##### Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549   FORM 10-Q    ☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022  ☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 814-00841   FS Energy and Power Fund (Exact name of registrant as specified in its charter)    Delaware

27-6822130(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)  201 Rouse Boulevard
Philadelphia, Pennsylvania

19112(Address of principal executive office)

(Zip Code) Registrants telephone number, including area code:
(215) 495-1150   Securities
registered pursuant to Section 12(b) Act: None  Title of each class

Trading
symbol(s)

Name on each exchange
on which registeredN/A

N/A

N/A Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days.    Yes  ☒    No  ☐. Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes  ☐    No  ☐. Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer,
accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.  Large accelerated filer

☐

Accelerated filer

☐Non-accelerated filer

☒

Smaller reporting company

☐Emerging growth company

☐ If an emerging growth company, indicate by check mark if the registrant has elected to not use the extended
transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes  ☐    No  ☒. Indicate the number of shares
outstanding of each of the issuers classes of common stock, as of the latest practicable date. The issuer had 448,830,118 common shares of beneficial interest outstanding as of May 10, 2022.




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##### Table of Contents

TABLE OF CONTENTS  PagePART IFINANCIAL INFORMATIONITEM 1.

FINANCIAL STATEMENTSConsolidated Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021


1Unaudited Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021


2Unaudited Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2022 and 2021


3Unaudited Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021


4Consolidated Schedules of Investments as of March 31, 2022 (Unaudited) and December 31, 2021


5Notes to Unaudited Consolidated Financial Statements


20ITEM 2.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


41ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


54ITEM 4.

CONTROLS AND PROCEDURES


55PART IIOTHER INFORMATIONITEM 1.

LEGAL PROCEEDINGS


56ITEM 1A.

RISK FACTORS


56ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


56ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


56ITEM 4.

MINE SAFETY DISCLOSURES


56ITEM 5.

OTHER INFORMATION


56ITEM 6.

EXHIBITS


56SIGNATURES


58




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##### Table of Contents

PART IFINANCIAL INFORMATION  Item 1.
Financial Statements. FS Energy and Power Fund Consolidated Balance Sheets (in thousands, except share and per share amounts)    March 31, 2022(Unaudited)


December 31,2021AssetsInvestments, at fair valueNon-controlled/unaffiliated investments (amortized
cost$1,861,075 and $1,961,617, respectively)

$
2,072,917


$
2,037,956Non-controlled/affiliated investments (amortized
cost$185,470 and $200,189, respectively)


217,240



175,908Controlled/affiliated investments (amortized cost$168,380 and $191,251,
respectively)


182,215



181,359Total investments, at fair value (amortized cost$2,214,925 and $2,353,057,
respectively)


2,472,372



2,395,223Cash


93,452



33,879Receivable for investments sold and repaid






4,975Interest receivable


19,113



26,242Prepaid expenses and other assets


88



156Total assets

$
2,585,025


$
2,460,475LiabilitiesPayable for investments purchased

$



$
49,500Credit facilities payable (net of deferred financing costs of $1,131 and $2,036, respectively)(1)


304,545



284,631Secured note payable (net of deferred financing costs of $2,815 and $3,350, respectively)(1)


461,202



482,437Unrealized depreciation on swap contracts


3,482



Swap income payable


416



Shareholder distributions payable


13,426



13,388Management fees payable


10,037



10,466Administrative services expense payable


1,405



1,324Interest payable


4,702



14,170Trustees fees payable


227



200Other accrued expenses and liabilities


1,668



2,036Total liabilities


801,110



858,152Commitments and contingencies(2)Shareholders equityPreferred shares, $0.001 par value, 50,000,000 shares authorized, none issued and
outstanding






Common shares, $0.001 par value, 700,000,000 shares authorized, 447,523,931 and 446,089,499 shares
issued and outstanding, respectively


448



446Capital in excess of par value


3,134,485



3,129,252Accumulated earnings (deficit)


(1,351,018
)


(1,527,375
)Total shareholders equity


1,783,915



1,602,323Total liabilities and shareholders equity

$
2,585,025


$
2,460,475Net asset value per common share at period end

$
3.99


$
3.59  (1)
See Note 9 for a discussion of the Companys financing arrangements.  (2)
See Note 10 for a discussion of the Companys commitments and contingencies. See notes to unaudited consolidated financial statements.  1




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##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Statements of Operations (in thousands, except share and per share amounts)    Three Months EndedMarch 31,2022


2021Investment incomeFrom non-controlled/unaffiliated investments:Interest income

$
23,140


$
26,059Paid-in-kind
interest income


4,423



8,339Fee income


1,233



516From non-controlled/affiliated investments:Interest income


1,910



1,086Paid-in-kind
interest income


35



72Dividend income


1,726



From controlled/affiliated investments:Interest income


2,037



2,020Paid-in-kind
interest income


670



69Dividend income


735



Total investment income


35,909



38,161Operating expensesManagement fees


10,735



10,650Administrative services expenses


1,420



1,581Share transfer agent fees


720



718Accounting and administrative fees


177



186Interest expense(1)


13,694



15,490Trustees fees


227



207Other general and administrative expenses


1,444



672Total operating expenses


28,417



29,504Less: Management fee offset(2)


(698
)


(2
)Net expenses


27,719



29,502Net investment income


8,190



8,659Realized and unrealized gain/lossNet realized gain (loss) on investments:Non-controlled/unaffiliated


(16,664
)


(440
)Non-controlled/affiliated


(12,380
)


Net realized gain (loss) on swap contracts


(416
)


Net realized gain (loss) on debt extinguishment


(746
)


Net change in unrealized appreciation (depreciation) on investments:Non-controlled/unaffiliated


135,503



149,226Non-controlled/affiliated


56,051



(6,441
)Controlled/affiliated


23,727



(11,222
)Net change in unrealized appreciation (depreciation) on swap contracts


(3,482
)


Net change in unrealized gain (loss) on foreign currency






4Total net realized and unrealized gain (loss)


181,593



131,127Net increase (decrease) in net assets resulting from operations

$
189,783


$
139,786Per share informationbasic and dilutedNet increase (decrease) in net assets resulting from operations (Earnings per Share)

$
0.42


$
0.32Weighted average shares outstanding


447,404,395



441,521,922  (1)
See Note 9 for a discussion of the Companys financing arrangements.  (2)
See Note 4 for a discussion of the offset by FS/EIG Advisor, LLC, the Companys investment adviser, of
certain management fees to which it was otherwise entitled during the applicable period. See notes to unaudited
consolidated financial statements.  2




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##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Statements of Changes in Net Assets (in thousands)    Three Months Ended March 31,2022


2021OperationsNet investment income

$
8,190


$
8,659Net realized gain (loss) on investments, swap contracts and debt extinguishment


(30,206
)


(440
)Net change in unrealized appreciation (depreciation) on investments


215,281



131,563Net change in unrealized appreciation (depreciation) on swap contracts


(3,482
)


Net change in unrealized gain (loss) on foreign currency






4Net increase (decrease) in net assets resulting from operations


189,783



139,786Shareholder distributions(1)Distributions to shareholders


(13,426
)


(13,249
)Net decrease in net assets resulting from shareholder distributions


(13,426
)


(13,249
)Capital share transactions(2)Reinvestment of shareholder distributions


5,235



5,341Net increase in net assets resulting from capital share transactions


5,235



5,341Total increase (decrease) in net assets


181,592



131,878Net assets at beginning of period


1,602,323



1,428,577Net assets at end of period

$
1,783,915


$
1,560,455  (1)
See Note 5 for a discussion of the sources of distributions paid by the Company.  (2)
See Note 3 for a discussion of the Companys common share transactions. See notes to unaudited consolidated financial statements.  3




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##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Statements of Cash Flows (in thousands)    Three Months Ended March 31,2022


2021Cash flows from operating activitiesNet increase (decrease) in net assets resulting from operations

$
189,783


$
139,786Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net
cash provided by (used in) operating activities:Purchases of investments


(122,503
)


(145,199
)Paid-in-kind
interest


(5,128
)


(8,480
)Proceeds from sales and repayments of investments


238,748



253,939Net realized (gain) loss on investments


29,044



440Net change in unrealized (appreciation) depreciation on investments


(215,281
)


(131,563
)Net change in unrealized (appreciation) depreciation on swap contracts


3,482



Accretion of discount


(2,029
)


(3,526
)Amortization of deferred financing costs and discount


2,185



3,084(Increase) decrease in receivable for investments sold and repaid


4,975



7,691(Increase) decrease in interest receivable


7,129



9,527(Increase) decrease in prepaid expenses and other assets


68



80Increase (decrease) in payable for investments purchased


(49,500
)


10,474Increase (decrease) in swap income payable


416



Increase (decrease) in management fees payable


(429
)


492Increase (decrease) in administrative services expense payable


81



617Increase (decrease) in interest
payable(1)


(9,468
)


(8,924
)Increase (decrease) in trustees fees payable


27



15Increase (decrease) in other accrued expenses and liabilities


(368
)


259Net cash provided by (used in) operating activities


71,232



128,712Cash flows from financing activitiesShareholder distributions paid


(8,153
)


(7,847
)Borrowings under credit facilities(1)



29,009



Repayments of credit facilities(1)


(10,000
)


(185,000
)Repayments under senior secured
notes(1)


(22,383
)


Deferred financing costs paid


(132
)


(128
)Net cash provided by (used in) financing activities


(11,659
)


(192,975
)Total increase (decrease) in cash


59,573



(64,263
)Cash at beginning of period


33,879



142,536Cash at end of period

$
93,452


$
78,273Supplemental disclosureReinvestment of shareholder distributions

$
5,235


$
5,341Non-cash purchases of investments

$
(1,587
)

$
(30,790
)Non-cash sales of investments

$
1,587


$
30,790Excise and state taxes paid

$
846


$
  (1)
See Note 9 for a discussion of the Companys financing arrangements. During the three months ended
March 31, 2022 and 2021, the Company paid $20,977 and $21,330, respectively, in interest expense on the financing arrangements and Senior Secured Notes. See notes to unaudited consolidated financial statements.  4




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##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Schedule of Investments As of March 31, 2022 (in
thousands, except share amounts)    Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor

Maturity

PrincipalAmount(c)


AmortizedCost


FairValue(d)Senior Secured LoansFirst Lien39.1%AIRRO (Mauritius) Holdings II

(k)(p)(s)

Power

L+350, 3.5% PIK (3.5% Max PIK)

1.5%

7/24/25

$
22,259


$
19,608


$
19,380AIRRO (Mauritius) Holdings II

(e)(k)(p)(s)

Power

L+350, 3.5% PIK (3.5% Max PIK)

1.5%

7/24/25


14,602



14,602



12,713Allied Downhole Technologies, LLC

(f)(s)(y)

Service & Equipment

8.0% PIK (8.0% Max PIK)



9/30/22


7,939



7,939



7,939Allied Downhole Technologies, LLC

(e)(s)(y)

Service & Equipment

8.0% PIK (8.0% Max PIK)



9/30/22


2,500



2,500



2,500Allied Wireline Services, LLC

(f)(s)(y)

Service & Equipment

10.0% PIK (10.0% Max PIK)



6/15/25


58,080



58,080



48,738ARB Midstream Operating Company, LLC

(s)

Midstream

L+825

1.0%

5/6/22


261



261



261Brazos Delaware II LLC



Midstream

L+400



5/21/25


39,579



38,104



39,153Cimarron Energy Inc.

(f)(m)(o)(s)

Service & Equipment

L+900

1.0%

12/31/24


7,500



7,126



4,256Cox Oil Offshore, LLC, Volumetric Production Payments

(i)(s)(v)

Upstream

10.5%



12/31/23


100,000



20,927



37,511CPV Maryland, LLC



Power

L+400

1.0%

5/11/28


15,353



15,187



15,199CPV Shore Holdings LLC



Power

L+375



12/29/25


23,601



22,583



22,601EIF Van Hook Holdings, LLC



Midstream

L+525



9/5/24


29,790



29,389



28,872FR BR Holdings LLC

(f)(s)

Midstream

L+650



12/14/23


82,367



80,319



83,396FR XIII PAA Holdings HoldCo, LLC

(s)

Midstream

L+725

0.5%

10/15/26


28,957



28,489



30,576GasLog Ltd.

(k)(s)

Midstream

L+775



3/31/29


14,648



14,542



14,539Generation Bridge LLC



Power

L+500

0.8%

12/1/28


7,817



7,667



7,817Generation Bridge LLC



Power

L+500

0.8%

12/1/28


163



160



163GIP II Blue Holding LP



Midstream

L+450

1.0%

9/29/28


7,481



7,376



7,472Lucid Energy Group II Borrower LLC



Midstream

L+425

0.8%

11/22/28


24,938



24,760



24,826Medallion Midland Acquisition LP



Midstream

L+375

0.8%

10/18/28


7,980



7,942



7,915MRP CalPeak Holdings, LLC

(s)

Power

L+500

1.5%

1/27/25


12,804



12,804



12,804MRP West Power Holdings II, LLC

(s)

Power

L+500

1.5%

1/27/25


13,849



13,849



13,849NNE Holding LLC

(s)

Upstream

L+475, 4.5% PIK (4.5% Max PIK)



12/31/23


42,333



42,306



42,040OE2 North, LLC

(s)

Midstream

L+525

1.0%

5/21/26


14,621



14,526



14,789OE2 North, LLC

(e)(s)

Midstream

L+525

1.0%

5/21/26


15,379



15,379



15,556Oryx Midstream Services Permian Basin LLC

(f)

Midstream

L+325

0.5%

10/5/28


32,918



32,762



32,694Parkway Generation LLC



Power

L+475

0.8%

2/18/29


6,140



6,079



6,018Parkway Generation LLC



Power

L+475

0.8%

2/18/29


43,860



43,421



43,037Permian Production Holdings, LLC

(f)(s)(x)

Upstream

7.0%, 2.0% PIK (2.0% Max PIK)



11/23/25


5,426



4,658



5,426Pinnacle Midland Gas Holdco LLC

(s)

Midstream

L+675

1.0%

12/9/26


5,385



5,309



5,347Pinnacle Midland Gas Holdco LLC

(e)(s)

Midstream

L+675

1.0%

12/9/26


6,462



6,462



6,416Plainfield Renewable Energy Holdings LLC

(f)(s)

Power

6.4%, 9.1% PIK (9.5% Max PIK)



8/22/25


11,838



11,838



11,519Plainfield Renewable Energy Holdings LLC

(f)(s)

Power

10.0% PIK (10.0% Max PIK)



8/22/25


3,469



3,469



Plainfield Renewable Energy Holdings LLC, Letter of Credit

(e)(s)

Power

10.0%



8/22/25


2,709



2,709



Potomac Energy Center, LLC

(s)

Power

L+600

0.5%

11/10/26


58,754



57,654



58,115  See notes to
unaudited consolidated financial statements.  5




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##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Schedule of Investments (continued) As of March 31, 2022 (in
thousands, except share amounts)    Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor


Maturity

PrincipalAmount(c)


AmortizedCost


FairValue(d)Traverse Midstream Partners LLC



Midstream

S+425


1.0%


9/27/24

$
31,615


$
31,693


$
31,536Warren Resources, Inc.

