Sparkfund Accounting Overview
Simgle, monthly OpEx payment and no upfront cost.
The Sparkfund Platform™ provides a new way to procure energy services across your organization’s building portfolio. With a simple, monthly OpEx payment* and no upfront cost, you unlock the benefits of better technology, backed by a no-risk guarantee: if the system doesn’t work, we will promptly fix the issue or you don’t have to pay.
Xcel Energy’s contract is distinct from other energy efficiency or energy services contracts in the market, and this carries implications for accounting treatment:
1. The contract is based on the measured and guaranteed function of provided technology.
Our experts will design a system that meets the needs of your space. We then guarantee that the system provides agreed-upon, measurable benefits to you for the entire contract term in a simple list that’s easy to understand and demonstrates the system is performing (e.g., wattage draw or BTU/hr). (We call that the functional guarantee.)
2. There is no minimum payment.
If at any time during the contract the technology does not perform as specified, and we do not promptly remedy the issue, then your payment will decrease in proportion to the underperformance.
3. Meaningful transfer of risk from you to us for the entire term.
We own the technology and bear all associated risk and cost to maintain the functional guarantee under the contract.
4. Third-party control over the system.
In order to ensure the delivery of the service as specified in the contract, Xcel Energy and/or the installation partner have the right to substitute or modify equipment as we see fit, as long as benefits to you are not compromised.
A Big 4 accounting firm provided advice on the appropriate treatment of our contract under applicable accounting guidance, including Financial Accounting Standards Board (“FASB”), Accounting Standard Codification (“ASC”) No. 842, Leases. According to our accounting advisor’s analysis, the contract should not be treated as a lease under ASC 842, and customers may appropriately treat their monthly Facilities-as-a-Service payments as an operating expense*.
For an in-depth discussion of our accounting advisor’s analysis of the contract under FASB ASC 842, please refer to our Facilities-as-a-Service memos.
*Sparkfund is not an accounting firm and does not provide accounting advice. This content is designed for informational purposes in order to assist customers in conducting their own independent assessment of a transaction using the Sparkfund Platform. Customers should consult their accounting advisors with respect to the appropriate treatment of any transaction.