufactured in China. Based on determinations by the United States government, the applicable anti-dumping tariff rates range from approximately 8% to 239%. To the extent that United States market participants experience harm from Chinese pricing practices, an additional tariff of approximately 15%-16% will be applied. If project developers purchase solar panels containing cells manufactured in China, our purchase price for renewable energy facilities would reflect the tariff penalties mentioned above. A shortage of key commodity materials could also lead to a reduction in the number of renewable energy facilities that we may have the opportunity to acquire in the future, or delay or increase the costs of acquisitions. The risks discussed above under “~~The SunEdison Bankruptcy may adversely affect our relationships with current or potential counterparties” may be increased by our dependence on a limited number of suppliers.~~

~~We may incur unexpected expenses if the suppliers of components in our renewable energy facilities default in their warranty obligations.~~

The solar panels, inverters, modules and other system components utilized in our solar generation facilities are generally covered by manufacturers’ warranties, which typically range from 5 to 20 years. When purchasing wind turbines, the purchaser will enter into warranty agreements with the manufacturer which typically expire within two to five years after the turbine delivery date. In the event any such components fail to operate as required, we may be able to make a claim against the applicable warranty to cover all or a portion of the expense associated with the faulty component. However, these suppliers could cease operations and no longer honor the warranties, which would leave us to cover the expense associated with the faulty component. For example, a portion of our solar power plants utilize modules made by SunEdison and certain of its affiliates that are debtors in the SunEdison Bankruptcy. Our business, financial condition, results of operations and cash flows could be materially adversely affected if we cannot make claims under warranties covering our renewable energy facilities.operations.

We are subject to environmental, health and safety laws and regulations and related compliance expenditures and liabilities.

Our assets are subject to numerous and significant federal, state, local and foreign laws, and other requirements governing or relating to the ~~environment.~~environment, health and safety. Our facilities could experience incidents, malfunctions and other unplanned events, such as spills of hazardous materials that may result in personal injury, penalties and property damage. At

least one of our concentrated solar power plants was found to have elevated levels of certain regulated thermal fluids, indicating the possibility of a leak of such fluids at the site. We are working with local regulators, as well as the site’s previous owner, to investigate the situation and determine the cause of the elevated levels of the thermal fluids. While there is no enforcement action against us at this time, there is no assurance that we will not face liability for this incident in the future.

In addition, certain environmental, health and safety laws may result in liability for failure to comply with periodic reporting and other administrative requirements and, regardless of fault, concerning contamination at a range of properties, including properties currently or formerly owned, leased or operated by us and properties where we disposed of, or arranged for disposal of, waste and other hazardous materials. In addition, with an increasing global focus and public sensitivity to environmental sustainability and environmental regulation becoming more stringent, we could also be subject to increasing environmental related responsibilities and associated liability. Environmental legislation and permitting requirements may evolve in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their directors and employees. As such, the operation of our facilities carries an inherent risk of environmental liabilities, and may result in our involvement from time to time in administrative and judicial proceedings relating to such matters. These changes may result in increased costs to our operations and may have an adverse impact on prospects for growth of our business. While we have implemented environmental management and health and safety programs designed to continually improve environmental, health and safety performance, ~~we cannot assure you~~there is no assurance that such liabilities including significant required capital expenditures, as well as the costs for complying with environmental laws and regulations, will not have a material adverse effect on our business, financial condition, results of operations and cash flows.

Harming of protected species can result in curtailment of wind power plant operations, monetary fines and negative publicity.

The operation of wind power plants can adversely affect endangered, threatened or otherwise protected animal species. Wind power plants, in particular, involve a risk that protected species will be harmed, as the turbine blades travel at a high rate of speed and may strike flying animals (such as birds or bats) that happen to travel into the path of spinning blades.

Our wind power plants are known to strike and kill flying animals, and occasionally strike and kill endangered or protected ~~species, including protected golden or bald eagles.~~species. As a result, we expect to observe ~~all~~ industry guidelines and comply with regulator approved incidental take permits and governmentally recommended best practices to avoid harm to protected species, such as avoiding structures with perches, avoiding guy wires that may kill birds or bats in flight, or avoiding lighting that may attract protected species at night. In addition, we will attempt to reduce the attractiveness of a site to predatory birds bythrough regular site maintenance (e.g., mowing, removal of animal and bird carcasses, etc.).

Where possible, we will obtain permits for incidental taking of protected species. We hold such permits for some of our wind power plants, particularly in Hawaii, where several species are endangered and protected by law. We are ~~currently in discussions with~~monitoring the U.S. Fish & Wildlife Service ~~(“USF&WS”)~~rulemaking and policy about obtaining incidental take permits for bald and golden eagles at locations with low to moderate risk of such ~~events.~~events and will seek permits as appropriate, and continue to monitor rulemaking for other species. We are also ~~discussing with USF&WS~~in the process of amending the incidental take permits for ~~certain~~one wind power ~~plants~~plant in Hawaii, where, ~~observed~~based on standardized monitoring, endangered species mortality has exceeded prior estimates and ~~may exceed permit limits~~the permitted limit on such takings. We are cooperating with federal and state agencies to amend our incidental take permits to come into compliance.

Excessive taking of protected species could result in requirements to implement mitigation strategies, including ~~curtailment~~modification of operations and/or substantial monetary fines and negative publicity. Our wind power plants in Hawaii, several of which hold incidental take permits to authorize the incidental taking of small numbers of protected species, are subject to curtailment (i.e., reduction in operations) if excessive taking of protected species is detected through monitoring. At some of the facilities in Hawaii, curtailment has been implemented, but not at levels that materially reduce electricity generation or revenues. Such curtailments (to protect bats) have reduced nighttime operation and limited operation to times when wind speeds are high enough to prevent bats from flying into a wind power plant’s blades. ~~Based on continuing concerns about species other than bats, however, additional~~Additional curtailments are possible at those locations. We cannot guarantee that such curtailments, any monetary fines that are levied or negative publicity that we receive as a result of incidental taking of protected species will not have a material adverse effect on our business, financial condition, results of operations and cash flows.

Risks that are beyond our control, including but not limited to acts of terrorism or related acts of war, natural disasters, hostile cyber intrusions, theft or other catastrophic events, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our renewable energy facilities, or those that we otherwise acquire in the future, may be targets of terrorist activities that could cause environmental repercussions and/or result in full or partial disruption of the facilities’ ability to generate electricity. Hostile cyber intrusions, including those targeting information systems as well as electronic control systems used at the facilities and for the related distribution systems, could severely disrupt business operations and result in loss of service to customers, as well as create significant expense to repair security breaches or system damage.

Furthermore, certain of our renewable energy facilities are located in active earthquake zones. The occurrence of a natural disaster, such as an earthquake, hurricane, lightning, flood or localized extended outages of critical utilities or transportation systems, or any critical resource shortages, affecting us could cause a significant interruption in our business, damage or destroy our facilities or those of our suppliers or the manufacturing equipment or inventory of our suppliers.

Additionally, certain of our renewable energy facilities and equipment are at risk for theft and damage. For example, we are at risk for copper wire theft, especially at our solar generation facilities, due to an increased demand for copper in the United States and internationally. Theft of copper wire or solar panels can cause significant disruption to our operations for a period of months and can lead to operating losses at those locations. Damage to wind turbine equipment may also occur, either through natural events such as lightning strikes that damage blades or in-ground electrical systems used to collect electricity from turbines, or through vandalism, such as gunshots into towers or other generating equipment. Such damage can cause disruption of operations for unspecified periods, which may lead to operating losses at those locations.

Any such terrorist acts, environmental repercussions or disruptions, natural disasters or theft incidents could result in a significant decrease in revenues or significant reconstruction, remediation or replacement costs, beyond what could be recovered through insurance policies, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Any cyber-attack or other failure of the Company’s communications and technology infrastructure and systems could have ana material adverse impact on the Company.

~~The Company relies~~We rely on ~~the~~information technology systems for secure storage, processing and transmission of sensitive electronic data and other proprietary information ~~and technology systems, including software and hardware,~~ for the efficient operation of its renewable energy ~~facilities.~~facilities and corporate operations. In light of this, we may be subject to cyber security risks or other breaches of information technology security intended to obtain unauthorized access to our proprietary information and that of our business partners, destroy data or disable, degrade, or sabotage these systems through the introduction of computer viruses, fraudulent emails, cyber attacks and other means, and such breaches could originate from a variety of sources including our own employees or unknown third parties. There can be no assurance that measures implemented to protect the integrity of these systems will provide adequate protection, and any such breach could go undetected for an extended period of time. If ~~the Company, its communications~~these information technology systems ~~or computer hardware or software~~ are impacted by a cyber-attack or cyber-intrusion, ~~particularly or as part of a broader attack or intrusion by third parties, including computer hackers, foreign governments and cyber terrorists, the Company’s~~our operations or capabilities could be interrupted or diminished and important information could be lost, deleted, misused or stolen, which could have a negative impact on ~~the Company’s~~our renewable energy facilities, operating results and revenues ~~and results of operations~~ or which could cause ~~the Company~~us to incur unanticipated liabilities, reputational damage and regulatory penalties, or incur costs and expenses to repair, replace or enhance affected systems, including costs related to cyber security for ~~the Company’s~~our renewable energy ~~facilities.~~facilities and technology systems.

Our use and enjoyment of real property rights for our renewable energy facilities may be adversely affected by the rights of lienholders and leaseholders that are superior to those of the grantors of those real property rights to us.

Renewable energy facilities generally are and are likely to be located on land occupied by the facility pursuant to long-term easements and leases. The ownership interests in the land subject to these easements and leases may be subject to mortgages securing loans or other liens (such as tax liens) and other easement and lease rights of third parties (such as leases of oil or mineral rights) that were created prior to the facility’s easements and leases. As a result, the facility’s rights under these easements or leases may be subject, and subordinate, to the rights of those third parties. We perform title searches and obtain title insurance to protect ourselves against these risks. Such measures may, however, be inadequate to protect us against all risk of loss of our rights to use the land on which our renewable energy facilities are located, which could have a material adverse effect on our business, financial condition and results of operations.

~~International operations subject us to political and economic uncertainties.~~

Our portfolio consists of renewable energy facilities located in the United States (including Puerto Rico), Canada, the United Kingdom and Chile. In addition, since solar and wind energy generation and other forms of clean energy are in the early stages of development and the industry is evolving rapidly, we could decide to expand into other international markets. As a result, our activities are and will be subject to significant political and economic uncertainties that may adversely affect our operating and financial performance. These uncertainties include, but are not limited to:

~~the risk of a change in renewable power pricing policies, possibly with retroactive effect;~~

~~political and economic instability;~~

~~measures restricting the ability of our facilities to access the grid to deliver electricity at certain times or at all;~~

~~the macroeconomic climate and levels of energy consumption in the countries where we have operations;~~

~~the comparative cost of other sources of energy;~~

~~changes in taxation policies and/or the regulatory environment in the countries in which we have operations, including reductions to renewable power incentive programs;~~

~~the imposition of currency controls and foreign exchange rate fluctuations;~~

~~high rates of inflation;~~

~~protectionist and other adverse public policies, including local content requirements, import/export tariffs, increased regulations or capital investment requirements;~~

~~changes to land use regulations and permitting requirements;~~

~~difficulty in timely identifying, attracting and retaining qualified technical and other personnel;~~

~~difficulty competing against competitors who may have greater financial resources and/or a more effective or established localized business presence;~~

~~difficulties with, and extra-normal costs of, recruiting and retaining local individuals skilled in international business operations;~~

~~difficulty in developing any necessary partnerships with local businesses on commercially acceptable terms; and~~

~~being subject to the jurisdiction of courts other than those of the United States, which courts may be less favorable to us.~~

~~These uncertainties, many of which are beyond our control, could have a material adverse effect on our business, financial condition, results of operations and cash flows.~~

~~Our international operations require us to comply with anti-corruption laws and regulations of the United States government and various non-U.S. jurisdictions.~~

Doing business in multiple countries requires us and our subsidiaries to comply with the laws and regulations of the United States government and various non-U.S. jurisdictions. Our failure to comply with these rules and regulations may expose us to liabilities. These laws and regulations may apply to us, our subsidiaries, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities. In particular, our non-U.S. operations are subject to United States and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”). The FCPA prohibits United States companies and their officers, directors, employees and agents acting on their behalf from corruptly offering, promising, authorizing or providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies to make and keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. As part of our business, we deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. As a result, business dealings between our employees and any such foreign official could expose the Company to the risk of violating anti-corruption laws even if such business practices may be customary or are not otherwise prohibited between the Company and a private third party. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. We have established policies and procedures designed to assist us and our personnel in complying with applicable United States and non-U.S. laws and regulations; however, we cannot assure you that these policies and procedures will completely eliminate the risk of a violation of these legal requirements, and any such violation (inadvertent or otherwise) could have a material adverse effect on our business, financial condition and results of operations.

~~In the future, we may acquire certain assets in which we have limited control over management decisions and our interests in such assets may be subject to transfer or other related restrictions.~~

We have acquired, and may seek to acquire, assets in the future in which we own less than a majority of the related interests in the assets. In these investments, we will seek to exert a degree of influence with respect to the management and operation of assets in which we own less than a majority of the interests by negotiating to obtain positions on management committees or to receive certain limited governance rights, such as rights to veto significant actions. However, we may not always succeed in such negotiations, and we may be dependent on our co-venturers to operate such assets. Our co-venturers may not have the level of experience, technical expertise, human resources management and other attributes necessary to operate these assets optimally. In addition, conflicts of interest may arise in the future between us and our stockholders, on the one hand, and our co-venturers, on the other hand, where our co-venturers’ business interests are inconsistent with our interests and those of our stockholders. Further, disagreements or disputes between us and our co-venturers could result in litigation, which could increase our expenses and potentially limit the time and effort our officers and directors are able to devote to our business.

The approval of co-venturers also may be required for us to receive distributions of funds from assets or to sell, pledge, transfer, assign or otherwise convey our interest in such assets. Alternatively, our co-venturers may have rights of first refusal or rights of first offer in the event of a proposed sale or transfer of our interests in such assets. These restrictions may limit the price or interest level for our interests in such assets, in the event we want to sell such interests.

We may not be able to renew our sale-leasebacks on similar terms. If we are unable to renew a sale-leaseback on acceptable terms we may be required to remove the renewable energy facility from the facility site subject to the sale-leaseback transaction or, alternatively, we may be required to purchase the renewable energy facilities from the lessor at unfavorable terms.

Provided the lessee is not in default, customary end of lease term provisions for sale-leaseback transactions obligate the lessee to (i) renew the sale-leaseback assets at fair market value, (ii) purchase the renewable energy facilities at fair market value or (iii) return the renewable energy facility to the lessor. The cost of acquiring or removing a significant number of solar energy assets could be material. Further, we may not be successful in obtaining the additional financing necessary to purchase such renewable energy facilities from the lessor. Failure to renew our sale-leaseback transactions as they expire may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Negative public or community response to renewable energy facilities could adversely affect our acquisition of new facilities and the operation of our existing facilities.

Negative public or community response to solar, wind and other renewable energy facilities could adversely affect our ability to acquire and operate our facilities. Our experience is that such opposition subsides over time after renewable energy

facilities are completed and are operating, but there are cases where opposition, disputes and even litigation continue into the operating period and could lead to curtailment of a facility or other facility modifications.

The seasonality of our operations may affect our liquidity.

We will need to maintain sufficient financial liquidity to absorb the impact of seasonal variations in energy production or other significant events. Our principal sources of liquidity are cash generated from our operating activities, the cash retained by us for working capital purposes out of the gross proceeds of financing activities as well as our borrowing capacity under our ~~Revolver,~~existing credit facilities, subject to ~~the~~any conditions required to draw under ~~our Revolver.~~such existing credit facilities. Our quarterly results of operations may fluctuate significantly for various reasons, mostly related to economic incentives and weather patterns.

For instance, the amount of electricity and revenues generated by our solar generation facilities is dependent in part on the amount of sunlight, or irradiation, where the assets are located. Due to shorter daylight hours in winter months which results in less irradiation, the generation produced by these facilities will vary depending on the season. The electricity produced and revenues generated by a wind power plant depend heavily on wind conditions, which are variable and difficult to predict. Operating results for wind power plants vary significantly from period to period depending on the wind conditions during the periods in question. Additionally, to the extent more of our renewable energy facilities are located in the northern or southern hemisphere, overall generation of our entire asset portfolio could be impacted by seasonality. Further, time-of-day pricing factors vary seasonally which contributes to variability of revenues. We expect our portfolio of renewable energy facilities to generate the lowest amount of electricity during the fourth quarter. However, we expect aggregate seasonal variability to decrease if geographic diversity of our portfolio between the northern and southern hemisphere increases.

If we fail to adequately manage the fluctuations in the timing of distributions from our renewable energy facilities, our business, financial condition or results of operations could be materially affected. The seasonality of our energy production may create increased demands on our working capital reserves and borrowing capacity under our ~~Revolver~~existing credit facilities during periods where cash generated from operating activities are lower. In the event that our working capital reserves and borrowing capacity under our ~~Revolver~~existing credit facilities are insufficient to meet our financial requirements, or in the event that the restrictive covenants in our ~~Revolver~~existing credit facilities restrict our access to such facilities, we may require additional equity or debt financing to maintain our solvency. Additional equity or debt financing may not be available when required or available on commercially favorable terms or on terms that are otherwise satisfactory to us, in which event our financial condition may be materially adversely affected.

~~The production~~Risks Related to our Financing Activity

We have incurred substantial indebtedness and may in the future incur additional substantial indebtedness, which may limit our ability to grow our business, reduce our financial flexibility and otherwise may have a material negative impact on our business, results of ~~wind energy depends heavily~~operations and financial condition.

We have incurred substantial corporate and project-level indebtedness and may incur additional substantial indebtedness in the future. This substantial indebtedness has certain consequences on ~~suitable wind conditions,~~our business, results of operations and financial condition, including, but not limited to, the following:

increasing our vulnerability to, and reducing our flexibility to, respond to general adverse economic and industry conditions;

limiting our flexibility in planning for, or reacting to, changes in our business and the ~~production~~competitive environment and business in which we operate;

limiting our ability to borrow additional amounts to fund our growth or otherwise meet our obligations;

requiring us to dedicate a significant portion of ~~solar depends~~our revenues to pay the principal of and interest on ~~irradiance,~~our indebtedness; and

magnifying the impact of fluctuations in our cash flows on cash available for the payment of dividends to the holders of our Class A common stock.

As a result of these consequences, our substantial indebtedness could have a material adverse effect on our business, results of operations and financial condition.

We are subject to operating and financial restrictions through covenants in our corporate loan, debt and security agreements that may limit our operational activities or limit our ability to raise additional indebtedness.

We are subject to operating and financial restrictions through covenants in our loan, debt and security agreements. These restrictions prohibit or limit our ability to, among other things, incur additional debt, provide guarantees for indebtedness, grant liens, dispose of assets, liquidate, dissolve, amalgamate, consolidate or effect corporate or capital reorganizations, and declare distributions. A financial covenant in our corporate revolver limits the overall corporate indebtedness that we may incur to a multiple of our cash available for distribution, which ~~is the amount~~may limit our ability to obtain

additional financing, withstand downturns in our business and take advantage of ~~solar energy received at a particular site.~~business and development opportunities. If ~~wind~~we breach our covenants, our corporate revolving credit facility, term loan facility or ~~solar conditions are unfavorable or below our estimates, our electricity production, and therefore our revenue,~~senior notes may be ~~substantially below~~terminated or come due and such event may cause our ~~expectations.~~credit rating to deteriorate and subject us to higher interest and financing costs. We may also be required to seek additional debt financing on terms that include more restrictive covenants, require repayment on an accelerated schedule or impose other obligations that limit our ability to grow our business, acquire needed assets or take other actions that we might otherwise consider appropriate or desirable.

Uncertainty regarding LIBOR may adversely affect the interest we pay under certain of our indebtedness.

In July 2017, the U.K. Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. Currently, it is not possible to predict the exact transitional arrangements for calculating applicable reference rates that may be made in the U.K., the U.S., the Eurozone or elsewhere given that a number of outcomes are possible, including the cessation of the publication of one or more reference rates. To the extent LIBOR is not available, we do not anticipate alternative calculations will be materially different from what would have been calculated under LIBOR. Additionally, no mandatory prepayment or redemption provisions would be triggered under our loan documents in the event that the LIBOR rate is not available. It is possible, however, that any new reference rate that applies to our LIBOR-indexed debt could be different than any new reference rate that applies to our LIBOR-indexed derivative instruments. We anticipate managing this difference and any resulting increased variable-rate exposure through modifications to our debt and/or derivative instruments however, future market conditions may not allow immediate implementation of desired modifications and/or we may incur significant associated costs.

Changes in our credit ratings may have an adverse effect on our financial position and ability to raise capital.

The ~~electricity produced~~credit rating assigned to the Company or any of our subsidiaries’ debt securities may be changed or withdrawn entirely by the relevant rating agency. A lowering or withdrawal of such ratings may have an adverse effect on our financial position and ~~revenues generated by~~ability to raise capital.

Risks Related to our Growth Strategy

The growth of our business depends on locating and acquiring interests in attractive renewable energy facilities at favorable prices and with favorable financing terms. Additionally, even if we consummate such acquisitions and financings on terms that we believe are favorable, such acquisitions may in fact result in a ~~wind power plant depend heavily on wind conditions,~~decrease in cash available for distribution per Class A common share.

The following factors, among others, could affect the availability of attractive renewable energy facilities to grow our business and dividend per Class A common share:

competing bids for a renewable energy facility, including from companies that may have substantially greater capital and other resources than we do;

fewer third party acquisition opportunities than we expect, which ~~are variable~~could result from, among other things, available renewable energy facilities having less desirable economic returns or higher risk profiles than we believe suitable for our business plan and ~~difficult~~investment strategy;

risk relating to ~~predict. Operating results~~our ability to successfully acquire ROFO assets from Brookfield and its affiliates; and

our access to the capital markets for ~~wind power plants vary significantly from period to period depending on the wind conditions during the periods in question. The electricity produced~~equity and ~~revenues generated by a solar power plant depends heavily on insolation, which is the amount of solar energy received~~debt (including project-level debt) at a ~~site.~~cost and on terms that would be accretive to our stockholders.

Even if we consummate acquisitions that we believe will be accretive to our dividends per share, those acquisitions may in fact result in a decrease in dividends per share as a result of incorrect assumptions in our evaluation of such acquisitions, unforeseen consequences or external events beyond our control.

Our acquisition strategy exposes us to substantial risk.

Our acquisition of renewable energy facilities or of companies that own and operate renewable energy facilities is subject to substantial risk, including but not limited to the failure to identify material problems during due diligence (for which we may not be indemnified post-closing), the risk of over-paying for assets (or not making acquisitions on an accretive basis), the ability to obtain or retain customers and, if the renewable energy facilities are in new markets, the risks of entering markets where we have limited experience. While ~~somewhat more predictable than wind conditions,~~we perform due diligence on prospective acquisitions, we may not be able to discover all potential operational deficiencies in such renewable energy facilities. In addition, our expectations for the operating ~~results for solar power plants can also vary~~performance of newly constructed renewable energy facilities as well as those under construction are based on assumptions and

estimates made without the benefit of operating history. However, the ability of these renewable energy facilities to meet our performance expectations is subject to the risks inherent in newly constructed renewable energy facilities and the construction of such facilities, including, but not limited to, degradation of equipment in excess of our expectations, system failures and outages. Future acquisitions may not perform as expected or the returns from ~~period~~such acquisitions may not support the financing utilized to ~~period depending on the solar conditions during the periods in question. We have based our decisions about which sites to develop in part on the findings~~acquire them or maintain them. Furthermore, integration and consolidation of ~~long-term wind, irradiance~~acquisitions requires substantial human, financial and other meteorological data and studies conducted in the proposed area, which, as applicable, measure the wind’s speed and prevailing direction, the amount of solar irradiance a site is expected to receive and seasonal variations. Actual conditions at these sites, however, may not conform to the measured data in these studiesresources and may divert management’s attention from our existing business concerns, disrupt our ongoing business or not be ~~affected by variations in weather patterns, including any potential impact~~successfully integrated. As a result, the consummation of ~~climate change. Therefore, the electricity generated by our power plants~~acquisitions may ~~not meet our anticipated production levels or the rated capacity of the turbines or solar panels located there, which could adversely affect~~have a material adverse effect on our business, financial condition, ~~and~~ results of ~~operations. In some quarters the wind resources at our operating wind power plants, while within the range~~operations and cash flows.

We may not be able to effectively identify or consummate any future acquisitions. Additionally, even if we consummate acquisitions, such acquisitions may in fact result in a decrease in cash available for distribution to holders of our ~~long-term estimates, have varied from the averages~~Class A common stock. In addition, we ~~expected. If the wind~~may engage in asset dispositions or ~~solar resources at~~other transactions that result in a ~~facility~~decrease in our cash available for distribution.

Future acquisition opportunities for renewable energy facilities are ~~below the average level we expect, our rate of return~~limited and there is substantial competition for the ~~facility would~~acquisition of these assets. Moreover, while Brookfield and its affiliates will grant us a right of first offer with respect to the projects in the right of first offer portfolio as a result of the Merger and Sponsorship Transaction, there is no assurance that we will be ~~below~~able to acquire or successfully integrate any such projects. We will compete with other companies for future acquisition opportunities from Brookfield and its affiliates and third parties.

Competition for acquisitions may increase our ~~expectations and we would be adversely affected. Projections~~cost of ~~wind resources also rely upon assumptions about turbine placement, interference between turbines and the effects of vegetation, land use and terrain, which involve uncertainty and require~~making acquisitions or cause us to ~~exercise considerable judgment. Projections~~refrain from making acquisitions at all. Some of ~~solar resources depend on assumptions about weather patterns (including snow), shading, and other assumptions which involve uncertainty and also require~~our competitors are much larger than us ~~to exercise considerable judgment. We or our consultants~~with substantially greater resources. These companies may ~~make mistakes in conducting these wind, irradiance and other meteorological studies. Any of these factors could cause our sites to have less wind or solar potential than we expected, may cause us~~be able to pay more for ~~wind~~acquisitions and ~~solar power plants~~may be able to identify, evaluate, bid for and purchase a greater number of assets than our resources permit. If we are unable to identify and consummate future acquisitions, it will impede our ability to execute our growth strategy and limit our ability to increase the amount of dividends paid to holders of our Class A common stock. In addition, as we continue to manage our liquidity profile, we may engage in ~~connection~~asset dispositions, or incur additional project-level debt, which may result in a decrease in our cash available for distribution.

Even if we consummate acquisitions that we believe will be accretive to such cash per unit, those acquisitions may in fact result in a decrease in such cash per unit as a result of incorrect assumptions in our evaluation of such acquisitions, unforeseen consequences or other external events beyond our control. Furthermore, if we consummate any future acquisitions, our capitalization and results of operations may change significantly, and stockholders will generally not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and other resources.

In the future, we may acquire certain assets in which we have limited control over management decisions and our interests in such assets may be subject to transfer or other related restrictions.

We own and may seek to acquire assets in which we own less than a majority of the related interests in the assets. In these investments, we will seek to exert a degree of influence with respect to the management and operation of assets in which we own less than a majority of the interests by negotiating to obtain positions on management committees or to receive certain limited governance rights, such as rights to veto significant actions. However, we may not always succeed in such negotiations, and we may be dependent on our co-investors to operate such assets. Our co-investors may not have the level of experience, technical expertise, human resources management and other attributes necessary to operate these assets optimally. In addition, conflicts of interest may arise in the future between us and our stockholders, on the one hand, and our co-investors, on the other hand, where our co-investors’ business interests are inconsistent with our interests and those of our stockholders. Further, disagreements or disputes between us and our co-investors could result in litigation, which could increase our expenses and potentially limit the time and effort our officers and directors are able to devote to our business.

The approval of co-investors also may be required for us to receive distributions of funds from assets or to sell, pledge, transfer, assign or otherwise convey our interest in such assets. Alternatively, our co-investors may have rights of first refusal or rights of first offer in the event of a proposed sale or transfer of our interests in such assets. Co-investors may also seek to exercise consent rights that may inhibit our ability to manage the asset as we see fit. These restrictions may limit the price or interest level for our interests in such assets, in the event we want to sell such interests.

Our ability to grow and make acquisitions ~~than~~with cash on hand may be limited by our cash dividend policy.

In the future, we ~~otherwise would have paid had~~intend to pay dividends to our stockholders each quarter and to rely primarily upon external financing sources, including the issuance of debt and equity securities to fund our acquisitions and growth capital expenditures. We may

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be precluded from pursuing otherwise attractive acquisitions if the projected short-term cash flow from the acquisition or investment is not adequate to service the capital raised to fund the acquisition or investment. As such, our growth may not be as fast as that of businesses that reinvest their available cash to expand ongoing operations.

