Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Special Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Overview
We are a renewable energy company committed to advancing sustainable solutions. With a focus on utility-scale projects, such as solar parks, and complementary technologies like microgrids and battery storage, we aim to deliver comprehensive, clean energy across Europe and America. Through strategic investments, we are building a portfolio poised to lead the transition to a sustainable energy future.
The Company was incorporated in Delaware on May 14, 2021, and was originally known as Clean Earth Acquisitions Corp. (“Clean Earth”).
On October 12, 2022, Clean Earth entered into a Business Combination Agreement, as amended by that certain First Amendment to the Business Combination Agreement, dated as of April 12, 2023 (the “First BCA Amendment”) (as amended by the First BCA Amendment, the “Initial Business Combination Agreement”), and as amended and restated by that certain Amended and Restated Business Combination Agreement, dated as of December 22, 2023 (the “A&R BCA”) (the Initial Business Combination Agreement, as amended and restated by the A&R BCA, the “Business Combination Agreement”), by and among Clean Earth, Alternus Energy Group Plc (“AEG”), and the Sponsor. Following the approval of the Initial Business Combination Agreement and the transactions contemplated thereby at the special meeting of the stockholders of Clean Earth held on December 4, 2023, the Company consummated the Business Combination on December 22, 2023. In accordance with the Business Combination Agreement, Clean Earth issued 2,300,000 shares of common stock of Clean Earth, par value $0.0001 per share, to AEG, and AEG transferred to Clean Earth, and Clean Earth received from AEG, all of the issued and outstanding equity interests in the Acquired Subsidiaries (as defined in the Business Combination Agreement) (the “Equity Exchange,” and together with the other transactions contemplated by the Business Combination Agreement, the “Business Combination”). In connection with the Closing, the Company changed its name from Clean Earth Acquisition Corp. to Alternus Clean Energy, Inc.
The Company uses annual recurring revenues as a key metric in its financial management information and believes this method better reflects the long-term stability of operations into the future. Annual recurring revenues are defined as the estimated future revenue generated by operating solar parks based on the remaining term by the price received per mega-watt hour (MWh) of energy produced multiplied by the estimated production from each solar park over a full year of operation. It should be noted that the actual revenues reported by the Company in a particular year may be lower than the annual recurring revenues because not all parks may be revenue generating for the full year in their first year of operation. The Company must also account for the timing of acquisitions that take place throughout the financial year.
Impacts of the Ukraine/Russia conflict
The geopolitical situation in Eastern Europe intensified on February 24, 2022 with Russia’s invasion of Ukraine. The war between the two countries continues to evolve as military activity proceeds and additional sanctions are imposed. In addition to the human toll and impact of the events on entities that have operations in Russia, Ukraine, or neighboring countries (e.g., Belarus, Poland, Romania) or that conduct business with their counterparties, the war is increasingly affecting economic and global financial markets and exacerbating ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption. These events have not impacted the physical operations of our facilities in Romania. However, the Company has seen fluctuations in energy rates due to inflation, increased interest rates, and other macro-economic factors.
Known trends or Uncertainties
The Company has a working capital deficiency and negative equity. Management has determined there is doubt about the Company’s ability to continue as a going concern if planned financing and/or equity raises do not complete. Refer to Footnote 2 of the accompanying financial statements.
The Company is currently working on several processes to address the going concern issue. We are working with multiple global banks and funds to secure the necessary corporate and project level financing to execute our transatlantic business plan.
Competitive Strengths
The Company believes the following competitive strengths have contributed and will continue to contribute to its success:
Fully Integrated Clean Energy Provider Model:
We operate as a comprehensive energy provider, managing the full renewable energy value chain across both utility scale and behind-the-meter microgrid markets. This “develop-to-own or sell” strategy enables the Company to capture greater margin and retain control from early-stage development through to long-term operations or strategic monetization, unlike peers focused solely on operational asset acquisitions.
Experienced and Adaptive Management Team:
The leadership team brings decades of collective experience in capital markets, energy infrastructure, project development, and public company governance. Recent partnerships also bolster technical and operational capabilities in areas such as microgrids, reinforcing the Company’s strategic direction.
Capital-Efficient Growth Through Project-Level Leverage:
Our approach emphasizes projects with minimal to no owner equity requirements, particularly in the U.S. where tax equity (ITC) and long-term debt can fund up to 100% of project costs. This model allows for rapid, capital-efficient scaling and high-return deployments, freeing up corporate equity for strategic growth.
Transatlantic Market Footprint Mitigates Risk:
With operations and revenue targets split between North America and Europe by 2029, Alternus is uniquely positioned to reduce geopolitical and regulatory concentration risk. The diversified presence enhances resilience and positions the Company to capture incentives from multiple clean energy policy regimes.
Unique Microgrid Technology and Offerings:
Through partnerships such as with Hover Energy, Alternus delivers differentiated microgrid solutions combining rooftop wind, solar, storage, and AI-based energy management systems. This provides a compelling and exclusive offering, particularly in the high-growth commercial and industrial market segments.
Proven International Expansion and Partner Network:
The Company’s ability to enter new geographies and establish strong local partnerships has enabled consistent expansion across Europe and North America. These local relationships and Alternus’ development track record provide a competitive edge in securing grid access, permits, and financing in highly competitive markets.
Flexible and Technology Agnostic Strategy:
Alternus is not tied to specific technologies or suppliers, allowing it to source best-in-class components and services globally. This flexibility supports cost optimization and futureproofing as new solutions and innovations emerge in the renewable energy space.
Vision and Strategy:
We are expanding beyond our core utility solar operations by integrating microgrids and on-site generation systems that provide customers with energy resilience, grid independence, and long-term cost savings. These customer deployed systems enable faster revenue realization and lower capital intensity compared to utility scale projects.
To accelerate this transition, we are actively forming strategic partnerships and pursuing targeted ventures and acquisitions in high-growth areas such as battery storage and circular economy energy systems. These additions enhance our technical capabilities, diversify revenue streams, and strengthen our ability to meet the rising demand for consistent power driven by AI, data centers, and industrial onshoring.
This strategy builds on our foundation as an integrated independent power producer (IPP) with experience developing a portfolio of renewable energy assets across North America and Europe. By owning and operating long-term contracted energy projects, we generate stable, recurring income while unlocking lasting value for shareholders.
With strong regulatory tailwinds and rapidly growing global demand for sustainable and reliable energy, Alternus is well positioned to scale as a more comprehensive energy provider, broadening our market reach, enhancing financial performance, and advancing our mission to power a cleaner, more resilient energy future.