(s)(y)

Upstream

L+900, 1.0% PIK (1.0% Max PIK)


1.0%


5/22/24


23,405



23,405



23,405Total Senior Secured LoansFirst Lien


















735,884



738,378Unfunded Loan Commitments


















(41,652
)


(41,652
)Net Senior Secured LoansFirst Lien


















694,232



696,726Senior Secured LoansSecond Lien7.3%Aethon III BR LLC

(f)(s)

Upstream

L+750


1.5%


1/10/25


20,000



19,805



20,200ERA II Minerals, LLC

(f)(s)

Upstream

S+625


0.8%


3/7/27


40,000



39,500



39,500Olympus Energy, LLC

(f)(s)

Upstream

L+750


1.0%


7/23/26


22,500



22,500



22,684Olympus Energy, LLC

(e)(s)

Upstream

L+750


1.0%


7/23/26


7,500



7,500



7,562Peak Exploration & Production, LLC

(f)(s)

Upstream

L+675


1.5%


11/16/23


13,545



13,516



13,561Peak Exploration & Production, LLC

(e)(s)

Upstream

L+675


1.5%


11/16/23


1,505



1,505



1,507SilverBow Resources, Inc.

(f)(k)(s)

Upstream

L+750


1.0%


12/15/26


14,250



14,183



14,392Tenrgys, LLC

(n)(s)

Upstream

L+750


1.0%


3/17/27


20,000



20,000



20,000Total Senior Secured LoansSecond Lien


















138,509



139,406Unfunded Loan Commitments


















(9,005
)


(9,005
)Net Senior Secured LoansSecond Lien


















129,504



130,401Senior Secured Bonds4.8%Great Western Petroleum, LLC

(f)(x)

Upstream

12.0%





9/1/25


55,096



53,985



61,848SM Energy Co.

(k)

Upstream

10.0%





1/15/25


12,000



13,234



13,114ST EIP Holdings Inc.

(s)

Midstream

6.1%





1/10/30


10,526



10,029



10,490Total Senior Secured Bonds


















77,248



85,452Unsecured Debt21.4%Aethon United BR LP

(f)

Upstream

8.3%





2/15/26


40,500



40,500



42,096Archrock Partners, L.P.

(f)(k)

Midstream

6.3%





4/1/28


22,239



23,113



21,961Cheniere Energy Partners LP Holdings, LLC

(f)(k)

Midstream

4.5%





10/1/29


16,825



17,877



16,929Colgate Energy Partners III LLC

(f)

Upstream

5.9%





7/1/29


11,000



11,121



11,360Colgate Energy Partners III LLC



Upstream

7.8%





2/15/26


23,365



24,663



24,939Endeavor Energy Resources, L.P.



Upstream

5.8%





1/30/28


31,299



32,967



32,391EnLink Midstream, LLC

(k)

Midstream

5.4%





6/1/29


6,000



6,264



5,995EnLink Midstream, LLC

(f)(k)

Midstream

5.6%





1/15/28


5,881



6,317



6,007Hammerhead Resources Inc.

(f)(k)(s)

Upstream

12.0% PIK (12.0% Max PIK)





7/15/24


67,889



67,434



67,889Moss Creek Resources, LLC

(f)

Upstream

7.5%





1/15/26


11,693



10,103



10,746  See notes to
unaudited consolidated financial statements.  6




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##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Schedule of Investments (continued) As of March 31, 2022 (in
thousands, except share amounts)    Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor


Maturity


PrincipalAmount(c)


AmortizedCost


FairValue(d)NRG Energy, Inc.

(k)

Power

3.9%






2/15/32


$
19,125


$
18,638


$
16,868Range Resources Corp.

(k)

Upstream

8.3%






1/15/29



8,750



9,743



9,602Ranger Oil Corp.

(k)

Upstream

9.3%






8/15/26



29,772



29,610



31,441SM Energy Co.

(k)

Upstream

5.6%






6/1/25



8,000



8,038



8,000Southwestern Energy Co.



Upstream

5.4%






2/1/29



18,928



19,707



19,190Suburban Propane Partners LP

(f)(k)

Midstream

5.0%






6/1/31



17,690



18,344



16,608Tallgrass Energy Partners, LP

(f)

Midstream

6.0%






3/1/27



23,261



23,810



23,217Tallgrass Energy Partners, LP

(f)

Midstream

7.5%






10/1/25



15,424



16,534



16,270Total Unsecured Debt




















384,783



381,509Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor


Maturity


Number ofShares


AmortizedCost


FairValue(d)Preferred Equity27.1%(l)Abaco Energy Technologies LLC, Preferred Equity

(f)(o)(s)

Service & Equipment












28,942,003


$
1,447


$
3,980Altus Midstream LP, Series A Preferred Units

(j)(s)

Midstream

11.0%






6/28/26



40,170



45,047



45,769Global Jet Capital Holdings, LP, Preferred Equity

(f)(s)

Industrials

9.0% PIK (9.0% Max PIK)






10/1/28



170,938



12,493



10,491Global Jet Capital Holdings, LP, Preferred Equity

(f)(o)(s)

Industrials












27,856



2,786



NGL Energy Partners, LP, Preferred Equity

(f)(k)(m)(o)(s)

Midstream

14.2%






7/2/27



156,250



157,633



125,000NuStar, Preferred Equity

(f)(k)(s)

Midstream

12.8%






6/29/28



3,910,165



106,037



124,050Segreto Power Holdings, LLC, Preferred Equity

(f)(g)(m)(o)(s)

Power

13.1%






6/30/25



70,297



99,760



82,037USA Compression Partners, LP, Preferred Equity

(k)(s)

Midstream

9.8%






4/3/28



79,336



77,807



92,320Total Preferred Equity




















503,010



483,647PrincipalAmount(c)


Cost


FairValue(d)Sustainable Infrastructure Investments, LLC2.9%Sustainable Infrastructure Investments, LLC

(k)(s)(y)

Power











$
60,603


$
54,514


$
52,100Total Sustainable Infrastructure Investments, LLC




















54,514



52,100  See notes to
unaudited consolidated financial statements.  7




---

##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Schedule of Investments (continued) As of March 31, 2022 (in
thousands, except share amounts)    Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor

Maturity

Number ofShares


AmortizedCost


FairValue(d)Equity/Other36.0%(l)Abaco Energy Technologies LLC, Common Equity

(f)(o)(s)

Service & Equipment








6,944,444


$
6,944


$
628AIRRO (Mauritius) Holdings II, Warrants

(f)(k)(o)(p)(s)

Power








35



2,652



2,067Allied Wireline Services, LLC, Common Equity

(f)(n)(o)(s)(y)

Service & Equipment








48,400



1,527



Allied Wireline Services, LLC, Warrants

(f)(n)(o)(s)(y)

Service & Equipment








22,000







Arena Energy, LP, Contingent Value Rights

(f)(o)(s)

Upstream








126,632,117



351



1,471Ascent Resources Utica Holdings, LLC, Common Equity

(f)(o)(q)(s)

Upstream








148,692,909



44,700



52,191Cimarron Energy Holdco Inc., Common Equity

(f)(o)(s)

Service & Equipment








4,302,293



3,950



Cimarron Energy Holdco Inc., Participation Option

(f)(o)(s)

Service & Equipment








25,000,000



1,289



Great Western Petroleum, LLC, Common Equity

(f)(o)(r)(s)(x)

Upstream








105,785



30,790



77,254Harvest Oil & Gas Corp., Common Equity

(f)(o)(x)

Upstream








135,062



15,802



810Limetree Bay Energy, LLC, Class A Units

(f)(o)(s)(x)

Midstream








76,938,973



21,249



4,616Maverick Natural Resources, LLC, Common Equity

(f)(g)(n)(o)(s)

Upstream








503,176



138,208



367,450MB Precision Investment Holdings LLC, Class A-2
Units

(f)(n)(o)(s)

Industrials








1,426,110



490



MECO IV Holdco, LLC, Class A-1 Units

(f)(n)(o)(s)(y)

Upstream








1,225,000



2,161



12,565NGL Energy Partners, LP, Warrants (Par)

(f)(k)(o)(s)

Midstream








2,187,500



3,083



409NGL Energy Partners, LP, Warrants (Premium)

(f)(k)(o)(s)

Midstream








3,125,000



2,623



463NGL Energy Partners, LP, Warrants (Premium)

(f)(k)(o)(s)

Midstream








781,250



576



111NGL Energy Partners, LP, Warrants (Par)

(f)(k)(o)(s)

Midstream








546,880



630



99Permian Production Holdings, LLC, Common Equity

(f)(n)(o)(s)(x)

Upstream








1,961,896



1



9,613Ridgeback Resources Inc., Common Equity

(f)(k)(o)(s)(t)(x)

Upstream








9,599,928



58,985



57,673Swift Worldwide Resources Holdco Limited, Common Equity

(f)(k)(o)(s)(u)

Service & Equipment








3,750,000



6,029



2,775Telpico, LLC, Common Equity

(f)(n)(o)(s)(x)

Upstream








50







Tenrgys, LLC, Common Equity

(f)(n)(o)(s)

Upstream








50



7,571



7,571USA Compression Partners, LP, Warrants (Market)

(f)(k)(o)(s)

Midstream








793,359



555



2,839USA Compression Partners, LP, Warrants (Premium)

(f)(k)(o)(s)

Midstream








1,586,719



714



4,464Warren Resources, Inc., Common Equity

(f)(o)(s)(y)

Upstream








4,415,749



20,754



37,468Total Equity/Other
















371,634



642,537TOTAL INVESTMENTS138.6%















$
2,214,925



2,472,372LIABILITIES IN EXCESS OF OTHER ASSETS(38.6%)

(h)


















(688,457
)NET ASSETS100.0%



















$
1,783,915  See notes to
unaudited consolidated financial statements.  8




---

##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Schedule of Investments (continued) As of March 31, 2022 (in
thousands, except share amounts)    Swap ContractsCrude Oil(i)  Counterparty

Type

Location

Period


Bbls


WeightedAveragePrice($/Bbls)


UnrealizedAppreciation(w)


UnrealizedDepreciation(w)BP Energy Co.

Fixed

ICE Brent


April 1, 2022  December 31, 2023



301,634


$
83.19


$



$
(2,976
)Total Swap ContractsCrude Oil

















$



$
(2,976
) Swap ContractsNatural Gas(i)  Counterparty

Type

Location

Period


MMBtu


WeightedAveragePrice($/MMBtu)


UnrealizedAppreciation(w)


UnrealizedDepreciation(w)BP Energy Co.

Fixed

NYMEX Henry Hub


April 1, 2022  December 31, 2023



586,944


$
4.12


$



$
(506
)Total Swap ContractsNatural Gas

















$



$
(506
)TOTAL SWAP CONTRACTS

















$



$
(3,482
)  Bbls 
Barrels MMBtu  One million British thermal units  (a)
Security may be an obligation of one or more entities affiliated with the named company.  (b)
Certain variable rate securities in the Companys portfolio bear interest at a rate determined by a
publicly disclosed base rate plus a basis point spread. As of March 31, 2022, the three-month London Interbank Offered Rate, or LIBOR, or L, was 0.96% and the Secured Overnight Financing Rate, or SOFR, or S, was 0.29%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment.  (c)
Denominated in U.S. dollars, unless otherwise noted.  (d)
Fair value determined by the Companys board of trustees (see Note 8).  (e)
Security is an unfunded commitment. The stated rate reflects the spread disclosed at the time of commitment and
may not indicate the actual rate received upon funding.  (f)
Security or portion thereof is pledged as collateral supporting the amounts outstanding under the Senior Secured
Notes with JPMorgan Chase Bank, N.A. (see Note 9).  See notes to
unaudited consolidated financial statements.  9




---

##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Schedule of Investments (continued) As of March 31, 2022 (in
thousands, except share amounts)    (g)
Security held within FS Energy Investments, LLC, a wholly-owned subsidiary of the Company.  (h)
Includes the effect of swap contracts.  (i)
Security held within EP Northern Investments, LLC, a wholly-owned subsidiary of the Company.  (j)
Security held within FS Power Investments, LLC, a wholly-owned subsidiary of the Company.  (k)
The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act.
A business development company may not acquire any asset other than a qualifying asset, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the business development companys total assets. As of
March 31, 2022, 71.9% of the Companys total assets represented qualifying assets. (l)
Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax
purposes.  (m)
Security was on non-accrual status as of March 31, 2022.  (n)
Security held within FSEP Investments, Inc., a wholly-owned subsidiary of the Company.  (o)
Security is non-income producing.  (p)
Security or portion thereof held within FS Power Investments II, LLC, a wholly-owned subsidiary of the Company.  (q)
Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.  (r)
Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of Gladwyne Funding LLC.  (s)
Security is classified as Level 3 in the Companys fair value hierarchy (see Note 8).  (t)
Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of
March 31, 2022.  (u)
Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of
March 31, 2022.  (v)
Investment is a real property interest and is included with Senior Secured LoansFirst Lien to facilitate
comparison with other investments.  (w)
Represents the amounts the Company would pay or receive under each swap contract if it were to settle on
March 31, 2022 (see Note 6).  See notes to
unaudited consolidated financial statements.  10




---

##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Schedule of Investments (continued) As of March 31, 2022 (in
thousands, except share amounts)    (x)
Under the 1940 Act, the Company generally is deemed to be an affiliated person of a portfolio
company if it owns 5% or more of the portfolio companys voting securities and generally is deemed to control a portfolio company if it owns more than 25% of the portfolio companys voting securities or it has the power to
exercise control over the management or policies of such portfolio company. As of March 31, 2022, the Company held investments in portfolio companies of which it is deemed to be an affiliated person but is not deemed to
control. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person as of March 31, 2022:  Portfolio Company

Fair Value atDecember 31,2021


GrossAdditions(1)


GrossReductions(2)


Net RealizedGain (Loss)


Net Change inUnrealizedAppreciation(Depreciation)


Fair Value atMarch 31,2022


InterestIncome(3)


PIKIncome(3)


DividendIncome(3)Senior Secured LoansFirst LienLimetree Bay Energy, LLC

$
3,166


$



$
(1,587
)

$
(12,756
)

$
11,177


$



$



$



$
Permian Production Holdings, LLC


7,889



88



(2,498
)


376



(429
)


5,426



185



35



Senior Secured BondsGreat Western Petroleum, LLC


58,055



72











3,721



61,848



1,725







Equity/OtherGreat Western Petroleum, LLC, Common Equity


40,731















36,523



77,254











Harvest Oil & Gas Corp., Common Equity


2,836















(2,026
)


810











Limetree Bay Energy, LLC, Class A Units


6,046



1,586











(3,016
)


4,616











Permian Production Holdings, LLC, Common Equity


8,829















784



9,613











1,726Ridgeback Resources Inc., Common Equity


48,356















9,317



57,673











Telpico, LLC, Common Equity


































$
175,908


$
1,746


$
(4,085
)

$
(12,380
)

$
56,051


$
217,240


$
1,910


$
35


$
1,726  (1)
Gross additions may include increases in the cost basis of investments resulting from new portfolio investments,
PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company into this category from a different category.  (2)
Gross reductions may include decreases in the cost basis of investments resulting from principal collections
related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company out of this category into a different category.  (3)
Interest, PIK and dividend income presented for the three months ended March 31, 2022.  See notes to
unaudited consolidated financial statements.  11




---

##### Table of Contents

FS Energy and Power Fund Unaudited Consolidated Schedule of Investments (continued) As of March 31, 2022 (in
thousands, except share amounts)    (y)
Under the 1940 Act, the Company generally is deemed to control a portfolio company if it owns more
than 25% of the portfolio companys voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of March 31, 2022, the Company held investments in portfolio companies of which it
is deemed to be an affiliated person of and deemed to control. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person and
deemed to control as of March 31, 2022:  Portfolio Company

Fair Value atDecember 31,2021


GrossAdditions(1)


GrossReductions(2)


Net RealizedGain (Loss)


Net Change inUnrealizedAppreciation(Depreciation)


Fair Value atMarch 31,2022


InterestIncome(3)


PIKIncome(3)


DividendIncome(3)Senior Secured LoansFirst LienAllied Downhole Technologies, LLC(4)

$
7,782


$
157


$



$



$



$
7,939


$



$
157


$
Allied Wireline Services, LLC


46,339















2,399



48,738



1,452







MECO IV Holdco, LLC


22,745



455



(23,200
)


















455



Warren Resources, Inc.