~~such mistakes~~We may not ~~been made, which could cause the return on our investment in these~~have access to all operating wind and solar ~~power plants to be lower than expected.~~acquisitions that Brookfield identifies.

~~If our~~Our ability to grow through acquisitions depends on Brookfield’s ability to identify and present us with acquisition opportunities. Brookfield has designated the Company, subject to certain exceptions, as its primary vehicle to acquire operating wind and solar ~~energy assessments turn out~~assets in North America and Western Europe. However, Brookfield’s obligations to ~~be wrong, our business could suffer~~the Company under the Relationship Agreement are subject to a number of ~~material~~exceptions and Brookfield has no obligation to source acquisition opportunities specifically for us. There are a number of factors which could materially and adversely impact the extent to which suitable acquisition opportunities are made available to us by Brookfield, for example:

It is an integral part of Brookfield’s strategy to pursue the acquisition or development of renewable power assets through consortium arrangements with institutional investors, strategic partners and/or financial sponsors and to form partnerships (including private funds, joint ventures and similar arrangements) to pursue acquisitions on a specialized basis. In certain circumstances, acquisitions of operating wind and solar assets in our primary jurisdictions may be made by other Brookfield vehicles, either with or instead of us.

The same professionals within Brookfield’s organization that are involved in sourcing acquisitions that are suitable for us are often responsible for sourcing opportunities for vehicles, consortiums and partnerships referred to above, as well as having other responsibilities within Brookfield’s broader asset management business. Limits on the availability of such individuals will likewise result in a limitation on the availability of acquisition opportunities for us.

Brookfield will only recommend acquisition opportunities that it believes are suitable and appropriate for us. The question of whether a particular acquisition is suitable and appropriate is highly subjective and is dependent on a number of factors including an assessment by Brookfield of our liquidity position, the risk and return profile of the opportunity, and other factors. If Brookfield determines that an opportunity is not suitable or appropriate for us, it may still pursue such opportunity on its own behalf, or on behalf of a Brookfield-sponsored vehicle.

Our ability to raise additional capital to fund our operations and growth may be limited.

We may need to arrange additional financing to fund all or a portion of the cost of acquisitions, including potential contingent liabilities and other aspects of our operations. Our ability to arrange additional financing or otherwise access the debt or equity capital markets, either at the corporate-level or at a non-recourse project-level subsidiary, may be limited. Any limitations on our ability to obtain financing may have an adverse ~~consequences,~~effect on our business, or growth prospects or our results of operations. Additional financing, including the costs of such financing, will be dependent on numerous factors, including:

general economic and capital market conditions, including the then-prevailing interest rate environment;

credit availability from banks and other financial institutions;

investor confidence in us, our ~~energy production~~partners, our Sponsor, and ~~sales may be significantly lower than we predict;~~the regional wholesale power markets;

our ~~hedging arrangements may be ineffective or more costly;~~

~~we may not produce sufficient energy to meet~~financial performance and the financial performance of our ~~commitments to sell electricity or RECs and, as a result, we may have to buy electricity or RECs on the open market to cover our obligations or pay damages; and~~subsidiaries;

our ~~wind~~level of indebtedness and ~~solar power plants~~compliance with covenants in debt agreements;

our ability to file SEC reports on a timely basis and obtain audited project-level financial statements;

maintenance of acceptable credit ratings or credit quality, including maintenance of the legal and tax structure of the project-level subsidiary upon which the credit ratings may ~~not generate sufficient~~depend;

our cash ~~flow to make payments~~flows; and

provisions of ~~principal~~tax and ~~interest as they become due on the notes and our non-recourse debt, and we~~securities laws that may ~~have difficulty obtaining financing for future wind power plants.~~impact raising capital.

~~If we are deemed to~~We may not be ~~an investment company,~~successful in obtaining additional financing for these or other reasons. Furthermore, we may be ~~required~~unable to ~~institute burdensome compliance requirements~~refinance or replace non-recourse financing arrangements or other credit facilities on favorable terms or at all upon the expiration or termination thereof. Our failure, or the failure of any of our renewable energy facilities, to obtain additional capital or enter into new or replacement financing arrangements when due may constitute a default under such existing indebtedness and ~~our activities~~ may ~~be restricted, which may make it difficult for us to complete strategic acquisitions or affect combinations.~~

~~If we are deemed to be an investment company under the Investment Company Act of 1940 (the “Investment Company Act”)~~have a material adverse effect on our business, ~~would be subject to applicable restrictions under the Investment Company Act, which could make it impractical for us to continue our business as contemplated.~~

~~We believe our company is not an investment company under Section 3(b)(1)~~financial condition, results of ~~the Investment Company Act because we are primarily engaged in a non-investment company business,~~operations and we intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the Investment Company Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated.cash flows.

Risks Inherent in an Investment in TerraForm Power, Inc.

We may not be able to pay ~~comparable or growing~~ cash dividends to holders of our Class A common stock in the future.

The amount of our cash available for distribution principally depends upon the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among other things:

our ability to realize the ~~impact of the Merger and the Sponsorship Transaction~~expected benefits from Brookfield's sponsorship on our business and results of operations;

~~the~~any adverse consequences arising out of our separation from SunEdison and of the SunEdison Bankruptcy;

the timing of our ability to complete our ~~Form 10-Q for the quarters ended March 31, 2017~~audited corporate and ~~June 30, 2017 and audited~~ project-level financial statements;

defaults or potential defaults arising under our Revolver, the indentures governing our Senior Notes due 2023 and Senior Notes due 2025 and in our project-level financing agreements; and the resulting impact on our projects;

risks related to our ~~failure~~ability to file our annual and quarterly reports with the SEC on a timely basis and to satisfy the requirements of the ~~NASDAQ~~Nasdaq Global Select Market ~~which could result in a delisting of our common stock;~~(“Nasdaq”);

our ability to integrate acquired assets and realize the anticipated benefits of these acquired assets;

counterparties’ to our offtake agreements willingness and ability to fulfill their obligations under such agreements;

price fluctuations, termination provisions and buyout provisions related to our offtake agreements;

our ability to enter into contracts to sell power on acceptable terms as our offtake agreements expire;

delays or unexpected costs during the completion of construction of certain renewable energy facilities we intend to acquire;

our ability to successfully identify, evaluate and consummate acquisitions;

government regulation, including compliance with regulatory and permit requirements and changes in market rules, rates, tariffs and environmental laws;

operating and financial restrictions placed on us and our subsidiaries related to agreements governing our indebtedness and other agreements of certain of our subsidiaries and project-level subsidiaries ~~generally and in our Revolver;~~generally;

our ability to borrow additional funds and access capital markets, as well as our substantial indebtedness and the possibility that we may incur additional indebtedness going forward;

our ability to compete against traditional and renewable energy companies;

hazards customary to the power production industry and power generation operations such as unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or

repairs, interconnection problems or other developments, environmental incidents, or electric transmission constraints and the possibility that we may not have adequate insurance to cover losses as a result of such hazards;

~~restrictions contained in our debt agreements (including our project level financing, the indentures governing our Senior Notes and our Revolver);~~

our ability to expand into new business segments or new geographies;

seasonal variations in the amount of electricity our wind and solar plants produce, and fluctuations in wind and solar resource conditions; and

our ability to operate our businesses efficiently, manage capital expenditures and costs tightly, manage litigation, manage risks related to international operations and generate earnings and cash flow from our asset-based businesses in relation to our debt and other obligations.

As a result of all these factors, we cannot guarantee that we will have sufficient cash generated from operations to pay a specific level of cash dividends to holders of our Class A common stock. Furthermore, holders of our Class A common stock should be aware that the amount of cash available for distribution depends primarily on our cash flow, and is not solely a function of profitability, which is affected by non-cash items. We may incur other expenses or liabilities during a period that could significantly reduce or eliminate our cash available for distribution and, in turn, impair our ability to pay dividends to holders of our Class A common stock during the period. We are a holding company and our ability to pay dividends on our Class A common stock is limited by restrictions on the ability of our subsidiaries to pay dividends or make other distributions to us, including restrictions under the terms of the agreements governing project-level financing. Our project-level financing agreements prohibit distributions to us unless certain specific conditions are met, including the satisfaction of financial ~~ratios. Our Revolver also restricts our ability to declare~~ratios and ~~pay dividends if an event~~the absence of ~~default has occurred and is continuing~~payment or ~~if the payment of the dividend would result in an event of default.~~covenant defaults.

~~To the extent~~Furthermore, we issued additional equity securities in connection with acquisition of our European Platform, and we may issue additional equity securities in connection with any other acquisitions or growth capital ~~expenditures, the~~expenditures. The payment of dividends on these additional equity securities may increase the risk that we will be unable to maintain or increase our per share dividend. There are no limitations in our amended and restated certificate of incorporation (other than a specified number of authorized shares) on our ability to issue equity securities, including securities ranking senior to our Class A common stock. The incurrence of bank borrowings or other debt by Terra Operating LLC or by our project-level subsidiaries to finance our growth strategy will result in increased interest expense and the imposition of additional or more restrictive covenants which, in turn, may impact the cash distributions we distribute to holders of our Class A common stock.

Terra LLC’s cash available for distribution will likely fluctuate from quarter to quarter, in some cases significantly, due to seasonality or wind and solar resource conditions. As a result, we may cause Terra LLC to reduce the amount of cash it distributes to its members in a particular quarter to establish reserves to fund distributions to its members in future periods for which the cash distributions we would normally receive from Terra LLC would otherwise be insufficient to fund our quarterly dividend. If we fail to cause Terra LLC to establish sufficient reserves, we may not be able to maintain our quarterly dividend with respect to a quarter adversely affected by seasonality.

Finally, dividends to holders of our Class A common stock will be paid at the discretion of our Board.

Our ~~Board~~payout ratio has recently exceeded our long-term target and, in some periods, our CAFD. If this were to continue, it could impact our ability to maintain or grow our dividends.

TerraForm Power’s payout ratio is a measure of its ability to make cash distributions to stockholders. TerraForm Power targets a long-term payout ratio of 80 to 85% of CAFD. From time to time, TerraForm Power’s payout ratio may ~~decrease~~exceed 100%, during periods of lower generation or lower merchant power prices or combination thereof. Because our business is

primarily dependent on generation conditions and merchant power prices, as well as other factors beyond our control, it is possible that our payout ratio may remain above 100% for a sustained period. If this were to occur, it could impact our ability to maintain or grow our dividends to stockholders in line with our stated targets.

Certain of our stockholders have accumulated large concentrations of holdings of our Class A shares, which among other things, may impact the ~~level~~liquidity of our Class A shares.

In addition to Brookfield, certain of our stockholders hold large positions in our Class A shares and new or ~~entirely discontinue payment~~existing stockholders may accumulate large positions in our Class A shares, which may impact the liquidity of ~~dividends.~~shares of our Class A shares. In the event that stockholders hold these large positions in shares of our Class A common stock not owned by Brookfield this concentration of ownership may reduce the liquidity of our Class A common stock and may also have the effect of delaying or preventing a future change in control of our company or discouraging others from making tender offers for our shares, which could depress the price per share a bidder might otherwise be willing to pay.

We are a holding company and our ~~only material~~primary asset is our direct and indirect interest in Terra LLC, and we are accordingly dependent upon distributions from Terra LLC and its subsidiaries to pay dividends and taxes and other expenses.

TerraForm Power is a holding company and has no material assets other than its direct and indirect ownership of membership interests in Terra LLC, a holding company that ~~will have~~has no material assets other than its interest in Terra Operating LLC, whose sole material assets are interests in holding companies that directly or indirectly own the renewable energy facilities that comprise our portfolio and the renewable energy facilities that we subsequently acquire. TerraForm Power, Terra LLC and Terra Operating LLC have no independent means of generating revenue. We intend to cause Terra Operating LLC’s subsidiaries to make distributions to Terra Operating LLC and, in turn, make distributions to Terra LLC, and, Terra LLC, in turn, to make distributions to TerraForm Power in an amount sufficient to cover all applicable taxes payable and dividends, if any, declared by us. To the extent that we need funds to pay a quarterly cash dividend to holders of our Class A common stock or otherwise, and Terra Operating LLC or Terra LLC is restricted from making such distributions under applicable law or regulation or is otherwise unable to provide such funds (including as a result of Terra Operating LLC’s operating subsidiaries being unable to make distributions, such as due to defaults in project-level financing agreements), it could materially adversely affect our liquidity and financial condition and limit our ability to pay dividends to holders of our Class A common stock.

Market interest rates may have an effect on the value of our Class A common stock.

One of the factors that influences the price of shares of our Class A common stock will be the effective dividend yield of such shares (i.e., the yield as a percentage of the then market price of our shares) relative to market interest rates. An increase in market interest ~~rates, which are currently at low levels relative to historical~~ rates may lead prospective purchasers of shares of our Class A common stock to expect a higher dividend yield. If market interest rates increase and we are unable to increase our dividend in response, including due to an increase in borrowing costs, insufficient cash available for distribution or otherwise, investors may seek alternative investments with higher yield, which would result in selling pressure on, and a decrease in the market price of, our Class A common stock. As a result, the price of our Class A common stock may decrease as market interest rates increase.

The market price and marketability of our shares may from time to time be significantly affected by numerous factors beyond our control, which may adversely affect our ability to raise capital through future equity financings.

The market price of our shares may fluctuate significantly. Many factors may significantly affect the market price and marketability of our shares and may adversely affect our ability to raise capital through equity financings and otherwise materially adversely impact our business. These factors include, but are not limited to, the following:

price and volume fluctuations in the stock markets generally;

significant volatility in the market price and trading volume of securities of registered investment companies, business development companies or companies in our sectors, which may not be related to the operating performance of these companies;

changes in our earnings or variations in operating results;

changes in regulatory policies or tax law;

operating performance of companies comparable to us; and

loss of funding sources or the ability to finance or refinance our obligations as they come due.

~~Certain of our shareholders have accumulated large concentrations of holdings of our Class A shares.~~

Certain of our shareholders, including entities affiliated with Brookfield and Appaloosa Investment Limited Partnership I, have accumulated large positions in our Class A shares. These concentrated holdings may impact the liquidity of shares of our Class A shares and these entities may possess the ability to significantly impact the outcome of the requisite majority of the minority approval in connection with the Merger and the Sponsorship Transaction with Brookfield and its affiliates. While the Board has adopted a Stockholder Protection Rights Agreement which limits the ability of our shareholders to accumulate additional holdings of our Class A shares in certain circumstances, these concentrated holdings may impact our execution of strategic alternatives in the event that we are unable to consummate the Merger and the Sponsorship Transaction, including any shareholder vote we are required or elect to obtain in connection with any strategic alternative. Additionally, the interests of these shareholders may conflict with our interests and the interests of holders of our Class A common stock to the extent these shareholders are also creditors in the SunEdison Bankruptcy.

Provisions of our charter documents or Delaware law could delay or prevent an acquisition of us, even if the acquisition would be beneficial to holders of our Class A common stock, and could make it more difficult for investors to change management.

In the event that we are unable to consummate the Merger and the Sponsorship Transaction, provisions of our amended and restated certificate of incorporation and bylaws may discourage, delay or prevent a merger, acquisition or other change in control that holders of our Class A common stock may consider favorable, including transactions in which such stockholders might otherwise receive a premium for their shares. This is because these provisions may prevent or frustrate attempts by stockholders to replace or remove members of our management. These provisions include:

~~a prohibition on stockholder action through written consent once SunEdison ceases to hold a majority of the combined voting power of our common stock;~~

~~a requirement that special meetings of stockholders be called upon a resolution approved by a majority of our directors then in office;~~

~~the right of SunEdison as the holder of our Class B common stock, to appoint up to two additional directors to our Board;~~

~~advance notice requirements for stockholder proposals and nominations; and~~

~~the authority of the Board to issue preferred stock with such terms as the Board may determine.~~

Section 203 of the Delaware General Corporation Law, prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder (generally a person that together with its affiliates owns or within the

last three years has owned 15% of voting stock), for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. As a result of these provisions in our charter documents and Delaware law, the price investors may be willing to pay in the future for shares of our Class A common stock may be limited.

Additionally, in order to ensure compliance with Section 203 of the FPA, our amended and restated certificate of incorporation prohibits any person from acquiring, without prior FERC authorization or the written consent of our Board, in purchases other than secondary market transactions (i) an amount of our Class A or Class B1 common stock that, after giving effect to such acquisition, would allow such purchaser together with its affiliates (as understood for purposes of FPA Section 203) to exercise 10% or more of the total voting power of the outstanding shares of our Class A, Class B and Class B1 common stock in the aggregate, or (ii) an amount of our Class A common stock or Class B1 common stock as otherwise determined by our Board sufficient to allow such purchaser together with its affiliates to exercise control over our company. Any acquisition of our Class A common stock or Class B1 common stock in violation of this prohibition shall not be effective to transfer record, beneficial, legal or any other ownership of such common stock, and the transferee shall not be entitled to any rights as a stockholder with respect to such common stock (including, without limitation, the right to vote or to receive dividends with respect thereto). Any acquisition of 10% or greater voting power or a change of control with respect to us or any of our solar and wind generation project companies could require prior authorization from FERC under Section 203 the FPA. Furthermore, a “holding company” (as defined in PUHCA) and its “affiliates” (as defined in PUHCA) may be subject to restrictions on the acquisition of our Class A common stock or Class B1 common stock in secondary market transactions to which other acquirers are not subject. A purchaser of our securities which is a “holding company” or an “affiliate” or “associate company” of such a “holding company” (as defined in PUHCA) should seek their own legal counsel to determine whether a given purchase of our securities may require prior FERC approval.

Investors may experience dilution of their ownership interest due to the future issuance of additional shares of our Class A common stock.

We are in a capital intensive business, and may not have sufficient funds to finance the growth of our business, ~~future~~ acquisitions or to support our projected capital expenditures. As a result, we have engaged in, and may require additional funds from further, equity or debt financings, including tax equity financing transactions or sales of preferred shares or convertible debt to complete future acquisitions, expansions and capital expenditures and pay the general and administrative costs of our business. In the future, we may issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of purchasers of our Class A common stock offered hereby. Under our amended and restated certificate of incorporation, we are authorized to issue ~~850,000,000~~1,200,000,000 shares of Class A common stock ~~140,000,000 shares of Class B common stock, 260,000,000 shares of Class B1 common stock~~ and ~~50,000,000~~100,000,000 shares of preferred stock with preferences and rights as determined by our Board. The potential issuance of additional shares of Class A common stock or preferred stock or convertible debt may create downward pressure on the trading price of our Class A common stock. We may also issue additional shares of our Class A common stock or other securities that are convertible into or exercisable for our Class A common stock in future public offerings or private placements for capital raising purposes or for other business purposes, potentially at an offering price, conversion price or exercise price that is below the trading price of our Class A common stock.

If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they change their recommendations regarding our Class A common stock adversely, the stock price and trading volume of our Class A common stock could decline.

The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our Class A common stock adversely, or provide more favorable relative recommendations about our competitors, the price of our Class A common stock would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the stock price or trading volume of our Class A common stock to decline.

~~Future sales~~The settlement of ~~our~~certain existing litigation will trigger a requirement to issue additional Class A common stock ~~or disposals or transfers by SunEdison~~to Brookfield.

We have agreed pursuant to the merger and ~~Brookfield~~sponsorship transaction agreement (the “Merger Agreement”) dated March 6, 2017 among the Company, Orion Holdings and BRE TERP Holdings Inc., to issue additional shares of Class A common stock to Brookfield for no additional consideration in respect of the final resolution of certain specified litigation (see Note 18. Commitments and Contingencies to our consolidated financial statements for a description of such litigation). The number of additional shares of Class A common stock to be issued to Brookfield is subject to a pre-determined formula as set forth in the Merger Agreement as described in greater detail in the Company's Definitive Proxy Statement filed on Schedule 14A with the SEC on September 6, 2017 and will compensate Brookfield for the total amount of losses we incur with respect to such specified litigation. The number of shares of Class A common stock to be issued to Brookfield could result in the dilution of the ownership interests of our remaining Class A common stockholders.

Our failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and share price.

We are required to comply with Section 404(a) of the Sarbanes-Oxley Act in the course of preparing our financial statements, and our management is required to report on the effectiveness of our internal control over financial reporting for such year. Additionally, our independent registered public accounting firm is required pursuant to Section 404(b) of the Sarbanes-Oxley Act to attest to the effectiveness of our internal control over financial reporting on an annual basis. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S. GAAP. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected on a timely basis. The existence of any material weakness would require management to devote significant time and incur significant expense to remediate any such material weaknesses and management may not be able to remediate any such material weaknesses in a timely manner.

As of December 31, 2018, we did not maintain an effective control environment attributable to certain identified material weaknesses. We describe these material weaknesses in Item 9A. Controls and Procedures in this Annual Report on Form 10-K. These control deficiencies create a reasonable possibility that a material misstatement to the consolidated financial

statements will not be prevented or detected on a timely basis, and therefore we concluded that the deficiencies represent material weaknesses in our internal control over financial reporting and our internal control over financial reporting was not effective as of December 31, 2018.

The existence of these or other material weaknesses in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause stockholders to lose confidence in our reported financial information, all of which could materially and adversely affect our business and stock price.

A significant portion of our assets consists of long-lived assets, the value of which may be reduced if we determine that those assets are impaired.

As of December 31, 2018, the net carrying value of long-lived assets represented $8,587.0 million, or 92%, of our total assets and consisted of renewable energy facilities, intangible assets and goodwill from the acquisition of Saeta. Renewable energy facilities and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate carrying values may not be recoverable. An impairment loss is recognized if the total future estimated undiscounted cash flows expected from an asset are less than its carrying value.

We currently have a REC sales agreement with a customer expiring December 31, 2021 that is significant to a distributed generation solar project, and on March 31, 2018, this customer filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The potential replacement of this contract would likely result in a significant decrease in our expected revenues. Our analysis indicated that the bankruptcy filing was a triggering event to perform an impairment evaluation, and the carrying amount of $19.5 million as of March 31, 2018 was no longer considered recoverable based on an undiscounted cash flow forecast. We estimated the fair value of the operating project at $4.3 million as of March 31, 2018 and recognized an impairment charge of $15.2 million equal to the difference between the carrying amount and the estimated fair value, which is reflected within impairment of renewable energy facilities in our consolidated statements of operations for the year ended December 31, 2018. There has been no impairment of intangible assets to date. If intangible assets or additional renewable energy facilities are impaired based on a future impairment test, we could be required to record further non-cash impairment charges to our operating income. Such non-cash impairment charges, if significant, could materially and adversely affect our results of operations in the period recognized.

Goodwill is reviewed for impairment at least annually and whenever facts and circumstances indicate that it is more-likely-than-not that the fair value of a reporting unit that has goodwill is less than its carrying value. An impairment loss is recognized if the fair value of a reporting unit exceeds its carrying value. As of December 1, 2018, we performed a qualitative impairment test for the goodwill balance in Saeta of $120.6 million and determined that it is more-likely-than-not that the fair values of the reporting units exceed their carrying amounts. We concluded that further evaluation of impairment was not necessary and goodwill associated with the Saeta acquisition was not impaired at December 31, 2018.

Risks Related to our Relationship with Brookfield

We may not realize the expected benefits of Brookfield sponsorship.

Following the transition to Brookfield sponsorship, we may not perform as we expect, or as the market expects, which could have an adverse effect on the price of our Class A common stock. The Company and Brookfield are party to certain sponsorship agreements, which include, among other things, for Brookfield to provide strategic and investment management services to us, for Brookfield, subject to certain terms and conditions, to provide us with a right of first offer on certain operating wind and solar assets that are located in North America and Western Europe and developed by persons sponsored by or under the control of Brookfield and for Brookfield to provide TerraForm Power with a $500 million secured revolving credit facility to fund certain acquisitions or growth capital expenditures.

We may not realize expected benefits of Brookfield’s management services and the other aspects of the sponsorship arrangements. For example, we may fail to realize expected operational or margin improvements, synergies or other cost savings or reductions, may not achieve expected growth in its portfolio through organic growth or third-party acquisitions and may not be able to acquire assets from Brookfield. We may also not be able to effectively utilize the $500 million revolving credit facility provided by Brookfield for accretive acquisitions or at all. Our failure to realize these aspects of Brookfield sponsorship may have an adverse effect on the price of our Class A common stock ~~to fall.~~and on our business, growth and the results of our operations.

~~The market price~~

We are a “controlled company” controlled by Brookfield, whose interest in our business may be different from ours or other holders of our Class A common stock.

Brookfield owns an approximate 65% interest in the Company. Pursuant to the terms of the New Terra LLC Agreement (as defined herein), Brookfield is also entitled to IDRs. Cash distributions from Terra LLC are allocated between the holders of the Class A units in Terra LLC and the holders of the IDRs according to a fixed formula. In addition, pursuant to the terms of the Brookfield MSA, Brookfield is entitled to certain fixed and variable management fees for services performed for the Company. As a result of these economic rights, Brookfield may have interests in our business that are different from our interests or the interests of the other holders of our Class A common stock.

In addition, pursuant to the Merger Agreement, if there has been a final resolution of certain specified litigation involving the Company, we have agreed to issue a number of additional Class A shares to Brookfield for no additional consideration based on the amounts paid or accrued by us or any of our affiliates, including Brookfield, with respect to such litigation, calculated in accordance with specified formulas. As a result of this arrangement, Brookfield may have interests in the specified litigation that is different from our interests or the interests of the other holders of our Class A common stock.

Brookfield currently owns interests in, manages and controls, and may in the future own or acquire interests in, manage and/or control, other yield focused publicly listed and private electric power businesses that own clean energy assets, primarily hydroelectric facilities and wind assets, and other public and private businesses that own and invest in other real property and infrastructure assets. Brookfield may have conflicts or potential conflicts, including resulting from the operation by Brookfield of its other businesses, including its other yield focused electric power businesses, including with respect to Brookfield’s attention to and management of our business which may be negatively affected by Brookfield’s ownership and/or management of other power businesses and other public and private businesses that it owns, controls or manages.

For so long as Brookfield or another entity controls greater than 50% of the total outstanding voting power of our Class A common stock, ~~could decline as~~we will be considered a ~~result~~“controlled company” for the purposes of ~~sales by investors, who hold restricted shares, into~~ the ~~market, or~~Nasdaq listing requirements. As a “controlled company,” we are permitted to opt out of the ~~perception~~Nasdaq listing requirements that ~~these sales could occur. Certain investors in~~require (i) a majority of the members of our ~~Class A common stock hold restricted shares due~~Board to ~~securities law restrictions and/or contractual restrictions. These holders have exercised certain registration rights~~be independent, (ii) that we establish a compensation committee and a nominating and governance committee, each comprised entirely of independent directors, and (iii) an annual performance evaluation of the nominating and governance and compensation committees. We expect to rely on such exceptions with respect to having a majority of independent directors, establishing a compensation committee or nominating committee and annual performance evaluations of such committees. Brookfield may sell part or all of its stake in the ~~shares that~~Company, or may have its interest in the Company diluted due to future equity issuances, in each case, which could result in a loss of the “controlled company” exemption under the Nasdaq rules. We would then be required to comply with those provisions of the Nasdaq listing requirements on which we ~~hold~~currently or in the future may rely upon exemptions.

Brookfield and ~~would be able~~its affiliates control the Company and have the ability to ~~sell these shares~~designate a majority of the members of our Board.

Pursuant to the governance agreements entered into between the ~~market once any contractual restrictions on~~Company and Brookfield, Brookfield has the ability to designate a majority of our Board to our Nominating and Corporate Governance Committee for nomination for election by our stockholders. Due to such ~~shares expire. The presence~~agreements, and Brookfield’s approximate 65% interest in the Company, the ability of ~~additional shares~~other holders of our Class A common stock ~~trading~~to exercise control over the corporate governance of the Company will be limited. In addition, due to its approximate 65% interest in the Company, Brookfield has a substantial influence on our affairs and its voting power constitutes a large percentage of any quorum of our stockholders voting on any matter requiring the approval of our stockholders. As discussed in the risk factor entitled “We are a “controlled company” controlled by Brookfield and its affiliates, whose interest in our business may be different from ours or other holders of our Class A common stock.” above, Brookfield may hold certain interests that are different from ours or other holders of our Class A common stock and there is no assurance that Brookfield will exercise its control over the Company in a manner that is consistent with our interests or those of the other holders of our Class A common stock.

6642

Brookfield’s sponsorship may create significant conflicts of interest that may be resolved in a manner that is not in our best interest or the best interest of our stockholders.

~~public market~~Our sponsorship arrangements with Brookfield involve relationships that may give rise to conflicts of interest between us and our stockholders, on the one hand, and Brookfield, on the other hand. We rely on Brookfield to provide us with, among other things, strategic and investment management services. Although our sponsorship arrangements require Brookfield to provide us with a Chief Executive Officer, Chief Financial Officer and General Counsel who are dedicated to us on a full-time basis and have as their primary responsibility the provision of services to us, there is no requirement for Brookfield to act exclusively for us or for Brookfield to provide any specific individuals to us on an ongoing basis.