T o achieve its goals, the Company intends to pursue the following strategies:
Continue our growth strategy of acquiring utility scale clean energy (e.g., solar, battery storage and other technologies) projects that are either in development, in construction, newly installed or already operational, in order to build a diversified portfolio across multiple geographies;
Pursue expansion into complementary or strategic market segments either through M&A or strategic partnerships that enhance and diversify our core energy generation business. These additional segments are designed to create independent income streams and strengthen our asset platform;
Strengthen long-term relationships with high-quality developers and other partners, both local and international, to reduce competition in acquisition pricing and provide Alternus with exclusive rights to projects at varying stages of development. This provides the Company with a better understanding of the markets we address and, in some cases, enables it to contract for projects in a less competitive environment;
Expand our US and European portfolio in regions with attractive returns on investments, and increase the Company’s long-term recurring revenue and cash flow;
Secure strong and predictable cash flows via long-term FiT (feed-in tariff) contracts combined with the Company’s efficient operations. This allows for high leverage capacity and flexibility of debt structuring. Our strategy is to reinvest of project cash flows into additional projects to provide non-dilutive capital for Alternus to “self-fund” organic growth;
Optimization of financing sources to support long-term growth and profitability in a cost-efficient manner;
As a renewable energy company, we are committed to growing our portfolio of projects in the most sustainable way possible. Alternus is highly aware and conscious of the ever growing need to mitigate the effects of climate change which is evident by its core strategy. As the Company grows, it intends to establish a formal sustainability policy framework in order to ensure that all project development is carried out in a sustainable manner, mitigating any potential local and environmental impacts identified during the development, construction, and operational process.
Given the long-term nature of our business, Alternus operates with a strategic focus on sustained value creation rather than short-term quarterly performance. Our approach prioritizes maximizing long-term shareholder returns by developing projects from the ground up and acquiring assets at various stages of maturity, whether in development, under construction, or already operational. In parallel, we are expanding into complementary market segments that enhance our operational capabilities and financial performance, strengthening the foundation for consistent, scalable growth.
Key Factors that Significantly Affect Company Results of Operations and Business
The Company expects inflation and energy rate fluctuations will affect its results of operations.
Offtake Contracts
Company revenue is primarily a function of the volume of electricity generated and sold by its renewable energy facilities as well as, where applicable, the sale of green energy certificates and other environmental attributes related to energy generation. The Company’s current portfolio of renewable energy facilities is generally contracted under long-term FiT programs or PPAs with investment grade counterparties. Pricing of the electricity sold under these FiTs and PPAs is generally fixed for the duration of the contract, although some of its PPAs have price escalators based on an index (such as the consumer price index) or other rates specified in the applicable PPA.
Project Operations and Generation Availability
The Company revenue is a function of the volume of electricity generated and sold by Company renewable energy facilities. The volume of electricity generated and sold by the Company’s renewable energy facilities during a particular period is impacted by the number of facilities that have achieved commercial operations, as well as both scheduled and unexpected repair and maintenance required to keep its facilities operational.
The costs the Company incurs to operate, maintain, and manage renewable energy facilities also affect the results of operations. Equipment performance represents the primary factor affecting the Company’s operating results because equipment downtime impacts the volume of the electricity that the Company can generate from its renewable energy facilities. The volume of electricity generated and sold by the Company’s facilities will also be negatively impacted if any facilities experience higher than normal downtime because of equipment failures, electrical grid disruption or curtailment, weather disruptions, or other events beyond the Company’s control.
Seasonality and Resource Variability
The amount of electricity produced and revenues generated by the Company’s solar generation facilities is dependent in part on the amount of sunlight, or irradiation, where the assets are located. As shorter daylight hours in winter months result in less irradiation, the electricity generated by these facilities will vary depending on the season. Irradiation can also be variable at a particular location from period to period due to weather or other meteorological patterns, which can affect operating results. As most of the Company’s solar power plants are in the Northern Hemisphere, the Company expects its current solar portfolio’s power generation to be at its lowest during the first and fourth quarters of each year. Therefore, the Company expects first and fourth quarter solar revenue to be lower than in other quarters. As a result, on average, each solar park generates approximately 15% of its annual revenues in Q1 every year, 35% in each of Q2 and Q3, and the remaining 15% in Q4. The Company’s costs are relatively flat over the year, and so the Company will always report lower profits in Q1 and Q4 as compared to the middle of the year.
Interest Rates on Company Debt
Interest rates on the Company’s senior debt are mostly variable for the full term of the debt at interest rates ranging from 6% to 30%. The relative certainty of cash flows provides sufficient coverage ratios.
In addition to the project specific senior debt, the Company uses a small number of promissory notes to reduce, and in some cases eliminate, the requirement for the Company to provide equity in the acquisition of the projects. As of December 31, 2024, 62.2% of the Company’s total liabilities were project-related debt.
Cash Distribution Restrictions
In certain cases, the Company, through its subsidiaries, obtain project-level or other limited or non-recourse financing for Company renewable energy facilities which may limit these subsidiaries’ ability to distribute funds to the Company for corporate operational costs. These limitations typically require that the project-level cash is used to meet debt obligations and fund operating reserves of the operating subsidiary. These financing arrangements also generally limit the Company’s ability to distribute funds generated from the projects if defaults have occurred or would occur with the giving of notice or the lapse of time or both.
Renewable Energy Facility Acquisitions and Investments
The Company’s long-term growth strategy is dependent on its ability to acquire additional renewable power generation assets. This growth is expected to be comprised of additional acquisitions across the Company’s scope of operations both in its current focus countries and new countries. Our operating revenues are insufficient to fund our operations, and our assets already are pledged to secure our indebtedness to various third party secured creditors, respectively. The unavailability of additional financing could require us to delay, scale back, or terminate our acquisition efforts as well as our own business activities, which would have a material adverse effect on the Company and its viability and prospects.
Management believes renewable power has been one of the fastest growing sources of electricity generation globally over the past decade. The Company expects the renewable energy generation segment to continue to offer growth opportunities driven by:
The continued reduction in the cost of solar and other renewable energy technologies, which the Company believes will lead to grid parity in an increasing number of markets;
Distribution charges and the effects of an aging transmission infrastructure, which enable renewable energy generation sources located at a customer’s site, or distributed generation, to be more competitive with, or cheaper than, grid-supplied electricity;
The replacement of aging and conventional power generation facilities in the face of increasing industry challenges, such as regulatory barriers, increasing costs of and difficulties in obtaining and maintaining applicable permits, and the decommissioning of certain types of conventional power generation facilities, such as coal and nuclear facilities;
The ability to couple renewable energy generation with other forms of power generation and/or storage, creating a hybrid energy solution capable of providing energy on a 24/7 basis while reducing the average cost of electricity obtained through the system;
The desire of energy consumers to lock in long-term pricing for a reliable energy source;
Renewable energy generation’s ability to utilize freely available sources of fuel, thus avoiding the risks of price volatility and market disruptions associated with many conventional fuel sources;
Environmental concerns over conventional power generation; and
Government policies that encourage the development of renewable power, such as country, state or provincial renewable portfolio standard programs, which motivate utilities to procure electricity from renewable resources.
Access to Capital Markets
The Company’s ability to acquire additional clean power generation assets and manage its other commitments will likely be dependent on its ability to raise or borrow additional funds and access debt and equity capital markets, including the equity capital markets, the corporate debt markets, and the project finance market for project-level debt. The Company accessed the capital markets several times in 2023 and 2024 in connection with long-term project debt, and corporate loans and equity. Limitations on the Company’s ability to access the corporate and project finance debt and equity capital markets in the future on terms that are accretive to its existing cash flows would be expected to negatively affect its results of operations, business, and future growth.