23,688



58



(341
)










23,405



585



58



Sustainable Infrastructure Investments, LLCSustainable Infrastructure Investments, LLC


50,770















1,330



52,100











735Equity/OtherAllied Wireline Services, LLC, Common Equity


































Allied Wireline Services, LLC, Warrants


































MECO IV Holdco, LLC, Class A-1 Units


4,181















8,384



12,565











Warren Resources, Inc., Common Equity


25,854















11,614



37,468











$
181,359


$
670


$
(23,541
)

$



$
23,727


$
182,215


$
2,037


$
670


$
735  (1)
Gross additions may include increases in the cost basis of investments resulting from new portfolio investments,
PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company into this category from a different category.  (2)
Gross reductions may include decreases in the cost basis of investments resulting from principal collections
related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company out of this category into a different category.  (3)
Interest, PIK and dividend income presented for the three months ended March 31, 2022.  (4)
Security includes a partially unfunded commitment with amortized cost of $2,500 and fair value of $2,500.  See notes to
unaudited consolidated financial statements.  12




---

##### Table of Contents

FS Energy and Power Fund Consolidated Schedule of Investments As of December 31, 2021 (in thousands, except share amounts)    Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor


Maturity

PrincipalAmount(c)


AmortizedCost


FairValue(d)Senior Secured LoansFirst Liens50.7%AIRRO (Mauritius) Holdings II

(k)(p)(s)

Power

L+350, 3.5% PIK (3.5% Max PIK)


1.5%


7/24/25

$
22,067


$
19,415


$
19,229AIRRO (Mauritius) Holdings II

(e)(k)(p)(s)

Power

L+350, 3.5% PIK (3.5% Max PIK)


1.5%


7/24/25


14,602



14,602



12,724Allied Downhole Technologies, LLC

(f)(s)(x)

Service & Equipment

8.0% PIK (8.0% Max PIK)





9/30/22


7,782



7,782



7,782Allied Downhole Technologies, LLC

(e)(s)(x)

Service & Equipment

8.0% PIK (8.0% Max PIK)





9/30/22


2,500



2,500



2,500Allied Wireline Services, LLC

(f)(s)(x)

Service & Equipment

10.0% PIK (10.0% Max PIK)





6/15/25


58,080



58,080



46,339ARB Midstream Operating Company, LLC

(s)

Midstream

L+825


1.0%


5/6/22


625



624



625Bioenergy Infrastructure Holdings Limited

(k)(s)

Power

L+725


1.0%


12/22/22


413



413



403Birch Permian LLC

(s)

Upstream

L+800


1.5%


4/12/23


42,781



42,642



43,209Brazos Delaware II LLC



Midstream

L+400





5/21/25


39,685



38,112



38,738Cimarron Energy Inc.

(f)(m)(o)(s)

Service & Equipment

L+900


1.0%


12/31/24


7,500



7,311



3,600Cox Oil Offshore, LLC, Volumetric Production Payments

(i)(o)(s)(v)

Upstream

0.0%





12/31/23


100,000



23,342



28,987CPV Maryland, LLC



Power

L+400


1.0%


5/11/28


15,353



15,182



15,276CPV Shore Holdings LLC



Power

L+375





12/29/25


23,601



22,525



22,682EIF Van Hook Holdings, LLC



Midstream

L+525





9/5/24


30,332



29,889



29,081FR BR Holdings LLC

(f)(s)

Midstream

L+650





12/14/23


82,610



80,293



83,436FR XIII PAA Holdings HoldCo, LLC

(s)

Midstream

L+725


0.5%


10/15/26


29,141



28,650



30,307GasLog Ltd.

(e)(k)(o)(s)

Midstream

L+775





3/21/29


15,113



15,113



15,000Generation Bridge LLC



Power

L+500


0.8%


12/1/28


7,837



7,681



7,876Generation Bridge LLC



Power

L+500


0.8%


12/1/28


163



160



164GIP II Blue Holding LP



Midstream

L+450


1.0%


9/29/28


7,481



7,372



7,477Limetree Bay Energy, LLC

(f)(o)(s)(w)

Midstream

0.0%





10/31/21


26,444



14,343



3,166Lucid Energy Group II Borrower LLC



Midstream

L+425


0.8%


11/22/28


25,000



24,752



24,737MECO IV Holdco, LLC

(s)(x)

Upstream

8.0%





9/14/25


22,745



22,745



22,745Medallion Midland Acquisition LP



Midstream

L+375


0.8%


10/18/28


7,980



7,941



7,954MRP CalPeak Holdings, LLC

(s)

Power

L+500


1.5%


1/27/25


12,842



12,842



12,842MRP West Power Holdings II, LLC

(s)

Power

L+500


1.5%


1/27/25


13,887



13,887



13,887Navitas Midstream Midland Basin LLC

(f)

Midstream

L+400


1.0%


12/13/24


68,341



66,690



68,359NNE Holding LLC

(s)

Upstream

L+475, 4.5% PIK (4.5% Max PIK)





12/31/23


42,333



42,302



41,696OE2 North, LLC

(s)

Midstream

L+525


1.0%


5/21/26


11,627



11,527



11,688OE2 North, LLC

(e)(s)

Midstream

L+525


1.0%


5/21/26


18,373



18,373



18,468Oryx Midstream Services Permian Basin LLC

(f)

Midstream

L+325


0.5%


10/5/28


36,000



35,825



35,817Parkway Generation LLC

(h)

Power

L+475


0.8%


11/5/28


6,140



6,079



6,117Parkway Generation LLC

(h)

Power

L+475


0.8%


11/5/28


43,860



43,421



43,654Permian Production Holdings, LLC

(f)(s)(w)

Upstream

7.0%, 2.0% PIK (2.0% Max PIK)





11/23/25


7,889



6,692



7,889Pinnacle Midland Gas Holdco LLC

(s)

Midstream

L+675


1.0%


12/2/26


5,385



5,306



5,305Pinnacle Midland Gas Holdco LLC

(e)(s)

Midstream

L+675


1.0%


12/2/26


6,462



6,462



6,365Plainfield Renewable Energy Holdings LLC

(f)(s)

Power

6.7%, 8.8% PIK (9.5% Max PIK)





8/22/25


11,804



11,804



11,954Plainfield Renewable Energy Holdings LLC

(f)(s)

Power

10.0% PIK (10.0% Max PIK)





8/22/25


3,304



3,304



  See notes to
unaudited consolidated financial statements.  13




---

##### Table of Contents

FS Energy and Power Fund Consolidated Schedule of Investments (continued) As of December 31, 2021 (in thousands, except share amounts)    Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor


Maturity

PrincipalAmount(c)


AmortizedCost


FairValue(d)Plainfield Renewable Energy Holdings LLC, Letter of Credit

(e)(o)(s)

Power

10.0%





8/22/25

$
2,709


$
2,709


$
Potomac Energy Center, LLC



Power

L+600


0.5%


11/10/26


59,000



57,848



58,705Traverse Midstream Partners LLC



Midstream

SF+425


1.0%


9/27/24


31,702



31,788



31,623Warren Resources, Inc.

(s)(x)

Upstream

L+900, 1.0% PIK (1.0% Max PIK)


1.0%


5/22/24


23,688



23,688



23,688Total Senior Secured LoansFirst Lien


















892,016



872,094Unfunded Loan Commitments


















(59,759
)


(59,759
)Net Senior Secured LoansFirst Lien


















832,257



812,335Senior Secured LoansSecond Lien5.2%Aethon III BR LLC

(f)(s)

Upstream

L+750


1.5%


1/10/25


20,000



19,792



20,200Chisholm Energy Holdings, LLC

(f)(s)

Upstream

L+625


1.5%


5/15/26


17,143



17,091



17,314Olympus Energy, LLC

(f)(s)

Upstream

L+750


1.0%


7/23/26


18,750



18,750



18,750Olympus Energy, LLC

(e)(s)

Upstream

L+750


1.0%


7/23/26


11,250



11,250



11,250Peak Exploration & Production, LLC

(f)(s)

Upstream

L+675


1.5%


11/16/23


13,545



13,512



13,438Peak Exploration & Production, LLC

(e)(s)

Upstream

L+675


1.5%


11/16/23


1,505



1,505



1,493SilverBow Resources, Inc.

(f)(k)(s)

Upstream

L+750


1.0%


12/15/26


14,250



14,177



14,393Total Senior Secured LoansSecond Lien


















96,077



96,838Unfunded Loan Commitments


















(12,755
)


(12,755
)Net Senior Secured LoansSecond Lien


















83,322



84,083Senior Secured Bonds5.1%Great Western Petroleum, LLC

(f)(w)

Upstream

12.0%





9/1/25


55,096



53,913



58,055SM Energy Co.

(k)

Upstream

10.0%





1/15/25


12,000



13,337



13,220ST EIP Holdings Inc.

(s)

Midstream

6.1%





1/10/30


10,526



10,016



10,371Total Senior Secured Bonds


















77,266



81,646Unsecured Debt24.8%Aethon United BR LP

(f)

Upstream

8.3%





2/15/26


40,500



40,500



43,552Archrock Partners, L.P.

(f)(k)

Midstream

6.3%





4/1/28


22,239



23,141



23,221Cheniere Energy Partners LP Holdings, LLC

(f)(k)

Midstream

4.5%





10/1/29


13,500



14,531



14,333Colgate Energy Partners III LLC

(f)

Upstream

5.9%





7/1/29


8,000



8,110



8,251Colgate Energy Partners III LLC



Upstream

7.8%





2/15/26


23,365



24,737



25,312Endeavor Energy Resources, L.P.



Upstream

5.8%





1/30/28


31,299



33,030



33,412EnLink Midstream, LLC

(k)

Midstream

5.4%





6/1/29


6,000



6,271



6,145EnLink Midstream, LLC

(f)(k)

Midstream

5.6%





1/15/28


5,881



6,334



6,125Hammerhead Resources Inc.

(f)(k)(s)

Upstream

12.0% PIK (12.0% Max PIK)





7/15/24


64,046



63,569



64,046Moss Creek Resources, LLC

(f)

Upstream

7.5%





1/15/26


11,693



10,027



10,945NRG Energy, Inc.

(k)

Power

3.9%





2/15/32


11,625



11,619



11,411  See notes to
unaudited consolidated financial statements.  14




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##### Table of Contents

FS Energy and Power Fund Consolidated Schedule of Investments (continued) As of December 31, 2021 (in thousands, except share amounts)    Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor


Maturity


PrincipalAmount(c)


AmortizedCost


FairValue(d)Penn Virginia Escrow LLC

(k)

Upstream

9.3%






8/15/26


$
29,772


$
29,603


$
30,926Range Resources Corp.

(k)

Upstream

8.3%






1/15/29



5,000



5,643



5,584Range Resources Corp.

(k)

Upstream

9.3%






2/1/26



3,000



3,256



3,237SM Energy Co.

(k)

Upstream

5.6%






6/1/25



8,000



8,041



8,079Southwestern Energy Co.



