Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 400

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 1A
Chunk 400
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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.

67

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