In certain instances, the interests of Brookfield may differ from our interests, including among other things with respect to the types of acquisitions we pursue, the timing and amount of distributions we make, the reinvestment of returns generated by our operations, the use of leverage when making acquisitions and the appointment of certain outside advisers and service providers. Although we believe the requirement for our Conflicts Committee to review and approve any potential conflict transactions between us and Brookfield should mitigate this risk, there can be no assurance that such review and approvals will result in a resolution that is entirely in our best interests or the best interests of our stockholders.

Brookfield exercises substantial influence over the Company and we are highly dependent on Brookfield.

We depend on the management and administration services provided by Brookfield pursuant to the Brookfield MSA. Other than our Chief Executive Officer, Chief Financial Officer and General Counsel, Brookfield personnel and support staff that provide services to us under the Brookfield MSA are not required to have as their primary responsibility the management and administration of us or to act exclusively for us and the Brookfield MSA does not require any specific individuals to be provided to us. Failing to effectively manage our current operations or to implement our strategy could have a material adverse effect on our business, financial condition and results of operations.

The departure of some or all of Brookfield’s professionals could prevent us from achieving our objectives.

We depend on the diligence, skill and business contacts of Brookfield’s professionals and the information and opportunities they generate during the normal course of their activities. Our future success will depend on the continued service of these individuals, who are not obligated to remain employed with Brookfield. Brookfield has experienced departures of key professionals in the past and may experience departures again in the future, and we cannot predict the impact that any such departures will have on our ability to achieve our objectives. The departure of a significant number of Brookfield’s professionals for any reason, or the failure to appoint qualified or effective successors in the event of such departures, could have a material adverse effect on our ability to achieve our objectives.

The role of Brookfield, and the relative amount of the Company’s Class A common stock that it controls, may change.

Our arrangements with Brookfield do not require Brookfield to maintain any ownership level in the Company. If Brookfield decides to sell part or all of its stake in the Company, or has its interest in the Company diluted due to future equity issuances, we could lose the benefit of the “controlled company” exemption for the purposes of the Nasdaq Global Select Market rules as discussed in the risk factor entitled “We are a “controlled company” controlled by Brookfield, whose interest in our business may be different from ours or other holders of our Class A common stock.” Additionally, if Brookfield’s ownership interest falls below 25%, we would have the right to terminate the Brookfield MSA. Any decision by us to terminate the Brookfield MSA would trigger a termination of the Relationship Agreement. As a result, we cannot predict with any certainty the effect that any change in Brookfield’s ownership would have on the trading price of our shares or our ability to raise capital or make investments in the future.

Other Risks

We may face difficulty in transitioning important corporate, project and other services to new vendors, which involves management challenges and poses risks that may materially adversely affect our business, results of operations and financial condition.

Beginning in 2017, as we transitioned away from our historical dependence on SunEdison for corporate, project and other services, including providing for critical systems and information technology infrastructure sponsorship, we engaged new vendors and/or developed our own capabilities and resources for corporate, project and other services, including providing for critical systems and information technology infrastructure. These efforts included creating a separate stand-alone corporate organization, including, among other things, directly hiring employees and establishing our own accounting, information

technology, human resources and other systems and infrastructure, and also include transitioning the project-level O&M and asset management services in-house or to third party service providers. While these efforts are largely complete, they involve a number of new risks and challenges that may materially adversely affect our business, results of operations and financial condition.

Finalizing these changes may take longer than we expect, cost more than we expect, and divert management’s attention from other aspects of our business. We may also incur substantial legal and compliance costs in many of the jurisdictions where we operate.

If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete strategic acquisitions or affect combinations.

If we are deemed to be an investment company under the Investment Company Act of 1940 (the “Investment Company Act”) our business would be subject to applicable restrictions under the Investment Company Act, which could make it impractical for us to continue our business as contemplated. We believe our company is not an investment company under Section 3(b)(1) of the Investment Company Act because we are primarily engaged in a non-investment company business, and we intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the Investment Company Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated.

Potential future delays in the filing of our reports with the SEC, as well as further delays in the preparation of audited financial statements at the project level, could have a material adverse effect.

We did not file with the SEC on a timely basis our Annual Reports on Form 10-K for each of the years ended December 31, 2015 and 2016 and our Quarterly Reports on Form 10-Q for each of the quarters ended March 31, 2016, June 30, 2016, September 30, 2016, March 31, 2017, June 30, 2017 and March 31, 2018. We filed our Annual Reports on Form 10-K for the year ended December 31, 2017 and 2018, and our Quarterly Reports on Form 10-Q for each of the quarters ended September 30, 2017 and June 30, 2018 after the applicable filing deadline but within the applicable grace period provided by the SEC. During the period of these delays, we received notification letters from Nasdaq that granted extensions to regain compliance with Nasdaq’s continued listing requirements, subject to the requirement that we file our SEC reports and hold our annual meeting of stockholders by certain deadlines. While we are now current in our filing of periodic reports under the Exchange Act, and are in compliance with Nasdaq's continued listing requirements, in the event that any future periodic report is delayed, there is no assurance that we will be able to obtain further extensions from Nasdaq to maintain or regain compliance with Nasdaq’s continued listing requirements with respect to any such delayed periodic report. If we fail to obtain any such further extensions from Nasdaq, our Class A common stock would likely be delisted from the Nasdaq Global Select Market.

The delay in filing our Annual Reports on Form 10-K and our Quarterly Reports on Form 10-Q and related financial statements has at times impaired our ability to obtain financing and access the capital markets, and to the extent we fail to make timely filings in the future, our access to financing may be impaired. For example, as a result of the delayed filing of our periodic reports with the SEC, we will not be eligible to register the offer and sale of our securities using a short-form registration statement on Form S-3 until we have timely filed all periodic reports required under the Exchange Act for one year. Additional delays may also negatively impact our ability to obtain project financing and our ability to obtain waivers or forbearances to the extent of any defaults or breaches of project-level financing. An inability to obtaining financing may have a material adverse effect on our ability to grow our business, acquire assets through acquisitions or optimize our portfolio and capital structure. Additionally, a delay in audited financial statements may make our Board less comfortable with approving the ~~market price~~payment of dividends.

Financial statements at the project-level have also been delayed over the course of 2016, 2017 and 2018. This delay created defaults under most of our securities. The market price of our Class A common stock may also decline as a result of SunEdison disposing or transferring some or all of the outstanding Class A common stock it will own following the consummation of the Sponsorship Transaction. These dispositions might also make it more difficult for us to sell equity securities at a time and price that we deem appropriate.

~~Risks Related to Taxation~~

Tax provisions and policies supporting renewable energy could change at any time, and such changes may result in a material increase in our estimated future income tax liability and may limit the current benefits of solar and wind energy investment.

We face risks related to potential changes in tax laws that may limit the current benefits of solar and wind energy investment. Renewable energy facilities currently benefit from, or are affected by, various federal, state and local governmental incentives and regulatory policies. As discussed in "Government Incentives" within ~~Item 1. Business~~, government incentives provide significant support for renewable energy sources such as solar and wind energy, and a decrease in these tax benefits could increase the costs of investment in solar and wind energy. For example, in 2013 the Czech Republic and Spain announced retroactive taxes for solar energy producers. If these types of changes are enacted in other countries as well, the costs of solar energy may increase.

In the United States, these policies include federal ITCs, PTCs, and trade import tariff policies, as well as state RPS and IRP programs, state and local sales and property taxes, siting policies, grid access policies, rate design, net energy metering, and modified accelerated cost-recovery system of depreciation. For example, the IRS Code provides an ITC of 30% of the cost-basis of an eligible resource, including solar generation facilities having commenced construction prior to the end of 2019, for which the percentage is currently scheduled to gradually be reduced to 10% for solar generation facilities commencing construction before December 31, 2022 with permanence thereafter. The U.S. Congress could reduce the ITC to below 30% prior to the end of 2019, reduce the ITC to below 10% for periods after 2022 or replace the expected 10% ITC with an untested production tax credit of an unknown amount. PTCs, which are federal income tax credits related to the quantity of renewable energy produced and sold during a taxable year, or ITCs in lieu of PTCs, are available only for wind power plants that began construction on or prior to December 31, 2019. The Wind PTC and ITC are extended to 2019 but reduced 20% in 2017, 40% in 2018, and 60% in 2019 before expiring in 2020. PTCs and accelerated tax depreciation benefits generated by operating renewable energy facilities can be monetized by entering into tax equitynon-recourse financing agreements, ~~with investors that can utilize the tax benefits,~~ which have been ~~a key financing tool for wind power plants.~~

~~The growth of our wind energy business may be dependent on the U.S. Congress further extending the expiration date of, renewing~~substantially cured or replacing wind ITC and PTCs, without which the market for tax equity financing for wind power plants would likely cease to exist. Congress could decide to overturn the new ITC and PTC decisions in future years, which would materially affect our business. Additionally, we may be required to repay a Section 1603 Grant, with interest, if the U.S. Treasury were to successfully challenge a solar generation facility and wind power plant for which such a Section 1603 Grant has been madewaived as ~~not complying with the requirements of Section 1603.~~

~~Any reduction in our ITCs, PTCs or depreciation deductions as a result of a change in law, or any elimination or modification~~ of the ~~accelerated tax depreciation schedule, may result in a material increase in our estimated~~date hereof. To the extent any remaining defaults remain uncured or unwaived, or new defaults arise because of future income tax liability and may negatively impact our business, financial condition and results of operations. Additionally, in prior years we received grant payments for specified energy property from the U.S. Department of the Treasury in lieu of tax credits pursuant to Section 1603 Grant. As a condition to claiming these Section 1603 Grants, we are required to maintain compliance with the terms of the Section 1603 program for a period of five years beginning on the date the eligible solar and wind energy facility was placed in service. Failure to maintain compliance with the requirements of Section 1603 could result in recapture of all or a part of the amounts received under a Section 1603 Grant, plus interest.

~~In addition, the IRS or the Treasury Department, as applicable, may also challenge eligible tax basis~~delays in the ~~relevant renewable energy property that was used to determine the amount~~completion of ~~ITC, Section 1603 Grant~~audited or accelerated depreciation deductions claimed or applied for, as applicable, by subsidiaries of the Company or our tax equity partners with respect to our renewable energy projects. In some situations where SunEdison or other third parties made representations with regard to the fair market value or eligible basis of a renewable energy facility, the cash flows of that facility that would otherwise be distributed tounaudited financial statements, our subsidiaries may be ~~diverted~~restricted in their the ability to ~~cover losses sustained by our tax equity financing parties in~~make distributions to us, or the event the ITC, Section 1603 Cash Grant or accelerated depreciation deductions, as applicable, are recaptured, reduced or disallowed by the IRS or Treasury Department, as applicable. In other situations, werelated lenders may be ~~directly responsible for making such tax indemnity payments. In addition, we have provided guarantees~~entitled to ~~our tax investors and other financing parties related to the recapture of these tax benefits as a result of transfers of our~~demand repayment or enforce their security interests, ~~in our renewable energy projects to non-U.S. federal income tax payers~~

who qualify as “disqualified persons” under Section 1603 Grant rules and provisions of the Internal Revenue Code. While such transfers are generally within our control, and we would seek to avoid such transfers, there is some risk that we inadvertently structure a sale of our interests in our facilities in a way that results in such a transfer. Moreover, this riskwhich could ~~arise in connection with the sale or transfer of the B units in Terra LLC in connection with the SunEdison Bankruptcy or any potential transaction that we undertake if the Merger failed to close.~~

Congress and the Trump Administration have also expressed substantial interest in reducing corporate tax rates and making other changes to the Internal Revenue Code, including, among other potential proposals, permitting the immediate expensing of capital expenditures and no longer allowing the deduction of interest expense on indebtedness. These tax law changes may have an economic impact on our existing portfolio of renewable energy facilities. To date, however, no legislation has been passed by either the U.S. House of Representatives or the U.S. Senate, and so it is difficult to predict with any certainty whether these changes will have a ~~positive or negative impact~~material adverse effect on our business, ~~financial condition or~~ results of operations, ~~as it relates to our existing portfolio. In light of this uncertainty, we cannot give any assurances that the combined impact of these changes will not have a negative impact on our business,~~ financial condition, ~~or results of operations. Moreover, any reduction in the corporate tax rates would be expected~~our ability to reduce the value of certain of the tax benefits currently available for renewable energy facilities. Assuming those benefits are not also changed, the reduction of corporate tax rates may, all other things being equal, reduce the amount of new renewable energy generation that is constructed, which may increase competitionpay dividends and our ability to ~~acquire the facilities that are completed.~~comply with corporate-level debt covenants.

~~Changes in foreign withholding taxes could adversely affect our results of operations.~~

We conduct a portion of our operations in Canada, the United Kingdom and Chile, and may in the future expand our business into other foreign countries. We are subject to risks that foreign countries may impose additional withholding taxes or otherwise tax our foreign income. Currently, distributions of earnings and other payments, including interest, to us from our foreign facilities could constitute ordinary dividend income taxable to the extent of our earnings and profits, which may be subject to withholding taxes imposed by the jurisdiction in which such entities are formed or operating. Any such withholding taxes will reduce the amount of after-tax cash we can receive. If those withholding taxes are increased, the amount of after-tax cash we receive will be further reduced.Taxation Risks

Our future tax liability may be greater than expected if we do not generate ~~Net Operating Losses, or “NOLs,”~~NOLs sufficient to offset taxable ~~income.~~income or if tax authorities challenge certain of our tax positions.

We are subject to U.S. federal income tax at regular corporate rates on our net taxable income. We expect to generate ~~NOLs and~~ NOL carryforwards that we can ~~utilize~~use to offset future taxable income. ~~Based on our portfolio of assets that we expect will benefit from an accelerated tax depreciation schedule, and subject to tax obligations resulting from potential tax audits,~~As a result, we do not expect to pay ~~significant United States~~meaningful U.S. federal income tax in the ~~near term. However,~~foreseeable future. This estimate is based upon assumptions we have made regarding, among other things, our income, capital expenditures, cash flows, net working capital and cash distributions. Further, the IRS or other tax authorities could challenge one or more tax positions we take, such as the classification of assets under the income tax depreciation rules, the characterization of expenses for income tax purposes, the extent to which sales, use or goods and services tax applies to operations in a particular state or the availability of property tax exemptions with respect to our projects. Further, any change in tax law may affect our tax position, including changes in corporate income tax laws, regulations and policies applicable to us. While we expect that our NOLs and NOL carryforwards will be available to us as a future benefit, in the event ~~these losses~~that they are not generated as expected, ~~(including if our accelerated tax depreciation schedule for our eligible renewable energy facilities is eliminated or adversely modified),~~ are successfully challenged by the IRS (in a tax audit or otherwise), or are subject to future limitations as ~~a result of an “ownership change” as discussed~~described below, our ability to realize these ~~future tax~~ benefits may be limited. Any such reduction, limitation, or challenge may result in a material increase in our estimated future income tax liabilities and may negatively impact our business, financial condition and operating results.

Our ability to use NOLs to offset future income may be limited.

Our ability to use ~~existing NOL carryforwards and~~federal NOLs ~~generated in the~~to offset future ~~could be substantially~~taxable income are limited ~~if we were to experience an “ownership change” as defined~~ under ~~Section 382 of the~~ Internal Revenue Code. In general, an ownership change occurs if the aggregate stock ownership of certain stockholders (generally 5% stockholders, applying certain look-through and aggregation rules) increases by more than 50% over such stockholders’ lowest percentage ownership over a rolling three-year period. If a corporation experiences an ownership change, its ability to use its pre-change NOL carryforwards and other pre-change deferred tax attributes to offset its post-change income and taxesCode Section 382. Any NOLs that exceed this yearly limitation may be limited. Future sales of our Class B common stock by SunEdison, as well as future issuances by us or trades of stock amount our other 5% stockholders, could contribute to a potential ownership change. During 2015, we believe that an ownership change occurred at a point when the trading price of our stock was at a level that would not impact the ability to use our tax attributes. During 2016, we believe a second ownership change occurred when the stock price had lowered. Our initial analysis suggests that the limitation under the Section 382 rules, including the associated built-in gain rules, would not limit our ability to utilize our tax attributes at the time of the change. Should another ownership change occur in the future, it is possible that we may be in a position such that the ability to utilize tax attributes could be limited due to the incremental NOL generated in 2016. Additional ownership changes may occur as a result of shareholder activity and/or in connection with the closing of the Merger.

~~A valuation allowance may be required for our deferred tax assets.~~

~~Our expected NOLs will be reflected as a deferred tax asset as they are generated until~~carried forward and used to offset income. Valuation allowances may need to be maintained for deferred tax assets that we estimate are more likely than not to be unrealizable, based on available evidence at the time the estimate is made. Valuation allowances related to deferred tax assets can be affected by changes to tax laws, statutory tax rates and future taxable income ~~levels~~for the remainder of the carryforward period (i.e., 20 years from the year in which such NOL was generated for NOLs generated prior to January 1, 2018 and ~~based~~no carryforward limitation for any subsequently generated NOLs).

Distributions to stockholders may be taxable as dividends.

If we makes distributions from current or accumulated earnings and profits as computed for U.S. federal income tax purposes, such distributions will generally be taxable to stockholders as ordinary dividend income for U.S. federal income tax purposes. Distributions paid to non-corporate U.S. stockholders will be subject to U.S. federal income tax at preferential rates, provided that certain holding period and other requirements are satisfied. However, it is difficult to predict whether we will generate earnings and profits as computed for U.S. federal income tax purposes in any given tax year, and although we expect that distributions to stockholders may exceed its current and accumulated earnings and profits as computed for U.S. federal income tax purposes and therefore constitute a non-taxable return of capital distribution to the extent of a stockholder’s basis in its shares, this may not occur. In addition, although return-of-capital distributions are generally non-taxable to the extent of a stockholder’s basis in its shares, such distributions will reduce the stockholder’s adjusted tax basis in its shares, which will result in an increase in the amount of gain (or a decrease in the amount of loss) that will be recognized by the stockholder on ~~input from our auditors, tax advisers or regulatory authorities. In the event that we were to determine that we would not be able to realize all or~~ a ~~portion~~future disposition of our ~~net deferred tax assets in~~shares, and to the ~~future, we would reduce~~extent any return-of-capital distribution exceeds a stockholder’s basis, such ~~amounts through a charge to income tax expense in~~distributions will be treated as gain on the ~~period in which that determination was made, which could have a material adverse impact on our financial condition and results~~sale or exchange of ~~operations and our ability to maintain profitability.~~the shares.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our current portfolio consists of distributed generation solar facilities and utility-scale power plants that are located in the United States (including Puerto Rico), Canada, ~~Chile and~~ the United Kingdom, Spain, Portugal, Uruguay and Chile with a combined nameplate capacity of ~~2,606.7~~3,738 MW as of ~~June 30, 2017.~~December 31, 2018. We ~~typically finance~~have financed certain of our assets through project specific debt secured by the renewable energy facility's assets (mainly the renewable energy facility) or equity interests in such renewable energy facilities with no recourse to Terra LLC or Terra Operating LLC. See the table of our properties in Item 1. Business - Our Portfolio.

Distributed generation solar facilities

Distributed generation facilities provide customers with an alternative to traditional utility energy suppliers. Distributed resources are typically smaller in unit size and can be installed at a customer’s site, removing the need for lengthy transmission and distribution lines. By bypassing the traditional utility suppliers, distributed energy systems delink the customer’s price of power from external factors such as volatile commodity prices, costs of the incumbent energy supplier and some transmission and distribution charges. This makes it possible for distributed energy purchasers to buy energy at a predictable and stable price over a long period of time.

~~The~~Certain PPAs ~~for certain of~~within our distributed generation solar facilities located in the United States allow the offtake purchaser to elect to purchase the facility from us at a price equal to the greater of a specified amount in the PPA or fair market value. In

addition, certain of our PPAs allow the offtake purchaser to terminate the PPA if we do not meet certain prescribed operating thresholds or performance measures or otherwise by the payment of an early termination fee, which would require us to remove the renewable energy facility from the ~~offtaker’s~~offtake purchaser’s site. These operating thresholds and performance measures are readily achievable in the normal operation of the renewable energy facilities.

~~Utility-scale~~Concentrated solar power

Concentrated solar power plants use mirrors to concentrate the energy from the sun to generate heat which will be either temporarily stored or used to drive traditional steam turbines or engines that create electricity. Our concentrated solar projects consist of parabolic troughs that concentrate reflected light onto a receiver tube. The tube is filled with a working fluid, typically molten salt, which is then heated by the concentrated sunlight and used to heat water for a standard steam power generation system. The energy produced by the CSP facilities is produced in AC.

Utility-scale wind and solar facilities

Our utility-scale solar and wind generation facilities ~~and wind facilities~~ are larger scale power plants ~~where either~~for which the purchaser of the electricity is an electric utility, governmental entity or other third party or where the power is delivered directly to the grid. Our utility scale solar facilities are typically ground mounted solar photovoltaic or PV systems. The systems use either thin film, monocrystalline or polycrystalline PV modules that are attached to either fixed tilt racking or mounted on single axis (one direction) trackers, which allow the modules to track the sun as it moves throughout the day. The modules absorb direct and reflected sunlight to create electrical energy. Electrical energy is generated in direct current or DC and then converted to alternating current or AC using an inverter. The inverters are connected to a medium voltage power collection system that feeds into a substation, which increases the voltage further for interconnection with the existing electrical transmission system.

Our utility scale wind facilities consist of groupings of wind turbine generators spaced over a contiguous area. The wind turbine generators have three main sections, the rotor, nacelle, and tower. The rotor has three blades affixed to the hub at 120 degrees from each other. The nacelle houses the generator and gearbox and is attached to the hub through the main shaft at the front of the nacelle and the tower through the yaw drive at the bedplate of the nacelle. As wind turns the rotor, the main shaft turns the gearbox to increase the speed and turn the generator. The generator creates AC electrical energy. These turbines are connected via a medium voltage power collection system that feeds into one or more substations that are used to increase the voltage before transmitting the energy generated to the high voltage transmission system.

Item 3. Legal Proceedings.

See Note 19 18. Commitments and Contingenciesto our consolidated financial statements included in this Annual Report on Form 10-K for disclosures concerning our legal proceedings, which disclosures are incorporated herein by reference.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Class A Common Stock

~~The Company's~~TerraForm Power's Class A common stock began trading on the ~~NASDAQ~~Nasdaq Global Select Market under the symbol “TERP” on July 18, 2014. Prior to that, there was no public market for our Class A common stock. ~~The Company's~~

Upon the consummation of the Merger, our certificate of incorporation was amended and restated. TerraForm Power's authorized shares of preferred stock and Class BA common stock iswere increased to 100,000,000 shares and 1,200,000,000 shares, respectively. There are no other authorized classes of shares, and we do not ~~publicly traded.~~have any issued shares of preferred stock.

As of ~~June 30, 2017,~~February 28, 2019, there were 2513 holders of record of ~~the Company’s~~TerraForm Power’s Class A ~~common stock and two holders of record of the Company’s Class B~~ common stock and the closing sale price per share of our Class A common stock on the ~~NASDAQ~~Nasdaq Global Select Market was ~~$12.00.~~

~~The table below sets forth, for the periods indicated, the high and low sale prices per share~~$12.51. Affiliates of ~~our~~Brookfield held approximately 65% of TerraForm Power's Class A common stock ~~on the NASDAQ Global Select Market for the periods indicated below:~~

High Low
July 18, 2014 to September 30, 2014 $ 33.65
$ 28.53
Quarter ended December 31, 2014 33.64
22.83
Quarter ended March 31, 2015 36.51
29.01
Quarter ended June 30, 2015 42.15
36.34
Quarter ended September 30, 2015 39.61
14.16
Quarter ended December 31, 2015 20.01
6.90
Quarter ended March 31, 2016 12.61
7.64
Quarter ended June 30, 2016 11.00
7.44
Quarter ended September 30, 2016 14.59
10.94
Quarter ended December 31, 2016 14.38
11.40

~~Dividends~~

On October 27, 2014, the Company declared a quarterly dividend of $0.1717 per share on the Company's Class A common stock, which was paid on December 15, 2014 to holders of record on December 1, 2014. This amount represented a quarterly dividend of $0.2257 per share, or $0.9028 per share on an annualized basis, prorated to adjust for a partial quarter as the Company consummated its IPO on July 23, 2014.

On December 22, 2014, the Company declared a quarterly dividend for the fourth quarter of 2014 on the Company's Class A common stock of $0.27 per share, or $1.08 per share on an annualized basis. The fourth quarter dividend was paid on March 16, 2015 to shareholders of record as of ~~March 2, 2015.~~

On May 7, 2015, the Company declared a quarterly dividend for the first quarter of 2015 on the Company's Class A common stock of $0.325 per share, or $1.30 per share on an annualized basis. The first quarter dividend was paid on June 15, 2015 to shareholders of record as of June 1, 2015.that date.

On August 6, 2015, the Company declared a quarterly dividend for the second quarter of 2015 on the Company's Class A common stock of $0.335 per share, or $1.34 per share on an annualized basis. The second quarter dividend was paid on September 15, 2015 to shareholders of record as of September 1, 2015.

On November 9, 2015, the Company declared a quarterly dividend for the third quarter of 2015 on the Company's Class A common stock of $0.35 per share, or $1.40 per share on an annualized basis. The third quarter dividend was paid on December 15, 2015 to shareholders of record as of December 1, 2015.

TerraForm Power has not declared or paid a dividend since the quarterly dividend for the third quarter of 2015. As a result of the SunEdison Bankruptcy, the limitations on the Company's ability to access the capital markets for its corporate debt

7046

and equity securities and other risks that the Company faced as detailed in this report, the Company's management believed it was prudent to defer any decisions on paying dividends to its shareholders.

Stock Performance Graph

This performance graph below shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the ~~Securities~~ Exchange Act, ~~of 1934, as amended,~~ or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act ~~of 1933, as amended,~~ or the ~~Securities~~ Exchange ~~Act of 1934, as amended.~~Act.

The performance graph below compares ~~the Company's~~TerraForm Power's cumulative total stockholder return on ~~the Company's~~its Class A common stock from July 18, 2014 through December 31, ~~2016,~~2018, with the cumulative total return of the Standard & Poor's 500 Composite Price Index or(the “S&P 500”), the ~~"S&P 500," the NASDAQ~~Nasdaq Composite Index, as well as our peer group consisting of Atlantica Yield PLC; Clearway Energy, Inc.; NextEra Energy Partners, LP; ~~NRG Yield, Inc.;~~and Pattern Energy Group ~~Inc; and 8point3 Energy Partners LP.~~Inc.

The performance graph below compares each period assuming that $100 was invested on the initial public offering date in each of the Class A common stock of the Company, the stocks in the S&P 500, the ~~NASDAQ~~Nasdaq Composite Index, our peer group, and that all dividends were reinvested.

Comparison of Cumulative Total Return

Securities Authorized for Issuance under Equity Compensation Plans

Stock July 18, 2014 September 30, 2014 December 31, 2014 March 31, 2015 June 30, 2015 September 30, 2015 December 31, 2015 March 31, 2016 June 30, 2016 September 30, 2016 December 31, 2016
TerraForm Power, Inc. $ 100.00
$ 87.22
$ 93.85
$ 111.78
$ 117.28
$ 44.94
$ 40.86
$ 28.10
$ 35.41
$ 45.19
$ 41.62
S&P 500 100.00
99.70
104.08
104.54
104.30
97.06
103.32
104.12
106.10
109.61
113.17
NASDAQ Composite Index 100.00
101.38
106.85
110.57
112.50
104.23
112.96
109.85
109.23
119.81
121.42
Peer Group 100.00
93.75
84.09
98.49
81.29
46.36
58.98
55.25
61.63
62.59
59.15

For information regarding our equity compensation plans, see Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

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Item 6. Selected Financial Data.

~~The Company's~~Our historical selected financial data is presented in the following table. For all periods prior to ~~the IPO,~~our initial public offering (“IPO”) on July 23, 2014, the amounts shown in the table below represent the combination of TerraForm Power and Terra LLC, the accounting predecessor, and were prepared using SunEdison's historical basis in assets and liabilities. For all periods subsequent to the IPO, the amounts shown in the table below represent the results of TerraForm Power, which consolidates Terra LLC through its controlling interest. This historical data should be read in conjunction with the ~~Consolidated Financial Statements~~consolidated financial statements and the related notes thereto in Item 15. Exhibits, Financial Statements and ~~Schedules.~~Schedules

~~Our consolidated financial statements were prepared assuming we would continue as a going concern (which contemplates the realization~~and with Item 7. Management's Discussion and Analysis of ~~assets~~Financial Condition and ~~the satisfaction~~Results of liabilities in the normal course of business). Our ability to continue as a going concern is dependent on many factors, including among other things, the resolution of the SunEdison Bankruptcy absent claims from interested parties that the assets and liabilities of the Company be substantively consolidated with SunEdison and that the Company and/or its assets and liabilities be included in the SunEdison Bankruptcy as well as our ability to comply with or modify our existing debt covenant requirements. Management’s plans with respect to these conditions are further described in Note 1 to our consolidated financial statements included in this annual report on Form 10-K. The following Selected Financial Data taken from our accompanying financial statements have been prepared assuming that we will continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.Operations.