Upstream

5.4%






2/1/29



18,928



19,731



20,043Suburban Propane Partners LP

(f)(k)

Midstream

5.0%






6/1/31



17,690



18,359



17,919Tallgrass Energy Partners, LP

(f)

Midstream

7.5%






10/1/25



13,424



14,499



14,545Tallgrass Energy Partners, LP

(f)

Midstream

6.0%






3/1/27



9,000



9,414



9,369Tenrgys, LLC

(f)(m)(n)(o)(s)

Upstream

L+900


2.5%



12/23/18



75,000



75,300



40,613Total Unsecured Debt




















425,715



397,068Number ofShares


AmortizedCost


FairValue(d)Preferred Equity31.0%(l)Abaco Energy Technologies LLC, Preferred Equity

(f)(o)(s)

Service & Equipment












28,942,003


$
1,447


$
3,965Altus Midstream LP, Series A Preferred Units

(j)(s)

Midstream

11.0%






6/28/26



52,856



58,725



61,379Global Jet Capital Holdings, LP, Preferred Equity

(f)(s)

Industrials

9.0% PIK (9.0% Max PIK)






10/1/28



167,176



12,305



12,204Global Jet Capital Holdings, LP, Preferred Equity

(f)(o)(s)

Industrials












27,856



2,786



NGL Energy Partners, LP, Preferred Equity

(f)(k)(m)(o)(s)

Midstream

14.2%






7/2/27



156,250



157,633



125,000NuStar, Preferred Equity

(f)(k)(s)

Midstream

12.8%






6/29/28



3,910,165



105,291



124,050Segreto Power Holdings, LLC, Preferred Equity

(f)(g)(m)(o)(s)

Power

13.1%






6/30/25



70,297



99,761



80,772USA Compression Partners, LP, Preferred Equity

(k)(s)

Midstream

9.8%






4/3/28



79,336



77,763



89,918Total Preferred Equity




















515,711



497,288PrincipalAmount(c)


Cost


FairValue(d)Sustainable Infrastructure Investments, LLC3.2%Sustainable Infrastructure Investments, LLC

(k)(s)(x)

Power











$
60,603


$
54,514


$
50,770Total Sustainable Infrastructure Investments, LLC




















54,514



50,770  See notes to
unaudited consolidated financial statements.  15




---

##### Table of Contents

FS Energy and Power Fund Consolidated Schedule of Investments (continued) As of December 31, 2021 (in thousands, except share amounts)    Portfolio Company(a)


Footnotes

Industry

Rate(b)

Floor


Maturity


Number ofShares


AmortizedCost


FairValue(d)Equity/Other29.5%(l)Abaco Energy Technologies LLC, Common Equity

(f)(o)(s)

Service & Equipment












6,944,444


$
6,944


$
642AIRRO (Mauritius) Holdings II, Warrants

(f)(k)(o)(p)(s)

Power












35



2,652



2,125Allied Wireline Services, LLC, Common Equity

(f)(n)(o)(s)(x)

Service & Equipment












48,400



1,527



Allied Wireline Services, LLC, Warrants

(f)(n)(o)(s)(x)

Service & Equipment












22,000







Arena Energy, LP, Contingent Value Rights

(f)(o)(s)

Upstream












126,632,117



351



1,070Ascent Resources Utica Holdings, LLC, Common Equity

(f)(o)(q)(s)

Upstream












148,692,909



44,700



34,051Cimarron Energy Holdco Inc., Common Equity

(f)(o)(s)

Service & Equipment












4,302,293



3,950



Cimarron Energy Holdco Inc., Participation Option

(f)(o)(s)

Service & Equipment












25,000,000



1,289



Great Western Petroleum, LLC, Common Equity

(f)(o)(r)(s)(w)

Upstream












105,785



30,790



40,731Harvest Oil & Gas Corp., Common Equity

(f)(o)(w)

Upstream












135,062



15,802



2,836Limetree Bay Energy, LLC, Class A Units

(f)(o)(s)(w)

Midstream












50,494,585



19,663



6,046Maverick Natural Resources, LLC, Common Equity

(f)(g)(n)(o)(s)

Upstream












503,176



138,208



278,760MB Precision Investment Holdings LLC, Class A-2
Units

(f)(n)(o)(s)

Industrials












1,426,110



490



MECO IV Holdco, LLC, Class A-1 Units

(f)(n)(o)(s)(x)

Upstream












1,225,000



2,161



4,181NGL Energy Partners, LP, Warrants (Par)

(f)(k)(o)(s)

Midstream












2,187,500



3,083



265NGL Energy Partners, LP, Warrants (Premium)

(f)(k)(o)(s)

Midstream












3,125,000



2,623



280NGL Energy Partners, LP, Warrants (Premium)

(f)(k)(o)(s)

Midstream












781,250



576



69NGL Energy Partners, LP, Warrants (Par)

(f)(k)(o)(s)

Midstream












546,880



630



63Permian Production Holdings, LLC, Common Equity

(f)(n)(o)(s)(w)

Upstream












1,961,896



1



8,829Ranger Oil Corp., Common Equity

(f)(o)

Upstream












332,863



1,795



8,961Ridgeback Resources Inc., Common Equity

(f)(k)(o)(s)(t)(w)

Upstream












9,599,928



58,985



48,356Swift Worldwide Resources Holdco Limited, Common Equity

(f)(k)(o)(s)(u)

Service & Equipment












3,750,000



6,029



3,206USA Compression Partners, LP, Warrants (Market)

(f)(k)(o)(s)

Midstream












793,359



555



2,209USA Compression Partners, LP, Warrants (Premium)

(f)(k)(o)(s)

Midstream












1,586,719



714



3,499Warren Resources, Inc., Common Equity

(f)(o)(s)(x)

Upstream












4,415,749



20,754



25,854Total Equity/Other




















364,272



472,033TOTAL INVESTMENTS149.5%



















$
2,353,075


$
2,395,223LIABILITIES IN EXCESS OF OTHER ASSETS(49.5%)
























(792,900
)NET ASSETS100.0%























$
1,602,323  See notes to
unaudited consolidated financial statements.  16




---

##### Table of Contents

FS Energy and Power Fund Consolidated Schedule of Investments (continued) As of December 31, 2021 (in thousands, except share amounts)     (a)
Security may be an obligation of one or more entities affiliated with the named company.  (b)
Certain variable rate securities in the Companys portfolio bear interest at a rate determined by a
publicly disclosed base rate plus a basis point spread. As of December 31, 2021, the three-month London Interbank Offered Rate, or LIBOR, or L, was 0.21% and the Secured Overnight Financing Rate, or SOFR, or SF, was 0.05%. PIK means paid-in-kind. PIK income accruals may be adjusted based on the fair value of the underlying investment.  (c)
Denominated in U.S. dollars, unless otherwise noted.  (d)
Fair value determined by the Companys board of trustees (see Note 8).  (e)
Security is an unfunded commitment. The stated rate reflects the spread disclosed at the time of commitment and
may not indicate the actual rate received upon funding.  (f)
Security or portion thereof is pledged as collateral supporting the amounts outstanding under the Senior Secured
Notes with JPMorgan Chase Bank, N.A. (see Note 9).  (g)
Security held within FS Energy Investments, LLC, a wholly-owned subsidiary of the Company.  (h)
Position or portion thereof unsettled as of December 31, 2021.  (i)
Security held within EP Northern Investments, LLC, a wholly-owned subsidiary of the Company.  (j)
Security held within FS Power Investments, LLC, a wholly-owned subsidiary of the Company.  (k)
The investment is not a qualifying asset under the Investment Company Act of 1940, as amended, or the 1940 Act.
A business development company may not acquire any asset other than a qualifying asset, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the business development companys total assets. As of
December 31, 2021, 72.1% of the Companys total assets represented qualifying assets.  (l)
Listed investments may be treated as debt for U.S. generally accepted accounting principles, or GAAP, or tax
purposes.  (m)
Security was on non-accrual status as of December 31, 2021.  (n)
Security held within FSEP Investments, Inc., a wholly-owned subsidiary of the Company.  (o)
Security is non-income producing.  (p)
Security or portion thereof held within FS Power Investments II, LLC, a wholly-owned subsidiary of the Company.  (q)
Security held within EP American Energy Investments, Inc., a wholly-owned subsidiary of the Company.  (r)
Security held within EP Synergy Investments, Inc., a wholly-owned subsidiary of the Company.  (s)
Security is classified as Level 3 in the Companys fair value hierarchy (see Note 8).  (t)
Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of
December 31, 2021.  (u)
Investment denominated in British pounds. Amortized cost and fair value are converted into U.S. dollars as of
December 31, 2021.  (v)
Investment is a real property interest and is included with Senior Secured LoansFirst Lien to facilitate
comparison with other investments.  See notes to
unaudited consolidated financial statements.  17




---

##### Table of Contents

FS Energy and Power Fund Consolidated Schedule of Investments (continued) As of December 31, 2021 (in thousands, except share amounts)    (w)
Under the 1940 Act, the Company generally is deemed to be an affiliated person of a portfolio
company if it owns 5% or more of the portfolio companys voting securities and generally is deemed to control a portfolio company if it owns more than 25% of the portfolio companys voting securities or it has the power to
exercise control over the management or policies of such portfolio company. As of December 31, 2021, the Company held investments in portfolio companies of which it is deemed to be an affiliated person but is not deemed to
control. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person as of December 31, 2021:  Portfolio Company

Fair Value atDecember 31,2020


GrossAdditions(1)


GrossReductions(2)


NetRealizedGain(Loss)


Net Change inUnrealizedAppreciation(Depreciation)


Fair Value atDecember 31,2021


InterestIncome(3)


PIKIncome(3)


DividendIncome(3)Senior Secured LoansFirst LienLimetree Bay Energy, LLC

$



$
14,343


$



$



$
(11,177
)

$
3,166


$



$



$
Permian Production Holdings, LLC


11,446



489



(6,401
)


1,106



1,249



7,889



1,009



215



Warren Resources, Inc.(4)


27,788



69



(27,857
)






















Senior Secured BondsGreat Western Petroleum, LLC






53,913











4,142



58,055



5,861



Limetree Bay Ventures, LLC


25,538







(3,810
)


(21,752
)


24















Limetree Bay Ventures, LLC


36,308



19



(5,137
)


(29,021
)


(2,169
)






19







Limetree Bay Ventures, LLC


89,968



43,291



(9,889
)


(49,783
)


(73,587
)














Unsecured DebtLimetree Bay Ventures, LLC










(6,298
)


(31,516
)


37,814















Limetree Bay Ventures, LLC










(1,648
)


(8,244
)


9,892















Preferred EquityLimetree Bay Ventures, LLC, Preferred Equity














(53,548
)


53,548















Limetree Bay Ventures, LLC, Preferred Equity














(86,729
)


86,729















Equity/OtherGreat Western Petroleum, LLC, Common Equity






30,790











9,941



40,731











Harvest Oil & Gas Corp., Common Equity


2,794







(1,756
)






1,798



2,836











Limetree Bay Energy, LLC, Class A Units






19,663











(13,617
)


6,046











Limetree Bay Ventures, LLC, Common Equity














(3,406
)


3,406















Lonestar Resources US Inc., Common Equity


2,592







(2,376
)






(216
)














Permian Production Holdings, LLC, Common Equity






1











8,828



8,829











1,574Ridgeback Resources Inc., Common Equity


38,385















9,971



48,356











Warren Resources, Inc., Common
Equity(4)


4,460







(20,754
)






16,294















$
239,279


$
162,578


$
(85,926
)

$
(282,893
)

$
142,870


$
175,908


$
6,889


$
215


$
1,574  (1)
Gross additions may include increases in the cost basis of investments resulting from new portfolio investments,
PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company into this category from a different category.  (2)
Gross reductions may include decreases in the cost basis of investments resulting from principal collections
related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company out of this category into a different category.  (3)
Interest, PIK and dividend income presented for the year ended December 31, 2021.  (4)
The Company held this investment as of December 31, 2021 but it was deemed to control the
portfolio company as of December 31, 2021. Transfers in or out have been presented at amortized cost.  See notes to
unaudited consolidated financial statements.  18




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##### Table of Contents

FS Energy and Power Fund Consolidated Schedule of Investments (continued) As of December 31, 2021 (in thousands, except share amounts)    (x)
Under the 1940 Act, the Company generally is deemed to control a portfolio company if it owns more
than 25% of the portfolio companys voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2021, the Company held investments in portfolio companies of which
it is deemed to be an affiliated person of and deemed to control. The following table presents certain information with respect to investments in portfolio companies of which the Company was deemed to be an affiliated person
and deemed to control as of December 31, 2021:  Portfolio Company

Fair Value atDecember 31,2020


GrossAdditions(1)


GrossReductions(2)


NetRealizedGain(Loss)


Net Change inUnrealizedAppreciation(Depreciation)


Fair Value atDecember 31,2021


InterestIncome(3)


PIKIncome(3)


FeeIncome(3)


DividendIncome(3)Senior Secured LoansFirst LienAllied Downhole Technologies, LLC

$



$
10,282


$
(2,500
)

$



$



$
7,782


$
2


$
282


$



$
Allied Wireline Services, LLC


53,007



5,280



(207
)






(11,741
)


46,339



276



5,280







MECO IV Holdco, LLC






22,745















22,745



91



951



9



Warren Resources, Inc.(4)






27,134



(3,446
)










23,688



2,601



261







Sustainable Infrastructure Investments, LLCSustainable Infrastructure Investments, LLC


61,816







(6,089
)






(4,957
)


50,770















5,729Equity/OtherAllied Wireline Services, LLC, Common Equity


1,904















(1,904
)


















Allied Wireline Services, LLC, Warrants






































MECO IV Holdco, LLC, Class A-1 Units






2,161











2,020



4,181















Warren Resources, Inc., Common
Equity(4)






20,754











5,100



25,854















$
116,727


$
88,356


$
(12,242
)

$



$
(11,482
)

$
181,359


$
2,970


$
6,774


$
9


$
5,729  (1)
Gross additions may include increases in the cost basis of investments resulting from new portfolio investments,
PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company into this category from a different category.  (2)
Gross reductions may include decreases in the cost basis of investments resulting from principal collections
related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and/or the movement of an existing portfolio company out of this category into a different category.  (3)
Interest, PIK, fee and dividend income presented for the year ended December 31, 2021.  (4)
The Company held this investment as of December 31, 2020 but it was deemed to be an affiliated
person of the portfolio company as of December 31, 2020. Transfers in or out have been presented at amortized cost.  See notes to
unaudited consolidated financial statements.  19




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (in thousands, except share and per share amounts)   Note 1. Principal Business and Organization FS Energy and Power Fund, or the Company, was formed as a Delaware statutory trust under the Delaware Statutory Trust Act on
September 16, 2010 and formally commenced investment operations on July 18, 2011. The Company is an externally managed, non-diversified, closed-end management
investment company that has elected to be regulated as a business development company, or BDC, under the Investment Company Act of 1940, as amended, or the 1940 Act. In addition, the Company has elected to be treated for U.S. federal income tax
purposes, and intends to qualify annually, as a regulated investment company, or RIC, as defined under Subchapter M of the Internal Revenue Code of 1986, as amended, or the Code. As of March 31, 2022, the Company had various wholly-owned
financing subsidiaries, including special-purpose financing subsidiaries and subsidiaries through which it holds or expects to hold interests in certain portfolio companies. The unaudited consolidated financial statements include both the
Companys accounts and the accounts of its wholly-owned subsidiaries as of March 31, 2022. All significant intercompany transactions have been eliminated in consolidation. Certain of the Companys consolidated subsidiaries are subject
to U.S. federal and state income taxes. The Companys investment objective is to generate current income and long-term capital
appreciation by investing primarily in privately-held U.S. companies in the energy and power industry. The Companys investment policy is to invest, under normal circumstances, at least 80% of its total assets in securities of energy and power
related, or Energy, companies. The Company considers Energy companies to be those companies that engage in the exploration, development, production, gathering, transportation, processing, storage, refining, distribution, mining, generation or
marketing of natural gas, natural gas liquids, crude oil, refined products, coal or power, including those companies that provide equipment or services to companies engaged in any of the foregoing. The Company is managed by FS/EIG Advisor, LLC, or FS/EIG Advisor, pursuant to an investment advisory and administrative services agreement,
dated as of April 9, 2018, or the FS/EIG investment advisory agreement. FS/EIG Advisor oversees the management of the Companys operations and is responsible for making investment decisions with respect to the Companys portfolio.
FS/EIG Advisor is jointly operated by an affiliate of Franklin Square Holdings, L.P. (which does business as FS Investments) and EIG Asset Management, LLC, or EIG. Note 2. Summary of Significant Accounting Policies Basis of Presentation: The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been included. For a more complete discussion of significant accounting policies and certain other information, the Companys interim unaudited consolidated financial
statements should be read in conjunction with its audited consolidated financial statements as of and for the year ended December 31, 2021 included in the Companys annual report on Form 10-K.
Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022. The December 31, 2021 consolidated balance sheet and consolidated
schedule of investments are derived from the Companys audited consolidated financial statements as of and for the year ended December 31, 2021. The Company is considered an investment company under GAAP and follows the accounting and
reporting guidance applicable to investment companies under Accounting Standards Codification Topic 946, Financial ServicesInvestment Companies. The Company has evaluated the impact of subsequent events through the date the unaudited
consolidated financial statements were issued and filed with the Securities and Exchange Commission, or the SEC. Use of Estimates:
The preparation of the unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Many of the amounts have been rounded, and all amounts are in
thousands, except share and per share amounts.  20