Foreign Exchange
The Company’s operating results are reported in United States dollars (USD). The Company’s current project revenue and expenses are generated in other currencies, including the Euro (EUR), the Polish Zloty (PLN), and the Romanian Lei (RON). This mix may continue to change in the future if the Company elects to alter the mix of its portfolio within its existing markets or elect to expand into new markets. In addition, the Company’s investments (including intercompany loans) in renewable energy facilities in foreign countries are exposed to foreign currency fluctuations. As a result, the Company expects revenues and expenses will be exposed to foreign exchange fluctuations in local currencies where the Company’s renewable energy facilities are located. To the extent the Company does not hedge these exposures, fluctuations in foreign exchange rates could negatively impact profitability and financial position.
Key Metrics
Operating Metrics
The Company regularly reviews several operating metrics to evaluate its performance, identify trends affecting its business, formulate financial projections, and make certain strategic decisions. The Company considers a solar park operating when it has achieved connection and begins selling electricity to the energy grid.
Operating Nameplate capacity
The Company measures the electricity-generating production capacity of its renewable energy facilities in nameplate capacity. The Company expresses nameplate capacity in direct current (DC), for all facilities. The size of the Company’s renewable energy facilities varies significantly among the assets comprising its portfolio.
The Company believes the combined nameplate capacity of its portfolio is indicative of its overall production capacity and period to period comparisons of its nameplate capacity are indicative of the growth rate of its business. The production capacity listed below for Poland, the Netherlands, Romania, and the United States reflect the actual production from those parks while they were owned by or operating under the Company for the year ended December 31, 2024. The parks were sold on January 19, 2024, February 21, 2024, October 3, 2024, and November 5, 2024, respectively. Refer to Footnotes 19 and 20 for additional information on the sale/disposal of the parks.
The table below outlines the Company’s operating renewable energy facilities as of December 31, 2024 and 2023:
Year Ended December 31,
MW (DC) Nameplate capacity by country
United States
Total
Discontinued Operations:
Netherlands
Poland
Romania
Total
Total for the period
Megawatt hours sold
Megawatt hours sold refers to the actual volume of electricity sold by the Company’s renewable energy facilities during a particular period. The Company tracks MWh sold as an indicator of its ability to realize cash flows from the generation of electricity at its renewable energy facilities. The megawatt hours listed below for Poland, the Netherlands, Romania, and the United States reflect the actual volume of electricity sold during the year ended December 31, 2024. The parks were sold on January 19, 2024, February 21, 2024, October 3, 2024, and November 5, 2024, respectively. Refer to Footnotes 19 and 20 for additional information on the sale/disposal of the parks.
The Company’s MWh sold for renewable energy facilities for the years ended December 31, 2024 and 2023, were as follows:
Year Ended December 31,
MWh (DC) Sold by country
Italy
United States
Total
Discontinued Operations:
Netherlands
Poland
Romania
Total
Total for the period
Consolidated Results of Operations
The following table illustrates the consolidated results of operations for the years ended December 31, 2024 and 2023 (in thousands):
Year Ended December 31,
Revenues
Operating Expenses
Cost of revenues
Selling, general, and administrative
Depreciation, amortization, and accretion
Development costs
Impairment of Spanish assets
Loss on disposal of assets
Total operating expenses
Loss from continuing operations
Other income/(expense):
Interest expense
Valuation on FPA asset
Fair value movement of FPA asset
Fair value movement of convertible debt
Fair value movement of warrant
Net loss on issuance of debt
Gain on extinguishment of debt
Other expense
Other income
Total other expenses
Loss before provision for income taxes
Income taxes
Loss from continuing operations
Discontinued operations:
Loss from operations of discontinued business components
Gain on sale of discontinued operations, net assets
Solis bond waiver fee
Impairment loss recognized on the remeasurement to fair value less costs to sell
Income tax
Income/(loss) from discontinued operations
Net income/(loss) for the period
Basic & diluted earnings loss per share of common stock:
Continuing operations
Discontinued operations
Total earnings loss per share of common stock, basic & diluted
Weighted-average common stock outstanding, basic & diluted
Comprehensive income/(loss):
Net income/(loss)
Foreign currency translation adjustment
Comprehensive income/(loss)
Fiscal Year Ended December 31, 2024 compared to December 31, 2023.
The Company generates its revenue from the sale of electricity from its solar parks. The revenue is from FiT, PPA, REC, or in the day-ahead or spot market.
Revenue
Revenue for the year ended December 31, 2024 and 2023 were as follows:
Year Ended December 31,
Revenue by Country
Change
Change
(in thousands)
Italy
United States
Total for continuing operations
Discontinued Operations:
Netherlands
Poland
Romania
Total for discontinued operations
Total for the period
Revenue for continuing operations decreased by $3.2 million for the year ended December 31, 2024 compared to the same period in 2023 as there was only one country producing revenue in 2024 (Lightwave parks) compared to the additional 11 Italian parks that were producing revenue in 2023. Furthermore, the total revenue for 2024 accounts for only 10 months as the Company deconsolidated Lightwave Renewables, LLC and sold 100% of its equity ownership to AEG (parent company) on November 5, 2024. Refer to Footnote 20 for additional deconsolidation information.
Revenue for discontinued operations decreased by $17.2 million for the year ended December 31, 2024 compared to the same period in 2023. All operating parks in Poland and the Netherlands were sold on January 19, 2024 and February 21, 2024, respectively, resulting in a $10.3 million decrease in revenues. Romanian revenues decreased by $6.9 million due to a lower volume of Green Certificates being sold in 2024 and lower energy rates obtained for energy production in 2024. Furthermore, the total Romanian revenue for 2024 accounts for only nine months as the Company sold the Romanian operating parks on October 3, 2024. Refer to Footnote 19 for additional sale information.
Year Ended December 31,
Revenue by Offtake Type
Change
Change
(in thousands)
Country Renewable Programs (FiT)
Energy Offtake Agreements (PPA)
Total for continuing operations
Discontinued Operations:
Country Renewable Programs (FiT)
Green Certificates
Guarantees of Origin
Energy Offtake Agreements (PPA)
Other Revenue
Total for discontinued operations
Total for the period
Cost of Revenues
The Company capitalizes its equipment costs, development costs, engineering costs, and construction related costs that are deemed recoverable. The Company’s cost of revenues with regard to its solar parks is primarily a result of the asset management, operations, and maintenance, as well as tax, insurance, and lease expenses. Certain economic incentive programs, such as FiT regimes, generally include mechanisms that ratchet down incentives over time. As a result, the Company seeks to connect its solar parks to the local power grids and commence operations in a timely manner to benefit from more favorable existing incentives. Therefore, the Company generally seeks to make capital investments during times when incentives are most favorable.
Cost of revenues for the year ended December 31, 2024 and 2023 were as follows:
Year Ended December 31,
Cost of Revenues by Country
Change
Change
(in thousands)
Italy
United States
Total for continuing operations
Discontinued Operations:
Netherlands
Poland
Romania
Total for discontinued operations
Total for the period
Cost of revenues for continuing operations decreased by $0.9 million for the year ended December 31, 2024 compared to the same period in 2023 as there was only one country with operating parks in 2024 (Lightwave parks) compared to the additional 11 Italian parks in 2023. Furthermore, the total costs of revenue for 2024 accounts for only 10 months as the Company deconsolidated Lightwave Renewables, LLC and sold 100% of its equity ownership to AEG (parent company) on November 5, 2024. Refer to Footnote 20 for additional deconsolidation information.