	Year Ended December 31,															Year Ended December 31,
(in thousands, except per share data)	2016			2015			2014			2013			2012
Statement of Operations Data:
(In thousands, except per share data)																2018			2017			2016			2015			2014
Statements of Operations Data:
Operating revenues, net	$	654,556		$	469,506		$	127,156		$	18,716		$	16,992		$	766,570		$	610,471		$	654,556		$	469,506		$	127,156
Operating costs and expenses:
Cost of operations	113,302			70,468			10,630			1,112			917			220,907			150,733			113,302			70,468			10,630
Cost of operations - affiliate	26,683			19,915			8,063			1,068			834			—			17,601			26,683			19,915			8,063
General and administrative expenses	89,995			55,811			20,984			289			177			87,722			139,874			89,995			55,811			20,984
General and administrative expenses - affiliate	14,666			55,330			19,144			5,158			4,425			16,239			13,391			14,666			55,330			19,144
Acquisition and related costs	2,743			49,932			10,177			—			—
Acquisition and related costs - affiliate	—			5,846			5,049			—			—
Acquisition costs																7,721			—			2,743			49,932			10,177
Acquisition costs - affiliate																6,925			—			—			5,846			5,049
Loss on prepaid warranty - affiliate	—			45,380			—			—			—			—			—			—			45,380			—
Goodwill impairment	55,874			—			—			—			—
Impairment of goodwill																—			—			55,874			—			—
Impairment of renewable energy facilities	18,951			—			—			—			—			15,240			1,429			18,951			—			—
Depreciation, accretion and amortization expense	243,365			161,310			41,280			5,731			5,034			341,837			246,720			243,365			161,310			41,280
Formation and offering related fees and expenses	—			—			3,570			—			—			—			—			—			—			3,570
Formation and offering related fees and expenses - affiliate	—			—			1,870			—			—			—			—			—			—			1,870
Total operating costs and expenses	565,579			463,992			120,767			13,358			11,387			696,591			569,748			565,579			463,992			120,767
Operating income	88,977			5,514			6,389			5,358			5,605			69,979			40,723			88,977			5,514			6,389
Other expenses (income):
Interest expense, net	310,336			167,805			86,191			8,129			7,665			249,211			262,003			310,336			167,805			86,191
Loss (gain) on extinguishment of debt, net	1,079			16,156			(7,635		)	—			—
Loss (gain) on foreign currency exchange, net	13,021			19,488			14,007			(771		)	—
Loss on extinguishment of debt, net																1,480			81,099			1,079			16,156			(7,635		)
Gain on sale of renewable energy facilities																—			(37,116		)	—			—			—
(Gain) loss on foreign currency exchange, net																(10,993		)	(6,061		)	13,021			19,488			14,007
Loss on investments and receivables - affiliate	3,336			16,079			—			—			—			—			1,759			3,336			16,079			—
Other expenses, net	2,218			7,362			438			—			—
Other (income) expenses, net																(4,102		)	(5,017		)	2,218			7,362			438
Total other expenses, net	329,990			226,890			93,001			7,358			7,665			235,596			296,667			329,990			226,890			93,001
Loss before income tax expense (benefit)	(241,013		)	(221,376		)	(86,612		)	(2,000		)	(2,060		)
Income tax expense (benefit)	494			(13,241		)	(4,689		)	(88		)	(1,270		)
Loss before income tax (benefit) expense																(165,617		)	(255,944		)	(241,013		)	(221,376		)	(86,612		)
Income tax (benefit) expense																(12,290		)	(19,641		)	2,734			(12,584		)	(4,689		)
Net loss	$	(241,507	)	$	(208,135	)	$	(81,923	)	$	(1,912	)	$	(790	)	$	(153,327	)	$	(236,303	)	$	(243,747	)	$	(208,792	)	$	(81,923	)
Net loss attributable to Class A common stockholders	$	(129,847	)	$	(79,886	)	$	(25,617	)	N/A			N/A
Net income (loss) attributable to Class A common stockholders																$	12,380		$	(160,154	)	$	(123,511	)	$	(78,832	)	$	(25,617	)
Basic and diluted loss per Class A common share	(1.47		)	(1.25		)	(0.87		)	N/A			N/A			0.07			(1.61		)	(1.40		)	(1.24		)	(0.87		)
Dividends declared per Class A common share	—			1.01			0.44			N/A			N/A			0.76			1.94			—			1.01			0.44

house to a Company affiliate; however, certain of these defaults persist. Moreover, the Company has experienced, or expects to experience, additional defaults under most of the same non-recourse financing agreements in 2017 as the result of the failure to timely complete Company or project-level audits. The Company is working to complete these audits and seeking to cure or obtain waivers of such defaults. To date none of the non-recourse financings has been accelerated and no project-level lender has notified the Company of such lenders election to enforce project security interests, although no assurances can be given that the Company will obtain waivers and/or permanent forbearance of existing or future defaults or that none of the financings will be accelerated. The Company's corporate-level revolving credit facility and senior note indentures do not include an event of default provision directly triggered by the occurrence of the SunEdison Bankruptcy.

~~Going Concern~~

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

As described above, SunEdison filed for bankruptcy on April 21, 2016. The Company is not a part of the SunEdison Bankruptcy and has no plans to file for bankruptcy itself. The Company does not rely on SunEdison for funding or liquidity and believes that it will have sufficient liquidity to support its ongoing operations, absent the potential negative impact of default conditions that could arise from failure to meet financial statement deadlines as described below. The Company believes its equity interests in its renewable energy facilities that are legally owned by the Company's subsidiaries are not available to satisfy the claims of the creditors of the SunEdison Bankruptcy. However, we believe the SunEdison Bankruptcy and the related impacts raise substantial doubt about our ability to continue as a going concern for the following reasons:

Prior to the SunEdison Bankruptcy, we relied almost exclusively on the personnel and management and administration services provided by or under the direction of SunEdison. Subsequent to the SunEdison Bankruptcy, we have incurred and expect to continue to incur significant costs procuring these services from unaffiliated third parties. In addition, if we are unable to replace these services or key personnel in the future, this would restrict our ability to timely complete Company or project-level audits as required by our corporate and non-recourse financing arrangements.

We experienced covenant defaults under most of our financing arrangements in 2016, mainly because of delays in the delivery of project-level audited financial statements and the delay in the filing of the Company’s audited annual financial statements for 2015 on Form 10-K, which was filed in December of 2016. In addition, in a number of cases the SunEdison Bankruptcy resulted in defaults because SunEdison Debtors have been serving as O&M and asset management services providers or as guarantors under relevant contracts. We have been working diligently with our lenders to cure or waive instances of default, including through the completion of project-level audits and the retention of replacement service providers. However, there can be no assurance that all remaining defaults will be cured or waived, and we have experienced, or expect to experience, additional defaults under most of the same non-recourse financing agreements in 2017 as the result of the failure to timely complete Company or project-level audits. If the remaining or future defaults are not cured or waived, this would restrict the ability of the relevant project-level subsidiaries to make distributions to us, which may affect our ability to meet certain covenants related to our revolving credit facility at the corporate level, or entitle the related lenders to demand repayment or enforce their security interests, which could have a material adverse effect on our business, results of operations, financial condition and ability to pay dividends. If this were to occur, the Company would not have sufficient liquidity to meet its obligations.

Finally, there is a risk that an interested party in the SunEdison Bankruptcy could request that the assets and liabilities of the Company be substantively consolidated with SunEdison. Bankruptcy courts have broad equitable powers, and thus, outcomes in bankruptcy proceedings are inherently difficult to predict. To the extent the Bankruptcy Court were to determine that substantive consolidation was appropriate under the Company's facts and circumstances, the assets and liabilities of the Company could be made available to help satisfy the debt or contractual obligations of SunEdison. While it has not been requested to date and we believe there is no basis for substantive consolidation in our circumstances, we cannot assure you that substantive consolidation will not be requested in the future or that the Bankruptcy Court would not consider it.

~~As described above under~~ ~~"The SunEdison Bankruptcy and the Brookfield Sponsorship Transaction,"~~ the Company has undertaken, and continues to undertake, a number of strategic initiatives to mitigate the adverse impacts of the SunEdison Bankruptcy on the Company. While the Company believes that the actions described above are more likely than not to address the substantial doubt surrounding our ability to continue as a going concern, we cannot assert that it is probable that

~~150~~

management's plans will fully mitigate the conditions identified. If we cannot continue as a going concern, material adjustments to the carrying values and classifications of our assets and liabilities and the reported amounts of income and expense could be required.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The Company is required to recast historical financial statements when renewable energy facilities are acquired from SunEdison. The recast reflects the assets and liabilities, results of operations and cash flows of the acquired renewable energy facilities for the period the facilities were owned by SunEdison, which is in accordance with applicable rules governing transactions between entities under common control.

For the period prior to the Company's initial public offering ("IPO") on July 23, 2014, the accompanying consolidated financial statements represent the combination of TerraForm Power and Terra LLC, the accounting predecessor, and were prepared using SunEdison's historical basis in assets and liabilities. For all periods subsequent to the IPO, the accompanying consolidated financial statements represent the results of TerraForm Power, which consolidates Terra LLC through its controlling interest.

The ~~historical~~accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). They include the results of wholly and partially owned subsidiaries in which the Company has a controlling interest with all significant intercompany accounts and transactions eliminated.

The Company elected not to push-down the application of the ~~Predecessor include allocations~~acquisition method of ~~certain SunEdison corporate expenses~~accounting to its consolidated financial statements following the consummation of the Merger and ~~income tax expense. Management believes~~ the ~~assumptions and methodology underlying the allocation~~change of general corporate overhead expenses are reasonable. Subsequent to the IPO, general and administrative expenses represent actual costs incurred directly by the Company and general and administrative expenses - affiliate represent costs incurred by SunEdison for services provided to the Company pursuant to the MSA, as more fully described in ~~Note 20. Related Parties~~.

~~2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~control that occurred.

Use of Estimates

In preparing the consolidated financial statements, the Company ~~used~~uses estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements. Such estimates also affect the reported amounts of revenues, expenses and cash flows during the reporting period. To the extent there are material differences between the estimates and actual results, the Company's future results of operations would be affected.

~~Principles of Consolidation~~

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). They include the results of wholly owned and partially owned subsidiaries in which the Company has a controlling interest with all significant intercompany accounts and transactions eliminated. The Company consolidates variable interest entities ("VIEs")~~in renewable energy facilities when determined to be the primary beneficiary.~~

~~Variable Interest Entities~~

~~As discussed below, as of January 1, 2016, the Company adopted Accounting Standards Update ("ASU") No. 2015-02,~~ ~~Consolidation (Topic 810) Amendments to the Consolidation Analysis~~. The standard makes changes to both the variable interest entity model and the voting interest model, including modifying the evaluation of whether limited partnerships or similar legal entities are VIEs or voting interest entities ("VOEs"), amending the guidance for assessing how relationships of related parties affect the consolidation analysis of VIEs and modifying the evaluation of fees paid to a decision maker or service provider as a variable interest and in determination of the primary beneficiary in the consolidation analysis. The adoption of the standard did not result in any changes to the Company's previous consolidation conclusions; however, it did result in certain of its consolidated subsidiaries being considered VIEs.

VIEs are entities that lack one or more of the characteristics of a voting interest entity. The Company has a controlling financial interest in a VIE when its variable interest or interests provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

~~151~~

VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity is consolidated.

For the Company's consolidated VIEs, the Company has presented on its consolidated balance sheets, to the extent material, the assets of its consolidated VIEs that can only be used to settle specific obligations of the consolidated VIE, and the liabilities of its consolidated VIEs for which creditors do not have recourse to the Company's general assets outside of the VIE.

Cash and Cash Equivalents

Cash and cash equivalents include all cash balances and money market funds with original maturity periods of three months or less when purchased. As of December 31, ~~2016~~2018 and ~~2015,~~2017, cash and cash equivalents included ~~$57.6~~$177.0 million and ~~$81.1~~$60.1 million, respectively, of unrestricted cash held at project-level subsidiaries, which was available for project expenses but not available for corporate use.

Restricted Cash

Restricted cash consists of cash on deposit in financial institutions that is restricted to satisfy the requirements of certain debt agreements and funds held within the Company's project companies that are restricted for current debt service payments and other purposes in accordance with the applicable debt agreements. These restrictions include: (i) cash on deposit in collateral accounts, debt service reserve accounts and maintenance reserve accounts; and (ii) cash on deposit in operating accounts but subject to distribution restrictions related to debt defaults existing as of the date of the financial statements. Restricted cash that is not expected to become unrestricted within the next twelve months is presented within non-current assets on the consolidated statements of financial position.

Reconciliation of Cash and Cash Equivalents and Restricted Cash as Presented in the Consolidated Statements of Cash Flows

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance ~~sheet date.~~sheets to the total of the same such amounts shown in the consolidated statements of cash flows for the years ended December 31, 2018, 2017 and 2016.



(In thousands)	As of December 31,
	2018		2017		2016
Cash and cash equivalents	$	248,524	$	128,087	$	565,333
Restricted cash - current	27,784		54,006		114,950
Restricted cash - non-current	116,501		42,694		2,554
Cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	392,809	$	224,787	$	682,837

As discussed in Note ~~11.~~10. Long-term Debt, the Company was in default under certain of its non-recourse financing agreements as of the financial statement issuance date for the years ended December 31, ~~2016~~2018 and ~~2015.~~2017. As a result, the Company reclassified ~~$65.3~~$11.2 million and ~~$61.1~~$18.8 million, respectively, of long-term restricted cash to current as of December 31, ~~2016~~2018 and ~~2015,~~2017, consistent with the corresponding debt classification, as the restrictions that required the cash balances to be classified as long-term restricted cash were driven by the financing agreements. As of December 31, ~~2016, $67.1~~2018 and 2017, $1.4 million and $21.7 million, respectively, of cash and cash equivalents was also reclassified to current restricted cash as the cash balances were subject to distribution restrictions related to debt defaults that existed as of the respective balance sheet date. ~~$33.8 million of this reclassification amount was reclassified from current restricted cash to assets held for sale as it related to the portfolios discussed in~~ ~~Note 4. Assets Held for Sale. No similar reclassifications were made as of December 31, 2015, as these defaults and distribution restrictions did not exist as of the balance sheet date for that period.~~

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are reported on the consolidated balance sheets, including both billed and unbilled amounts, and are adjusted for any write-offs as well as the allowance for doubtful accounts. The Company establishes an allowance for doubtful accounts to adjust its receivables to amounts considered to be ultimately collectible and charges to the allowance are recorded within general and administrative expenses in the consolidated statements of operations. The Company's allowance is based on a variety of factors, including the length of time receivables are past due, significant one-time events, the financial health of its customers and historical experience. The allowance for doubtful accounts was ~~$3.2~~$1.6 million and ~~$2.7~~$1.7 million as of December 31, ~~2016~~2018 and ~~2015,~~2017, respectively, and charges (reductions) to the allowance recorded within general and administrative expenses for the years ended December 31, 2018, 2017 and 2016 were $0.1 million, $(1.5) million and ~~2015 were~~ $0.5 million, ~~and $2.7 million,~~ respectively. ~~There were no charges to the allowance recorded for the year ended December 31, 2014.~~ Accounts receivable are written off in the period in which the receivable is deemed uncollectible and collection efforts have been exhausted. There were no write-offs of accounts receivable for the years ended December 31, ~~2016, 2015~~2018, 2017 and ~~2014.~~2016.

Renewable Energy Facilities

Renewable energy facilities consist of solar generation facilities and wind power plants that are stated at cost. Expenditures for major additions and improvements are capitalized, and minor replacements, maintenance and repairs are charged to expense as incurred. When renewable energy facilities are retired, or otherwise disposed of, the cost and accumulated depreciation is removed from the consolidated balance sheet and any resulting gain or loss is included in the

~~152~~

~~results of operations for the respective period.~~ Depreciation of renewable energy facilities is recognized using the straight-line method over the estimated useful lives of the renewable energy facilities, which range from 2023 to 30 years for the ~~Company's~~Company’s solar generation facilities. Effective October 1, 2016, the Company changed its estimates of the useful lives of the major components of its wind power plants to better reflect the estimated periods during which these major components will remain in service. These major components comprising ~~our~~the Company’s wind power plants ~~have~~had remaining useful lives ranging from 5 to 41 years and ~~have~~had an overall weighted average remaining useful life of 24 years as of October 1, 2016. This prospective change in estimate increased depreciation expense and net loss by $1.9 million for the ~~quarter and year ended December 31, 2016 and increased basic and diluted loss per share by $0.02 for the quarter and~~ year ended December 31, 2016. As of December 31, 2018 and 2017, they had a weighted average remaining useful life of 21 and 23 years, respectively.

Construction in-progress represents the cumulative construction costs, including the costs incurred for the purchase of major equipment and engineering costs and capitalized interest. Once the project achieves commercial operation, the Company reclassifies the amounts recorded in construction in progress to renewable energy facilities.

Finite-Lived Intangibles

The Company's finite-lived intangible assets and liabilities represent revenue contracts, consisting of long-term concessions and licensing contracts, power purchase agreements ~~("PPAs") and renewable energy certificates ("RECs"~~(“PPAs”), RECs, lease agreements and operations and maintenance (“O&M&M”) contracts that were obtained through third party acquisitions. The revenue contract intangibles are comprised of favorable and unfavorable rate PPAs and REC agreements and the in-place value of market rate PPAs. The lease agreement intangibles are comprised of favorable and unfavorable rate land leases, and the O&M contract intangibles consist of unfavorable rate O&M contracts. Intangible assets and liabilities that have determinable estimated lives are amortized on a straight-line basis over those estimated lives. Amortization of favorable and unfavorable rate revenue contracts is recorded within operating revenues, net in the consolidated statements of operations. Amortization expense related to the concessions and licensing contracts and in-place value of market rate revenue contracts is recorded within depreciation, accretion and amortization expense in the consolidated statements of operations, and amortization of favorable and unfavorable rate land leases and unfavorable rate O&M contracts is recorded within cost of operations. The straight-line method of amortization is used because it best reflects the pattern in which the economic benefits of the intangibles are consumed or otherwise used up. The amounts and useful lives assigned to intangible assets acquired and liabilities ~~acquired~~assumed impact the amount and timing of future amortization.

Impairment of Renewable Energy Facilities and Intangibles

Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances indicate carrying values may not be recoverable. An impairment loss is recognized if the total future estimated undiscounted cash flows expected from an asset are less than its carrying value. An impairment charge is measured as the difference between an asset's carrying amount and its fair value. Fair values are determined by a variety of valuation methods, including appraisals, sales prices of similar assets and present value techniques.

During the year ended December 31, ~~2016,~~2018, the Company recognized a ~~$19.0~~$15.2 million non-cash impairment charge within its Solar segment related to an operating project within its Enfinity portfolio due to the bankruptcy of a significant customer. During the years ended December 31, 2016 and 2017, the Company recognized an impairment charge of $15.7 million and $1.4 million, respectively, within impairment of renewable energy facilities in the consolidated statements of operations, on its 11.4 MW portfolio of residential rooftop solar assets that was classified as held for sale as of December 31, 2016, and subsequently sold in 2017. The Company also recorded a $3.3 million charge within impairment of renewable energy facilities for the year ended December 31, 2016 due to the decision to abandon certain residential construction in progress assets that were not completed by SunEdison as a result of the SunEdison Bankruptcy. Impairment charges are reflected within impairment of renewable energy facilities in the consolidated ~~statement~~statements of operations (see Note 4. ~~Assets Held for Sale~~Acquisitions and Dispositions and Note 5. Renewable Energy Facilities for further discussion).~~There were no impairments of renewable energy facilities or intangibles recognized during the years ended December 31, 2015 and 2014.~~

Goodwill

~~Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value assigned to the individual assets acquired and liabilities assumed.~~ The Company ~~does not amortize goodwill, but instead~~ evaluates goodwill for impairment at least annually on December 1^st. The Company performs an impairment test between scheduled annual tests if facts and circumstances indicate that it is more-likely-than-not that the fair value of a reporting unit that has goodwill is less than its carrying value. A reporting unit is either the operating segment level or one level below, which is referred to as a component. The level at which the impairment test is performed requires judgment as to whether the operations below the operating segment constitute a self-sustaining business or whether the operations are similar such that they should be aggregated for purposes of the impairment test. The Company defines its reporting units to be consistent with its operating segments.

The Company may first make a qualitative assessment of whether it is more-likely-than-not that a reporting unit’s fair value is less than its carrying value to determine whether it is necessary to perform the ~~two-step~~ quantitative goodwill impairment test. The qualitative impairment test includes considering various factors including macroeconomic conditions, industry and market conditions, cost factors, a sustained share price or market capitalization decrease and any reporting unit specific events. If it is determined through the qualitative assessment that a reporting unit’s fair value is more-likely-than-not greater than its carrying value, the ~~two-step~~quantitative impairment test is not required. If the qualitative assessment indicates it is more-likely-than-not that a reporting unit’s fair value is not greater than its carrying value, the Company must perform the ~~two-step~~quantitative impairment test. The Company may also elect to proceed directly to the ~~two-step~~quantitative impairment test without considering such qualitative factors.

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The ~~first step in the two-step~~quantitative impairment test is the comparison of the fair value of a reporting unit with its carrying amount, including goodwill. ~~The Company defines its reporting units to be consistent with its reportable segments.~~ In accordance with the authoritative guidance over fair value measurements, the Company defines the fair value of a reporting unit as the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. The Company primarily uses the income approach methodology of valuation, which uses the discounted cash flow method, to estimate the fair values of the Company's reporting units. The Company does not believe that a cost approach is relevant to measuring the fair values of its reporting units.

Significant management judgment is required when estimating the fair value of the Company's reporting units, including the forecasting of future operating results, the discount rates and expected future growth rates that it uses in the discounted cash flow method of valuation, and in the selection of comparable businesses that are used in the market approach. If the estimated fair value of the reporting unit exceeds the carrying value assigned to that unit, goodwill is not ~~impaired and no further analysis is required.~~

impaired. If the carrying value assigned to a reporting unit exceeds its estimated fair value, ~~in the first step, then~~ the Company ~~is required to perform~~records an impairment charge based on the ~~second step~~excess of the reporting unit’s carrying amount over its fair value. The impairment ~~test. In this step,~~charge is limited to the amount of goodwill allocated to the reporting unit.

The Company ~~assigns~~performed a qualitative impairment test for the ~~fair value~~goodwill balance in Saeta Yield S.A.U. (“Saeta”) of $120.6 million as of December 1, 2018 and concluded that the carrying amount of the reporting unit ~~calculated in step one to all of~~does not exceed its fair value. No goodwill impairment charges were recorded for the ~~assets~~years ended December 31, 2018 and liabilities of that reporting unit as if a market participant just acquired the reporting unit in a business combination. The excess of the fair value of the reporting unit determined in the first step of the impairment test over the total amount assigned to the assets and liabilities in the second step of the impairment test represents the implied fair value of goodwill. If the carrying value of a reporting unit’s goodwill exceeds the implied fair value of goodwill, the Company would record an impairment loss equal to the difference.2017. The Company recorded a goodwill impairment charge of $55.9 million for the year ended December 31, 2016 as reflected in the consolidated ~~statement~~statements of operations (see Note 8.7. Goodwill for further discussion).

Capitalized Interest

Interest incurred on funds borrowed to finance construction of renewable energy facilities is capitalized until the system is ready for its intended use. The amount of interest capitalized during the years ended December 31, 2018 and 2016 ~~2015~~was $0.2 million and ~~2014 was~~ $1.6 million, ~~$22.7 million and $19.7 million,~~ respectively. There was no interest capitalized during the year ended December 31, 2017.

Financing Lease Obligations

Certain of the Company's assets were financed with sale-leaseback arrangements. Proceeds received from a sale-leaseback are treated using the deposit method when the sale of the renewable energy facility is not recognizable. A sale is not recognized when the leaseback arrangements include a prohibited form of continuing involvement, such as an option or obligation to repurchase the assets under the Company's master lease agreements. Under these arrangements, the Company does not recognize any profit until the sale is recognizable, which the Company expects will be at the end of the arrangement when the contract is canceled and the initial deposits received are forfeited by the financing party.

The Company is required to make rental payments over the course of the leaseback arrangements. These payments are allocated between principal and interest payments using an effective yield method.

Deferred Financing Costs

Financing costs incurred in connection with obtaining construction and term financing are deferred and amortized over the maturities of the respective financing arrangements using the effective interest ~~method. As discussed below, as of January 1, 2016, the Company adopted ASU No. 2015-03,~~ ~~Interest - Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs~~ method and ~~ASU No. 2015-15~~ ~~Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements~~ ~~and reclassified deferred financing costs to be~~are presented as a direct deduction from the carrying amount of the related debt ~~in both the current and prior periods,~~(see Note 10. Long-term Debt), with the exception of the costs related to the Company's ~~senior secured~~ revolving credit ~~facility,~~facilities, which are ~~still~~ presented as a non-current asset on in the consolidated balance ~~sheet. Amortization~~sheets within other assets. As of December 31, 2018 and 2017, the Company had $6.7 million and $9.4 million, respectively, of unamortized deferred financing costs related to its revolving credit facilities.

Inventory

Inventory consists of spare parts and is ~~capitalized during construction~~recorded at the lower of weighted average cost of purchase or net realizable value within prepaid expenses and ~~recorded~~other current assets in the consolidated balance sheets. Inventory as ~~interest expense~~of December 31, 2018 and 2017, was $7.6 million and $5.7 million, respectively. Spare parts are expensed to cost of operations in the consolidated statements of operations ~~following achievement of commercial operation.~~or capitalized to renewable energy facilities, as appropriate, when installed or used.

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Asset Retirement Obligations

Asset retirement obligations are accounted for in accordance with ASC 410-20, Asset Retirement Obligations. Retirement obligations associated with renewable energy facilities included within the scope of ASC 410-20 are those for which a legal obligation exists under enacted laws, statutes, and written or oral contracts, and for which the timing and/or method of settlement may be conditional on a future event. Asset retirement obligations are recognized at fair value in the period in which they are incurred and the carrying amount of the related renewable energy facility is correspondingly increased. Over time, the liability is accreted to its expected future value. The corresponding renewable energy facility that is capitalized at inception is depreciated over its useful life. Historically, the Company accreted its asset retirement obligations over the term of the related PPA agreement. During the fourth quarter of 2016, the Company revised the accretion period and determined that these obligations should be accreted to expected future value over the remaining useful life of the corresponding renewable energy facility, consistent with the depreciation expense that is recorded on the asset retirement cost recognized within renewable energy facilities and with its estimate of the future timing of settlement. This change in accretion period and related estimate associated with the timing of the original undiscounted cash flows resulted in a $22.2 million reduction in the Company's asset retirement obligation and corresponding renewable energy facility carrying amount as of December 31, 2016. The Company also recorded an adjustment during the fourth quarter of 2016 to reduce previously reported accretion and depreciation expense by $4.4 million as a result of this change. $2.9 million of the accretion and depreciation expense reduction related to amounts previously reported for the year ended December 31, 2015. The quarterly accretion and depreciation expense reduction that related to each of the first three quarters of 2016 was $0.5 million. Management performed an assessment of the balance sheet and income statement impact on its previously issued filings and determined it to be immaterial.

The Company generally reviews its asset retirement obligations annually, based on its review of updated cost studies, as necessary, and its evaluation of cost escalation factors. The Company evaluates newly assumed costs or substantive changes in previously assumed costs to determine if the cost estimate impacts are sufficiently material to warrant application of the updated estimates to the asset retirement obligations. Changes resulting from revisions to the timing or amount of the original estimate of cash flows are recognized as an increase or a decrease in the asset retirement cost to the extent applicable. ~~Effective December 31, 2016,~~

During the fourth quarter of 2018, the Company revised the accretion period related to its ~~original estimates~~wind projects and determined that these obligations should be accreted to expected future value over the remaining useful life of the ~~costs and related amount~~ of ~~cash flows for certain~~the corresponding components of ~~its~~the renewable energy facilities rather than the expected weighted-average life of the assets, consistent with the depreciation expense that is recorded on the asset retirement ~~obligations which~~cost recognized within renewable energy facilities and using its estimate of the future timing of settlement. This change resulted in a ~~$7.9~~$15.7 million reduction in the Company’s asset retirement obligation and ~~related~~corresponding renewable energy facility carrying amount as of December 31, ~~2016. As~~2018. The Company also recorded an adjustment during the fourth quarter of 2018 to reduce previously reported accretion and depreciation expense by $6.3 million as a result of this ~~was a prospective~~ change, ~~in estimate, there was no impact to~~of which $4.4 million of the accretion orand depreciation expense reduction related to amounts previously reported for the years ended December 31, 2017, 2016 and 2015. The quarterly accretion and depreciation expense reduction that relates to each of the first three quarters of 2018 was approximately $0.5 million. Management performed an assessment of the balance sheet and income statement impact on its previously issued filings and determined it to be immaterial.