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 2. Summary of Significant Accounting
Policies (continued)  Capital Gains Incentive Fee: Pursuant to the terms of the FS/EIG investment advisory
agreement, the incentive fee on capital gains is determined and payable in arrears as of the end of each calendar year (or upon termination of such agreement). Such fee equals 20.0% of the Companys incentive fee capital gains,
which are the Companys realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less
the aggregate amount of any previously paid incentive fees on capital gains. The Company will accrue for the incentive fee on capital gains, which, if earned, will be paid annually. The Company will accrue the incentive fee on capital gains based on
net realized and unrealized gains; however, the fee payable to FS/EIG Advisor will be based on realized gains and no such fee will be payable with respect to unrealized gains unless and until such gains are actually realized. Subordinated Income Incentive Fee: Pursuant to the terms of the FS/EIG investment advisory agreement, FS/EIG Advisor may also be
entitled to receive a subordinated incentive fee on income. The subordinated incentive fee on income under the FS/EIG investment advisory agreement is calculated and payable quarterly in arrears and equals 20.0% of the Companys pre-incentive fee net investment income for the immediately preceding quarter subject to a hurdle rate, expressed as a rate of return on adjusted capital, equal to 1.625% per quarter, or an annualized
hurdle rate of 6.5%. As a result, FS/EIG Advisor will not earn this incentive fee for any quarter until the Companys pre-incentive fee net investment income for such quarter exceeds the hurdle rate of
1.625%. For purposes of this fee, adjusted capital means cumulative gross proceeds generated from sales of the Companys common shares (including proceeds from its distribution reinvestment plan) reduced for distributions from non-liquidating dispositions of the Companys investments paid to shareholders and amounts paid for share repurchases pursuant to the Companys share repurchase program. Once the Companys pre-incentive fee net investment income in any quarter exceeds the hurdle rate, FS/EIG Advisor will be entitled to a catch-up fee equal to the amount of the
Companys pre-incentive fee net investment income in excess of the hurdle rate, until the Companys pre-incentive fee net investment income for such quarter
equals 2.031%, or 8.125% annually, of adjusted capital. This catch-up feature will allow FS/EIG Advisor to recoup the fees foregone as a result of the existence of the hurdle rate. Thereafter,
FS/EIG Advisor will be entitled to receive 20.0% of the Companys pre-incentive fee net investment income. Reclassifications: Certain amounts in the unaudited consolidated financial statements for the three months ended March 31, 2021 may
have been reclassified to conform to the classifications used to prepare the unaudited consolidated financial statements for the three months ended March 31, 2022. Revenue Recognition: Security transactions are accounted for on the trade date. The Company records interest income on an accrual
basis to the extent that it expects to collect such amounts. The Company records dividend income on the ex-dividend date. Distributions received from limited liability company, or LLC, and limited partnership,
or LP, investments are evaluated to determine if the distribution should be recorded as dividend income or a return of capital. The Company does not accrue as a receivable interest or dividends on loans and securities if it has reason to doubt its
ability to collect such income. The Companys policy is to place investments on non-accrual status when there is reasonable doubt that interest income will be collected. The Company considers many factors
relevant to an investment when placing it on or removing it from non-accrual status including, but not limited to, the delinquency status of the investment, economic and business conditions, the overall
financial condition of the underlying investment, the value of the underlying collateral, bankruptcy status, if any, and any other facts or circumstances relevant to the investment. If there is reasonable doubt that the Company will receive any
previously accrued interest, then the accrued interest will be written-off. Payments received on non-accrual investments may be recognized as income or applied to
principal depending upon the collectability of the remaining principal and interest. Non-accrual investments may be restored to accrual status when principal and interest become current and are likely to
remain current based on the Companys judgment. Loan origination fees, original issue discount and market discount are capitalized
and the Company amortizes such amounts as interest income over the respective term of the loan or security. Upon the prepayment of a loan or security, any unamortized loan origination fees and original issue discount are recorded as interest income.
Structuring and other non-recurring upfront fees are recorded as fee income when earned. The Company records prepayment premiums on loans and securities as fee income when it earns such amounts. For the three
months ended March 31, 2022 and 2021, the Company did not recognize any structuring or other upfront fee revenue.  21




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 2. Summary of Significant Accounting
Policies (continued)  Net Realized Gains or Losses on Extinguishment of Debt: Upon the repayment of debt
obligations which are deemed to be extinguishments, the difference between the principal amount due at maturity and the amount repaid on the extinguishment of debt is recognized as a gain or loss. Recent Accounting Pronouncements: In March 2020, the FASB issued ASU No. 2020-04,
Reference Rate Reform (Topic 848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The
amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. ASU
2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract
modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through
the end of the hedging relationship. The Company is currently evaluating the impact of the adoption of ASU 2020-04 and 2021-01 on its consolidated financial statements. Note 3. Share Transactions Below is a summary of transactions with respect to the Companys common shares during the three months ended March 31, 2022 and 2021:  Three Months Ended March 31,2022


2021Shares


Amount


Shares


AmountReinvestment of Distributions


1,434,432


$
5,235



1,618,706


$
5,341Proceeds from Share Transactions


1,434,432


$
5,235



1,618,706


$
5,341 During the period from April 1, 2022 to May 10, 2022, the Company issued 1,306,187 common shares
pursuant to its distribution reinvestment plan for gross proceeds of $5,225 at an average price per share of $4.00. On February 25,
2020, the Company received exemptive relief from the SEC permitting it to offer multiple classes of common shares. While the Company has no present intention to recommence a public offering of its common shares, the Company could do so in the
future. Share Repurchase Program In
March 2020, in light of difficult market conditions and in an effort to preserve liquidity in the Company, the Companys board of trustees determined to suspend for an indefinite period of time the Companys share repurchase program and
will reassess the Companys ability to recommence such program in future periods. Prior to its suspension, the Company intended to
conduct quarterly tender offers pursuant to its share repurchase program. The Companys board of trustees will consider the following factors, among others, in making its determination regarding whether to cause the Company to offer to
repurchase common shares and under what terms:  

the effect of such repurchases on the Companys qualification as a RIC (including the consequences of any
necessary asset sales);  

the liquidity of the Companys assets (including fees and costs associated with disposing of assets);  

the Companys investment plans and working capital requirements;  

the relative economies of scale with respect to the Companys size;  22




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 3. Share Transactions (continued)  

the Companys history in repurchasing common shares or portions thereof; and  

the condition of the securities markets. Historically, the Company limited the number of common shares to be repurchased during any calendar year to the lesser of (i) the number
of common shares the Company can repurchase with the proceeds it receives from the issuance of common shares under the Companys distribution reinvestment plan and (ii) 10% of the weighted average number of common shares outstanding in the
prior calendar year, or 2.5% in each calendar quarter. On May 5, 2017, the board of trustees of the Company further amended the share repurchase program. As amended, the Company will limit the maximum number of common shares to be repurchased
for any repurchase offer to the greater of (A) the number of common shares that the Company can repurchase with the proceeds it has received from the sale of common shares under its distribution reinvestment plan during the twelve-month period
ending on the date the applicable repurchase offer expires (less the amount of proceeds used to repurchase common shares on each previous repurchase date for repurchase offers conducted during such twelve-month period) (this limitation is referred
to as the twelve-month repurchase limitation) and (B) the number of common shares that the Company can repurchase with the proceeds the Company receives from the sale of common shares under its distribution reinvestment plan during the
three-month period ending on the date the applicable repurchase offer expires (this limitation is referred to as the three-month repurchase limitation). In addition to this limitation, the maximum number of common shares to be repurchased for any
repurchase offer will also be limited to 10% of the weighted average number of common shares outstanding in the prior calendar year, or 2.5% in each calendar quarter. As a result, the maximum number of common shares to be repurchased for any
repurchase offer will not exceed the lesser of (i) 10% of the weighted average number of common shares outstanding in the prior calendar year, or 2.5% in each calendar quarter, and (ii) whichever is greater of the twelve-month repurchase
limitation described in clause (A) above and the three-month repurchase limitation described in clause (B) above. Furthermore, the maximum number of common shares to be repurchased for any repurchase offer may further be limited by that
certain Senior Secured Credit Agreement, dated August 16, 2018, by and among the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., or JPMorgan, as administrative agent and collateral agent, and the other parties signatory thereto,
as amended, or the JPMorgan Facility. See Note 9 for a discussion of the JPMorgan Facility. If the Company recommences its share
repurchase program, the Company intends to offer to repurchase common shares at a price equal to the price at which common shares are issued pursuant to the Companys distribution reinvestment plan on the distribution date coinciding with the
applicable share repurchase date. The price at which common shares are issued under the Companys distribution reinvestment plan is determined by the Companys board of trustees or a committee thereof, in its sole discretion, and will be
(i) not less than the net asset value per common share as determined in good faith by the Companys board of trustees or a committee thereof, in its sole discretion, immediately prior to the payment date of the distribution and
(ii) not more than 2.5% greater than the net asset value per common share as of such date. The Companys board of trustees may amend, suspend or terminate the share repurchase program at any time, upon 30 days notice. The
Company did not repurchase any shares pursuant to its share repurchase program during the three months ended March 31, 2022 and 2021. In order to minimize the expense of supporting small accounts and provide additional liquidity to shareholders of the Company holding small
accounts after completion of a regular quarterly share repurchase offer, the Company reserves the right to repurchase the shares of and liquidate any investors account if the balance of such account is less than the Companys $5 minimum
initial investment, unless the account balance has fallen below the minimum solely as a result of a decline in the Companys net asset value per share. The Company will provide or will cause to be provided 30 days prior written notice to
potentially affected investors, which notice may be included in a regular quarterly repurchase offer materials, of any such repurchase. Any such repurchases will be made at the Companys most recent price at which the Companys shares were
issued pursuant to its distribution reinvestment plan. There were no de minimis account liquidations during the three months ended March 31, 2022 and 2021.  23




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)    Note 4. Related Party Transactions Compensation of the Investment Adviser Pursuant to the FS/EIG investment advisory agreement, FS/EIG Advisor is entitled to an annual base management fee based on the average weekly
value of the Companys gross assets (gross assets equals total assets as set forth on the Companys consolidated balance sheets) during the most recently completed calendar quarter and an incentive fee based on the Companys
performance. The base management fee is payable quarterly in arrears, and is calculated at an annual rate of 1.75% of the average weekly value of the Companys gross assets. See Note 2 for a discussion of the capital gains and subordinated
income incentive fees that FS/EIG Advisor may be entitled to under the FS/EIG investment advisory agreement. FS/EIG Advisor may receive
structuring or other upfront fees from portfolio companies in which FS/EIG Advisor has caused the Company to invest. FS/EIG Advisor has agreed to offset the amount of any structuring or other upfront fees received by FS/EIG Advisor against the
management fees payable by the Company under the FS/EIG investment advisory agreement. During the three months ended March 31, 2022 and 2021, $698 and $2, respectively, of structuring or other upfront fees received by FS/EIG Advisor were offset
against management fees. Pursuant to the FS/EIG investment advisory agreement, FS/EIG Advisor oversees the Companys day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs
activities and other administrative services. FS/EIG Advisor also performs, or oversees the performance of, the Companys corporate operations and required administrative services, which includes being responsible for the financial records that
the Company is required to maintain and preparing reports for the Companys shareholders and reports filed with the SEC. The Company
reimburses FS/EIG Advisor for expenses necessary to perform services related to the Companys administration and operations, including FS/EIG Advisors allocable portion of the compensation and/or related expenses of certain personnel of
FS Investments and EIG providing administrative services to the Company on behalf of FS/EIG Advisor, and for transactional expenses for prospective investments, such as fees and expenses associated with performing due diligence reviews of
investments that do not close, often referred to as broken deal costs. The Company reimburses FS/EIG Advisor no less than quarterly for expenses necessary to perform services related to the Companys administration and operations.
The amount of this reimbursement is set at the lesser of (1) FS/EIG Advisors actual costs incurred in providing such services and (2) the amount that the Company estimates it would be required to pay alternative service providers for
comparable services in the same geographic location. FS/EIG Advisor allocates the cost of such services to the Company based on factors such as time allocations and other reasonable metrics. The Companys board of trustees reviews the
methodology employed in determining how the expenses are allocated to the Company and assesses the reasonableness of such reimbursements for expenses allocated to the Company based on the breadth, depth and quality of such services as compared to
the estimated cost to the Company of obtaining similar services from third-party providers known to be available. In addition, the Companys board of trustees considers whether any single third-party service provider would be capable of
providing all such services at comparable cost and quality. Finally, the Companys board of trustees, among other things, compares the total amount paid to FS/EIG Advisor for such services as a percentage of the Companys net assets to the
same ratio as reported by other comparable BDCs. The Company does not reimburse FS/EIG Advisor for any services for which it receives a separate fee, or for rent, depreciation, utilities, capital equipment or other administrative items allocated to
a controlling person of FS/EIG Advisor. The following table describes the fees and expenses accrued under the FS/EIG investment advisory
agreement during the three months ended March 31, 2022 and 2021:  Source Agreement


Description

Three Months EndedMarch 31,Related Party

2022


2021FS/EIG Advisor


FS/EIG investment advisory agreement


Base Management Fee(1)

$
10,037


$
10,648FS/EIG Advisor


FS/EIG investment advisory agreement


Administrative Services Expenses(2)

$
1,420


$
1,581  (1)
During the three months ended March 31, 2022 and 2021, $10,466 and $10,156, respectively, in base
management fees were paid to FS/EIG Advisor. The base management fee amount shown in the table above is shown net of $698 and $2 in structuring or other  24