Gross margins were 17% of sales for the year ended December 31, 2024 compared to 63% for the same period in 2023, mainly due to the exclusion of Italian operating parks that were sold in December 2023.
Cost of revenues for discontinued operations decreased by $3.2 million for the year ended December 31, 2024 compared to the same period in 2023. All operating parks in Poland and the Netherlands were sold on January 19, 2024 and February 21, 2024, respectively, resulting in a $4.0 million decrease in cost of revenues. Romanian parks had a $0.8 million increase in operational costs driven by higher costs of energy acquisition for contracted revenues in the period. Furthermore, the total Romanian costs of revenue for 2024 accounts for only nine months as the Company sold the Romanian operating parks on October 3, 2024. Refer to Footnote 19 for additional sale information.
Selling, General, and Administrative Expenses
Selling, general, and administrative expenses for the year ended December 31, 2024 and 2023 were as follows:
Year Ended December 31,
Change
Change
(in thousands)
Selling, general and administrative
Total for continuing operations
Discontinued Operations:
Selling, general and administrative
Total for discontinued operations
Total for the period
Selling, general, and administrative expenses for continuing operations increased by $7.1 million for the year ended December 31, 2024 compared to the same period in 2023 mainly driven by an increase in audit, consulting, legal, and listing costs along with other costs relating to be listed on Nasdaq along with an increase in insurance costs.
Selling, general and administrative expenses for discontinued operations decreased by $4.7 million for the year ended December 31, 2024 compared to the same period in 2023 mainly driven by a decrease in the Solis management fee to oversee operations for five parks in Romania for 2024 compared to the 23 parks in 2023 (5 in Romania, 1 in the Netherlands, 6 in Poland, and 11 in Italy).
Acquisition Costs
On December 11, 2024, BESS LLC, a Delaware limited liability company and wholly owned subsidiary of the Company entered into an asset purchase agreement (the “APA”) with LiiON LLC (“LiiON”), a U.S.-based expert in advanced energy storage solutions, and closed on the acquisition of certain assets related to LiiON’s Battery Storage Business. The assets purchased included customer relationships, customer service agreements and intellectual property (IP). The Company determined that the set of assets and activities acquired in connection with the APA and related agreements constitute a business subject to the guidance in ASC 805 Business Combinations. Refer to Footnote 5 for more information.
Subsequent to December 31, 2024, the Company and LiiON LLC mutually agreed to rescind the Asset Purchase Agreement (see Footnote 5). The rescission was driven by the discovery of certain material issues not known at the time of closing including questions surrounding the perceived value of certain assets or relationships acquired as well as NASDAQ’s delisting of the Company’s equity in February 2025. The agreement to rescind the transaction was finalized on April 29,2025, resulting in the unwinding of all consideration transferred and legal ownership.
The Company has evaluated the rescission in accordance with ASC 855, Subsequent Events, and determined it to be a non-recognized subsequent event, as the rescission did not change the condition of “control” that existed as of the acquisition date or the reporting period end. As such, no adjustments have been made to the financial statements for the period ended December 31, 2024. The rescission will be reflected in the Company’s financial statements in the future accounting period in which the sale or disposal criteria are met (i.e., either the first or second quarterly period of the year ending December 31, 2025).
Development Cost
The Company depends heavily on government policies that support our business and enhance the economic feasibility of developing and operating solar energy projects in regions in which we operate or plan to develop and operate renewable energy facilities. The Company can decide to abandon a project if there is material change in budgetary constraints, political factors or otherwise, governments from time to time may review their laws and policies that support renewable energy and consider actions that would make the laws and policies less conducive to the development and operation of renewable energy facilities. Any reductions or modifications to, or the elimination of, governmental incentives or policies that support renewable energy or the imposition of additional taxes or other assessments on renewable energy, could result in, among other items, the lack of a satisfactory market for the development and/or financing of new renewable energy projects, our abandoning the development of renewable energy projects, a loss of our investments in the projects, and reduced project returns, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Refer to Footnote 18 to the accompanying financial statements for more detail of development cost.
Year Ended December 31,
Change
Change
(in thousands)
Development Cost
Total for continuing operations
Discontinued Operations:
Development Cost
Total for discontinued operations
Total for the period
Development cost increased by $0.4 million for the year ended December 31, 2024 compared to the same period in 2023 due to final work performed for projects abandoned for the development of renewable energy projects in Spain and the United States.
Development cost for discontinued operations decreased by $0.4 million for the year ended December 31, 2024 compared to the same period in 2023 due to final work performed for Solis endeavors abandoned in 2023.
Depreciation, Amortization, and Accretion Expense
Depreciation, amortization, and accretion expenses for the year ended December 31, 2024 and 2023 were as follows:
Year Ended December 31,
Change
Change
(in thousands)
Depreciation, Amortization and Accretion expense
Total for continuing operations
Discontinued Operations:
Depreciation, Amortization and Accretion expense
Total for discontinued operations
Total for the period
Depreciation, amortization and accretion expenses for continuing operations decreased by $1.5 million for the year ended December 31, 2024 compared to the same period in 2023 as there was only one country with operating parks recognizing depreciation in 2024 (Lightwave parks) compared to the additional 11 Italian parks in 2023. Furthermore, the total depreciation expense for 2024 accounts for only 10 months as the Company deconsolidated Lightwave Renewables, LLC and sold 100% of its equity ownership to AEG (parent company) on November 5, 2024. Refer to Footnote 20 for additional deconsolidation information.
Depreciation, amortization and accretion expenses for discontinued operations decreased by $3.3 million for the year ended December 31, 2024 compared to the same period in 2023. All operating parks in Poland and the Netherlands were sold on January 19, 2024 and February 21, 2024, respectively, resulting in a $2.8 million decrease in depreciation expense. Furthermore, the total Romanian depreciation expense for 2024 accounts for only nine months as the Company sold the Romanian operating parks on October 3, 2024. Refer to Footnote 19 for additional sale information.
Gain on Disposal of Assets
Year Ended December 31,
Change
Change
(in thousands)
Loss on disposal of assets
Costs related to disposal of asset
Total for continuing operations
Discontinued Operations:
Gain on disposal of asset
Costs related to disposal of asset
Gain on sale of discontinued operations
Total for discontinued operations
Total for the period
There were no gains or losses on disposal of assets for continuing operations for the year ended December 31, 2024. On December 27, 2023, the Company sold its operating parks in Italy with a carrying value of $22.3 million for $17.4 million resulting in a $4.9 million loss. The costs incurred to complete the transaction totaled $0.6 million and are reported together with the disposal of the assets according to ASC 360-10-35-38.
On January 19, 2024, the Company sold its operating parks in Poland with a carrying value of $55.2 million for $59.4 resulting in a $4.2 million gain. The costs incurred to complete the transaction totaled $0.8 million and are reported together with the disposal of the assets according to ASC 360-10-35-38.