Revenue From Contracts With Customers

Adoption of Topic 606

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which replaces most existing revenue recognition guidance in U.S. GAAP and requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Additionally, the new standard requires an entity to disclose additional quantitative and qualitative information regarding the nature and amount of revenues arising from contracts with customers, as well as other information about the significant judgments and estimates used in recognizing revenues from contracts with customers. In March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies how to apply the implementation guidance on principal versus agent considerations related to the sale of goods or services to a customer as updated by ASU No. 2014-09. The Company adopted these standards as of January 1, 2018, which it collectively refers to as “Topic 606.” The Company analyzed the impact of Topic 606 on its revenue contracts which primarily include bundled energy and incentive sales through PPAs, individual REC sales, and upfront sales of federal & state incentive benefits recorded. The Company elected to apply a modified retrospective approach with a cumulative-effect adjustment to accumulated deficit recognized as of January 1, 2018 for changes to revenue recognition resulting from Topic 606 adoption as described below. The Company adopted Topic 606 for all revenue contracts in scope that had future performance obligations at January 1, 2018, and elected to use the contract modification practical expedient for purposes of computing the cumulative transition adjustment.

The Company accounts for the majority of its PPAs as operating leases under ASC 840, Leases and recognizes rental income as revenue when the electricity is delivered. The Company elected not to early adopt ASC 842, Leases in fiscal 2018. The expected impact of the adoption of the new lease standard is discussed below. For PPAs under the scope of Topic 606 in fiscal 2018, the Company concluded that there were no material changes to revenue recognition patterns from existing accounting practice. See below for the revenue recognition policy of PPAs.

The Company evaluated the impact of Topic 606 as it relates to the individual sale of RECs. In certain jurisdictions, there may be a lag between physical generation of the underlying energy and the transfer of RECs to the customer due to administrative processes imposed by state regulations. Under the Company’s previous accounting policy, revenue was recognized as the underlying electricity was generated if the sale had been contracted with the customer. Based on the framework in Topic 606, for a portion of the existing individual REC sale arrangements where the transfer of control to the customer is determined to occur upon the transfer of the RECs, the Company now recognizes revenue commensurate with the transfer of RECs to the customer as compared to the generation of the underlying energy under the previous accounting policy. Revenue recognition practices for the remainder of existing individual REC sale arrangements remain the same; that is, revenue is recognized based on the underlying generation of energy because the contracted RECs are produced from a designated facility and control of the RECs transfers to the customer upon generation of the underlying energy. The adoption of Topic 606, as it relates to the individual sale of RECs, resulted in an increase in accumulated deficit on January 1, 2018, of $20.5 million, net of tax, and net of $0.3 million and $4.5 million that was allocated to non-controlling interests and redeemable non-controlling interests, respectively. The adjustments for accumulated deficit and non-controlling interests are reflected within cumulative-effect adjustment in the consolidated statements of stockholders’ equity for the year ended December 31, ~~2016 as a result of this change.~~2018, and the redeemable non-controlling interests adjustment is reflected within cumulative-effect adjustment in the redeemable non-controlling interests roll-forward presented in Note 17.Non-controlling Interests.

~~Revenue Recognition~~The Company evaluated the impact of Topic 606 as it relates to the upfront sale of investment tax credits (“ITCs”) through its lease pass-through fund arrangements. The amounts allocated to the ITCs were initially recorded as deferred revenue in the consolidated balance sheets, and subsequently, one-fifth of the amounts allocated to the ITCs was recognized annually as incentives revenue in the consolidated statements of operations based on the anniversary of each solar energy system’s placed-in-service date. The Company concluded that revenue related to the sale of ITCs through its lease pass-through arrangements should be recognized at the point in time when the related solar energy systems are placed in service. Previously, the Company recognized this revenue evenly over the five-year ITC recapture period. The Company concluded that the likelihood of a recapture event related to these assessments is remote. The adoption of Topic 606, as it relates to the upfront sale of ITCs, resulted in a decrease in accumulated deficit on January 1, 2018 of $40.9 million, net of tax, which is reflected within cumulative-effect adjustment in the consolidated statements of stockholders’ equity for the year ended December 31, 2018. The impact on the Company’s results of operations for the year ended December 31, 2018 resulted in a decrease in non-cash deferred revenue recognition of $16.3 million.

~~Power Purchase Agreements~~PPA Rental Income

~~A significant~~The majority of the ~~Company's revenues are obtained through the sale of~~Company’s energy ~~(based on MW) pursuant to terms of~~revenue is derived from long-term PPAs ~~or other contractual arrangements which have a weighted average remaining life of 15 years as of December 31, 2016. Most of the Company's PPAs are~~ accounted for as operating leases ~~and have no minimum lease payments.~~under ASC 840, Leases. Rental income under these leases is recorded as revenue when the electricity is delivered. The Company adopted ASC 842, Leases on January 1, 2019. The Company elected certain of the practical expedients permitted in the issued standard, including the expedient that permits the Company to retain its existing lease assessment and classification.

Commodity Derivatives

The Company has certain revenue contracts within its wind fleet that are accounted for as derivatives under the scope of ASC 815, Derivatives and Hedging. Amounts recognized within operating revenues, net in the consolidated statements of operations consist of cash settlements and unrealized gains and losses representing changes in fair value for the commodity derivatives that are not designated as hedging instruments. See Note 12. Derivatives for further discussion.

Solar and Wind PPA Revenue

PPAs that are not accounted for under the scope of leases or derivatives are accounted for under Topic 606. The Company typically delivers bundled goods consisting of energy and incentive products for a singular rate based on a unit of generation at a specified facility over the term of the agreement. In these type of arrangements, volume reflects total energy generation measured in kWhs which can vary period to period depending on system and resource availability. The contract rate per unit of generation (kWhs) is generally fixed at contract inception; however, certain pricing arrangements can provide for time-of-delivery, seasonal or market index adjustment mechanisms over time. The customer is invoiced monthly equal to the volume of energy delivered multiplied by the applicable contract rate.

The Company considers bundled energy and incentive products within PPAs to be distinct performance obligations. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the

performance obligation is satisfied under Topic 606. The Company views the sale of energy as a series of distinct goods that is substantially the same and has the same pattern of transfer measured by the output method. Although the Company views incentive products in bundled PPAs to be performance obligations satisfied at a point in time, measurement of satisfaction and transfer of control to the customer in a bundled arrangement coincides with a pattern of revenue recognition with the underlying energy generation. Accordingly, the Company applied the practical expedient in Topic 606 as the right to consideration corresponds directly to the value provided to the customer to recognize revenue at the invoice amount for its standalone and bundled PPA contracts.

For the year ended December 31, 2018, the Company’s energy revenue from PPA contracts with solar and wind customers was $39.6 million and $55.0 million, respectively, which does not include the market energy sales from the regulated solar and wind segment discussed below. As of December 31, 2018, the Company’s receivable balances related to PPA contracts with solar and wind customers was approximately $11.2 million. Trade receivables for PPA contracts are reflected in accounts receivable, net in the consolidated balance sheets. The Company typically receives payment within 30 days for invoiced PPA revenue. The Company does not have any other significant contract asset or liability balances related to PPA revenue.

Energy revenues yet to be earned under these contracts are expected to be recognized between 2019 and 2043. The Company applies the practical expedient in Topic 606 to its bundled PPA contract arrangements, and accordingly, does not disclose the value of unsatisfied performance obligations for contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

Regulated Solar and Wind Revenue

Regulated solar and wind includes revenue generated by Saeta’s solar and wind operations in Spain, which are subject to regulations applicable to companies that generate production from renewable sources for facilities located in Spain. While Saeta’s Spanish operations are regulated by the Spanish regulator, the Company has determined that the Spanish entities do not meet the criteria of a rate regulated entity under ASC 980 Regulated Operations, since the rates established by the Spanish regulator are not designed to recover the entity’s costs of providing its energy generation services. Accordingly, the Company applied Topic 606 to recognize revenue for these customer contract arrangements. The Company has distinct performance

obligations to deliver electricity, capacity, and incentives which are discussed below.

The Company has a performance obligation to deliver electricity and these sales are invoiced monthly at the wholesale market price (subject to adjustments due to regulatory price bands that reduce market risk). The Company transfers control of the electricity over time and the customer receives and consumes the benefit simultaneously. Accordingly, the Company applied the practical expedient in Topic 606 as the right to consideration corresponds directly to the value provided to the customer to recognize revenue at the invoice amount for electricity sales.

The Company has a stand-ready performance obligation to deliver capacity in the Spanish electricity market in which these renewable energy facilities are located. Proceeds received by the Company from the customer in exchange for capacity are determined by a remuneration on an investment per unit of installed capacity that is determined by Spanish regulators. The Company satisfies its performance obligation for capacity under a time-based measure of progress and recognizes revenue by allocating the total annual consideration evenly to each month of service.

For the Company’s Spanish solar renewable energy facilities, the Company has identified a performance obligation linked to an incentive that is distinct from the electricity and capacity deliveries discussed above. For solar technologies under the Spanish market, the customer makes an operating payment per MWh which is calculated based on the difference of a standard cost and an expected market price, both, determined by the Spanish regulator. The customer is invoiced monthly equal to the volume of energy produced multiplied by the regulated rate. The performance obligation is satisfied when the Company generates electricity from the solar renewable facility. Accordingly, the Company applied the practical expedient in Topic 606 and recognizes revenue based on the amount invoiced each month.

Amortization of Favorable and Unfavorable rate Revenue Contracts

agreements) is recognized on a straight-line basis over the remaining contract term. The current period amortization for favorable rate revenue contracts is reflected as a reduction to operating revenues, net, and amortization for unfavorable rate revenue contracts is reflected as an increase to operating revenues, net. There was no impact related to the adoption of Topic 606 on the amortization of favorable and unfavorable rate revenue contracts. See Note 8. Intangible Assets, Net.

Solar and Wind Incentive Revenue

The Company generates incentive revenue from individual incentive agreements relating to the sale of RECs and performance-based incentives to third-party customers that are not bundled with the underlying energy output. The majority of individual REC sales reflect a fixed quantity, fixed price structure over a specified term. The Company views REC products in these arrangements as ~~it produces electricity.~~distinct performance obligations satisfied at a point in time. Since the REC products delivered to the customer are not linked to the underlying generation of a specified facility, these RECs are ~~accounted for as government incentives~~now recognized into revenue when delivered and ~~are not considered output~~invoiced under Topic 606. This was a change from the Company’s prior year accounting policy which recognized REC sales upon underlying electricity generation. The impact of the adoption resulted in a decrease in operating revenues, net of $3.7 million during the year ended December 31, 2018. Incentive revenues yet to be earned for fixed price incentive contracts are expected to be $61.1 million and recognized between 2019 and 2031. The Company typically receives payment within 30 days of invoiced REC revenue.

For certain incentive contract arrangements, the quantity delivered to the customer is linked to a specific facility. Similar to PPA revenues under Topic 606, the pattern of revenue recognition for these incentive arrangements is recognized over time coinciding with the underlying revenue generation which is consistent with the Company’s policy prior to the adoption of Topic 606. For the year ended December 31, 2018, the Company’s incentive revenue from facility-linked contracts with customers was $28.9 million. Revenue accruals for facility linked incentive contracts within accounts receivable, net were $3.1 million as of December 31, 2018. The Company applied the practical expedient in Topic 606 to its variable consideration incentive contract arrangements where revenues are linked to the underlying generation of the renewable energy ~~facilities. These RECs are currently sold pursuant to agreements with SunEdison, unaffiliated third parties~~facilities, and ~~a certain debt holder, and revenue is recognized as~~accordingly does not disclose the ~~underlying electricity is generated if the sale has been contracted with the customer.~~

~~The Company also receives performance-based incentives ("PBIs") from public utilities in connection with certain sponsored programs. The Company has a PBI arrangement with the State~~value of ~~California whereby the Company will receive a fixed rate multiplied by the kilowatt hour ("kWh") production on a monthly basis~~unsatisfied performance obligations for ~~60 months. The PBI revenue is recognized as energy is generated over the measurement-period. The Company~~contracts for which it recognizes revenue ~~based on the rate applicable~~ at the ~~time~~amount to which it has the ~~energy is created and adjusts the amount recognized when it meets the threshold that qualifies it~~right to invoice for ~~the higher rate. PBI in the state of Colorado has a 20-year term at a fixed-price per kWh produced. The revenue is recognized as energy is generated over the term of the agreement.~~

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services performed.

Deferred Revenue

Deferred revenue primarily consists of upfront incentives or subsidies received from various state governmental jurisdictions for operating certain of the Company's renewable energy ~~facilities or from~~facilities. Prior to the ~~sale~~adoption of ~~investment tax credits~~Topic 606, the Company deferred sales of ITCs through its lease pass-through fund arrangements as a deferred revenue liability in the consolidated balance sheets. The Company now recognizes revenue related to ~~non-controlling members.~~the sales of ITCs at the point in time when the related solar energy systems are placed in service. The ~~amounts~~Company concluded that the likelihood of a recapture event related to these assessments is remote. Under Topic 605, the Company would have recognized an increase of $16.3 million in non-cash deferred revenue within operating revenues, net for the year ended December 31, 2018. The remaining deferred revenue balance in the consolidated balance sheet as of December 31, 2018, consisted of upfront government incentives of $8.8 million and contract liabilities of $4.9 million related to performance obligations that have not yet been satisfied. These contract liabilities represent advanced customer receipts primarily related to future REC deliveries that are recognized asinto revenue under Topic 606. The amount of revenue recognized during the year ended December 31, 2018 related to contract liabilities was $1.3 million.

Prior to the adoption of Topic 606, deferred revenue was recognized on a straight-line basis over the depreciable life of the renewable energy facility or upon the contingency of claw-back of the tax credits resolve as the Company fulfills its obligation to operate these renewable energy facilities. Recognition of deferred revenue was ~~$16.5 million, $9.9~~$18.2 million and ~~$0.3~~$16.5 million during the years ended December 31, 2017 and 2016, ~~2015 and 2014,~~ respectively. See Note 3. Revenue for additional disclosures.

Income Taxes

The Company accounts for income taxes using the liability method, which requires ~~that~~ it to use the asset and liability method of accounting for deferred income taxes and provide deferred income taxes for all significant temporary differences.

The Company reports certain of its revenues and expenses differently for financial statement purposes than for income tax return purposes, resulting in temporary and permanent differences between the Company's financial statements and income tax returns. The tax effects of such temporary differences are recorded as either deferred income tax assets or deferred income

tax liabilities in the Company's consolidated balance sheets. The Company measures its deferred income tax assets and deferred income tax liabilities using ~~income~~enacted tax rates that are ~~currently~~expected to be in ~~effect.~~effect when the deferred tax liabilities are expected to be realized or settled. Many factors are considered when assessing the likelihood of future realization of deferred tax assets, including recent earnings within taxing jurisdictions, expectations of future taxable income, the carry forward periods available and other relevant factors. The Company believes it is more likely than not that the ~~results of future operations will generate sufficient taxable income, which includes the~~ future reversal of existing taxable temporary differences will allow the Company to realize deferred tax assets, net of valuation allowances. A valuation allowance is recorded to reduce the net deferred tax assets to an amount that is more-likely-than-not to be realized. Tax benefits are recognized when it is more-likely-than-not that a tax position will be sustained upon examination by the authorities. The benefit recognized from a position that has surpassed the more-likely-than-not threshold is the largest amount of benefit that is more than 50% likely to be realized upon settlement. The Company recognizes interest and penalties ~~accrued~~ related to uncertain tax benefits as a component of income tax expense. Changes to existing net deferred tax assets or valuation allowances or changes to uncertain tax benefits are recorded to income tax ~~expense.~~expense in the period such determination is made.

Adoption of ASU 2018-02

In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income to help entities address certain stranded income tax effects in AOCI resulting from the U.S. government’s enactment of the Tax Cuts and Jobs Act (the “Tax Act”) on December 22, 2017. The amendment provides entities with an option to reclassify stranded tax effects within AOCI to retained earnings in each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act (or portion thereof) is recorded. The amendment also includes disclosure requirements regarding the issuer’s accounting policy for releasing income tax effects from AOCI. The optional guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted, and entities should apply the provisions of the amendment either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized.

During the fourth quarter of 2018, the Company early adopted ASU No. 2018-02 and elected the provisions of the amendment in the period of adoption. The adoption of ASU No. 2018-12 resulted in reclassifying $9.4 million of stranded tax effects on the net unrealized gains on derivatives designated as hedging instruments in a cash flow relationship from AOCI to accumulated deficit. The reclassification is reflected as an increase to accumulated deficit within the cumulative-effect adjustment in the consolidated statements of stockholders’ equity for the year ended December 31, 2018, and an increase to the opening balance of AOCI as of January 1, 2018 (See Note 21. Accumulated Other Comprehensive Income).

The Company releases the taxes deferred in AOCI as the individual units of account (i.e., derivative instruments in a cash flow hedge or net investment hedge relationships) are terminated, extinguished, sold or substantially liquidated.

Variable Interest Entities

The Company assesses entities for consolidation in accordance with ASC 810. The Company consolidates variable interest entities (“VIEs”)in renewable energy facilities when determined to be the primary beneficiary. VIEs are entities that lack one or more of the characteristics of a voting interest entity (“VOE”). The Company has a controlling financial interest in a VIE when its variable interest or interests provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

Non-controlling Interests and Hypothetical Liquidation at Book Value ~~("HLBV"~~(“HLBV”)

Non-controlling interests represent the portion of net assets in consolidated entities that are not owned by the Company and are reported as a component of equity in the consolidated balance sheets. Non-controlling interests in subsidiaries that are redeemable either at the option of the holder or at fixed and determinable prices at certain dates in the future are classified as redeemable non-controlling interests in subsidiaries between liabilities and stockholders' equity in the consolidated balance sheets. Redeemable non-controlling interests that are currently redeemable or redeemable after the passage of time are adjusted to their redemption value as changes occur. The Company applies the guidance in ASC 810-10 along with the ~~SEC~~Securities and Exchange Commission (“SEC”) guidance in ASC 480-10-S99-3A in the valuation of redeemable non-controlling interests.

The Company has determined the allocation of economics between the controlling party and the third party for non-controlling interests does not correspond to ownership percentages for certain of its consolidated subsidiaries. In order to reflect the substantive profit sharing arrangements, the Company has determined that the appropriate methodology for determining the value of non-controlling interests is a balance sheet approach using the HLBV method. Under the HLBV method, the amounts reported as non-controlling interest on the consolidated balance sheets represent the amounts the third party investors could hypothetically receive at each balance sheet reporting date based on the liquidation provisions of the respective operating partnership agreements. HLBV assumes that the proceeds available for distribution are equivalent to the unadjusted, stand-alone net assets of each respective partnership, as determined under U.S. GAAP. The third party non-controlling interests in the consolidated statements of operations and statements of comprehensive loss are determined based on the difference in the carrying amounts of non-controlling interests on the consolidated balance sheets between reporting dates, adjusted for any capital transactions between the Company and third party investors that occurred during the respective period.

Where, prior to the commencement of operating activities for a respective renewable energy facility, HLBV results in an immediate change in the carrying value of non-controlling ~~interest~~interests on the consolidated balance ~~sheet~~sheets due to the recognition of ITCs or other adjustments as required by the U.S. Internal Revenue Code, the Company defers the recognition of the respective adjustments and recognizes the adjustments in non-controlling interest on the consolidated ~~statement~~statements of operations on a straight-line basis over the expected life of the underlying assets giving rise to the respective difference. Similarly, where

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the Company has acquired a controlling interest in a partnership and there is a resulting difference between the initial fair value of non-controlling interest and the value of non-controlling interest as measured using HLBV, the Company initially records non-controlling ~~interest~~interests at fair value and amortizes the resulting difference over the remaining life of the underlying assets.

Contingencies

The Company is involved in conditions, situations or circumstances in the ordinary course of business with possible gain or loss contingencies that will ultimately be resolved when one or more future events occur or fail to occur. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range, that amount will be accrued. When no amount within the range is a better estimate than any other amount, the minimum amount in the range will be accrued. The Company continually evaluates uncertainties associated with loss contingencies and records a charge equal to at least the minimum estimated liability for a loss contingency when both of the following conditions are met: (i) information available prior to the issuance of the financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements; and (ii) the loss or range of loss can be reasonably estimated. Legal costs are expensed when incurred. Gain contingencies are not recorded until realized or realizable.

Derivative Financial Instruments

Adoption of ASU 2017-12

In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This ASU amends the hedge accounting model to enable entities to better portray the economics of their risk management activities in the financial statements and simplifies the application of hedge accounting in certain situations. ASU No. 2017-12 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company recognizes the cumulative effect of the change on the opening balance of each affected component of equity as of the date of adoption. The Company adopted ASU 2017-12 on March 26, 2018 with the adoption impact reflected on a modified retrospective basis as of January 1, 2018, which resulted in the following primary changes:

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The ineffective hedging portion of derivatives designated as hedging instruments is no longer required to be measured, recognized or reported. Alternatively, the entire change in the fair value of the designated hedging instrument is recorded in accumulated other comprehensive income (“AOCI”);

The Company will perform ongoing prospective and retrospective hedge effectiveness assessments qualitatively after performing the initial test of hedge effectiveness on a quantitative basis and only to the extent that an expectation of high effectiveness can be supported on a qualitative basis in subsequent periods;

For derivatives with periodic cash settlements and a non-zero fair value at hedge inception, the gains or losses recorded in AOCI in a qualifying cash flow hedging relationship are reclassified to earnings on a systematic and rational basis over the hedge term; and

For derivatives with components excluded from the assessment of hedge effectiveness, the gains or losses recorded in AOCI on such excluded components in a qualifying cash flow hedging relationship are reclassified to earnings on a systematic and rational basis over the hedge term.

The adoption of ASU 2017-12 resulted in a cumulative-effect adjustment of $4.2 million, net of tax of $1.6 million, representing a decrease in accumulated deficit and AOCI, which is reflected within cumulative-effect adjustment in the consolidated statements of stockholders’ equity for the year ended December 31, 2018.

Initial Recognition

The Company recognizes its derivative instruments as assets or liabilities at fair value in the consolidated balance ~~sheets.~~sheets unless they qualify for certain exceptions, including the normal purchases and normal sales exception. Accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated as part of a hedging relationship and the type of hedging relationship.

Derivatives that qualify and are designated for hedge accounting are classified as either hedges of the variability of expected future cash flows to be received or paid related to a recognized asset or liability (cash flow hedges) or hedges of the exposure to foreign currency of a net investment in a foreign operation (net investment hedges).

The ~~effective portion of changes~~Company also uses derivative contracts outside the hedging program to manage foreign currency risk associated with intercompany loans.

Subsequent Measurement

The change in fair value of components included in the effectiveness assessment of derivative instruments designated as cash flow hedges is ~~reported~~recognized as a component of ~~other comprehensive (loss) income. Changes in the fair value of these derivatives are subsequently~~OCI and reclassified into earnings in the period that the hedged transaction affects earnings. The ~~ineffective portion of changes~~change in fair value of components included in the effectiveness assessment of foreign currency contracts designated as net investment hedges is recorded in cumulative translation adjustments within AOCI and reclassified into earnings when the foreign operation is sold or substantially liquidated.

The change in fair value of derivative contracts intended to serve as economic hedges that are not designated as hedging instruments is reported as a component of ~~net loss~~earnings in the consolidated statements of operations.

~~The change in fair value of undesignated~~Cash flows from derivative instruments ~~is reported~~designated as ~~a component~~net investment hedges and non-designated derivatives used to manage foreign currency risks associated with intercompany loans are classified as investing activities in the

consolidated statements of ~~net loss~~cash flows. Cash flows from all other derivative instruments are classified as operating activities in the consolidated statements of ~~operations.~~cash flows.

Fair Value Measurements

The Company performs fair value measurements defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at their fair values, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the assets or liabilities, such as inherent risk, transfer restrictions and risk of nonperformance.

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In determining fair value measurements, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. Assets and liabilities are categorized within a fair value hierarchy based upon the lowest level of input that is significant to the fair value measurement:

Level 1: Quoted prices in active markets for identical assets or liabilities;

Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair values of the assets or liabilities.

The Company maintains various financial instruments recorded at cost in the consolidated balance sheets that are not required to be recorded at fair value. For cash and cash equivalents, restricted cash, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses and other current liabilities and due to ~~SunEdison,~~affiliates, net, the carrying amount approximates fair value because of the short-term maturity of the instruments. See Note ~~14.~~13. Fair Value of Financial Instruments for disclosures related to the fair value of the Company's derivative instruments and long-term debt.

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Foreign ~~Operations~~Currency

The Company's reporting currency is the U.S. dollar. Certain of the Company's subsidiaries maintain their records in local currencies other than the U.S. dollar, which are their functional currencies. When a subsidiary’s local currency is considered its functional currency, the Company translates its assets and liabilities to U.S. dollars using exchange rates in effect at date of the ~~balance sheet date~~financial statements and its revenue and expense accounts to U.S. dollars at average exchange rates for the period. ~~Translation~~Cumulative translation adjustments are reported in ~~accumulated other comprehensive income~~AOCI in stockholders’ equity. Cumulative translation adjustments are reclassified from AOCI to earnings only when realized upon sale or upon complete or substantially complete liquidation of an investment in a foreign subsidiary. Transaction gains and losses and changes in fair value of the Company's foreign exchange derivative contracts not accounted for under hedge accounting are included in results of operations as ~~incurred. Loss~~recognized. (Gain) loss on foreign currency exchange, net was ~~$13.0~~$(11.0) million, ~~$19.5~~$(6.1) million and ~~$14.0~~$13.0 million during the years ended December 31, ~~2016, 2015~~2018, 2017 and ~~2014,~~2016, respectively, as reported in the consolidated statements of operations.

Business Combinations

The Company accounts for its business combinations by recognizing in the financial statements the identifiable assets acquired, the liabilities assumed and any non-controlling interests in the acquiree at fair value at the acquisition date. The Company also recognizes and measures the goodwill acquired or a gain from a bargain purchase in the business combination and determines what information to disclose to enable users of an entity's financial statements to evaluate the nature and financial effects of the business combination. In addition, acquisition costs related to business combinations are expensed as incurred.

When the Company acquires renewable energy facilities, the purchase price is allocated to (i) the acquired tangible assets and liabilities assumed, primarily consisting of land, plant and long-term debt, (ii) the identified intangible assets and liabilities, primarily consisting of the value of favorable and unfavorable rate PPAs, ~~and~~ REC agreements, the concessions and ~~the~~licensing contracts and in-place value of market rate PPAs, (iii) non-controlling interests, and (iv) other working capital items based in each case on their fair values. The excess of the purchase price over the estimated fair value of net assets acquired is recorded as goodwill.

The Company generally uses independent appraisers to assist with the estimates and methodologies used such as a replacement cost approach, or an income approach or excess earnings approach. Factors considered by the Company in its analysis include considering current market conditions and costs to construct similar facilities. The Company also considers information obtained about each facility as a result of its pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets and liabilities acquired or assumed. In estimating the fair value the Company also establishes estimates of energy production, current in-place and market power purchase rates, tax credit arrangements and operating and maintenance costs. A change in any of the assumptions above, which are subjective, could have a significant impact on the results of operations.

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The allocation of the purchase price directly affects the following items in the consolidated financial statements:

The amount of purchase price allocated to the various tangible and intangible assets, liabilities and non-controlling interests on the balance sheet;

The amounts allocated to the value of favorable and unfavorable rate PPAs and REC agreements are amortized to revenue over the remaining non-cancelable terms of the respective arrangement. The amounts allocated to all other tangible assets and intangibles are amortized to depreciation or amortization expense, with the exception of favorable and unfavorable rate land leases and unfavorable rate O&M contracts which are amortized to cost of operations; and

The period of time over which tangible and intangible assets and liabilities are depreciated or amortized varies, and thus, changes in the amounts allocated to these assets and liabilities will have a direct impact on the Company's results of operations.

~~Basic and Diluted Loss Per Share~~

Basic loss per share is computed by dividing net loss attributable to Class A common stockholders by the number of weighted average ordinary shares outstanding during the period. Net loss attributable to Class A common stockholders is reduced by the amount of deemed dividends related to the accretion of redeemable non-controlling interest and dividends paid on Class A shares and participating RSAs. Diluted loss per share is computed by adjusting basic loss per share for the impact of weighted average dilutive common equivalent shares outstanding during the period. Common equivalent shares represent the incremental shares issuable for unvested restricted Class A common stock and redeemable shares of Class B and Class B1 common stock.

