Company: ALCE
Filing Date: 2025-06-06
Form Type: 10-K
Source: 0001213900-25-052242
Chunk: 1747

Company: Alternus Clean Energy, Inc.
Filing Date: 2025-06-06
Form: 10-K
Item: Item 5
Chunk 1747
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 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.

49

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