On February 21, 2024, the Company sold its operating park in the Netherlands with a carrying value of $8.0 million for $7.1 million resulting in a $0.9 million loss. The costs incurred to complete the transaction totaled $0.4 million and are reported together with the disposal of the assets according to ASC 360-10-35-38.
On October 3, 2024, the Company sold its operating parks in Romania as part of the sale of Solis Bond Company DAC and its subsidiaries in Romania to the Solis Bondholders for €1 in accordance with the terms of the Solis Bonds, as amended. The net of all assets and liabilities resulted in a $51.8 million gain to be reported on the Consolidated Statement of Operations and Comprehensive Loss in accordance with ASC 205-20. The costs incurred to complete the transaction totaled $0.7 million and are reported together with the disposal of the assets according to ASC 360-10-35-38. The sale of these entities and exit of this market represented a strategic shift for the Company resulting in the gain being recorded under discontinued operations.
Interest Expense, Other Income, and Other Expense
Year Ended December 31,
Change
Change
(in thousands)
Interest expense
Valuation of FPA asset
Fair value movement of FPA asset
Fair value movement of convertible note
Fair value movement of warrant
Net loss on issuance of debt
Gain on extinguishment of debt
Other expense
Other income
Total for continuing operations
Discontinued Operations:
Interest income/(expense)
Solis bond waiver fee
Other expense
Total for discontinued operations
Total for the period
Total other expenses for continuing operations decreased by $14.4 million for the year ended December 31, 2024 compared to the same period in 2023. The primary drivers causing the decrease from 2023 is the recognition of a $16.6 million valuation on the Forward Purchase Agreement in 2023 not present for 2024, a $0.5 million positive movement in fair value on the convertible debt issued during 2024, a $0.1 million positive movement in fair value on the private warrant issued during 2024, a $0.2 million gain recognized on the conversion of the Nordic ESG debt to shares in January 2024, and $1.6 million increase in other income due to the sale of Lightwave tax credits to an energy company in Texas. This decrease was partially offset by a $3.1 million increase in interest expense, a $0.5 million reduction in valuation on the Forward Purchase Agreement, a $0.5 million net loss on issuance of convertible debt and private placement warrants issued in April and October 2024, and $0.5 million increase in other expense due to the recognition of termination agreement with Meteora.
Total other expenses for discontinued operations decreased by $22.8 million for the year ended December 31, 2024 compared to the same period in 2023. The primary drivers of the decrease from 2023 is the recognition of a $11.2 million bond waiver fee for the Solis bond in 2023 that was not present for 2024, a $10.0 million decrease in interest expense, and a $1.6 million decrease in other expense due to the write off of a Romanian receivable from 2021 expected to be paid by the Romanian government. The proceeds from the sale of the Polish and Netherlands parks in early 2024 were used to reduce the principal balance of the Solis Bond, resulting in lower interest expense for the rest of the year. Additionally, the interest expense for 2024 accounts for only nine months as the Company sold Solis on October 3, 2024. Refer to Footnote 19 for additional sale information.
Income Tax
Year Ended December 31,
Change
Change
(in thousands)
Corporate tax expense
Total for continuing operations
Discontinued Operations:
Corporate tax expense
Total for discontinued operations
Total for the period
Income tax expense for continuing operations increased by $0.6 million for the year ended December 31, 2024 compared to the same period in 2023 due to the recognition of penalties assessed for the late filing of the 2023 corporate tax return and late extension filing for the 2024 tax return.
Income tax expense for discontinued operations decreased by $0.1 million for the year ended December 31, 2024 compared to the same period in 2023. Zonnepark Rilland receives a fixed payment each month per agreed rates with the customer. In the second quarter of the following year, the customer settles any difference in the average rates for the prior year and the agreed upon rate for the prior year. This settlement of the rates exceeded the receivables the company had booked and resulted in extra income recognized in 2022. The additional income received resulted in a higher tax liability and a balance due in 2022. The balance due was paid at the time of filing in 2023.
Impairment Loss Recognized
Year Ended December 31,
Change ($)
Change (%)
(in thousands)
Impairment of Spanish assets
Total for continuing operations
Discontinued Operations:
Impairment loss recognized on the remeasurement to fair value less costs to sell
Total for discontinued operations
Total for the period
Impairment loss recognized for continuing operations increased by $3.3 million for the year ended December 31, 2024 compared to the same period in 2023. The decrease represents the expected loss at December 31, 2024 on the disposal of the Spanish assets.
Impairment loss recognized for discontinued operations decreased by $11.8 million for the year ended December 31, 2024 compared to the same period in 2023. The decrease represents the expected loss at December 31, 2023 on the sale of the Polish assets. There was no indication of impairment for the Netherlands as of December 31, 2023.
Net Loss
Net loss for continuing operations decreased by $7.9 million for the year ended December 31, 2024 compared to the same period in 2023. This is primarily due to a decrease in cost of revenues of $0.9 million, depreciation of $1.5 million, loss on disposal of asset of $5.5 million, and other expense of $14.3 million. This was partially offset by a decrease in revenues of $3.2 million, an increase in SG&A expenses of $7.0 million, development costs of $0.4 million, interest expense of $3.1 million, and income tax of $0.6 million.
Net loss for discontinued operations decreased by $82.7 million for the year ended December 31, 2024 compared to the same period in 2023. This is primarily due to a decrease in cost of revenues of $3.2 million, SG&A expenses of $4.7 million, depreciation of $3.3 million, development costs of $0.4 million, interest expense of $10.0 million, other expense of $25.0 million, tax expense of $0.2 million, and a gain of $53.0 million for the net sale of the Poland, Netherlands, and Romanian operating parks in January, February, and October 2024, respectively. This was offset by a decrease in revenues of $17.2 million.
Liquidity and Capital Resources
Capital Resources
A key element to the Company’s financing strategy is to raise much of its debt in the form of project specific non-recourse borrowings at its subsidiaries with investment grade metrics. Going forward, the Company intends to primarily finance acquisitions or growth capital expenditures using long-term non-recourse debt that fully amortizes within the asset’s contracted life, as well as retained cash flows from operations and issuance of equity securities through public markets.
The following table summarizes certain financial measures that are not calculated and presented in accordance with US GAAP, along with the most directly comparable US GAAP measure, for each period presented below. In addition to its results determined in accordance with US GAAP, the Company believes the following non-US GAAP financial measures are useful in evaluating its operating performance. The Company uses the following non-US GAAP financial information, collectively, to evaluate its ongoing operations and for internal planning and forecasting purposes.
The following non-US GAAP table summarizes the total capitalization and debt as of December 31, 2024 and December 31, 2023:
Year Ended December 31,
(in thousands)
Convertible debt, secured
Senior Secured debt and promissory notes
Total debt
Less current maturities
Long term debt, net of current maturities
Current Maturities
Less current debt discount
Less net loss on issuance of convertible note & warrant
Less movement in fair value
Current Maturities net of debt discount
Long-term maturities
Less long-term debt discount
Long-term maturities net of debt discount
Year Ended December 31,
(in thousands)
Cash and cash equivalents on the Consolidated Balance Sheets
Cash and cash equivalents of discontinued operations included in current assets of discontinued operations on the Consolidated Balance Sheets
Restricted cash of discontinued operations included in current assets of discontinued operations on the Consolidated Balance Sheets
Total cash, cash equivalents, and restricted cash on the Consolidated Statements of Cash Flow
Restricted Cash relates to balances that are in the bank accounts for specific defined purposes and cannot be used for any other undefined purposes. The decrease in available capital from discontinued operations was related to payments paying down the principal of the Green Bonds followed by the sale of operating parks in Poland, the Netherlands, and Romania. Refer to Footnote 3 for further discussion of restricted cash.
