Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 1092

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 2
Chunk 1092
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    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.

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Interest Rate Risk

Fluctuations in interest rates can impact the
value of investments and