Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 657

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 1B
Chunk 657
---
Operating lease expense attributable
to site leases is reported within cost of revenues in the Company’s Consolidated Statements of Operations and Comprehensive Income/(Loss).
Lease expense attributable to all other operating leases is reported within selling, general, and administrative expense in the Company’s
Consolidated Statements of Operations and Comprehensive Income/(Loss).

Revenue Recognition

The Company follows the guidance
of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue
from Contracts with Customers (“ASC 606”). The core principle underlying revenue recognition under ASC 606 is that revenue
should be recognized as goods or services are transferred to customers in an amount that reflects the consideration to which the Company
expects to be entitled. ASC 606 defines a five-step process to achieve this core principle. ASC 606 also mandates additional
disclosure about the nature, amount, timing, and uncertainty of revenues and cash flows arising from customer contracts, including significant
judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.

The Company has historically
derived revenues through its recently discontinued subsidiaries (see Footnote 6) from the sale of electricity and the sale of solar renewable
energy credits (RECs) in Romania and guarantees of origin certificates (GoOs) in Poland. The Company received Green Certificates based
on the amount of energy produced in Romania. Energy generation revenue and solar renewable energy credits revenue are recognized as electricity
generated by the Company’s solar energy facilities is delivered to the grid, at which time all performance obligations have been
delivered. Revenues are based on actual output and contractual sale prices set forth by its customer contracts.

The Company’s current
portfolio of renewable energy facilities is generally contracted under long-term Energy Offtake Agreements (FIT programs/PPAs/VPPAs) with
creditworthy counterparties in the respective regions we operate in. Pricing of the electricity sold under these agreements 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.

One solar park in the Netherlands
receives pre-payments calculated at the beginning of the year and based on the previous years’ production (MWhs produced) multiplied
by a calculated average price per MWh for the year and divided by twelve. The Company books revenue monthly by multiplying actual production
per the Company’s meters by the average price provided by the