Liquidity Position
Our consolidated financial statements for the year ended December 31, 2024 and 2023 identifies the existence of certain conditions that raise substantial doubt about our ability to continue as a going concern for twelve months from the issuance of this report. Refer to Footnote 2 of the accompanying financial statements for more information.
On October 3, 2024, because Solis was unable to fully repay the Solis Bonds, the Company sold Solis and its subsidiaries in Romania to Solis Trustee Special Vehicle Limited, the Solis Bondholders’ ownership vehicle, for €1 in accordance with the terms of the Solis Bonds, as amended. As a result of the sale, the Company eliminated approximately $115 million in debt and payables related to Solis activities and improved shareholders equity by approximately $59 million. Solis accounted for 98% of group revenues for the nine months ended September 30, 2024. Solis bondholders continue to hold a preference share in an Alternus holding company which holds certain development projects in Spain and Italy. The preference share gives the bondholders the right on any distributions up to €10 million, and such assets will be divested to ensure repayment of up to €10 million should it not be fully repaid by the Maturity Date.
On November 8, 2024, the Company was notified by the staff of The Nasdaq Stock Market (“Nasdaq”) that the Company did not meet the market value of listed securities requirement in Listing Rule 5550(b)(2) (the “MVLS Rule”) for continued listing on The Nasdaq Capital Market (the “Staff Determination”). The Company requested a hearing before the Nasdaq Hearings Panel (the “Panel”) to appeal the Staff Determination.
On February 10, 2025, the Company received a determination letter (the “Delisting Notification”) from the Nasdaq Hearings Advisor stating that the Panel has determined to delist the Company’s common stock, par value $0.0001 per share (the “Common Stock”) from the Nasdaq Capital Market, and Nasdaq suspended trading in the Company’s Common Stock on February 12, 2025 because the Company has not demonstrated compliance with the MVLS Rule, nor does it meet any of the alternative requirements under Nasdaq Listing Rule 5550(b) and has failed to demonstrate that additional time to regain compliance is appropriate. The Company was additionally in violation of the bid price requirement of Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”), as disclosed recently on January 31, 2025, which was taken into consideration by the Panel in its Delisting Notification.
The Company’s Common Stock is currently quoted on an over-the-counter trading market.
The Company is currently working on several processes to address the going concern issue. We are working with multiple global banks and funds to secure the necessary project financing to execute our transatlantic business plan.
Financing Activities
In May 2022, AEG MH02 entered into a loan agreement with a group of private lenders of approximately $10.8 million with an initial stated interest rate of 8% and a maturity date of May 31, 2023. In February 2023, the loan agreement was amended stating a new interest rate of 16% retroactive to the date of the first draw in June 2022. In May 2023, the loan was extended, and the interest rate was revised to 18% from June 1, 2023. In July 2023, the loan agreement was further extended to October 31, 2023. In November 2023, the loan agreement further extended to May 31, 2024. On December 31, 2024, the loan agreement was further extended to September 30, 2025 while also stating any accrued interest up to the date of the amendment was to be added to the principal loan balance. As a result of these amendments, $3.2 million of interest was recognized during the period ended December 31, 2024, and $5.9 million of accrued interest was added to the existing loan balance. The Company had principal outstanding of $16.0 million and $11.0 million as of December 31, 2024 and 2023, respectively.
In July 2023, Alt Spain Holdco, one of the Company’s Spanish subsidiaries acquired the project rights for a 32 MWp portfolio of Solar PV projects in Valencia, Spain, with an initial payment of $1.9 million, financed through a €3.0 million ($3.3 million) bank facility having a six-month term and accruing ’Six Month Euribor’ plus 2% margin. On January 24, 2024, the maturity date was extended to July 28, 2024. On July 28, 2024, the loan was further extended to January 28, 2025 and the principal amount was reduced to €2.6 million ($2.8 million) from cash on hand. This note had a principal outstanding balance of $2.7 million and $3.3 million as of December 31, 2024 and 2023, respectively.
For the year ended December 31, 2023, 9,000 shares of Common Stock were issued at Closing to the Sponsor of Clean Earth to settle CLIN promissory notes of $1.6 million. The note has a 0% interest rate until perpetuity. The shares were issued at the closing price of $125 per share for $1.1 million. The difference of $0.5 million was recognized as an addition to Additional Paid in Capital. Management determined the extinguishment of this note is the result of a Troubled Debt Restructuring.
In January 2024, the Company assumed a $938 thousand (€850 thousand) convertible promissory note with a 10% interest maturing in March 2025 as part of the Business Combination that was completed in December 2023. On January 3, 2024, the noteholder converted all of the principal and accrued interest owed under the note, equal to $1.0 million, into 52,800 shares of restricted common stock.
On March 21, 2024, ALCE, SPAC Sponsor Capital Access (“SCAF”), and the Sponsor of Clean Earth (“CLIN”) agreed to a settlement of a $1.4 million note assumed by ALCE as part of the Business Combination that was completed in December 2023. The note had a maturity date of whenever CLIN closes its Business Combination Agreement and accrued interest of 25%. ALCE issued 9,000 shares to SCAF in March 21, 2024 and a payment plan of the rest of the outstanding balance was agreed to with payments to commence on July 15, 2024. The closing stock price of the Company was $11.75 on the date of issuance.
On April 19, 2024, the Company entered into a Securities Purchase Agreement with an institutional investor pursuant to which the Company agreed to issue to the Investor a senior convertible note in the principal amount of $2,160,000, issued with an eight percent (8.0%) original issue discount and a warrant to purchase up to 96,444 shares of the Company’s common stock, at an exercise price of $5.76 per share. The Company received gross proceeds of $2,000,000, before fees and other expenses associated with the transaction. The Convertible Note matures on April 20, 2025, bears interest at 7% per annum, and ranks senior to the Company’s existing and future unsecured indebtedness. Refer to Footnote 5 for details on the conversions completed during the year ended December 31, 2024.
On October 1, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”), by and between the Company and an institutional investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor a series of senior convertible notes up to an aggregate principal amount of $2,500,000, issued with a twelve percent (12.0%) original issue discount (each a “Convertible Note” and together, the “Convertible Notes”), and warrants (each a “Warrant” and together the “Warrants”) to purchase shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), equal to 50% of the face value of the Convertible Note divided by the volume weighted average price, at an exercise price of $2.00 per share (the “Exercise Price”). Pursuant to the Purchase Agreement, with the closing of the initial tranche of the Convertible Note and Warrant, the Company issued a Warrant to purchase up to 212,784 shares of Common Stock and the Company received gross proceeds of $700,000, before fees and other expenses associated with the transaction, accounting for the 12% original issue discount. This warrant was adjusted so that as of November 12, 2024 it is adjusted to purchase up to 283,714 shares exercisable at $1.50 per share. This warrant was again adjusted on December 5, 2024 to purchase up to 425,571 shares exercisable at $1.00 per share. In conjunction with the transaction, the Company issued warrants for the purchase of 21,278 shares of common stock with an exercise price of $2.20 per share to Maxim for their role as placement agent, which is exercisable at any time on or after April 1, 2025 and will expire on December 19, 2027.