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 4. Related Party
Transactions (continued)  upfront fees received by FS/EIG Advisor and offset against base management fees for the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022, $10,037 in base
management fees were payable to FS/EIG Advisor.  (2)
During the three months ended March 31, 2022 and 2021, $638 and $1,093, respectively, of the accrued
administrative services expenses related to the allocation of costs of administrative personnel for services rendered to the Company by FS/EIG Advisor and the remainder related to other reimbursable expenses. The Company paid $1,121 and $905 in
administrative services expenses to FS/EIG Advisor, or its affiliates, during the three months ended March 31, 2022 and 2021, respectively. Potential Conflicts of Interest The
members of the senior management and investment teams of FS/EIG Advisor serve or may serve as officers, directors or principals of entities that operate in the same or a related line of business as the Company does, or of investment vehicles managed
by the same personnel. The officers, managers and other personnel of FS/EIG Advisor may serve in similar or other capacities for the investment advisers to future investment vehicles affiliated with FS Investments or EIG. In serving in these
multiple and other capacities, they may have obligations to other clients or investors in those entities, the fulfillment of which may not be in the Companys best interests or in the best interest of the Companys shareholders. The
Companys investment objectives may overlap with the investment objectives of such investment funds, accounts or other investment vehicles. For additional information regarding potential conflicts of interest, see the Companys annual
report on Form 10-K for the year ended December 31, 2021. Exemptive Relief As a BDC, the Company is subject to certain regulatory restrictions in making its investments. For example, BDCs generally are not permitted to
co-invest with certain affiliated entities in transactions originated by the BDC or its affiliates in the absence of an exemptive order from the SEC. However, BDCs are permitted to, and may, simultaneously co-invest in transactions where price is the only negotiated term. In an order dated June 4, 2013, or the Order, the SEC granted exemptive relief permitting the Company, subject to the satisfaction of certain
conditions, to co-invest in certain privately negotiated investment transactions with certain affiliates of its former investment adviser, including FS KKR Capital Corp., or collectively the Companys co-investment affiliates. Effective April 9, 2018, or the JV Effective Date, and in connection with the transition of advisory services to a joint advisory relationship with EIG, the Companys board of
trustees authorized and directed that the Company (i) withdraw from the Order, except with respect to any transaction in which the Company participated in reliance on the Order prior to the JV Effective Date, and (ii) rely on an exemptive
relief order dated April 10, 2018, granted to EIG and its affiliates which permits the Company to participate in co-investment transactions with certain other EIG advised funds, or the EIG Order. Note 5. Distributions The following table
reflects the cash distributions per share that the Company declared on its common shares during the three months ended March 31, 2022 and 2021:  DistributionFor the Three Months Ended

Per Share


AmountFiscal 2021March 31, 2021

$
0.03


$
13,249Fiscal 2022March 31, 2022

$
0.03


$
13,426 Although the Companys board of trustees has not declared or resumed regular cash distributions to
shareholders for any period after March 31, 2020, the Companys board of trustees has since declared three cash distributions in 2020, four cash distributions in 2021 and one cash distribution in 2022, each in the amount of $0.03 per
share. FS/EIG Advisor and the Companys board of trustees expect that future regular cash distributions to shareholders will remain suspended until such time that the Companys board of trustees and FS/EIG Advisor believe that market
conditions and the financial condition of the Company support the resumption of such distributions. The Companys board of trustees has and will continue to evaluate the  25




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 5. Distributions (continued)  Companys ability to pay any distributions in the future. There can be no assurance that the Company will be able to pay distributions in the future. The timing and amount of any future
distributions to shareholders are subject to applicable legal restrictions and the sole discretion of the Companys board of trustees. Furthermore, the JPMorgan Facility restricts the ability of the Company to make certain discretionary cash
dividends and distributions and other restricted payments. See Note 9 for a discussion of the JPMorgan Facility. The Company has adopted
an opt in distribution reinvestment plan for its shareholders. As a result, if the Company makes a cash distribution, its shareholders will receive distributions in cash unless they specifically opt in to the distribution
reinvestment plan so as to have their cash distributions reinvested in additional common shares. However, certain state authorities or regulators may impose restrictions from time to time that may prevent or limit a shareholders ability to
participate in the distribution reinvestment plan. Under the distribution reinvestment plan, cash distributions to participating
shareholders will be reinvested in additional common shares at a purchase price determined by the Companys board of trustees, or a committee thereof, in its sole discretion, that is (i) not less than the net asset value per common share
as determined in good faith by the Companys board of trustees or a committee thereof, in its sole discretion, immediately prior to the payment of the distribution and (ii) not more than 2.5% greater than the net asset value per common
share as of such date. Any distributions reinvested under the plan will remain taxable to a U.S. shareholder. The Company may fund its
cash distributions to shareholders from any sources of funds legally available to it, including proceeds from the sale of the Companys common shares, borrowings, net investment income from operations, capital gains proceeds from the sale of
assets and non-capital gains proceeds from the sale of assets, dividends or other distributions paid to the Company on account of preferred and common equity investments in portfolio companies. The Company has
not established limits on the amount of funds it may use from available sources to make distributions. The Companys distribution proceeds have exceeded and in the future may exceed its earnings. Therefore, portions of the distributions that
the Company has made represented, and may make in the future may represent, a return of capital to shareholders, which lowers their tax basis in their common shares. A return of capital generally is a return of a shareholders investment rather
than a return of earnings or gains derived from the Companys investment activities. Each year a statement on Form 1099-DIV identifying the sources of the distributions (i.e., paid from ordinary income,
paid from net capital gains on the sale of securities, and/or a return of capital, which is a nontaxable distribution) will be mailed to the Companys shareholders. There can be no assurance that the Company will be able to pay distributions at
a specific rate or at all. The following table reflects the sources of the cash distributions on a tax basis that the Company declared on
its common shares during the three months ended March 31, 2022 and 2021:  Three Months Ended March 31,2022


2021Source of Distribution

DistributionAmount


Percentage


DistributionAmount


PercentageNet investment income(1)

$
13,426



100
%

$
13,249



100
%Short-term capital gains proceeds from the sale of assets














Long-term capital gains proceeds from the sale of assets














Total

$
13,426



100
%

$
13,249



100
%  (1)
During the three months ended March 31, 2022 and 2021, 80.1% and 68.6%, respectively, of the Companys
gross investment income was attributable to cash income earned, 14.3% and 22.2%, respectively, was attributable to paid-in-kind, or PIK, interest and 5.6% and 9.2%,
respectively, was attributable to non-cash accretion of discount. In the past,
the Company has experienced restructurings and defaults and may experience such events again in the future. Any restructuring or default may have an impact on the level of income received by the Company.  26




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 5. Distributions (continued)  The determination of the tax attributes of the Companys distributions is made annually
as of the end of the Companys fiscal year based upon the Companys taxable income for the full year and distributions paid for the full year. Therefore, a determination made on a quarterly basis may not be representative of the actual tax
attributes of the Companys distributions for a full year. The actual tax characteristics of distributions to shareholders are reported to shareholders annually on Form 1099-DIV. Net capital losses may be carried forward indefinitely, and their character is retained as short-term or long-term. As of March 31, 2022,
the Company had short-term and long-term capital loss carryforwards available to offset future realized capital gains of $86,576 and $1,178,746, respectively. As of March 31, 2022 and December 31, 2021, for federal income tax purposes, the gross unrealized appreciation on the Companys
investments, swap contracts and unrealized gain on foreign currency was $427,257 and $288,368, respectively, and the gross unrealized depreciation on the Companys investments, swap contracts and unrealized loss on foreign currency was $493,465
and $552,882, respectively. The aggregate cost of the Companys investments for federal income tax purposes totaled $2,535,098 and
$2,659,737 as of March 31, 2022 and December 31, 2021, respectively. The aggregate net unrealized appreciation (depreciation) on a tax basis was $(62,726) and $(264,514) as of March 31, 2022 and December 31, 2021, respectively. As of March 31, 2022 and December 31, 2021, the Company had net deferred tax assets of $122,872 and $155,160, respectively,
resulting from net operating losses and capital losses of the Companys wholly-owned taxable subsidiaries. As of March 31, 2022 and December 31, 2021, certain wholly-owned taxable subsidiaries anticipated that they would be unable to
fully utilize their deferred tax assets, therefore the deferred tax assets were offset by valuation allowances of $122,872 and $155,160, respectively. For the three months ended March 31, 2022 and the year ended December 31, 2021, the
Company did not record a provision for taxes related to its wholly-owned taxable subsidiaries. Note 6. Financial Instruments The Company may trade in financial instruments with off-balance sheet risk in the normal course of its
investing activities. During the three months ended March 31, 2022, the Company utilized swap contracts to economically hedge certain risks against natural gas and crude oil price exposure related to certain investments in the Companys
portfolio. While the use of these derivative instruments limits the downside risk of adverse price movements, their use also limits future revenues from upward price movements. The Companys fixed price swaps are settled monthly based on differences between the fixed price specified in the contract and the
referenced settlement price. When the referenced settlement price is less than the price specified in the contract, the Company receives an amount from the counterparty based on the price difference multiplied by the volume. Similarly, when the
referenced settlement price exceeds the price specified in the contract, the Company pays the counterparty an amount based on the price difference multiplied by the volume. The prices contained in these fixed price swaps are based on the NYMEX Henry
Hub for natural gas and the ICE Brent for oil. Gas volumes are measured in one million British thermal units, or MMBtus, and oil volumes are measured in barrels, or Bbls. Below is a summary of the Companys open fixed price swap positions as of March 31, 2022. The hedged volumes reflected below
represent an aggregation of multiple derivative contracts that have varying durations and may not be realized on a ratable basis over a calendar year. Swap ContractsCrude Oil  Year

Location

Bbls


Weighted Average Price($/Bbls)2022

ICE Brent


133,123


$
87.222023

ICE Brent


168,511


$
80.00  27




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 6. Financial Instruments (continued)  Swap ContractsNatural Gas  Year

Location


MMBtu


Weighted Average Price($/MMBtu)2022


NYMEX Henry Hub



243,242


$
4.582023


NYMEX Henry Hub



343,702


$
3.80 As of December 31, 2021, the Company did not have any swap contracts. The fair value of swap contracts
(which are not considered to be hedging instruments for accounting disclosure purposes) as of March 31, 2022 was as follows:  Instrument

Asset(1)


Liability(2)Swap ContractsCrude Oil

$



$
(2,976
)Swap ContractsNatural Gas






(506
)Total

$



$
(3,482
)  (1)
Reflected on the Companys consolidated balance sheets as: Unrealized appreciation on swap contracts.  (2)
Reflected on the Companys consolidated balance sheets as: Unrealized depreciation on swap contracts. During the three months ended March 31, 2021, the Company did not have any swap contracts. The effect of swap
contracts (which are not considered to be hedging instruments for accounting disclosure purposes) on the Companys statements of operations for the three months ended March 31, 2022 was as follows:  Instrument

RealizedGain (Loss) onDerivativesRecognized inIncome(1)


Net Change inUnrealizedAppreciation(Depreciation) onDerivatives Recognizedin Income(2)Swap ContractsCrude Oil

$
(392
)

$
(2,976
)Swap ContractsNatural Gas


(24
)


(506
)Total

$
(416
)

$
(3,482
)  (1)
Reflected on the Companys consolidated statements of operations as: Net realized gain (loss) on swap
contracts.  (2)
Reflected on the Companys consolidated statements of operations as: Net change in unrealized appreciation
(depreciation) on swap contracts. Offsetting of Derivative Instruments The Company has derivative instruments that are subject to master netting agreements. These agreements include provisions to offset positions
with the same counterparty in the event of default by one of the parties. The Companys unrealized appreciation and depreciation on derivative instruments are reported as gross assets and liabilities, respectively, in the consolidated balance
sheets. The following table presents the Companys derivative assets and liabilities by counterparty, net of amounts available for offset under a master netting agreement as of March 31, 2022:  Counterparty

DerivativeAssets


DerivativeLiabilities


Net Value ofDerivatives


Non-CashCollateral(Received)Pledged(1)


Cash Collateral(Received)Pledged(1)


Net Amount ofDerivativeAssets(Liabilities)(2)BP Energy Co.





$
(3,482
)

$
(3,482
)









$
(3,482
)  (1)
In some instances, the actual amount of the collateral received and/or pledged may be more than the amount shown
due to overcollateralization.  (2)
Net amount of derivative assets and liabilities represents the net amount due from the counterparty to the
Company and the net amount due from the Company to the counterparty, respectively, in the event of default.  28




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)    Note 7. Investment Portfolio The following table summarizes the composition of the Companys investment portfolio at cost and fair value as of March 31, 2022 and
December 31, 2021:  March 31, 2022(Unaudited)


December 31, 2021AmortizedCost(1)


FairValue


Percentageof Portfolio


AmortizedCost(1)


FairValue


Percentageof PortfolioSenior Secured LoansFirst Lien

$
694,232


$
696,726



28
%

$
832,257


$
812,335



34
%Senior Secured LoansSecond Lien


129,504



130,401



5
%


83,322



84,083



3
%Senior Secured Bonds


77,248



85,452



3
%


77,266



81,646



3
%Unsecured Debt


384,783



381,509



16
%


425,715



397,068



17
%Preferred Equity


503,010



483,647



20
%


515,711



497,288



21
%Sustainable Infrastructure Investments, LLC


54,514



52,100



2
%


54,514



50,770



2
%Equity/Other


371,634



642,537



26
%


364,272



472,033



20
%Total

$
2,214,925


$
2,472,372



100
%

$
2,353,057


$
2,395,223



100
%  (1)
Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of
discounts, as applicable, on investments. In general, under the 1940 Act, the Company would be presumed to
control a portfolio company if it owned more than 25% of its voting securities or it had the power to exercise control over the management or policies of a portfolio company, and would be an affiliated person of a portfolio
company if it owned 5% or more of its voting securities. As of March 31, 2022, the Company held investments in four portfolio
companies of which it is deemed to control. As of March 31, 2022, the Company held investments in six portfolio companies of which it is deemed to be an affiliated person but is not deemed to control. For
additional information with respect to such portfolio companies, see footnotes (x) and (y) to the unaudited consolidated schedule of investments as of March 31, 2022 in this quarterly report on
Form 10-Q. As of December 31, 2021, the Company held investments in four portfolio
companies of which it is deemed to control. As of December 31, 2021, the Company held investments in five portfolio companies of which it is deemed to be an affiliated person but is not deemed to control. For
additional information with respect to such portfolio companies, see footnotes (w) and (x) to the consolidated schedule of investments as of December 31, 2021 in this quarterly report on
Form 10-Q. The Companys investment portfolio may contain loans or bonds that are in the
form of lines of credit or revolving credit facilities, or other investments, pursuant to which the Company may be required to provide funding when requested by portfolio companies in accordance with the terms of the underlying agreements. As of
March 31, 2022, the Company had seven senior secured loan investments with aggregate unfunded commitments of $50,657 and unfunded commitments of $7,625 in U.S. dollars and $858 in Canadian dollars to contribute capital to Sustainable
Infrastructure Investments, LLC. As of December 31, 2021, the Company had eight senior secured loan investments with aggregate unfunded commitments of $72,514 and unfunded commitments of $7,625 in U.S dollars and $858 in Canadian dollars to
contribute capital to Sustainable Infrastructure Investments, LLC. The Company maintains sufficient cash on hand, available borrowings and/or liquid securities to fund such unfunded commitments should the need arise.  29




