16. Leases

Lessor

The Company rents microturbine equipment to its customers for terms up to thirty-six months with an extension option, which may impact the lease term. Monthly rental payments are fixed; however, the leases may include variable payments for fuel, excess labor, additional equipment, or technician labor and engineering support. As further described below, the Company rents certain microturbine equipment back from customers and subleases this equipment to end users as a part of its Energy-as-a-Service business.

At December 31, 2023, the Company’s minimum rental revenue to be received under operating leases were as follows (in thousands):

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Lessee

The Company leases facilities and equipment under various non-cancelable operating and finance leases expiring at various times through Fiscal 2037. All of the leases require the Company to pay maintenance, insurance and property taxes. The lease agreements for primary office and manufacturing facilities provide for rent escalation over the lease term and renewal options for five-year periods. Lease expense is recognized on a straight-line basis over the term of the lease, which may include extension periods.

During the three and nine months ended December 31, 2023, the Company entered into zero and eight rental agreements, respectively, to rent used microturbine equipment from customers where that equipment was not currently in use. The existing rental agreements provide the Company an option to extend the lease, however, the Company is not likely to exercise these options and therefore not included in the determination of the lease term. As of December 31, 2023, lease commitments totaled approximately 18.4 MW of microturbines and have an average term of 36 months, and a total commitment value of approximately $18.7 million.

The components of lease expense were as follows (in thousands):

Supplemental balance sheet information related to the leases was as follows (dollars in thousands):

Supplemental cash flow information related to the leases was as follows (in thousands):

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At December 31, 2023, the Company’s minimum commitments under non-cancelable operating and finance leases were as follows (in thousands):

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