The Convertible Note matures on October 1, 2025 (unless accelerated due to an event of default, or accelerated up to six installments by the Investor), bears interest at a rate of seven percent (7%) per annum, which shall automatically be increased to eighteen percent (18.0%) per annum in the event of default and, other than the First Convertible Note, ranks senior to the Company’s existing and future unsecured indebtedness. The Convertible Note is convertible in whole or in part at the option of the Investor into shares of Common Stock (the “Conversion Shares”) at the Conversion Price (as defined below) at any time following the date of issuance of the Convertible Note. The Convertible Note is payable monthly on each Installment Date (as defined in the Convertible Note) commencing on the earlier of December 1, 2024 and the effective date of the initial registration statement required to be filed pursuant to the Registration Rights Agreement (as defined below) in an amount equal the sum of (A) the lesser of (x) $79,545 and (y) the outstanding principal amount of the Convertible Note, (B) interest due and payable under the Convertible Note and (C) other amounts specified in the Convertible Note (such sum being the “Installment Amount”); provided, however, if on any Installment Date, no failure to meet the Equity Conditions (as defined in the Convertible Note) exits pursuant to the Convertible Note, the Company may pay all or a portion of the Installment Amount with shares of its common stock. The portion of the Installment Amount paid with common stock shall be based on the Installment Conversion Price. “Installment Conversion Price” means the lower of (i) the Conversion Price (defined below) and (ii) the of (x) 92% of the average of the two (2) lowest daily volume-weighted average price (“VWAP”) (as defined in the Convertible Note) in the ten (10) trading days immediately prior to each conversion date and (y) $0.75. “Equity Conditions ” means that on any day during the period commencing twenty (20) trading days prior to the applicable Installment Notice Date or Interest Date (each as defined in the Convertible Note) through the later of the applicable Installment Date or Interest Date and the date on which the applicable shares of Common Stock are actually delivered to the Holder, the Equity Conditions have not been (or waived in writing by the Holder).
On October 21, 2024, pursuant to the Purchase Agreement, the closing of the second tranche of the Convertible Note and Warrant occurred, whereby the Company issued a Warrant to purchase 162,628 shares of Common Stock exercisable at $2.00 per share and the Company received gross proceeds of $535,000, before fees and other expenses associated with the transaction, accounting for the 12% original issue discount. In conjunction with the transaction, the Company issued warrants for the purchase of 16,263 shares of common stock with an exercise price of $2.20 per share for their role as placement agent, which is exercisable at any time on or after April 21, 2024 and will expire on the third anniversary of the effective date of the registration statement registering the underlying warrant shares. This warrant was adjusted on November 12, 2024 to purchase up to 216,838 shares at an exercise price of $1.50 per share.
On November 12, 2024, pursuant to the Purchase Agreement, the closing of the third tranche of the Convertible Note and Warrant occurred, whereby the Company issued a Warrant to purchase 303,978 shares of Common Stock exercisable at $1.50 per share and the Company received gross proceeds of $750,000, before fees and other expenses associated with the transaction, accounting for the 12% original issue discount.
On December 4, 2024, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with Secure Net Capital LLC (“Secure Net”), pursuant to which the Company issued a 20% Original Issue Discount promissory convertible note (the “2024 Note”) with a maturity date in April 2025, in the principal sum of $1,250,000. Pursuant to the terms of the 2024 Note, the Company agreed to pay to Secure Net the entire principal amount on the Maturity Date, failing which and certain events of default (as described in the 2024 Note), the 20% Original Issue Discount shall increase to 30% Original Issue Discount. The Purchase Agreement resulted in net proceeds of $1,000,000 to the Company. The 2024 Note, issued pursuant to the Purchase Agreement, is convertible at the option of the Holder at any time after the Maturity Date, including with registration rights, at a conversion price per share equal to ninety percent (90%) of the Company’s common stock’s VWAP (which is the the three (3) Trading Days immediately prior to such Conversion Date (or the nearest preceding date)) as of the date of such conversion (the “Conversion Date”). On December 5, 2024, pursuant to the Purchas Agreement, the closing of the fourth and final tranche of the Convertible Note and Warrant occurred, whereby the Company issued a Warrant to purchase 130,710 shares of Common Stock exercisable at $1.00 per shares and the Company received gross proceeds of $244,317 before fees and other expenses associated with the transaction, accounting for the 12% original issue discount.
On December 11, 2024, the Company entered into an agreement with LiiON LLC as part of the business acquisition for a $2,000,000 note with a maturity date of December 31, 2027. Subsequent to December 31, 2024, the Company and LiiON LLC mutually agreed to rescind the Asset Purchase Agreement. See Footnote 5 for further information.
On December 30, 2024, one of the Company’s subsidiaries, Alternus Europe Ltd, assumed a €1,000,000 ($1,041,720) promissory note from a subsidiary of AEG, Alternus FundCo Ltd, with a 120% repayment premium plus 10% accrued interest maturing July 31, 2025. Additionally, the Company assumed multiple promissory notes totaling $1,052,500 from AEG maturing June 30, 2025.
On December 31, 2024, the Company terminated their agreement with Meteora Capital LLC by issuing a $500,000 promissory note with a 10% annual interest rate maturing January 31, 2026.
Material Cash Requirements from Known Contractual Obligations
The Company’s contractual obligations consist of operating leases generally related to the rent of office building space, as well as land upon which the Company’s solar parks are built. These leases include those that have been assumed in connection with the Company’s asset acquisitions. The Company’s leases are for varying terms and expire between 2027 and 2055.
For the year ending December 31, 2023, the Company incurred operating lease expenses from continuing operations of $160 thousand.
For the year ending December 31, 2024, the Company incurred operating lease expenses from continuing operations of $126 thousand for the United States office lease before Alternus Energy Americas Inc. was sold back to AEG on November 5, 2024 and $48 thousand for the land lease in Madrid, Spain.
The Company had no finance leases as of December 31, 2024.
In October 2023, the Company entered a new lease for land in Madrid, Spain where solar parks are planned to be built. The lease term is 35 years with an estimated annual cost of $32 thousand.
Cash Flow Discussion
The Company uses traditional measures of cash flows, including net cash flows from operating activities, investing activities, and financing activities to evaluate its periodic cash flow results.