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~~Stock-Based Compensation~~

Stock-based compensation expense for all share-based payment awards to employees who provide services to the Company is based on the estimated grant-date fair value. The Company recognizes these compensation costs net of an estimated forfeiture rate for only those shares expected to vest on a straight-line basis over the requisite service period of the award, which is generally the award vesting term. For ratable awards, the Company recognizes compensation costs for all grants on a straight-line basis over the requisite service period of the entire award.

Assets Held for Sale

The Company records assets held for sale at the lower of the carrying value or fair value less costs to sell. The following criteria are used to determine if property is held for sale: (i) management has the authority and commits to a plan to sell the property; (ii) the property is available for immediate sale in its present condition; (iii) there is an active program to locate a buyer and the plan to sell the property has been initiated; (iv) the sale of the property is probable within one year; (v) the property is being actively marketed at a reasonable price relative to its current fair value; and (vi) it is unlikely that the plan to sell will be withdrawn or that significant changes to the plan will be made.

In determining the fair value of the assets less costs to sell, the Company considers factors including current sales prices for comparable assets in the region, recent market analysis studies, appraisals and any recent legitimate offers. If the estimated fair value less costs to sell of an asset is less than its current carrying value, the asset is written down to its estimated fair value less costs to sell. Due to uncertainties in the estimation process, it is reasonably possible that actual results could differ from the estimates used in the Company's historical analysis. The Company's assumptions about project sale prices require significant judgment because the current market is highly sensitive to changes in economic conditions. The Company estimates the fair values of assets held for sale based on current market conditions and assumptions made by management, which may differ from actual results and may result in additional impairments if market conditions deteriorate.

When assets are classified as held for sale, the Company does not record depreciation or amortization for the respective renewable energy facilities or intangibles.

~~Recent Accounting Developments~~At December 31, 2018, there were no assets held for sale.

Stock-Based Compensation

~~In May 2014,~~Stock-based compensation expense for all share-based payment awards to employees who provide services to the ~~Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09,~~ Company is based on the estimated grant-date fair value. The Company recognizes these compensation costs on a straight-line basis over the requisite service period of the award, which is generally the award vesting term. For ratable awards, the Company recognizes compensation costs for all grants on a straight-line basis over the requisite service period of the entire award. The Company recognizes the effect of forfeitures in compensation cost when they occur.

Deferred Compensation Plan

The Company sponsors a retirement saving plan that qualifies as a deferred compensation plan under Section 401(k) of the Internal Revenue ~~from Contracts with Customers (Topic 606), which requires an entity~~Code. Eligible U.S. employees may elect to ~~recognize~~defer a percentage of their qualified compensation for income tax purposes through payroll deductions and the ~~amount~~Company matches a percentage of ~~revenue to which it expects to be entitled~~the contributions based on employees’ elective deferrals. The Company’s total matching contribution expense under the arrangement was $0.6 million, $0.5 million, $0.5 million for the ~~transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In March~~years ended December 31, 2018, 2017 and 2016, ~~the FASB issued ASU No. 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606), Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~, which clarifies how to apply the implementation guidance on principal versus agent considerations related to the sale of goods or services to a customer as updated by ASU No. 2014-09. ASU No. 2014-09 and ASU No. 2016-08 will become effective for the Company on January 1, 2018. Early application is permitted but not before January 1, 2017. ASU No. 2014-09 and ASU No. 2016-08 permit the use of either the retrospective or modified retrospective method. The Company is working through an adoption plan which includes the evaluation of revenue contracts compared to the new standards and evaluating the impact of the new standards on the Company's consolidated financial statements and related disclosures. The Company does not plan to adopt these standards prior to January 1, 2018.respectively.

~~In August 2014, the FASB issued ASU No. 2014-15,~~ ~~Presentation of Financial Statements - Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern~~, which requires an entity’s management to evaluate whether there is substantial doubt about the entity’s ability to continue as a going concern and to provide related footnote disclosures. ASU No. 2014-15 is effective for interim and annual periods ending after December 15, 2016, with early adoption permitted for interim and annual reporting periods for which the financial statements have not been previously issued. The adoption of ASU No. 2014-15 on December 31, 2016 had no impact on the Company's consolidated financial statements, only the related disclosures. Refer to ~~Note~~1.~~Nature of Operations and Basis of Presentation~~ ~~for disclosures regarding management's evaluation of whether there is substantial doubt about the Company's ability to continue as a going concern.~~Restructuring

The Company accounts for restructuring costs in accordance with ASC 712 and ASC 420, as applicable. In ~~February 2015,~~connection with the ~~FASB issued ASU No. 2015-02,~~ ~~Consolidation (Topic 810) Amendments to the Consolidation Analysis, which affects the following areas~~consummation of the ~~consolidation analysis: limited partnerships~~Merger and ~~similar entities, evaluation~~the relocation of the Company’s headquarters to New York, New York, the Company

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~~fees paid to~~announced a ~~decision maker or service provider as a variable interest and in determination~~restructuring plan that went into effect upon the closing of the primary beneficiary, effect of related parties on the primary beneficiary determination and for certain investment funds. ASU No. 2015-02 is effective on a retrospective basis for the Company for the fiscal year ending December 31, 2016 and interim periods therein.Merger. The Company ~~adopted ASU No. 2015-02 as~~recognized $3.7 million of ~~January 1, 2016, which resulted in certain of its consolidated subsidiaries to be considered variable interest entities. No unconsolidated investments were consolidated~~severance and ~~no consolidated subsidiaries were deconsolidated as a result of implementing this standard.~~

~~In April 2015, the FASB issued ASU No. 2015-03,~~ ~~Interest - Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance~~transition bonus costs related to ~~a recognized debt liability~~this restructuring within general and administrative expenses in the consolidated statements of operations for the years ended December 31, 2018 and 2017. Severance and transition bonus payments were $5.5 million and $1.0 million during the years ended December 31, 2018 and 2017.

Recently Adopted Accounting Standards - Additional Guidance Adopted in 2018

In addition to ~~be presented on~~ the ~~balance sheet as a direct deduction from the carrying amount~~adoption of ~~that debt liability. In August 2015, the FASB issued~~Topic 606, ASU No. ~~2015-15~~ ~~Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements~~, in which an entity may defer and present debt issuance costs associated with line-of-credit arrangements as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU No. 2015-032017-12 and ASU No. ~~2015-15 are effective on a retrospective basis for annual and interim periods beginning on or after December 15, 2015. The~~2018-02 mentioned above, the Company adopted ASU No. 2015-03 and ASU No. 2015-15 as of January 1, 2016, resulting in a reclassification of $39.4 million and $43.1 million from deferred financing costs, net (current and non-current portion) to long-term debt and financing lease obligations, including current portion, as ofthe following standards during the year ended December 31, ~~2016 and 2015, respectively.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~, which primarily changes the lessee's accounting for operating leases by requiring recognition of lease right-of-use assets and lease liabilities. This standard is effective for annual reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect of ASU No. 2016-02 on its consolidated financial statements.

~~In March 2016, the FASB issued ASU No. 2016-09,~~ ~~Compensation - Stock Compensation (Topic 718)~~. This update was issued as part of the FASB's simplification initiative and affects all entities that issue share-based payment awards to their employees. The amendments in this update cover such areas as the recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. This update is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted if all provisions are adopted within the same period. The guidance is required to be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in the update. The Company is currently evaluating the effect of the standard on its ongoing financial reporting.

~~In March 2016, the FASB issued ASU No. 2016-06,~~ ~~Derivatives and Hedging (Topic 815)~~, which clarifies that determining whether the economic characteristics of a put or call are clearly and closely related to its debt host requires only an assessment of the four-step decision sequence outlined in FASB ASC paragraph 815-15-25-24. Additionally, entities are not required to separately assess whether the contingency itself is clearly and closely related. This standard is effective for annual and interim periods beginning after December 15, 2016, with early adoption permitted. The amendments in this update should be applied on a modified retrospective basis. The Company is currently evaluating the effect of this standard on its consolidated financial statements.

~~In March 2016, the FASB issued ASU No. 2016-07,~~ ~~Investments - Equity Method and Joint Ventures (Topic 323)~~. The amendments of ASU No. 2016-07 eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting with no retroactive adjustment to the investment. In addition, ASU No. 2016-07 requires that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The guidance in ASU No. 2016-07 is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. The adoption of ASU No. 2016-07 is required to be applied prospectively and early adoption is permitted. The Company does not expect the standard to have an impact on its consolidated financial statements.

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2018:

In August 2016, the FASB issued ASU No. 2016-15, ~~Statement~~ Statementsof Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments. The amendments of ASU No. 2016-15 were issued to address eight specific cash flow issues for which stakeholders have indicated to the FASB that a diversity in practice existed in how entities were presenting and classifying these items in the ~~statement~~statements of cash flows. The issues addressed by ASU No. 2016-15 include but are not limited to the classification of debt prepayment and debt extinguishment costs, payments made for contingent consideration for a business combination, proceeds from the settlement of insurance proceeds, distributions received from equity method investees and separately identifiable cash flows and the application of the predominance principle. The amendments of ASU No. 2016-15 are effective for public entities for fiscal years beginning after December 15, 2017 and interim periods in those fiscal years. Early adoption is permitted, including adoption in an interim fiscal period with all amendments adopted in the same period. The adoption of ASU No. 2016-15 is required to be applied retrospectively. The Company ~~is currently evaluating~~adopted ASU No. 2016-15 as of January 1, 2018, which did not result in any material adjustments to the ~~impact of the standard on its~~Company’s consolidated statements of cash flows.

In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. The amendments of ASU No. 2016-16 were issued to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. ~~Current~~Previous GAAP ~~prohibits~~prohibited the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset ~~has~~had been sold to an outside party which ~~has~~ resulted in diversity in practice and increased complexity within financial reporting. The amendments of ASU No. 2016-16 ~~would~~ require an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and do not require new disclosure requirements. The ~~amendments of ASU No. 2016-16 are effective for annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted and the~~ adoption of ASU No. 2016-16 should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The ~~Company does~~adoption of ASU No. 2016-16 as of January 1, 2018 did not ~~expect this standard to~~ have an impact on ~~its~~the Company’s consolidated financial statements.

~~In October 2016, the FASB issued ASU No. 2016-17,~~ ~~Consolidation (Topic 810), Interests Held through Related Parties That Are under Common Control~~. ASU No. 2016-17 updates ASU No. 2015-02. Under the amendments, a single decision maker is not required to consider indirect interests held through related parties that are under common control with the single decision maker to be the equivalent of direct interests in their entirety. Instead, a single decision maker is required to include those interests on a proportionate basis consistent with indirect interests held through other related parties. ASU No. 2016-17 is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company does not expect this standard to have an impact on its consolidated financial statements.

~~In November 2016, the FASB issued ASU No. 2016-18,~~ ~~Statement of Cash Flows (Topic 320), Restricted Cash, a Consensus of the FASB Emerging Issues Task Force~~. The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update do not provide a definition of restricted cash or restricted cash equivalents. ASU No. 2016-18 is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating the effect of this standard on its consolidated financial statements.

~~In December 2016, the FASB issued ASU No. 2016-19,~~ ~~Technical Corrections and Improvements~~. The amendments cover a wide range of topics in the Accounting Standards Codification, covering differences between original guidance and the Accounting Standards Codification, guidance clarification and reference corrections, simplification and minor improvements. The adoption of ASU No. 2016-19 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. The Company is currently evaluating the effect of this standard on its consolidated financial statements.

~~In December 2016, the FASB issued ASU No. 2016-20,~~ ~~Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The amendments in this update are of a similar nature to the items typically addressed in ASU 2016-19,~~ ~~Technical Corrections and Improvements~~. However, the FASB decided to issue a separate update for technical corrections and improvements to Topic 606 and other Topics amended by ASU No. 2014-09 to increase stakeholders’ awareness of the proposals and to expedite improvements to ASU No. 2014-09. The adoption of ASU No. 2016-20 is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual periods. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting

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~~periods within that reporting period. The Company is currently evaluating the effect of this standard on its consolidated financial statements.~~

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805), Clarifying the Definition of a Business. The amendment seeks to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill and consolidation. The ~~adoption of ASU No. 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The~~ amendments ~~should~~are required to be applied prospectively on or after the effective dates. Accordingly, the Company’s adoption ~~will~~of ASU No. 2017-01 as of January 1, 2018 did not have an ~~effect~~impact on the ~~Company's~~Company’s historical financial statements. ~~The~~Based on the Company’s evaluation of the new guidance, the Company ~~is currently evaluating~~determined that the ~~effect~~acquisition of ~~this standard~~Saeta on ~~future consolidated financial statements.~~June 12, 2018 qualified to be accounted for as an acquisition of a business and the acquisition of a total of 13 megawatt (“MW”) portfolios of operating solar assets located in California, New Jersey, Massachusetts and Southern Spain in 2018 qualified to be accounted for as acquisitions of assets. See Note 4. Acquisitions and Dispositions for further discussion of the Saeta acquisition.

In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill ~~Impairment.~~ Impairment. The amendment simplifies the accounting for goodwill impairment by removing Step 2 of the current test, which requires calculation of a hypothetical purchase price allocation. Under the revised guidance, goodwill impairment ~~will be~~is measured as the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill (currently Step 1 of the ~~two step~~two-step impairment test). Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. ~~This updated guidance is not currently expected to impact the Company's financial reporting.~~ The standard is effective January 1, 2020, with early adoption permitted, and must be adopted on a prospective basis. The Company adopted this new guidance in connection with its annual goodwill impairment test performed on December 1, 2018.

In February 2017, the FASB issued ASU No. 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. This ASU is meant to clarify the scope of ASC Subtopic 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets and to add guidance for partial sales of nonfinancial assets. ASU No. 2017-05 is to be

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applied using a full retrospective method or a modified retrospective method as outlined in the ~~guidance and is effective at the same time as ASU No. 2014-09. Further, the Company is required to adopt~~guidance. The adoption of ASU No. 2017-05 atas of January 1, 2018 did not have an impact on the ~~same time that it adopts the guidance in ASU No. 2014-09. The Company is currently evaluating the effect of this standard on its~~Company’s consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The amendment clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance is expected to reduce diversity in practice and result in fewer changes to the terms of an award being accounted for as a modification. Changes to the terms or conditions of a share-based payment award that do not impact the fair value of the award, vesting conditions and the classification as an equity or liability instrument will not need to be assessed under modification accounting. The ~~guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. The~~ amendments in this update should be applied prospectively to an award modified on or after the adoption date. Accordingly, the Company’s adoption ~~will~~of ASU No. 2017-09 as of January 1, 2018 did not have an ~~effect~~impact on the ~~Company's~~Company’s historical financial statements. The Company did not change the terms or conditions of any unvested share-based payment awards outstanding during the year ended December 31, 2018, but will apply the impact of this standard in the future should it change the terms or conditions of any share-based payment awards.

In February 2018, the FASB issued ASU No. 2018-03, Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This ASU amends and supersedes various paragraphs that contain SEC guidance in ASC 320, Investments - Debt Securities and ASC 980, Regulated Operations. ASU No. 2018-03 is effective for public business entities for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years beginning after June 15, 2018. Public business entities with fiscal years beginning between December 15, 2017 and June 15, 2018 are not required to adopt these amendments until the interim period beginning after June 15, 2018. The adoption of ASU No. 2018-03 as of July 1, 2018 did not have an impact on the Company’s consolidated financial statements.

In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The ASU added seven paragraphs to ASC 740, Income Taxes, that contain SEC guidance related to the application of U.S. GAAP when preparing an initial accounting of the income tax effects of the Tax Act which, among other things, allows for a measurement period not to exceed one year for companies to finalize the provisional amounts recorded as of December 31, 2017. The ASU was effective upon issuance. See Note 11. Income Taxes and Note 17.Non-Controlling Interests for disclosures on the Company’s accounting for the Tax Act.

Recently Issued Accounting Standards Not Yet Adopted

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which primarily changes the lessee’s accounting for operating leases by requiring recognition of lease right-of-use assets and lease liabilities. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842), Targeted Improvements, which amended the standard to give entities another option to apply the requirements of the standard in the period of adoption (January 1, 2019) or Effective Date Method. The Company adopted the new accounting guidance on January 1, 2019 using the Effective Date Method of adoption.

The Company has made the following elections provided under the standard:

Package of practical expedients that permits the Company to retain its existing lease assessment and classification;

Practical expedient that allows the Company to not evaluate existing and expired land easements;

Practical expedient to not separate non-lease components in power purchase agreement in which the Company is the lessor in providing energy, capacity, and incentive products for a bundled fixed rate; and

The Company elected not to apply the recognition requirements for short-term operating leases, defined as a term of 12-months or less from the commencement date.

The Company has evaluated the impact of Topic 842 as it relates to operating leases for land, buildings, and equipment for which it is the lessee and reviewed its existing contracts for embedded leases. The Company is continuing the analysis of the contractual arrangements that may qualify as leases under the new standard and expects the most significant impact will be the recognition of the right-of-use assets and lease liabilities for renewable energy facilities. The analysis and evaluation of the new standard will continue through the effective date in the first quarter of 2019. The Company is in the process of implementing a new lease accounting information system to assist with the tracking and accounting for leases. The Company must complete its analysis of contractual arrangements, quantify all impacts of this new guidance, and evaluate related disclosures. The Company must also implement any necessary changes/modifications to processes, accounting systems, and internal controls.

105

The Company adopted the guidance as of January 1, 2019, using the transition method that allows the Company to initially apply Topic 842 as of January 1, 2019 and recognize a cumulative-effect adjustment to the opening balance of accumulated deficit in the period of adoption. The Company does not expect to recognize a material adjustment to accumulated deficit upon adoption.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework —Changes to the Disclosure Requirements for Fair Value Measurement. This ASU removes some disclosure requirements, modifies others, and adds some new disclosure requirements. The guidance is effective January 1, 2020, with early adoption permitted. The Company is currently evaluating the effect of ~~this standard~~the new guidance on ~~future~~its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU amends the definition of a hosting arrangement and requires a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in ASC 350-402 to determine which implementation costs to capitalize as assets. Capitalized implementation costs are amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The guidance is effective January 1, 2020, with early adoption permitted. The Company is currently evaluating the effect of the new guidance on its consolidated financial statements.

~~3. TRANSACTIONS BETWEEN ENTITIES UNDER COMMON CONTROL~~

In October 2018, the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (“OIS”) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU expands the list of U.S. benchmark interest rates permitted in the application of hedge accounting by adding the SOFR as a permissible U.S. benchmark rate. The new amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of the new guidance on its consolidated financial statements for any future application of hedge accounting involving SOFR as a benchmark interest rate.

~~Recast~~In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this ASU require reporting entities to consider indirect interests held through related parties under common control for determining whether fees paid to decision makers and service provider are variable interests. These indirect interests should be considered on a proportional basis rather than as the equivalent of ~~Historical Financial Statements~~a direct interest in its entirety (as currently required in U.S. GAAP). The guidance is effective January 1, 2020, with early adoption permitted. Entities are required to apply the amendments in this guidance retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The Company is currently evaluating the effect of the new guidance on its consolidated financial statements.

~~During~~

106

3. REVENUE

As discussed in Note 2. Summary of Significant Accounting Policies, on January 1, 2018, the Company adopted Topic 606. The following tables present revenue disaggregated by segment and major product for the year ended December 31, ~~2016, the Company acquired renewable energy facilities with~~2018, and provide a ~~combined nameplate capacity of 19.2 MW from SunEdison, which resulted in a recast~~reconciliation of the adoption impact of Topic 606 on the consolidated statements of operations for the year ended December 31, 2018, and consolidated balance ~~sheet~~sheets as of December 31, ~~2015 and~~2018. There was no net impact on net cash provided by operating activities in the consolidated ~~statement~~statements of cash flows for the year ended December 31, ~~2015. The facilities acquired~~2018 resulting from ~~SunEdison during~~ the ~~year ended December 31, 2016 were not in operation in 2015 and there was no impact to the consolidated statement~~adoption of operations or consolidated statement of comprehensive loss for the years ended December 31, 2015 and 2014 as a result of these acquisitions. There was also no impact to the consolidated statement of cash flows for the year ended December 31, 2014.Topic 606.

~~162~~

~~The following table presents changes to the Company's previously reported consolidated balance sheet as~~Topic 606 Adoption Impact on Consolidated Statements of ~~December 31, 2015 included in the Company's 2015 Annual Report on Form 10-K:~~Operations

(In thousands)
Balance Sheet Caption As Reported Recast Adjustments As Recasted
Renewable energy facilities, net $ 5,802,380
$ 31,854
$ 5,834,234
Other assets 119,960
383
120,343
Change in total assets $ 32,237

Current portion of long-term debt and financing lease obligations¹
$ 2,014,331
$ 23,588
$ 2,037,919
Accounts payable, accrued expenses and other current liabilities 150,721
2,325
153,046
Due to SunEdison, net 20,274
6,324
26,598
Change in total liabilities
$ 32,237



	Year Ended December 31, 2018
	As Reported											Adjustments					Amounts excluding Topic 606 Adoption
(In thousands)	Solar			Wind			Regulated Solar and Wind		Total			REC Sales			ITC Sales		Amounts excluding Topic 606 Adoption
PPA rental income	$	198,610		$	192,324		$	—	$	390,934		$	—		$	—	$	390,934
Commodity derivatives	—			46,287			—		46,287			—			—		46,287
PPA and market energy revenue	39,566			54,998			58,742		153,306			—			—		153,306
Capacity revenue from remuneration programs¹	—			—			108,242		108,242			—			—		108,242
Amortization of favorable and unfavorable rate revenue contracts, net	(9,743		)	(29,024		)	—		(38,767		)	—			—		(38,767		)
Energy revenue	228,433			264,585			166,984		660,002			—			—		660,002
Incentive revenue	70,533			16,364			19,671		106,568			(3,673		)	16,315		119,210
Operating revenues, net	298,966			280,949			186,655		766,570			(3,673		)	16,315		779,212
Depreciation, accretion and amortization expense									341,837			—			—		341,837
Impairment of renewable energy facilities									15,240			—			—		15,240
Operating costs and expenses									339,514			—			—		339,514
Operating income									69,979			(3,673		)	16,315		82,621
Interest expense, net									249,211			—			—		249,211
Other expenses, net									(13,615		)	—			—		(13,615		)
Loss before income tax expense									(165,617		)	(3,673		)	16,315		(152,975		)
Income tax benefit									(12,290		)	—			—		(12,290		)
Net loss									$	(153,327	)	$	(3,673	)	$	16,315	$	(140,685	)

———

(1)

~~There is a $17.6 million difference between~~Represents the ~~as reported amount per the table above and the current portion of long-term debt and financing lease obligations amount reported in the Company's 2015 Annual Report on Form 10-K due~~return related to the ~~reclassification of the current portion of deferred financing costs, net amount reported~~Company’s investments associated with its renewable energy facilities in ~~the 2015 Form 10-K to current portion of long-term debt~~Spain, as discussed in “Regulated solar and ~~financing lease obligations within the consolidated balance sheet included~~wind revenue” in this Form 10-K. This reclassification was made per the Company's adoption of ASU No. 2015-03 as of January 1, 2016, which requires retrospective application for annual and interim reporting periods beginning on or after December 15, 2015. Refer to Note 2. Summary of Significant Accounting ~~Policies~~ ~~for further discussion.~~Policies.

107

Topic 606 Adoption Impact on the Consolidated Balance Sheet



	As of December 31, 2018
	As Reported		Adjustments					Amounts excluding Topic 606 Adoption
(In thousands)	As Reported		REC Sales		ITC Sales			Amounts excluding Topic 606 Adoption
Accounts receivable, net	$	145,161	$	21,603	$	—		$	166,764
Other current assets	356,024		—		—			356,024
Total current assets	501,185		21,603		—			522,788
Non-current assets	8,829,169		—		—			8,829,169
Total assets	$	9,330,354	$	21,603	$	—		$	9,351,957

Deferred revenue	$	1,626	$	—	$	16,310		$	17,936
Other current liabilities	686,656		—		—			686,656
Total current liabilities	688,282		—		16,310			704,592
Deferred revenue, less current portion	12,090		—		8,272			20,362
Other non-current liabilities	5,861,565		—		—			5,861,565
Total liabilities	6,561,937		—		24,582			6,586,519
Redeemable non-controlling interests and total stockholders’ equity	2,768,417		21,603		(24,582		)	2,765,438
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	9,330,354	$	21,603	$	—		$	9,351,957

4. ACQUISITIONS AND DISPOSITIONS

Saeta Acquisition

On February 7, 2018, the Company announced that it intended to launch a voluntary tender offer (the “Tender Offer”) to acquire 100% of the outstanding shares of Saeta, a Spanish renewable power company with then 1,028 MW of wind and solar facilities (approximately 250 MW of solar and 778 MW of wind) located primarily in Spain. The ~~following table presents~~Tender Offer was for €12.20 in cash per share of Saeta. On June 8, 2018, the Company announced that Spain’s National Securities Market Commission confirmed an over 95% acceptance of shares of Saeta in the Tender Offer (the “Tendered Shares”). On June 12, 2018, the Company completed the acquisition of the Tendered Shares for total aggregate consideration of $1.12 billion and the assumption of $1.91 billion of project-level debt. Having acquired 95.28% of the shares of Saeta, the Company then pursued a statutory squeeze out procedure under Spanish law to procure the remaining approximately 4.72% of the shares of Saeta for $54.6 million.

The Company funded the $1.12 billion purchase price of the Tendered Shares with $650.0 million of proceeds from the private placement of its Class A common stock to Orion Holdings and BBHC Orion Holco L.P. as discussed in Note 14. Stockholders’ Equity, along with approximately $471 million from its existing liquidity, including (i) the proceeds of a $30.0 million draw on its Sponsor Line (as defined in Note 10. Long-term Debt), (ii) a $359.0 million as part of a draw on the Company’s Revolver (as defined in Note 10. Long-term Debt), and (iii) approximately $82 million of cash on hand. The Company funded the purchase of the remaining approximately 4.72% non-controlling interest in Saeta using $54.6 million of the total proceeds from an additional draw on its Sponsor Line.

As discussed in Note 2. Summary of Significant Accounting Policies, the Company accounted for the acquisition of Saeta under the acquisition method of accounting for business combinations. The final accounting for the Saeta acquisition has not been completed because the evaluation necessary to assess the fair values of acquired assets and assumed liabilities is still in process. The preliminary allocation of the acquisition-date fair values of assets, liabilities and redeemable non-controlling interests pertaining to this business combination as of December 31, 2018 and changes from prior quarter were as follows:

108



(In thousands)	Saeta as of June 12, 2018 reported at June 30, 2018		Adjustments			Saeta as of June 12, 2018 reported at December 31, 2018
Renewable energy facilities in service	$	1,988,993	$	4,527		$	1,993,520
Accounts receivable	90,555		788			91,343
Intangible assets	992,883		41,293			1,034,176
Goodwill	115,381		7,725			123,106
Other assets	44,190		(788		)	43,402
Total assets acquired	3,232,002		53,545			3,285,547
Accounts payable, accrued expenses and other current liabilities	92,965		67			93,032
Long-term debt, including current portion	1,906,831		—			1,906,831
Deferred income taxes	174,080		(2,707		)	171,373
Asset retirement obligations	11,454		56,252			67,706
Derivative liabilities¹	137,002		—			137,002
Other long-term liabilities	23,069		(67		)	23,002
Total liabilities assumed	2,345,401		53,545			2,398,946
Redeemable non-controlling interests²	55,117		—			55,117
Purchase price, net of cash and restricted cash acquired³	$	831,484	$	—		$	831,484

———


(1)	Derivative liabilities are included within other liabilities in the consolidated balance sheets.

(2)

The fair value of the non-controlling interest was determined using a market approach using a quoted price for the instrument. As discussed above, the Company acquired the remaining shares of Saeta pursuant to a statutory squeeze out procedure under Spanish law, which closed on July 2, 2018. The quoted price for the purchase of the non-controlling interest is the best indicator of fair value and was supported by a discounted cash flow technique.


(3)	The Company acquired cash and cash equivalents of $187.2 million and restricted cash of $95.1 million as of the acquisition date.

The acquired non-financial assets primarily represent estimates of the fair value of acquired renewable energy facilities and intangible assets from concession and license agreements using the cost and income approach. Key inputs used to estimate fair value included forecasted power pricing, operational data, asset useful lives, and a discount rate factor reflecting current market conditions at the time of the acquisition. These significant inputs are not observable in the market and thus represent Level 3 measurements (as defined in Note 13. Fair Value of Financial Instruments). Refer below for additional disclosures related to the ~~Company's previously reported~~acquired finite-lived intangible assets.

The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill. As of the date of these financial statements, the analysis of the fair values of renewable energy facilities, intangible assets, asset retirement obligations, long-term debt and deferred income taxes have yet to be completed. The additional information needed by the Company to finalize the measurement of these provisional amounts include the assessment of the estimated removal costs and salvage values of renewable energy facilities, credit spreads of non-recourse project debt and additional information related to the renewable energy tariff system in certain markets. The provisional amounts for this business combination are subject to revision until these evaluations are completed.