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 7. Investment
Portfolio (continued)  The table below describes investments by industry classification and enumerates the
percentage, by fair value, of the total portfolio assets in such industries as of March 31, 2022 and December 31, 2021:  March 31, 2022(Unaudited)


December 31, 2021Industry Classification

FairValue


Percentage ofPortfolio


FairValue


Percentage ofPortfolioUpstream

$
1,195,465



48
%

$
1,071,201



44
%Midstream


839,124



34
%


893,004



37
%Power


306,876



13
%


302,510



13
%Service & Equipment


68,316



3
%


65,534



3
%Industrials


10,491



0
%


12,204



1
%Sustainable Infrastructure Investments,
LLC(1)


52,100



2
%


50,770



2
%Total

$
2,472,372



100
%

$
2,395,223



100
%  (1)
Sustainable Infrastructure Investments, LLC is generally comprised of midstream, renewables and power assets. Sustainable Infrastructure Investments, LLC Sustainable Infrastructure Investments, LLC, or SIIJV, is a joint venture between the Company and Imperial Sustainable Infrastructure
Investments, LLC, or Imperial, a subsidiary of Imperial Capital Asset Management, LLC, or ICAM. The joint venture is governed pursuant to the terms of an amended and restated limited liability company agreement of SIIJV, dated as of January 2,
2020, between the Company and Imperial, or the SIIJV Agreement. The SIIJV Agreement requires the Company and Imperial to provide capital to SIIJV of up to $67,629 in U.S. dollars and $5,430 in Canadian dollars in the aggregate where the Company and
Imperial would provide 87.5% and 12.5%, respectively, of the committed capital. Pursuant to the terms of the SIIJV Agreement, the Company and Imperial each have 50% voting control of SIIJV and are required to agree on all investment decisions as
well as all other significant actions for SIIJV. SIIJV invests in senior secured loans (both first lien and second lien) to middle market companies, broadly syndicated loans and other midstream, renewables and power assets. As administrative agent
of SIIJV, the Company performs certain day-to-day management responsibilities on behalf of SIIJV and is entitled to a fee in the annual amount of 0.25% of SIIJVs
net assets under administration, calculated and payable quarterly in arrears. As of March 31, 2022, the Company and Imperial funded approximately $62,300 to SIIJV, of which $54,514 was from the Company. The Company does not consolidate SIIJV in
its consolidated financial statements. On January 2, 2020, Seine Funding, LLC, or Seine Funding, a wholly-owned subsidiary of SIIJV,
entered into a credit facility, as amended, or the Seine Funding Facility, with certain financial institutions as lender, agent, collateral agent, collateral administrator, and collateral custodian, and SIIJV, as collateral manager. The Seine
Funding Facility provides for borrowings in U.S. dollars and certain agreed upon foreign currencies in an aggregate principal amount of up to $634,103 on a committed basis, which may be increased under certain circumstances at the request of Seine
Funding and with the consent of the lender and agent. The end of the reinvestment period for the Seine Funding Facility was December 31, 2021. The maturity date for the Seine Funding Facility is the earlier of (i) the latest maturity date
among the assets securing the facility and (ii) the first date, after the end of the reinvestment period, on which all assets securing the facility are paid in full. Under the Seine Funding Facility, borrowings bear interest at the rate of
three-month LIBOR (or the relevant reference rate for any foreign currency borrowings) (subject to a 0% floor) plus 1.20% per annum. Borrowings under the Seine Funding Facility are secured by a first priority security interest in substantially all
of the assets of Seine Funding. As of March 31, 2022, total outstanding borrowings under the Seine Funding Facility were $254,394.  30




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 7. Investment
Portfolio (continued)  Below is a summary of SIIJVs portfolio, followed by a listing of the individual loans
in SIIJVs portfolio as of March 31, 2022 and December 31, 2021:  March 31, 2022(Unaudited)


December 31, 2021Total investments(1)

$
315,010


$
316,422Weighted average current interest rate on debt investments(2)


3.15
%


3.34
%Number of portfolio assets in SIIJV


11



11Largest investment in a single portfolio
company(1)

$
79,521


$
79,521  (1)
At cost.  (2)
Computed as the (a) annual stated interest rate on accruing debt, divided by (b) total debt at par
amount. Sustainable Infrastructure Investments, LLC Portfolio As of March 31, 2022 (Unaudited)  Portfolio
Company(a)(f)

Footnotes


Industry


Rate(b)

Maturity

PrincipalAmount(c)


AmortizedCost


FairValue(d)Senior Secured LoansFirst Lien95.7%AES DE Holdings V, LLC






Renewables


L+175

6/13/26

$
12,720


$
12,720


$
12,202Alianca Transportadora de Gas Participacoes S.A.






Midstream


L+260

5/23/27


79,521



79,521



80,857Blue Heron Intermediate Holdco I, LLC






Midstream


L+175

4/22/24


32,626



32,626



32,669Cedar Creek II LLC






Renewables


L+188

11/18/23


9,574



9,574



9,657Copper Mountain Solar 3, LLC






Renewables


L+175

5/29/25


19,189



19,189



19,418FLNG Liquefaction 2, LLC






Midstream


L+150

12/31/26


29,321



29,321



29,376Meikle Wind Energy, LP


(e)



Renewables


C+150

5/12/24

C$
16,411



12,625



13,261NES Hercules Class B Member, LLC






Renewables


L+150

1/31/28

$
24,624



24,624



25,096ST EIP Holdco LLC






Midstream


L+250

11/5/24


59,722



59,722



59,155Top of the World Wind Energy LLC






Renewables


L+188

12/2/28


21,471



21,471



21,691Total Senior Secured LoansFirst Lien


















301,393



303,382Unsecured Debt4.3%Sociedad Minera Cerro Verde S.A.A.






Power


L+190

6/19/22


13,617



13,617



13,623Total Unsecured Debt


















13,617



13,623TOTAL INVESTMENTS100.0%

















$
315,010


$
317,005  31




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 7. Investment
Portfolio (continued)  Sustainable Infrastructure Investments, LLC Portfolio As of December 31, 2021  Portfolio
Company(a)(f)

Footnotes


Industry


Rate(b)

Maturity

PrincipalAmount(c)


AmortizedCost


FairValue(d)Senior Secured LoansFirst Lien95.7%AES DE Holdings V, LLC






Renewables


L+175

6/13/26

$
12,720


$
12,720


$
12,166Alianca Transportadora de Gas Participacoes S.A.






Midstream


L+260

5/23/27


79,521



79,521



80,498Blue Heron Intermediate Holdco I, LLC






Midstream


L+175

4/22/24


32,894



32,894



33,034Cedar Creek II LLC






Renewables


L+188

11/18/23


9,574



9,574



9,633Copper Mountain Solar 3, LLC






Renewables


L+175

5/29/25


19,189



19,189



19,315FLNG Liquefaction 2, LLC






Midstream


L+150

12/31/26


29,753



29,753



29,893Meikle Wind Energy, LP


(e)



Renewables


C+150

5/12/24

C$
16,777



12,907



13,567NES Hercules Class B Member, LLC






Renewables


L+150

1/31/28

$
24,777



24,777



25,573ST EIP Holdco LLC






Midstream


L+250

11/5/24


60,000



60,000



60,018Top of the World Wind Energy LLC






Renewables


L+188

12/2/28


21,470



21,470



21,604Total Senior Secured LoansFirst Lien


















302,805



305,301Unsecured Debt4.3%Sociedad Minera Cerro Verde S.A.A.






Power


L+190

6/19/22


13,617



13,617



13,665Total Unsecured Debt


















13,617



13,665TOTAL INVESTMENTS100.0%

















$
316,422


$
318,966  Percentages are shown as a percentage of total investments.  (a)
Security may be an obligation of one or more entities affiliated with the named company.  (b)
Certain variable rate securities in the Companys portfolio bear interest at a rate determined by a
publicly disclosed base rate plus a basis point spread. As of March 31, 2022 and December 31, 2021, the three-month LIBOR was 0.96% and 0.21%, respectively, and Canadian Dollar Offer Rate, or C, was 1.26% and 0.52%, respectively.  (c)
Denominated in U.S. dollars unless otherwise noted.  (d)
Security is classified as Level 3.  (e)
Investment denominated in Canadian dollars. Amortized cost and fair value are converted into U.S. dollars as of
March 31, 2022 and December 31, 2021.  (f)
Security or portion thereof is held within Seine Funding and is pledged as collateral supporting the amounts
outstanding under the Seine Funding Facility. Below is selected balance sheet information for SIIJV as of March 31,
2022 and December 31, 2021:  March 31, 2022(Unaudited)


December 31, 2021Selected Balance Sheet InformationTotal investments, at fair value

$
317,005


$
318,966Cash and other assets


3,759



67,611Total assets

$
320,764


$
386,577Debt

$
254,394


$
318,894Other liabilities


948



1,464Total liabilities


255,342



320,358Members equity

$
65,422


$
66,219  32




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 7. Investment
Portfolio (continued)  Below is selected statement of operations information for SIIJV for the three months ended
March 31, 2022 and 2021:  Three Months EndedMarch 31,2022


2021Selected Statement of Operations InformationTotal investment income

$
1,830


$
2,504ExpensesInterest expense


973



1,358Administrative services


41



45Custodian and accounting fees


47



45Professional services


25



35Other






10Total expenses


1,086



1,493Net investment income


744



1,011Net realized and unrealized gain (loss)


(700
)


1,127Net increase (decrease) in net assets resulting from operations

$
44


$
2,138 Note 8. Fair Value of Financial Instruments Under existing accounting guidance, fair value is defined as the price that the Company would receive upon selling an investment or pay to
transfer a liability in an orderly transaction to a market participant in the principal or most advantageous market for the investment. This accounting guidance emphasizes valuation techniques that maximize the use of observable market inputs and
minimize the use of unobservable inputs. Inputs refer broadly to the assumptions that market participants would use in pricing an asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are
inputs that reflect the assumptions market participants would use in pricing an asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the assumptions market
participants would use in pricing an asset or liability developed based on the best information available in the circumstances. The Company classifies the inputs used to measure these fair values into the following hierarchy as defined by current
accounting guidance: Level1: Inputs that are quoted prices (unadjusted) in active markets for identical assets
or liabilities. Level2: Inputs that are quoted prices for similar assets or liabilities in active markets. Level3: Inputs that are unobservable for an asset or liability. A financial instruments categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the
fair value measurement. As of March 31, 2022 and December 31, 2021, the Companys investments were categorized as follows
in the fair value hierarchy:  Valuation Inputs

March 31, 2022(Unaudited)


December 31, 2021Level 1Price quotations in active markets

$
810


$
11,797Level 2Significant other observable inputs


655,885



761,944Level 3Significant unobservable inputs


1,815,677



1,621,482Total

$
2,472,372


$
2,395,223  33




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 8. Fair Value of Financial
Instruments (continued)  As of December 31, 2021, the Company did not hold any swap contracts. As of
March 31, 2022, the Companys swap contracts were categorized as follows in the fair value hierarchy:  Valuation Inputs

Assets


LiabilitiesLevel 1Price quotations in active markets

$



$
Level 2Significant other observable inputs






3,482Level 3Significant unobservable inputs






Total

$



$
3,482 The Companys investments consist primarily of investments that were acquired directly from the issuer.
Debt investments, for which broker quotes are not generally available, are valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, the borrowers ability to adequately
service its debt, prevailing interest rates for like investments, call features, anticipated prepayments and other relevant terms of the investments. Except as described below, the Companys investment in SIIJV and all of the Companys
preferred equity and equity/other investments are also valued by independent valuation firms, which determine the fair value of such investments by considering, among other factors, contractual rights ascribed to such investments, as well as various
income scenarios and multiples of earnings before interest, taxes, depreciation and amortization, or EBITDA, cash flows, net income, revenues or, in limited instances, book value, PV-10 multiples or
liquidation value. An investment that is newly issued and purchased near the date of the financial statements is valued at cost if the Companys board of trustees determines that the cost of such investment is the best indication of its fair
value. Such investments described above are typically classified as Level 3 within the fair value hierarchy. Investments that are traded on an active public market are valued at their closing price as of the date of the financial statements and
are classified as Level 1 within the fair value hierarchy. In determining the fair values of swap contracts, the Company utilized an industry-standard pricing model that considers various inputs including quoted forward prices for
commodities, time value and current market and contractual prices for the underlying instruments. These assumptions are observable in the marketplace or can be corroborated by active markets or broker quotes and are typically classified as
Level 2 within the fair value hierarchy. Except as described above, the Company values its other investments by using the midpoint of the prevailing bid and ask prices from dealers on the date of the relevant period end, which are provided by
an independent third-party pricing service and screened for validity by such service and are typically classified as Level 2 within the fair value hierarchy. The Company periodically benchmarks the bid and ask prices it receives from the third-party pricing service and/or dealers and independent
valuation firms, as applicable, against the actual prices at which the Company purchases and sells its investments. Based on the results of the benchmark analysis and the experience of the Companys management in purchasing and selling these
investments, the Company believes that these prices are reliable indicators of fair value. The valuation committee of the board of trustees, or the valuation committee, and the board of trustees reviewed and approved the valuation determinations
made with respect to these investments in a manner consistent with the Companys valuation policy.  34




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 8. Fair Value of Financial
Instruments (continued)  The following is a reconciliation for the three months ended March 31, 2022 and 2021 of
investments for which significant unobservable inputs (Level 3) were used in determining fair value:  For the Three Months Ended March 31, 2022SeniorSecuredLoansFirst Lien


SeniorSecuredLoansSecond Lien


SeniorSecuredBonds


UnsecuredDebt


PreferredEquity


SustainableInfrastructureInvestments,LLC


Equity/Other


TotalFair value at beginning of period

$
414,075


$
84,083


$
10,371


$
104,659


$
497,288


$
50,770


$
460,236


$
1,621,482Accretion of discount (amortization of premium)


549



74



13



22



1,406











2,064Net realized gain (loss)


(12,397
)