For the Year Ended December 31, 2024 compared to December 31, 2023
The following table reflects the changes in cash flows for the comparative periods:
Year Ended December 31,
Change
(in thousands)
Net cash provided by/(used in) operating activities
Net cash provided by/(used in) operating activities – Discontinued Operations
Net cash provided by/(used in) investing activities
Net cash provided by/(used in) investing activities – Discontinued Operations
Net cash provided by/(used in) financing activities
Net cash provided by/(used in) financing activities – Discontinued Operations
Effect of exchange rate on cash
Net Cash Used in Operating Activities
Net cash used in continuing operating activities for the year ended December 31, 2024 compared to 2023 increased by $6.3 million. The net loss decreased by $7.9 million in 2024, which was mainly due to a decrease in revenues, costs of revenues, depreciation, other expenses as described above and an increase in selling, general, and administrative expenses, development costs, and interest expense. The offsetting increase was a result of the normal fluctuations of receivables and payables over the normal course of business operations. All expenses contributing to the decrease in the net loss are non-cash items recognized on the Consolidated Statement of Operation and Comprehensive Loss.
Net cash provided by discontinued operating activities for the year ended December 31, 2024 compared to 2023 increased by $85.4 million. The net loss decreased by $84.7 million in 2024, which was mainly due to a decrease in revenues, cost of revenues, selling, general, and administrative expenses, depreciation, development costs, interest expense, other expenses as described above, and a gain of $55.0 million for the net sale of the Poland, Netherlands, and Romanian operating parks. The remaining increase was a result of the normal fluctuations of receivables and payables over the normal course of business operations.
Net Cash Used in Investing Activities
Net cash used in continuing investing activities for the year ended December 31, 2024 compared to 2023 increased by $1.0 million. This was a result of the increase in costs for construction parks in the US, the development and pursuit of potential projects in Italy, Spain, and the US, and the final payment made to complete the last park for Lightwave in January 2024.
Net cash provided discontinued investing activities for the year ended December 31, 2024 compared to 2024 increased by $23.2 million. This was a result of the disposal of the Romanian, Polish, and Netherlands parks during the year.
Net Cash Provided by Financing Activities
Net cash provided by continuing financing activities for the year ended December 31, 2024 compared to 2023 decreased by $19.9 million mainly driven by the net decrease of $13.8 million of new debt and a $6.1 million net increase driven by intercompany transaction activity.
Net cash used in discontinued financing activities for the year ended December 31, 2024 compared to 2023 increased by $120.6 million mainly driven by the $75.2 million payment made towards the Solis Bond principal balance and $45.4 million of intercompany activity as part of the sale of Solis and its Romanian subsidiaries.
Critical Accounting Estimates
The preparation of financial statements in conformity with US GAAP requires the Company to make estimates and assumptions in certain circumstances that affect amounts reported in its consolidated financial statements and related footnotes. In preparing these consolidated financial statements, the Company has made its best estimates of certain amounts included in the consolidated financial statements. Application of accounting policies and estimates, however, involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In arriving at the Company’s critical accounting estimates, factors the Company considers include how accurate the estimate or assumptions have been in the past, how much the estimate or assumptions have changed, and how reasonably likely such change may have a material impact. The Company’s critical accounting policies are discussed below.
Business Combinations
The Company acquires assets which operate in nature with existing revenue streams and assets which are constructed for the purpose of being sold. The Company applies the screen test per ASC 805 to determine an asset acquisition versus business combination and accounts for 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. Cost directly attributed to an asset acquisition are capitalized to the asset per ASC 805 Business combinations is a critical accounting policy as there are significant judgments involved in the allocation of acquisition costs and determining the fair value of the net assets acquired. Refer to Footnote 5 to the accompanying financial statements for more information.
When the Company acquires renewable energy facilities, the Company allocates the purchase price to; (i) the acquired tangible assets and liabilities assumed, primarily consisting of plant equipment 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 and the 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 in accordance with ASC 805.
The Company performs the analysis of the acquisition using income approach valuation methodology. Factors considered by management 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 the Company’s 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.
When an acquired group of assets does not constitute a business, the transaction is accounted for as an asset acquisition. The cost of assets acquired and liabilities assumed in asset acquisitions is allocated based upon relative fair value. The fair value measurements of the solar facilities acquired and asset retirement obligations assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market. These inputs include, but are not limited to, estimates of future power generation, commodity prices, operating costs, and appropriate discount rates. These inputs require significant judgments and estimates at the time of the valuation. Transaction costs incurred, including legal and financing fees directly related to the acquisition, are capitalized as a component of the assets acquired.
The allocation of the purchase price directly affects the following items in the Company consolidated financial statements:
The amount of purchase price allocated to the various tangible and intangible assets, liabilities, and non-controlling interests on the Company balance sheet;
The amounts allocated to current assets or current liabilities are allocated at the acquisition value. The amounts allocated to long term tangible and intangible assets are amortized to depreciation or amortization expense, and
The period over which tangible and intangible assets and liabilities are depreciated or amortized varies. Changes in the amounts allocated to these assets and liabilities will have a direct impact on Company results of operations.
Measurement of Level 3 Liabilities
Financial liabilities where values are based on valuation techniques that require inputs that are both unobservable and are significant to the overall fair value measurement are classified as Level 3 under the fair value hierarchy established in applicable accounting standards. The fair value of these Level 3 financial liabilities is determined by using a third-party pricing service using Monte Carlo simulations or similar techniques for which the determination of fair value requires significant management judgment or estimation. The Level 3 gains and losses are valued quarterly and recorded in earnings.
Impairment of Renewable Energy Facilities
Renewable energy facilities 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.
Quantitative and Qualitative Disclosures About Market Risk
Market Risk
The Company has no derivative financial instruments or derivative commodity instruments.
Foreign Currency Risk
The Company is exposed to foreign currency risk as a result of certain transactions and borrowings which are denominated in foreign currencies.
In addition, the Company is exposed to currency risk associated with translating its functional currency financial statements into its reporting currency, which is the U.S. dollar. As a result, the Company is exposed to movements in the exchange rates of various currencies against the U.S. dollar.
The Company manages its exposure to currency risk by commercially transacting in the currencies in which the Company materially incurs operating expenses. The Company limits the extent to which it incurs operating expenses in other currencies, wherever possible, thereby minimizing the realized and unrealized foreign exchange gain/(loss). The currency of the Company’s borrowing is, in part, matched to the currencies expected to be generated from the Company’s operations. Intercompany funding is typically undertaken in the functional currency of the operating entities or undertaken to ensure offsetting currency exposures.
Interest Rate Risk
Fluctuations in interest rates can impact the value of investments and financing activities, giving rise to interest rate risk. The debt of the Company is comprised of different instruments, which bear interest at either fixed or floating interest rates. The ratio of fixed and floating rate instruments in the loan portfolio is monitored and managed. Refer to Footnote 14 – Convertible and Non-convertible Promissory Notes for more information.
The Company believes that the interest rates on all borrowings compare favorably with those rates available in the market.
Emerging Growth Company Status
In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company,” or an EGC, can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to use the extended transition period for new or revised accounting standards during the period in which we remain an EGC.
We expect to remain an EGC until the earliest to occur of: (1) the last day of the fiscal year in which we, as applicable, have more than $1.235 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700 million in market value of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our stock held by non-affiliates is greater than or equal to $250 million as of the end of that fiscal year’s second fiscal quarter, or (ii) our annual revenues are greater than or equal to $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is greater than or equal to $700 million as of the end of that fiscal year’s second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.
Recent Accounting Pronouncements
A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Footnote 2, “Significant Accounting Policies,” to our audited consolidated financial statements included elsewhere in this Report.