The results of operations of Saeta are included in the Company’s consolidated ~~statement~~results since the date of ~~cash flows~~acquisition. The operating revenues and net income of Saeta reflected in the consolidated statements of operations for the year ended December 31, ~~2015~~2018 were $221.2 million and $38.2 million, respectively.

Intangibles at Acquisition Date

The following table summarizes the estimated fair value and weighted average amortization period of acquired intangible assets as of the acquisition date for Saeta. The Company attributed intangible asset value to concessions and license agreements in-place from solar and wind facilities. These intangible assets are amortized on a straight-line basis over the estimated remaining useful life of the facility from the Company’s acquisition date.

109



	Saeta as of June 12, 2018
	Fair Value (In thousands)	Weighted Average Amortization Period (In years)¹
Intangible assets - concession and licensing contracts	1,034,176	15 years

———


(1)	For purposes of this disclosure, the weighted average amortization period is determined based on a weighting of the individual intangible fair values against the total fair value for each major intangible asset and liability class.

Unaudited Pro Forma Supplementary Data

The unaudited pro forma supplementary data presented in the table below shows the effect of the Saeta acquisition, as if the transaction had occurred on January 1, 2017. The pro forma net loss includes interest expense related to incremental borrowings used to finance the transaction and adjustments to depreciation and amortization expense for the valuation of renewable energy facilities and intangible assets. The pro forma net loss for the year ended December 31, 2018, excludes the impact of acquisition related costs disclosed below. The unaudited pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed or of the Company’s results of operations for any future date.



	Year Ended December 31,
(In thousands)	2018			2017
Total operating revenues, net	$	950,992		$	986,081
Net loss	(143,903		)	(210,427		)

Acquisition Costs

Acquisition costs incurred by the Company for the year ended December 31, 2018, were $14.6 million. Costs related to affiliates included in these balances were $6.9 million. There were no acquisition costs incurred by the Company for the year ended December 31, 2017. These costs are reflected as acquisition costs and acquisition costs - affiliate (see Note 19. Related Parties) in the consolidated statements of operations and are excluded from the unaudited pro forma net loss amount disclosed above.

U.K. Portfolio Sale

On May 11, 2017, the Company announced that TerraForm Power Operating, LLC (“Terra Operating LLC”) completed its sale of substantially all of its portfolio of solar power plants located in the United Kingdom (24 operating projects representing an aggregate 365.0 MW, the “U.K. Portfolio”) to Vortex Solar UK Limited, a renewable energy platform managed by the private equity arm of EFG Hermes, an investment bank. Terra Operating LLC received approximately $214.1 million of proceeds from the sale, which was net of transaction expenses of $3.9 million and distributions taken from the U.K. Portfolio after announcement and before closing of the sale. The Company also disposed of $14.8 million of cash and cash equivalents and $21.8 million of restricted cash as a result of the sale. The proceeds were used for the reduction of the Company's indebtedness (a $30.0 million prepayment for a non-recourse portfolio term loan and the remainder was applied towards revolving loans outstanding under its senior secured corporate-level revolving credit facility). The sale also resulted in a reduction in the Company's ~~2015 Annual Report~~non-recourse project debt by approximately £301 million British pounds sterling at the U.K. Portfolio level. The Company recognized a gain on ~~Form 10-K:~~the sale of $37.1 million, which is reflected within gain on sale of renewable energy facilities in the consolidated statements of operations for the year ended December 31, 2017. The Company has retained one 11.1 MW solar project in the United Kingdom.

Residential Portfolio Sale

In 2017, the Company closed on the sale of 100% of the membership interests of Enfinity Colorado DHA 1, LLC, a Colorado limited liability company that owns and operates 2.5 MW of solar installations situated on the roof of public housing units located in Colorado and owned by the Denver Housing Authority, and 100% of the membership interests of TerraForm Resi Solar Manager, LLC, a subsidiary of the Company that owns and operates 8.9 MW of rooftop solar installations, to Greenbacker Residential Solar II, LLC. The Company received proceeds of $7.1 million during 2017 as a result of the sale of

110

(In thousands)
Statement of Cash Flows Caption As Reported Recast Adjustments As Recasted
Cash flows from investing activities:
Cash paid to third parties for renewable energy facility construction $ (617,649 ) $ (29,912 ) $ (647,561 )
Change in net cash used in investing activities (29,912 )

Cash flows from financing activities:
Borrowings of non-recourse long-term debt 1,425,033
25,674
1,450,707
Principal payments on non-recourse long-term debt (515,514 ) (2,086 ) (517,600 )
Due to SunEdison, net (145,247 ) 6,324
(138,923 )
Change in net cash provided by financing activities 29,912

Net increase in cash and cash equivalents 160,442
—
160,442
Effect of exchange rate changes on cash and cash equivalents (2,401 ) —
(2,401 )
Cash and cash equivalents at beginning of period 468,554
—
468,554
Cash and cash equivalents at end of period $ 626,595
$ —
$ 626,595

these companies and also disposed of $0.6 million of cash and cash equivalents and $0.8 million of restricted cash. There was no additional loss recognized during 2017 as a result of these sales.

Acquisitions of Renewable Energy Facilities from SunEdison

The assets and liabilities transferred to the Company for the acquisitions of renewable energy facilities relate to interests under common control with SunEdison, and accordingly, have been recorded at historical cost. The difference between the cash purchase price and historical cost of the net assets acquired is recorded as a contribution or distribution from SunEdison.

~~163~~

The following tables summarize the renewable energy facilities acquired by the Company from SunEdison through a series of transactions during the ~~years~~year ended December 31, 2016. There were no renewable energy facilities acquired from SunEdison during the year ended December 31, 2018 and December 31, 2017. As TerraForm Power was a controlled affiliate of SunEdison during 2016, ~~2015~~the assets and ~~2014:~~liabilities transferred to the Company from SunEdison related to interests under common control with SunEdison, and accordingly, were recorded at historical cost. The difference between the cash purchase price and historical cost of the net assets acquired was recorded as a contribution or distribution from SunEdison, as applicable, upon final funding of the acquisition.



			Year Ended December 31, 2016				As of December 31, 2016
Facility Category	Type	Location	Nameplate Capacity (MW)	Number of Sites	Cash Paid¹		Cash Due to SunEdison²		Debt Assumed		Debt Transferred³
Distributed Generation	Solar	U.S.	1.2	3	$	2,750	$	—	$	—	$	—
Utility	Solar	U.S.	18.0	1	36,231		—		—		—
Total			19.2	4	$	38,981	$	—	$	—	$	—

————


(1)	Represents the total amount paid to SunEdison. Excludes aggregated tax equity partner payments of $1.6 million to SunEdison.


(2)	All amounts ~~have been~~were paid to SunEdison for these renewable energy facilities as of December 31, 2016.


(3)	$16.7 million of construction debt existed for one of the renewable energy facilities as of the acquisition date. This debt was fully repaid by SunEdison during the third quarter of 2016 using cash proceeds paid by the Company to SunEdison for the acquisition of the facility.

Year Ended December 31, 2015 As of December 31, 2015
Facility Category Type Location Nameplate Capacity (MW) Number of Sites
Cash Paid¹

Cash Due to SunEdison²

Debt Assumed³

Debt Transferred⁴
Distributed Generation Solar U.S. 91.5
74
$ 155,573
$ 2,600
$ —
$ —
Residential Solar U.S. 12.9
1,806
25,053
—
—
—
Utility Solar U.S. 54.8
9
69,868
14,341
—
14,475
Utility Solar U.K. 214.3
14
150,595
—
205,587
—
Utility Wind U.S. 200.0
1
127,000
—
—
—
Total 573.5
1,904
$ 528,089
$ 16,941
$ 205,587
$ 14,475

~~————~~


~~(1)~~	Represents the amount paid to SunEdison as of December 31, 2015. Excludes aggregated tax equity partner payments of $363.6 million to SunEdison, of which $0.7 million was refunded to the respective tax equity partner for one of the acquired projects in 2016.


~~(2)~~	Represents commitments by the Company to SunEdison for the amount required for SunEdison to complete the construction of renewable energy facilities acquired from SunEdison, which was paid to SunEdison during the first quarter of 2016. Excludes tax equity partner payments of $9.2 million due to SunEdison, which were paid during the first quarter of 2016.


~~(3)~~	~~Represents debt that was assumed by the Company as of the acquisition date of these facilities which was subsequently refinanced on November 6, 2015 (see~~ ~~Note 11. Long-term Debt~~).


~~(4)~~	Represents debt recorded on the Company's balance sheet as of December 31, 2015. This debt was repaid by SunEdison during the first quarter of 2016 using cash proceeds paid by the Company and the tax equity partner to SunEdison for the acquisition of these facilities.

Year Ended December 31, 2014 As of December 31, 2014
Facility Category Type Location Nameplate Capacity (MW) Number of Sites
Cash Paid¹

Cash Due to SunEdison²

Debt Assumed³
Debt Transferred
Distributed Generation Solar U.S. 25.7
21
$ 33,386
$ 11,854
$ —
$ —
Utility Solar U.K. 50.0
2
32,181
—
61,982
—
Total 75.7
23
$ 65,567
$ 11,854
$ 61,982
$ —

~~————~~


~~(1)~~	~~Represents the amount paid to SunEdison as of December 31, 2014. Excludes aggregated tax equity partner payments of $17.2 million to SunEdison.~~


~~(2)~~	Represents commitments by the Company to SunEdison for the amount required for SunEdison to complete the construction of renewable energy facilities acquired from SunEdison. $8.0 million was paid to SunEdison during 2015 and $3.9 million was paid to SunEdison during the first quarter of 2016. Excludes tax equity partner payments of $2.1 million due to SunEdison and subsequently paid.


~~(3)~~	~~Represents debt that was assumed by the Company as of the acquisition date of these facilities which was subsequently refinanced on November 6, 2015 (see~~ ~~Note 11. Long-term Debt~~).

~~164~~

The Company records a contribution or distribution from SunEdison upon final funding of the acquisition. The difference between the cash paid and historical cost of the net assets acquired from SunEdison for projects that achieved final funding during the years ended December 31, 2016, 2015 and 2014 was $19.5 million, $41.8 million and $1.5 million, respectively, and has been recorded as a net contribution from SunEdison, which is reflected within Net SunEdison investment on the consolidated statements of stockholders' equity.

The operating revenues of the facilities acquired from SunEdison in 2016, 2015 and 2014 reflected in the consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014, respectively, are $2.3 million, $37.6 million and $1.2 million. The net income (loss) of the facilities acquired from SunEdison in 2016, 2015 and 2014 reflected in the consolidated statements of operations for the years ended December 31, 2016, 2015 and 2014, respectively, are $0.7 million, $(3.9) million and $(3.6) million.

~~4. ASSETS HELD FOR SALE~~

The Company commenced a sale of substantially all of its portfolio of solar power plants located in the United Kingdom (the "U.K.") through a broad based sales process pursuant to a plan approved by management during 2016 (24 operating projects for sale representing 365.0 MW, the "U.K. Portfolio"), and it was determined that this portfolio met the criteria to be classified as held for sale during the first quarter of 2016. As a result, the Company classified $592.6 million of assets and $427.2 million of liabilities as held for sale as of December 31, 2016 and measured each at the lower of carrying value or fair value less costs to sell. The Company's analysis indicated that the fair value less costs to sell exceeded the carrying value of the assets and no impairment losses were recognized during the year ended December 31, 2016.

The Company also began exploring a sale of substantially all of its portfolio of residential rooftop solar assets located in the United States through a strategic sales process in 2016, and these assets were determined to meet the criteria to be classified as held for sale during the fourth quarter of 2016. As a result, the Company classified $21.2 million of assets and $5.3 million of liabilities as held for sale as of December 31, 2016 and measured each at the lower of carrying value or fair value less costs to sell. The Company's analysis indicated that the carrying value of the assets exceeded the fair value less costs to sell, and thus an impairment charge of $15.7 million was recognized within impairment of renewable energy facilities in the consolidated statement of operations for the year ended December 31, 2016. The Company also recorded a $3.3 million charge within impairment of renewable energy facilities for the year ended December 31, 2016 due to the decision to abandon certain residential construction in progress assets that were not completed by SunEdison as a result of the SunEdison Bankruptcy.

~~165~~

~~The following table summarizes the major classes of assets and liabilities which are classified as held for sale on the Company's consolidated balance sheet as of December 31, 2016:~~

(In thousands) U.K. Portfolio Residential Portfolio Total
Assets held for sale:
Restricted cash $ 53,604
$ 1,202
$ 54,806
Accounts receivable, net 4,952
300
5,252
Prepaid expenses and other current assets 1,295
170
1,465
Total current assets held for sale 59,851
1,672
61,523

Renewable energy facilities, net 529,154
19,534
548,688
Intangible assets, net 1,480
—
1,480
Other assets 2,103
—
2,103
Total non-current assets held for sale 532,737
19,534
552,271

Total assets held for sale $ 592,588
$ 21,206
$ 613,794

Liabilities related to assets held for sale:
Current portion of long-term debt $ 14,510
$ 175
$ 14,685
Accounts payable, accrued expenses and other current liabilities 5,980
245
6,225
Deferred revenue —
10
10
Due to SunEdison, net 692
186
878
Total current liabilities related to assets held for sale 21,182
616
21,798

Long-term debt, less current portion 349,687
4,190
353,877
Deferred revenue, less current portion —
246
246
Asset retirement obligations 39,563
287
39,850
Other long-term liabilities 16,786
—
16,786
Total non-current liabilities related to assets held for sale 406,036
4,723
410,759

Total liabilities related to assets held for sale $ 427,218
$ 5,339
$ 432,557

~~Sale of the U.K. Portfolio~~

On May 11, 2017, the Company announced that Terra Operating LLC completed its previously announced sale of the U.K. Portfolio to Vortex Solar UK Limited, a renewable energy platform managed by the private equity arm of EFG Hermes, an investment bank. Terra Operating LLC received approximately $211 million of proceeds from the sale, net of transaction expenses and distributions taken from the U.K. Portfolio after announcement and before closing of the sale, which is expected to be used for the reduction of the Company's indebtedness. The sale also resulted in a reduction in the Company's non-recourse project debt by approximately GBP 301 million at the U.K. Portfolio level. The Company has retained 11.1 MW of solar assets in the U.K.

~~Residential Portfolio Sale~~

On March 14, 2017, Enfinity SPV Holdings 2, LLC, a subsidiary of the Company, entered into a membership interest purchase and sale agreement with Greenbacker Residential Solar II, LLC for the sale of 100% of the membership interests of Enfinity Colorado DHA 1, LLC, a Colorado limited liability company that owns and operates 2.5 MW of solar installations situated on the roof of public housing units located in Colorado and owned by the Denver Housing Authority. The Company received net proceeds of $1.1 million upon the closing of this transaction on March 31, 2017. In addition, the Company entered into a membership interest purchase and sale agreement with Greenbacker Residential Solar II, LLC on June 12, 2017 for the sale of 100% of the membership interests of TerraForm Resi Solar Manager, LLC, a subsidiary of the Company, which owns and operates 8.9 MW of rooftop solar installations. The transaction closed on June 30, 2017; the Company received net proceeds of $5.4 million upon closing and expects to receive an additional $0.6 million in the third quarter of 2017.

~~166~~

5. ~~ACQUISITIONS~~

~~2015 Acquisitions~~

~~Acquisition of First Wind~~

On January 29, 2015, the Company, through Terra LLC, acquired from First Wind Holdings, LLC (together with its subsidiaries, “First Wind”) operating renewable energy facilities that have a combined nameplate capacity of 521.1 MW, including 500.0 MW of wind power plants and 21.1 MW of solar generation facilities (the “First Wind Acquisition”). The operating renewable energy facilities the Company acquired are located in Maine, New York, Hawaii, Vermont and Massachusetts and are contracted under PPAs including energy hedge contracts. Certain of the renewable energy facilities also receive revenue from RECs. The cash purchase price for this acquisition was $811.6 million, net of cash acquired.

During the year-ended December 31, 2015, the Company acquired an operating wind facility located in Texas and seven solar generation facilities located in Utah from SunEdison with a combined nameplate capacity of 222.6 MW. These facilities were initially acquired by SunEdison from First Wind on January 29, 2015. The purchase price paid by SunEdison to the third-party for these facilities was $168.4 million, net of cash acquired. The acquisitions were treated as transactions between entities under common control and as a result the acquisition accounting as of January 29, 2015 by SunEdison has been reflected in these consolidated financial statements.

~~Acquisition of Northern Lights Solar Generation Facilities~~

On June 30, 2015, the Company acquired two utility-scale, ground mounted solar generation facilities ("Northern Lights") from Invenergy Solar LLC. The facilities are located in Ontario, Canada and have a combined nameplate capacity of 25.4 MW. The facilities are contracted under long-term PPAs with an investment grade utility with a credit rating of Aa2 as of the acquisition date. The purchase price for this acquisition was 125.4 million Canadian Dollars ("CAD") (equivalent of $101.1 million on the acquisition date), net of cash acquired, including the repayment of project-level debt and breakage fees for the termination of interest rate swaps.

~~Acquisition of Invenergy Wind Power Plants~~

On December 15, 2015, the Company acquired operating wind power plants with a combined nameplate capacity of 831.5 MW (net) from Invenergy Wind Global LLC (together with its subsidiaries, “Invenergy Wind”) for $1.3 billion in cash and the assumption of $531.2 million of non-recourse indebtedness. The wind power plants that the Company acquired from Invenergy Wind have contracted PPAs with an average counterparty credit rating of AA as of the acquisition date. Invenergy Wind will retain a 9.9% non-controlling interest in wind power plants located in the U.S. that the Company acquired and will provide certain operation and maintenance services for such assets.

~~Acquisition of Integrys Solar Generation Facilities~~

During the year ended December 31, 2015, the Company acquired 56 solar generation facilities with a combined nameplate capacity of 32.0 MW (net) from Integrys Group, Inc. ("Integrys") for a purchase price of $70.7 million, net of cash acquired, and $15.9 million of project-level debt assumed. The facilities are located in Arizona, California, Connecticut, Massachusetts, New Jersey and Pennsylvania. The facilities are contracted under long-term PPAs with commercial and municipal customers.

~~Acquisition of Other Solar Generation Facilities~~

During the year-ended December 31, 2015, the Company acquired two solar generation facilities from SunEdison with a combined nameplate capacity of 38.8 MW. These facilities were initially acquired by SunEdison through other unaffiliated third parties during the year-ended December 31, 2015. The purchase price paid by SunEdison to the third parties for these acquisitions was $18.9 million, net of cash acquired. The acquisitions were treated as transactions between entities under common control and as a result the acquisition accounting by SunEdison has been reflected in these consolidated financial statements.

~~167~~

During the year ended December 31, 2015, the Company acquired 10 solar generation facilities with a combined nameplate capacity of 3.8 MW for a purchase price of $19.9 million, net of cash acquired. The facilities are located in Ontario, Canada.

~~Acquisition Accounting for the 2015 Acquisitions~~

The acquisition accounting for the First Wind, Northern Lights, Integrys and other solar generation facilities acquisitions was completed as of the fourth quarter of 2015, at which point the provisional fair values became final. The final amounts for these acquisitions are included in the table within the "Acquisition Accounting" section of this footnote below.

The acquisition accounting for the Invenergy Wind acquisition was initially completed as of the second quarter of 2016, at which point the provisional fair values became final. However, during the fourth quarter of 2016, management identified immaterial errors in the final opening balance sheet. The errors resulted in an increase of $45.9 million to renewable energy facilities, a decrease of $37.0 million to intangible assets, an increase of $3.0 million to accounts payable, accrued expenses and other current liabilities, an increase of $5.0 million to other long-term liabilities, a decrease of $7.1 million to redeemable non-controlling interest and an increase of $8.0 million to non-controlling interest. The final amounts for this acquisition are included in the table directly below.

The opening balance sheet errors, including the income statement impact, were corrected in the fourth quarter of 2016. The income statement impact resulted in an increase to depreciation expense and a net decrease to amortization expense. If the errors had been corrected in the second quarter of 2016, it would have resulted in a $0.4 million decrease in the net loss for the three and six months ended June 30, 2016 reported in the Form 10-Q for the second quarter of 2016 and a $0.4 million and $0.8 million decrease, respectively, in the net loss for the three and nine months ended September 30, 2016 reported in the Form 10-Q for the third quarter of 2016. Management performed an assessment of the balance sheet and income statement impact on its previously issued second and third quarter filings and determined it to be immaterial.

Invenergy Wind
2015 Final
(In thousands) As of June 30, 2016 Q4 2016 Corrections As of December 31, 2016
Renewable energy facilities $ 1,477,888
$ 45,903
$ 1,523,791
Accounts receivable 25,811
—
25,811
Intangible assets 748,300
(37,000 ) 711,300
Restricted cash 31,247
—
31,247
Derivative assets 32,311
—
32,311
Other assets 20,148
—
20,148
Total assets acquired 2,335,705
8,903
2,344,608
Accounts payable, accrued expenses and other current liabilities 23,195
3,041
26,236
Long-term debt, including current portion 531,221
—
531,221
Deferred income taxes 242
—
242
Asset retirement obligations 47,346
—
47,346
Other long-term liabilities 6,004
5,000
11,004
Total liabilities assumed 608,008
8,041
616,049
Redeemable non-controlling interest 140,635
(7,138 ) 133,497
Non-controlling interest 308,000
8,000
316,000
Purchase price, net of cash acquired $ 1,279,062
$ —
$ 1,279,062

~~168~~

The final acquisition-date fair values of assets, liabilities and non-controlling interest pertaining to the Invenergy Wind acquisition as of December 31, 2016 reflect the following changes from the initial opening balance sheet as of December 31, 2015; an increase of $37.0 million to renewable energy facilities, a decrease of $37.0 million to intangible assets, an increase of $8.1 million to other assets, an increase of $3.0 million to accounts payable, accrued expenses and other current liabilities, an increase of $5.0 million to other long-term liabilities, a decrease of $7.9 million in redeemable non-controlling interest and an increase of $8.0 million to non-controlling interest. The provisional amounts as of December 31, 2015 are included within the "Acquisition Accounting" section of this footnote below.

The operating revenues and net loss of the facilities acquired in 2015 reflected in the consolidated statements of operations for the year ended December 31, 2015 were $161.1 million and $8.8 million, respectively.

~~2014 Acquisitions~~

During the year ended December 31, 2014, the Company acquired various facilities referred to as Mt. Signal, Stonehenge Operating Projects, Capital Dynamics and Hudson Energy, as well as various other renewable energy facilities. The acquisition accounting for these 2014 acquisitions was finalized during 2015. The final acquisition-date fair value amounts for these acquisitions as of December 31, 2015, as well as the provisional amounts as of December 31, 2014, are included in the tables within the "Acquisition Accounting" section of this footnote below.

The operating revenues and net income of the facilities acquired in 2014 reflected in the consolidated statements of operations for the year ended December 31, 2014 were $60.8 million and $12.5 million, respectively.

~~Goodwill~~

Goodwill is recorded as the difference between the aggregate consideration paid for an acquisition and the fair value of the net tangible and identified intangible assets acquired. During 2015, the Company recorded $55.9 million of goodwill attributable to the acquisition of Capital Dynamics, which provided the Company with a distributed generation platform. The goodwill existed within the Company's Distributed Generation reporting unit within the solar reportable segment and is not deductible for federal income tax purposes. The Company performed its annual impairment test of the carrying value of its goodwill as of December 1, 2016, and concluded that the goodwill balance of $55.9 million was fully impaired (see ~~Note~~ 8. ~~Goodwill~~ ~~for further discussion).~~

~~Valuation of Non-controlling Interest~~

~~First Wind~~

The majority of the fair value of the non-controlling interest was determined using a market approach using a quoted price for the instrument. Upon the acquisition of the First Wind assets, the Company purchased a portion of the equity interest from the non-controlling interest holders of one of the joint venture investment funds. The quoted price for the purchase of a portion of the non-controlling interest is the best indicator of fair value and was supported by a discounted cash flow technique. The Company estimated the fair value of the remainder of the non-controlling interest balances using a discounted cash flow approach.

~~Invenergy Wind~~

The fair value of the non-controlling interest for Invenergy Wind was determined using a discounted cash flow approach. The non-controlling interest represents the fair value of 9.9% sponsor equity held by Invenergy Wind.

Sun Edison LLC, a wholly owned subsidiary of SunEdison, acting as intermediary, entered into certain option arrangements with Invenergy Wind for its remaining 9.9% interest in the Acquired Companies (the ‘‘Invenergy Wind Interest’’). Simultaneously, Terra LLC entered into a back to back option agreement with Sun Edison LLC on substantially identical terms (collectively the "Option Agreements"). The Option Agreements effectively permit (i) Terra LLC to exercise a call option to purchase the Invenergy Wind Interest over a 180-day period beginning on September 30, 2019, and (ii) Invenergy Wind to exercise a put option with respect to the Invenergy Wind Interest over a 180-day period beginning on September 30, 2018. The exercise prices of the put and call options described above would be based on the determination of the fair market value of the Invenergy Wind Interest at the time the relevant option is exercised, subject to certain minimum and maximum thresholds set forth in the Option Agreements. The minimum put option price per the Option Agreements is $137.8 million in aggregate. As

~~169~~

the put options represent redemption rights outside the control of the Company, this non-controlling interest was classified as redeemable non-controlling interest as of December 31, 2016 and 2015. The Company accretes this redeemable non-controlling interest, using the straight-line method, from the acquisition date fair value to the redemption value over the period through September 30, 2018. Accretion adjustments to the carrying value of this redeemable non-controlling interest are recorded against additional paid-in capital.

As part of the Settlement Agreement (which was approved by the Bankruptcy Court), with certain limited exceptions, all agreements, including the Option Agreement between Terra LLC and Sun Edison LLC, will be rejected as of the effectiveness of the settlement, which will occur upon the consummation of the Merger, subject to satisfaction of conditions precedent, or an alternative transaction that is jointly supported by the Company and SunEdison or a Stand-Alone Conversion. If the Option Agreement is rejected under the Settlement Agreement, the Company would not expect to be obligated to perform on its Option Agreement.

~~Acquisition Accounting~~

~~The acquisition-date fair values of assets, liabilities and non-controlling interests pertaining to business combinations as of December 31, 2015, were as follows:~~

2015 Preliminary 2015 Final 2014 Final
(In thousands) Invenergy Wind First Wind
Other First Wind¹
Northern Lights Integrys Other Mt. Signal Capital Dynamics Other
Renewable energy facilities in service $ 1,486,746
$ 795,462
$ —
$ 62,018
$ 69,935
$ 7,931
$ 649,570
$ 190,352
$ 256,912
Construction in progress —
—
264,858
—
—
28,878
—
—
—
Accounts receivable 25,811
30,031
—
1,361
2,610
—
11,687
8,331
9,906
Intangible assets 748,300
123,600
—
39,000
28,966
12,454
119,767
74,236
120,624
Goodwill —
—
—
—
—
—
—
55,874
—
Deferred income taxes —
—
—
—
—
—
—
—
—
Restricted cash 31,247
7,240
60
—
827
—
22,165
15
14,720
Derivative assets 32,311
44,755
—
—
—
—
—
—
—
Other assets 12,070
5,873
—
11
234
200
12,621
348
9,552
Total assets acquired 2,336,485
1,006,961
264,918
102,390
102,572
49,463
815,810
329,156
411,714
Accounts payable, accrued expenses and other current liabilities 23,195
9,854
442
440
409
1,854
22,725
1,478
3,016
Long-term debt, including current portion 531,221
47,400
72,881
—
15,882
—
413,464
—
136,156
Deferred income taxes 242
—
—
—
—
—
—
25,129
927
Asset retirement obligations 47,346
19,890
—
818
5,730
509
4,656
13,073
17,374
Other long-term liabilities 6,004
18,562
23,237
—
5,786
—
—
12,100
5,242
Total liabilities assumed 608,008
95,706
96,560
1,258
27,807
2,363
440,845
51,780
162,715
Redeemable non-controlling interest 141,415
3,076
—
—
—
8,298
—
20,194
2,250
Non-controlling interest 308,000
96,624
—
—
4,045
—
83,310
—
2,000
Purchase price, net of cash acquired $ 1,279,062
$ 811,555
$ 168,358
$ 101,132
$ 70,720
$ 38,802
$ 291,655
$ 257,182
$ 244,749

~~————~~


~~(1)~~	Represents renewable energy facilities with a combined nameplate capacity of 222.6 MW acquired from SunEdison during the year ended December 31, 2015. These facilities were acquired by SunEdison from First Wind on January 29, 2015.

~~170~~

As noted above, the acquisition accounting for the business combinations that occurred during 2014 was not finalized until 2015. The estimated acquisition-date fair values of assets, liabilities and non-controlling interests pertaining to these business combinations as of December 31, 2014, were as follows:

Capital Other
(In thousands) Dynamics Mt. Signal Acquisitions
Renewable energy facilities in service $ 200,712
$ 649,005
$ 245,828
Accounts receivable 4,511
11,617
11,251
Intangible assets 83,114
117,925
140,248
Deferred income taxes 22,129
—
—
Restricted cash 15
22,165
14,688
Other assets 687
12,621
4,987
Total assets acquired 311,168
813,333
417,002
Accounts payable, accrued expenses and other current liabilities 5,925
24,813
7,410
Long-term debt, including current portion —
413,464
137,472
Deferred income taxes 25,191
—
892
Asset retirement obligations 6,749
4,656
18,058
Total liabilities assumed 37,865
442,933
163,832
Redeemable non-controlling interest 16,600
—
7,738
Non-controlling interest —
78,745
2,175
Purchase price, net of cash acquired $ 256,703
$ 291,655
$ 243,257

The acquired renewable energy facilities' non-financial assets and other long-term liabilities primarily represent estimates of the fair value of acquired PPA and REC contracts based on significant inputs that are not observable in the market and thus represent a Level 3 measurement (as defined in ~~Note 14. Fair Value of Financial Instruments). The estimated fair values were determined based on an income approach. Refer below for additional disclosures related to the acquired intangibles.~~

~~171~~

~~2015 Acquisitions - Intangibles at Acquisition Date~~

The following table summarizes the final fair value and weighted average amortization period of acquired intangible assets and liabilities as of the acquisition date for transactions closed during 2015. The acquisition accounting was finalized during 2015 for all 2015 acquisitions, with the exception of Invenergy Wind, which was finalized in 2016. The final intangibles fair value reflects the following changes from the initial opening balance sheet for Invenergy; a decrease of $2.7 million to favorable rate revenue contracts, a decrease of $34.3 million to the in-place value of market rate revenue contracts and an increase of $5.0 million to unfavorable rate O&M contracts.

Fair Value
(In thousands) Invenergy
Wind First
Wind Northern
Lights Integrys Other
Intangible assets
Favorable rate revenue contracts $ 547,300
$ 3,900
$ 39,000
$ 21,168
$ 12,454
In-place value of market rate revenue contracts 164,000
103,900
—
7,798
—
Favorable rate land leases —
15,800
—
—
—
Intangible liabilities

Unfavorable rate revenue contracts —
17,200
—
5,786
—
Unfavorable rate O&M contracts 5,000
—
—
—
—
Unfavorable rate land lease —
1,000
—
—
—

Weighted Average Amortization Period¹
(In years) Invenergy
Wind First
Wind Northern
Lights Integrys Other
Intangible assets
Favorable rate revenue contracts 17 3 18 12 20
In-place value of market rate revenue contracts 22 18 — 22 —
Favorable rate land leases — 20 — — —
Intangible liabilities

Unfavorable rate revenue contracts — 6 — 19 —
Unfavorable rate O&M contracts 4 — — — —
Unfavorable rate land lease — 18 — — —

~~————~~


~~(1)~~	For purposes of this disclosure, the weighted average amortization period is determined based on a weighting of the individual intangible fair values against the total fair value for each major intangible asset and liability class.

~~2014 Acquisitions - Intangibles at Acquisition Date~~

The following table summarizes the fair value and weighted average amortization period of acquired intangible assets and liabilities as of the acquisition date for transactions closed during 2014. The fair values in the table below reflect the final acquisition accounting balances. The preliminary acquisition accounting as of December 31, 2014 reflected all intangible values as favorable rate revenue contracts with the exception of Mt. Signal, which was valued as an in-place market rate revenue contract.

~~172~~

Fair Value
(In thousands) Mt. Signal Capital
Dynamics Other
Intangible assets
Favorable rate revenue contracts $ —
$ 26,000
$ 70,179
In-place value of market rate revenue contracts 119,767
48,236
50,445
Intangible liabilities

Unfavorable rate revenue contracts —
12,100
—

Weighted Average Amortization Period¹
(In years) Mt. Signal Capital
Dynamics Other
Intangible assets
Favorable rate revenue contracts — 18 19
In-place value of market rate revenue contracts 25 23 15
Intangible liabilities

Unfavorable rate revenue contracts — 7 —

~~————~~


~~(1)~~	For purposes of this disclosure, the weighted average amortization period is determined based on a weighting of the individual intangible fair values against the total fair value for each major intangible asset and liability class.

~~Unaudited Pro Forma Supplementary Data~~

The unaudited pro forma supplementary data presented in the table below gives effect to the significant 2015 acquisitions, Invenergy Wind, First Wind and Northern Lights, as if those transactions had each occurred on January 1, 2014. Additionally, the table below gives effect to the significant 2014 acquisitions, Capital Dynamics and Mt. Signal, as if these transactions had occurred on January 1, 2013. The unaudited pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisitions been consummated on the date assumed or of the Company’s results of operations for any future date.

Year Ended December 31,
(In thousands, unaudited) 2015 2014
Total operating revenues, net $ 605,441
$ 427,098
Net loss (128,588 ) (102,010 )

Acquisition costs incurred by the Company related to third party acquisitions were $2.7 million, $55.8 million and $15.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. These costs are reflected as acquisition and related costs and acquisition and related costs - affiliate in the consolidated statements of operations and are excluded from the respective unaudited pro forma net loss amounts disclosed above.

~~173~~

6. RENEWABLE ENERGY FACILITIES

Renewable energy facilities, net consists of the following:


							As of December 31,
(In thousands)	December 31, 2016			December 31, 2015			2018			2017
Renewable energy facilities in service, at cost	$	5,354,883		$	5,906,154		$	7,298,371		$	5,378,462
Less accumulated depreciation - renewable energy facilities	(364,756		)	(187,874		)	(833,844		)	(578,474		)
Renewable energy facilities in service, net	4,990,127			5,718,280			6,464,527			4,799,988
Construction in progress - renewable energy facilities	3,124			115,954			5,499			1,937
Total renewable energy facilities, net	$	4,993,251		$	5,834,234		$	6,470,026		$	4,801,925



Delaware		46-4780940
(State or other jurisdiction of incorporation or organization)		(I. R. S. Employer Identification No.)
~~7550 Wisconsin Avenue, 9th~~200 Liberty Street, 14th Floor, ~~Bethesda, Maryland~~New York, New York		~~20814~~10281
(Address of principal executive offices)		(Zip Code)



Title of Each Class		Name of Exchange on Which Registered
Common Stock, Class A, par value $0.01		~~NASDAQ~~Nasdaq Global Select Market





Part I. General Information

Item 1.	Business	86
Item 1A.	Risk Factors	3019
Item 1B.	Unresolved Staff Comments	6945
Item 2.	Properties	6945
Item 3.	Legal Proceedings	6946
Item 4.	Mine Safety Disclosures	6946

Part II. Financial Information

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7046
Item 6.	Selected Financial Data	7348
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	7449
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	~~100~~73
Item 8.	Financial Statements and Supplementary Data	~~102~~75
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	~~102~~75
Item 9A.	Controls and Procedures	~~102~~75
Item 9B.	Other Information	~~104~~78

Part III. Executive Information

Item 10.	Directors, Executive Officers and Corporate Governance	~~105~~78
Item 11.	Executive Compensation	~~115~~78
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~130~~78
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~133~~78
Item 14.	Principal Accounting Fees and Services	~~134~~78

Part IV. Exhibits
Item 15.	Exhibits, Financial Statement Schedules	~~135~~79
Item 16.	Form 10-K Summary	79



Adjusted EBITDA		Adjusted EBITDA is defined as net income (loss) plus depreciation, accretion and amortization, non-cash general and administrative costs, interest expense, income tax (benefit) expense, acquisition related expenses, and certain other non-cash charges, unusual or non-recurring items and other items that we believe are not representative of our core business or future operating performance
ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Cash available for distribution or CAFD		Cash available for distribution is defined as net cash provided by operating activities of Terra LLC as adjusted for certain other cash flow items that we associate with our operations. It is a non-GAAP measure of our ability to generate cash to service our dividends. CAFD represents net cash provided by (used in) operating activities of Terra LLCAdjusted EBITDA (i) plus or minus changes in assets and liabilities as reflected on our statements of cash flows, (ii) minus deposits into (or plus withdrawals from) restricted cash accounts required by project financing arrangements to the extent they decrease (or increase) cash provided by operating activities, (iii) minus cash distributions paid to non-controlling interests in our renewable energy facilities, if any, ~~(iv)~~(ii) minus annualized scheduled ~~project-level~~interest and ~~other debt service~~project level amortization payments ~~and repayments~~ in accordance with the related borrowing arrangements, ~~to the extent they are paid from operating cash flows during a period, (v)~~(iii) minus ~~non-expansionary~~average annual sustaining capital expenditures ~~if any,~~(based on the long-sustaining capital expenditure plans) which are recurring in nature and used to maintain the ~~extent they are paid from operating cash flows during a period, (vi) plus cash contributions from SunEdison pursuant to the Interest Payment Agreement~~reliability and the Amended Interest Payment Agreement, (vii) plus operating costs and expenses paid by SunEdison pursuant to the MSA to the extent such costs or expenses exceed the fee payable by us pursuant to such agreement but otherwise reduceefficiency of our ~~net cash provided by operating activities and (viii)~~power generating assets over our long-term investment horizon, (iv) plus or minus operating items as necessary to present the cash flows we deem representative of our core business ~~operations,~~operations. As compared to the preceding period, we revised our definition of CAFD to (i) exclude adjustments related to deposits into and withdrawals from restricted cash accounts, required by project financing arrangements, (ii) replace sustaining capital expenditures payment made in the year with the ~~approval~~average annualized long-term sustaining capital expenditures to maintain reliability and efficiency of our assets, and (iii) annualized debt service payments. We revised our definition as we believe it provides a more meaningful measure for investors to evaluate our financial and operating performance and ability to pay dividends. For items presented on an annualized basis, we will present actual cash payments as a proxy for an annualized number until the ~~audit committee.~~
~~Call Right Projects~~		~~Qualifying projects from SunEdison's development pipeline required to be offered to us by SunEdison under the Support Agreement and the Intercompany Agreement, as applicable~~period commencing January 1, 2018.
GWh		Gigawatt hours
HLBV		Hypothetical Liquidation at Book Value
IDRs		Incentive Distribution Rights
ISDA		International Swaps and Derivatives Association, Inc.
ITC		Investment tax credit
kWh		Kilowatt hours
LIBOR		London Inter-bank Offered Rate
MW		Megawatt
MWh		Megawatt hours
~~Minimum Quarterly Distribution~~		Class A units and Class B1 units are entitled to receive quarterly distributions in an amount equal to $0.2257 per unit, plus any arrearages in the payment of the Minimum Quarterly Distribution from prior quarters, before any distributions may be made on the Class B units
Nameplate capacity		Nameplate capacity ~~for solar generation facilities~~ represents the maximum generating capacity ~~at standard test conditions~~ of a facility ~~(in~~as expressed in (1) direct current ~~"DC"~~(“DC”) ~~multiplied by~~, for all facilities within our percentage ownership of that facility (disregarding any equity interests held by any non-controlling member or lessor under any sale-leaseback financing or any non-controlling interests in a partnership). Nameplate capacity for wind power plants represents the manufacturer’s maximum nameplate generating capacity of each turbine (inSolar reportable segment, and (2) alternating current ~~"AC"~~(“AC”) ~~multiplied by the number of turbines at a facility multiplied by~~for all facilities within our percentage ownership of that facility (disregarding any equity interests held by any tax equity investor or lessor under any sale-leaseback financing or any non-controlling interests in a partnership).Wind and Regulated Solar and Wind reportable segments.
O&M		Operations and maintenance
PPA		As applicable, Power Purchase Agreement, energy hedge contract and/or REC or SREC contract
~~Projected FTM~~		~~Projected future twelve months~~
PTC		Production tax credit
QF		~~Qualifying small power production facility~~
REC		Renewable energy certificate or SREC
Renewable energy facilities		Solar generation facilities and wind power plants
SREC		Solar renewable energy certificate



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



~~Subordination Period~~U.S. GAAP		~~The period from July 23, 2014 until each of~~Accounting principles generally accepted in the ~~following tests has been met, which will be a minimum three-year period ending no earlier than the beginning of the period for which a distribution is paid for the third quarter of 2017:~~
		• distributions of CAFD on each of the outstanding Class A units, Class B units and Class B1 units equaled or exceeded $0.9028 per unit (the annualized Minimum Quarterly Distribution) for each of three non-overlapping, four-quarter periods immediately preceding that date;
		• the CAFD generated during each of three non-overlapping, four-quarter periods immediately preceding that date equaled or exceeded the sum of $0.9028 per unit (the annualized Minimum Quarterly Distribution) on all of the outstanding Class A units, Class B units and Class B1 units during those periods on a fully diluted basis; and
		~~• there are no arrearages in payment of the Minimum Quarterly Distribution on the Class A units or Class B1 units.~~United States


(2)	~~Calculated as~~These portfolios consist of ~~June 30, 2017.~~


~~(1)~~	~~As of December 31, 2016, includes $532.7 million and $19.5 million of non-current assets held for sale located in the United Kingdom and United States, respectively.~~



	High		Low
July 18, 2014 to September 30, 2014	$	33.65	$	28.53
Quarter ended December 31, 2014	33.64		22.83
Quarter ended March 31, 2015	36.51		29.01
Quarter ended June 30, 2015	42.15		36.34
Quarter ended September 30, 2015	39.61		14.16
Quarter ended December 31, 2015	20.01		6.90
Quarter ended March 31, 2016	12.61		7.64
Quarter ended June 30, 2016	11.00		7.44
Quarter ended September 30, 2016	14.59		10.94
Quarter ended December 31, 2016	14.38		11.40



Stock	July 18, 2014		September 30, 2014		December 31, 2014		March 31, 2015		June 30, 2015		September 30, 2015		December 31, 2015		March 31, 2016		June 30, 2016		September 30, 2016		December 31, 2016
TerraForm Power, Inc.	$	100.00	$	87.22	$	93.85	$	111.78	$	117.28	$	44.94	$	40.86	$	28.10	$	35.41	$	45.19	$	41.62
S&P 500	100.00		99.70		104.08		104.54		104.30		97.06		103.32		104.12		106.10		109.61		113.17
NASDAQ Composite Index	100.00		101.38		106.85		110.57		112.50		104.23		112.96		109.85		109.23		119.81		121.42
Peer Group	100.00		93.75		84.09		98.49		81.29		46.36		58.98		55.25		61.63		62.59		59.15



Operating Metrics	Year Ended December 31,
(In GWh)	2018	2017	2016
Solar segment	1,819	1,895	2,225
Wind segment	5,457	5,381	5,499
Regulated Solar and Wind segment¹	812	—	—
Total	8,088	7,276	7,724


(1)	Our Regulated Solar and Wind segment was added upon the acquisition of a controlling interest in Saeta that was completed on June 12, 2018.



	Year Ended December 31,
(In thousands, other than MW data)	2016		2015		Change
Energy:
Solar	$	258,114	$	227,843	$	30,271
Wind	248,617		105,361		143,256
Incentives including affiliates:
Solar	119,374		118,190		1,184
Wind	28,451		18,112		10,339
Total operating revenues, net	$	654,556	$	469,506	$	185,050

GWh sold:
Solar	2,224.7		1,972.8
Wind	5,499.0		1,488.8
Total GWh sold	7,723.7		3,461.6

Net nameplate capacity:
Solar	1,451.6		1,399.3
Wind	1,531.5		1,531.5
Total net nameplate capacity (MW)¹	2,983.1		2,930.8



Facility Category / Portfolio	Location	Nameplate Capacity (MW)	Number of Sites	Weighted Average Remaining Duration of PPA (Years)¹
Wind Utility:
South Plains I	Texas	200.0	1	11
California Ridge	Illinois	217.1	1	14
Bishop Hill	Illinois	211.4	1	14
Rattlesnake	Texas	207.2	1	9
Prairie Breeze	Nebraska	200.6	1	20
Cohocton	New York	125.0	1	2
Stetson I & II	Maine	82.5	2	2
Raleigh	Ontario	78.0	1	12
Rollins	Maine	60.0	1	13
Carapé I	Uruguay	52.3	1	20
Carapé II	Uruguay	43.1	1	17
Mars Hill	Maine	42.0	1	1
Sheffield	Vermont	40.0	1	9
Steel Winds I & II	New York	35.0	2	1
Bull Hill	Maine	34.5	1	9
Kaheawa Wind Power I	Hawaii	30.0	1	7
Kahuku	Hawaii	30.0	1	12
Penamacor 3B	Portugal	25.2	1	10
Sabugal	Portugal	25.2	1	10
Kaheawa Wind Power II	Hawaii	21.0	1	14
Penamacor 1	Portugal	20.0	1	10
Penamacor 2	Portugal	20.0	1	10
Penamacor 3A	Portugal	14.7	1	10
Penamacor 3B Ext1	Portugal	14.7	1	10
Sabugal Ext2	Portugal	12.0	1	10
Penamacor 3B Ext 2	Portugal	8.0	1	10
Sabugal Ext1	Portugal	4.0	1	10
Total Wind Utility		1,853.5	29	11

Regulated Solar and Wind
Seron 1	Spain	50.0	1	11
Tesosanto	Spain	50.0	1	15
Extresol 1	Spain	49.9	1	16
Extresol 2	Spain	49.9	1	17
Extresol 3	Spain	49.9	1	19
Machasol 2	Spain	49.9	1	18



(In thousands)	General and administrative		General and administrative - affiliate
Higher corporate costs due to professional fees for legal and accounting services as a result of the SunEdison Bankruptcy	$	22,770	$	—
Banker and advisory marketing services for the Merger	8,402		—
Higher corporate costs for employee retention and annual incentive awards	3,012		—
Decrease in the management and administrative services provided by SunEdison subsequent to the Bankruptcy	—		(40,664		)
Total change	$	34,184	$	(40,664	)


(1)	Represents $377.0 million drawn under our Revolver, and does not include the $99.5 million of outstanding project-level letters of credit. On October 5, 2018, Terra Operating LLC entered into an amendment to the Revolver. On October 26, 2018, Saeta repaid the outstanding balance under its revolver and terminated such revolving credit facility.


(2)	Represents corporate senior notes. See the Financing Activities section below for discussion regarding 2018 activity.


(3)	Represents senior secured term loan facility. See the Financing Activities section below for further discussion.


(4)	Represents asset-specific, non-recourse borrowings and financing lease obligations secured against the assets of certain project companies.


(5)	Represents total principal due for long-term debt and financing lease obligations, including the current portion, which excludes $35.1 million and $43.7 million of unamortized debt discounts and deferred financing costs as of December 31, 2018 and 2017, respectively.


(1)	On February 6, 2018, Terra Operating LLC elected to increase the total borrowing capacity of the Revolver from $450.0 million to $600.0 million. On October 5, 2018, Terra Operating LLC entered into an amendment to the Revolver, as discussed in the Financing Activities section below.



(In thousands)	2019		2020		2021		2022		2023		Thereafter		Total
Maturities of long-term debt¹	$	276,480	$	248,981	$	257,665	$	754,102	$	1,221,102	$	3,044,776	$	5,803,106



(In thousands)	2017¹		2018		2019		2020		2021		Thereafter		Total
Maturities of long-term debt and financing lease obligations²	$	745,445	$	109,730	$	449,578	$	96,396	$	99,883	$	2,502,907	$	4,003,939



	Type	Dividends per Share		Declaration Date	Record Date	Payment Date
First Quarter	Ordinary	$	0.19	February 6, 2018	February 28, 2018	March 30, 2018
Second Quarter	Ordinary	0.19		April 30, 2018	June 1, 2018	June 15, 2018
Third Quarter	Ordinary	0.19		August 13, 2018	September 1, 2018	September 15, 2018
Fourth Quarter	Ordinary	0.19		November 8, 2018	December 3, 2018	December 17, 2018


	Payment due by Period														Payment due by Period
Contractual Cash Obligations (in thousands)	2017		2018		2019		2020		2021		Thereafter		Total		2019		2020		2021		2022		2023		Thereafter		Total
Long-term debt (principal)¹	$	735,996	$	100,640	$	431,082	$	87,575	$	90,881	$	2,433,835	$	3,880,009	$	270,889	$	243,511	$	252,001	$	746,872	$	1,218,092	$	2,994,675	$	5,726,040
Long-term debt (interest)²	212,109		182,912		155,315		150,704		146,129		387,310		1,234,479		277,623		267,153		252,926		240,272		182,363		796,346		2,016,683
Financing lease obligations³	9,449		9,090		18,496		8,821		9,002		69,072		123,930
Financing lease obligations															5,591		5,470		5,664		7,230		3,010		50,101		77,066
Operating leases	16,705		16,485		16,601		16,797		16,986		274,869		358,443		20,002		20,005		20,241		20,410		20,577		331,425		432,660
Purchase obligations³															32,457		31,533		16,696		12,135		10,426		64,292		167,539
Brookfield MSA⁴															12,240		15,300		15,606		15,918		16,236		N/A⁴		75,300
Tracking accounts															597		1,018		1,094		1,174		1,261		38,667		43,811
Other															2,431		2,431		1,545		1,545		—		—		7,952
Total contractual obligations	$	974,259	$	309,127	$	621,494	$	263,897	$	262,998	$	3,165,086	$	5,596,861	$	621,830	$	586,421	$	565,773	$	1,045,556	$	1,451,965	$	4,275,506	$	8,547,051


(2)	Includes fixed rate interest and variable rate interest using December 31, ~~2016~~2018 rates.


(3)	Consists of contractual payments due for third party operation and maintenance services and asset management services.



		Page
Report of Independent Registered Public Accounting Firm - Internal Control Over Financial Reporting		80
Report of Independent Registered Public Accounting Firm - Consolidated Financial Statements		81
Report of Predecessor Independent Registered Public Accounting Firm - Consolidated Financial Statements		82
Consolidated Statements of Operations		83
Consolidated Statements of Comprehensive Loss		84
Consolidated Balance Sheets		85
Consolidated Statements of Stockholders' Equity		86
Consolidated Statements of Cash Flows		88
Notes to Consolidated Financial Statements		90



																										Non-controlling Interests
	Class A Common Stock Issued			Class B Common Stock Issued					Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			Common Stock Held in Treasury											Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income						Total Equity
	Shares	Amount		Shares		Amount			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Income			Shares		Amount			Total			Capital			Accumulated Deficit			Accumulated Other Comprehensive (Loss) Income			Total			Total Equity
Balance as of December 31, 2015	79,734	$	784	60,364		$	604		$	1,267,484		$	(103,539	)	$	22,900		(122	)	$	(2,436	)	$	1,185,797		$	1,953,584		$	(182,024	)	$	(15,236	)	$	1,756,324		$	2,942,121
SunEdison exchange	12,162	122		(12,162	)	(122		)	181,045			—			—			—		—			181,045			(181,045		)	—			—			(181,045		)	—
Stock-based compensation	581	14		—		—			6,729			—			—			(132	)	(1,589		)	5,154			—			—			—			—			5,154
Net loss	—	—		—		—			—			(123,511		)	—			—		—			(123,511		)	—			(126,718		)	—			(126,718		)	(250,229		)
Acquisition accounting adjustment to non-controlling interest in acquired renewable energy facility	—	—		—		—			—			—			—			—		—			—			8,000			—			—			8,000			8,000
Repurchase of non-controlling interest in renewable energy facility	—	—		—		—			—			—			—			—		—			—			(486		)	—			—			(486		)	(486		)
Net SunEdison investment	—	—		—		—			16,372			—			—			—		—			16,372			9,028			—			—			9,028			25,400
Other comprehensive income	—	—		—		—			—			—			12			—		—			12			—			—			830			830			842
Sale of membership interests and contributions from non-controlling interests in renewable energy facilities	—	—		—		—			—			—			—			—		—			—			15,674			—			—			15,674			15,674
Distributions to non-controlling interests in renewable energy facilities	—	—		—		—			—			—			—			—		—			—			(13,020		)	—			—			(13,020		)	(13,020		)
Accretion of redeemable non-controlling interest	—	—		—		—			(3,962		)	—			—			—		—			(3,962		)	—			—			—			—			(3,962		)
Equity reallocation	—	—		—		—			(560		)	—			—			—		—			(560		)	560			—			—			560			—
Balance as of December 31, 2016	92,477	$	920	48,202		$	482		$	1,467,108		$	(227,050	)	$	22,912		(254	)	$	(4,025	)	$	1,260,347		$	1,792,295		$	(308,742	)	$	(14,406	)	$	1,469,147		$	2,729,494
Net SunEdison investment	—	—		—		—			7,019			—			—			—		—			7,019			2,749			—			—			2,749			9,768
Equity reallocation	—	—		—		—			8,780			—			—			—		—			8,780			(8,780		)	—			—			(8,780		)	—
SunEdison exchange	48,202	482		(48,202	)	(482		)	641,452			—			(643		)	—		—			640,809			(835,662		)	194,210			643			(640,809		)	—
Issuance of Class A common stock to SunEdison	6,493	65		—		—			(65		)	—			—			—		—			—			—			—			—			—			—
Write-off of payables to SunEdison	—	—		—		—			15,677			—			—			—		—			15,677			—			—			—			—			15,677
Stock-based compensation	1,414	19		—		—			14,689			—			—			(246	)	(2,687		)	12,021			—			—			—			—			12,021
Net loss	—	—		—		—			—			(160,154		)	—			—		—			(160,154		)	—			(77,745		)	—			(77,745		)	(237,899		)
Special Dividend payment	—	—		—		—			(285,497		)	—			—			—		—			(285,497		)	—			—			—			—			(285,497		)
Other comprehensive income	—	—		—		—			—			—			25,749			—		—			25,749			—			—			14,657			14,657			40,406
Sale of membership interests and contributions from non-controlling interests in renewable energy facilities	—	—		—		—			—			—			—			—		—			—			6,935			—			—			6,935			6,935
Distributions to non-controlling interests in renewable energy facilities	—	—		—		—			—			—			—			—		—			—			(23,345		)	—			—			(23,345		)	(23,345		)
Deconsolidation of non-controlling interest in renewable energy facility	—	—		—		—			—			—			—			—		—			—			(8,713		)	—			—			(8,713		)	(8,713		)
Accretion of redeemable non-controlling interest	—	—		—		—			(6,729		)	—			—			—		—			(6,729		)	—			—			—			—			(6,729		)
Reclassification of Invenergy Wind Interest from redeemable non-controlling interests to non-controlling interests	—	—		—		—			—			—			—			—		—			—			131,822			—			—			131,822			131,822
Other	—	—		—		—			9,691			—			—			—		—			9,691						(5,919		)	—			(5,919		)	3,772
Balance as of December 31, 2017	148,586	$	1,486	—		$	—		$	1,872,125		$	(387,204	)	$	48,018		(500	)	$	(6,712	)	$	1,527,713		$	1,057,301		$	(198,196	)	$	894		$	859,999		$	2,387,712


(1)	See Note 2. Summary of Significant Accounting Policies for discussion regarding the Company’s adoption of Accounting Standards Update (“ASU”) No. 2014-09, ASU No. 2016-08, ASU No. 2017-12 and ASU No. 2018-02 as of January 1, 2018.



(in thousands)	-100 BPS			+100 BPS
Canadian Dollars	$	(189	)	$	185
British Pounds¹	—			—
Total	$	(189	)	$	185


~~(1)~~	During the year ended December 31, 2016, we terminated all of our British pounds forward contracts as we are no longer forecasting the underlying distributions denominated in British pounds. We still have exposure to fluctuations in exchange rates though we estimate that a hypothetical 100 bps, or 1% change in rates would have an inconsequential impact on our results of operations.



~~Name~~	~~Age~~	~~Position~~
~~Peter Blackmore~~	70	~~Interim Chief Executive Officer, Director and Chairman~~
~~Rebecca Cranna~~	48	~~Executive Vice President and Chief Financial Officer~~
~~Sebastian Deschler~~	46	~~Senior Vice President, General Counsel and Secretary~~
~~Thomas Studebaker~~	39	~~Chief Operating Officer~~
~~David Rawden~~	60	~~Interim Chief Accounting Officer~~
~~Hanif "Wally" Dahya~~	61	~~Director~~
~~Christopher Compton~~	68	~~Director~~
~~John F. Stark~~	66	~~Director~~
~~Kerri L. Fox~~	49	~~Director~~
~~Edward "Ned" Hall~~	58	~~Director~~
~~Marc S. Rosenberg~~	59	~~Director~~
~~Christian S. Fong~~	40	~~Director~~
~~David Pauker~~	58	~~Director~~



Name	Audit	Corporate Governance & Conflicts	Compensation
Hanif "Wally" Dahya	Chairperson	—	—
Christopher Compton	Member	—	Member
John F. Stark	Member	—	Chairperson
Kerri L. Fox	—	Member	—
Edward "Ned" Hall	—	Chairperson	Member
Marc S. Rosenberg	—	Member	—
Christian S. Fong	Member	Member	—
David Pauker	—	Member	—
Total meetings held in fiscal year 2016	19	82	N/A⁽¹⁾

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