434







(27,729
)


167











(39,525
)Net change in unrealized appreciation (depreciation)


24,374



136



106



34,665



(940
)


1,330



172,334



232,005Purchases


17,642



63,250



















9,157



90,049Paid-in-kind
interest


1,097











3,843



188











5,128Sales and repayments


(74,622
)


(17,576
)






(47,571
)


(14,462
)










(154,231
)Transfers into Level 3


58,705



























58,705Transfers out of Level 3






























Fair value at end of period

$
429,423


$
130,401


$
10,490


$
67,889


$
483,647


$
52,100


$
641,727


$
1,815,677The amount of total gains or losses for the period included in changes in net assets attributable
to the change in unrealized gains or losses relating to investments still held at the reporting date

$
14,611


$
359


$
106


$
(22
)

$
(940
)

$
1,330


$
172,334


$
187,778  For the Three Months Ended March 31, 2021SeniorSecuredLoansFirst Lien


SeniorSecuredLoansSecond Lien


SeniorSecuredBonds


UnsecuredDebt


PreferredEquity


SustainableInfrastructureInvestments,LLC


Equity/Other


TotalFair value at beginning of period

$
482,368


$
237,751


$
340,042


$
108,317


$
471,077


$
61,816


$
252,434


$
1,953,805Accretion of discount (amortization of premium)


1,709



91



19



21



732







455



3,027Net realized gain (loss)


(1,041
)


1,185







441



(16,595
)






(455
)


(16,465
)Net change in unrealized appreciation (depreciation)


7,541



1,647



(26,252
)


1,269



66,693



(1,970
)


53,729



102,657Purchases


291







35,312







13







30,790



66,406Paid-in-kind
interest


2,074











4,104



2,302











8,480Sales and repayments


(8,334
)


(157,904
)






(13,636
)


(41,207
)










(221,081
)Net transfers in or out of Level 3






























Fair value at end of period

$
484,608


$
82,770


$
349,121


$
100,516


$
483,015


$
59,846


$
336,953


$
1,896,829The amount of total gains or losses for the period included in changes in net assets attributable
to the change in unrealized gains or losses relating to investments still held at the reporting date

$
8,254


$
(1,231
)

$
(26,252
)

$
1,017


$
58,776


$
(1,970
)

$
53,729


$
92,323  35




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 8. Fair Value of Financial
Instruments (continued)  The valuation techniques and significant unobservable inputs used in recurring Level 3
fair value measurements as of March 31, 2022 and December 31, 2021 were as follows:  Type of Investment

Fair Value atMarch 31, 2022(Unaudited)


ValuationTechnique(1)

UnobservableInput

Range


WeightedAverageSenior Secured LoansFirst Lien

$
386,611


Market Comparables

Market Yield (%)


7.0% - 16.8%



9.3%EBITDA Multiples (x)


3.5x - 9.6x



5.4x42,812


Discounted Cash Flow

Discount Rate (%)


9.5% - 14.5%



11.8%Senior Secured LoansSecond Lien


130,401


Market Comparables

Market Yield (%)


8.5% - 11.0%



9.5%Senior Secured Bonds


10,490


Market Comparables

Market Yield (%)


6.5% - 7.5%



6.7%Unsecured Debt


67,889


Market Comparables

Market Yield (%)


7.9% - 8.9%



8.4%Preferred Equity


401,610


Market Comparables

Market Yield (%)


9.0% - 25.0%



15.2%EBITDA Multiples (x)


9.0x - 10.0x



9.5xNet Aircraft Book Value Multiple (x)


1.0x - 1.0x



1.0x82,037


Discounted Cash Flow

Discount Rate (%)


9.8% - 10.3%



10.1%Sustainable Infrastructure Investments, LLC


52,100


Discounted Cash Flow

Discount Rate (%)


11.5% - 12.5%



12.0%Equity/Other


612,623


Market Comparables

Market Yield (%)


9.3% - 9.8%



9.6%EBITDA Multiples (x)


2.3x - 10.0x



5.4xProduction Multiples (Mboe/d)


$40,000.0 - $45,000.0



$42,500.0Proved Reserves Multiples (Mmboe)


10.5x - 12.0x



11.3xProduction Multiples (MMcfe/d)


$3,650.0 - $3,950.0



$3,800.0Proved Reserves Multiples (Bcfe)


0.8x - 0.9x



0.8xPV-10 Multiples (x)


0.7x - 0.8x



0.8x3,538


Discounted Cash Flow

Discount Rate (%)


8.0% - 32.0%



21.7%8,385


Option Valuation Model

Volatility (%)


55.0% - 65.0%



63.7%17,181


Other(2)

Other(2)Total

$
1,815,677Type of Investment

Fair Value atDecember 31, 2021


ValuationTechnique(1)

UnobservableInput

Range


WeightedAverageSenior Secured LoansFirst Lien

$
376,827


Market Comparables

Market Yield (%)


6.3% - 15.8%



9.1%EBITDA Multiples (x)


3.5x - 6.7x



4.6x34,195


Discounted Cash Flow

Discount Rate (%)


8.5% - 13.5%



10.8%3,053


Other(2)

Other(2)Senior Secured LoansSecond Lien


84,083


Market Comparables

Market Yield (%)


7.0% - 10.5%



8.8%Senior Secured Bonds


10,371


Market Comparables

Market Yield (%)


6.5% - 7.0%



6.8%Unsecured Debt


64,046


Market Comparables

Market Yield (%)


8.9% - 9.9%



9.4%40,613


Other(2)

Other(2)Preferred Equity


416,516


Market Comparables

Market Yield (%)


7.5% - 24.5%



14.9%EBITDA Multiples (x)


9.0x - 10.0x



9.5xNet Aircraft Book Value Multiple (x)


1.0x - 1.0x



1.0x80,772


Discounted Cash Flow

Discount Rate (%)


9.5% - 10.0%



9.8%Sustainable Infrastructure Investments, LLC


50,770


Discounted Cash Flow

Discount Rate (%)


11.8% - 12.3%



12.0%Equity/Other


444,610


Market Comparables

EBITDA Multiples (x)


2.8x - 10.5x



4.7xProduction Multiples (Mboe/d)


$30,000.0 - $35,000.0



$32,500.0Proved Reserves Multiples (Mmboe)


10.0x - 11.5x



10.8xProduction Multiples (MMcfe/d)


$2,900.0 - $3,200.0



$3,050.0Proved Reserves Multiples (Bcfe)


0.7x - 0.7x



0.7xPV-10 Multiples (x)


1.2x - 4.8x



2.8x3,195


Discounted Cash Flow

Discount Rate (%)


8.0% - 32.0%



23.3%6,385


Option Valuation Model

Volatility (%)


52.0% - 65.0%



63.6%6,046


Other(2)

Other(2)Total

$
1,621,482  (1)
Investments using a market quotes valuation technique were valued by using the midpoint of the prevailing bid
and ask prices from dealers on the date of the relevant period end, which were provided by an independent third-party pricing service and screened for validity by such service. For investments utilizing a market comparables valuation technique, a
significant increase (decrease) in the market yield, in isolation, would result in a significantly lower (higher) fair value measurement, and a significant increase (decrease) in any of the valuation multiples, in isolation, would result in a
significantly higher (lower) fair value measurement. For investments utilizing a discounted cash flow valuation technique, a significant increase (decrease) in the discount rate, in isolation,  36




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 8. Fair Value of Financial
Instruments (continued)  would result in a significantly lower (higher) fair value measurement. For investments utilizing an option valuation model valuation technique, a significant increase (decrease) in the
volatility, in isolation, would result in a significantly higher (lower) fair value measurement.  (2)
Fair valued based on expected outcome of proposed corporate transactions, the expected value of the liquidation
preference of the investment or other factors. Note 9. Financing Arrangements The following tables present a summary of information with respect to the Companys outstanding financing arrangements as of
March 31, 2022 and December 31, 2021. For additional information regarding these financing arrangements, see the notes to the Companys audited consolidated financial statements contained in its annual report on Form 10-K for the year ended December 31, 2021. Any significant changes to the Companys financing arrangements during the three months ended March 31, 2022 are discussed below.  As of March 31, 2022(Unaudited)Arrangement(1)

Type of Arrangement


Rate(2)


AmountOutstanding


AmountAvailable


Maturity DateJPMorgan Facility


Revolving/Term



L+3.00%


$
305,676


$



February 16, 2023Senior Secured Notes(3)


Bond



7.50%



466,617






August 15, 2023Total









$
772,293


$
  As of December 31, 2021Arrangement(1)

Type of Arrangement


Rate(2)


AmountOutstanding


AmountAvailable


Maturity DateJPMorgan Facility


Revolving/Term



L+3.00%


$
286,667


$
85,000


February 16, 2023Senior Secured Notes(3)


Bond



7.50%



489,000






August 15, 2023Total









$
775,667


$
85,000  (1)
The carrying amount outstanding under the facility approximates its fair value, unless otherwise noted.  (2)
LIBOR is subject to a 0.00% floor.  (3)
As of March 31, 2022 and December 31, 2021, the fair value of the Senior Secured Notes was
approximately $478,357 and $510,511, respectively. These valuations are considered Level 2 valuations within the fair value hierarchy. For the three months ended March 31, 2022 and 2021, the components of total interest expense for the Companys financing arrangements
were as follows:  Three Months Ended March 31,2022


2021Arrangement(1)

DirectInterestExpense(2)


Amortizationof DeferredFinancingCosts andDiscount


TotalInterestExpense


DirectInterestExpense(2)


Amortizationof DeferredFinancingCosts andDiscount


TotalInterestExpenseJPMorgan Facility

$
2,405


$
905


$
3,310


$
3,237


$
2,089


$
5,326Senior Secured Notes


9,104



1,280



10,384



9,169



995



10,164Total

$
11,509


$
2,185


$
13,694


$
12,406


$
3,084


$
15,490  (1)
Borrowings of each of the Companys wholly-owned special-purpose financing subsidiaries are considered
borrowings of the Company for purposes of complying with the asset coverage requirements applicable to BDCs under the 1940 Act.  (2)
Direct interest expense includes the effect of non-usage fees,
administration fees and make-whole fees, if any.  37




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 9. Financing Arrangements (continued)  The Companys average borrowings and weighted average interest rate, including the
effect of non-usage fees, for the three months ended March 31, 2022 were $779,774 and 7.02%, respectively. As of March 31, 2022, the Companys effective interest rate on borrowings was 5.91%. The Companys average borrowings and weighted average interest rate, including the effect of
non-usage fees, for the three months ended March 31, 2021 were $899,500 and 6.89%, respectively. As of March 31, 2021, the Companys effective interest rate on borrowings was 6.11%. Under its financing arrangements, the Company has made certain representations and warranties and is required to comply with various covenants,
reporting requirements and other customary requirements for similar financing arrangements.The Company was in compliance with all covenants required by its financing arrangements as of March 31, 2022 and December 31, 2021. The revolving period for the JPMorgan Facility, during which the Company was permitted to borrow, repay and
re-borrow the revolving loans, terminated in accordance with the terms of the JPMorgan Facility on February 16, 2022. Obligations under the JPMorgan Facility mature on February 16, 2023. Note 10. Commitments and Contingencies The Company enters into contracts that contain a variety of indemnification provisions. The Companys maximum exposure under these
arrangements is unknown; however, the Company has not had prior claims or losses pursuant to these contracts. FS/EIG Advisor has reviewed the Companys existing contracts and expects the risk of loss to the Company to be remote. The Company is not currently subject to any material legal proceedings and, to the Companys knowledge, no material legal proceedings are
threatened against the Company. From time to time, the Company may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of the Companys rights under contracts with its
portfolio companies. While the outcome of any legal proceedings cannot be predicted with certainty, the Company does not expect that any such proceedings will have a material effect upon its financial condition or results of operations. See Note 4 for a discussion of the Companys commitments to FS/EIG Advisor and its affiliates (including FS Investments) and Note 7 for a
discussion of the Companys unfunded commitments.  38




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)    Note 11. Financial Highlights The following is a schedule of financial highlights of the Company for the three months ended March 31, 2022 and the year ended
December 31, 2021:  Three Months EndedMarch 31, 2022(Unaudited)


Year EndedDecember 31, 2021Per Share Data:(1)Net asset value, beginning of period

$
3.59


$
3.25Results of operations(2)Net investment income


0.02



0.09Net realized gain (loss) and unrealized appreciation (depreciation)


0.41



0.37Net increase (decrease) in net assets resulting from operations


0.43



0.46Shareholder distributions(3)Distributions from net investment income


(0.03
)


(0.12
)Net decrease in net assets resulting from shareholder distributions


(0.03
)


(0.12
)Capital share transactionsIssuance of common shares(4)






Net increase (decrease) in net assets resulting from capital share transactions






Net asset value, end of period

$
3.99


$
3.59Shares outstanding, end of period


447,523,931



446,089,499Total return(5)


11.98
%


14.22
%Total return (without assuming reinvestment of distributions)(5)


11.98
%


14.15
%Ratio/Supplemental Data:Net assets, end of period

$
1,783,915


$
1,602,323Ratio of net investment income to average net
assets(6)


1.90
%


2.77
%Ratio of total operating expenses to average net assets(6)


7.06
%


6.96
%Ratio of interest expense to average net
assets(6)


3.40
%


3.46
%Portfolio turnover(7)


5.18
%


44.25
%Total amount of senior securities outstanding, exclusive of treasury securities

$
772,293


$
775,667Asset coverage per unit(8)


3.31



3.07  (1)
Per share data may be rounded in order to recompute the ending net asset value per share.  (2)
The per share data was derived by using the weighted average shares outstanding during the applicable period.  (3)
The per share data for distributions reflects the actual amount of distributions paid per share during the
applicable period.  (4)
The issuance of common shares on a per share basis reflects the incremental net asset value changes as a result
of the issuance of common shares pursuant to the Companys distribution reinvestment plan. The issuance of common shares at a price that is greater than the net asset value per share results in an increase in net asset value per share.  (5)
The total return for each period presented was calculated based on the change in net asset value during the
applicable period, including the impact of distributions reinvested in accordance with the Companys distribution reinvestment plan. The total return (without assuming reinvestment of distributions) for each period presented was calculated by
taking the net asset value per share as of the end of the applicable period, adding the cash distributions per share which were declared during the applicable period and dividing the total by the net asset value per share at the beginning of the
applicable period. The total returns do not consider the effect of any sales commissions or charges that may be incurred in connection with the sale of the Companys common shares. The total returns include the effect of the issuance of common
shares at a net offering price that is greater than net asset value per share, which causes an increase in net asset value per share. The historical calculations of total returns in the table should not be considered representations of the
Companys future total returns, which may be greater or less than the returns shown in the table due to a number of factors, including the Companys ability or  39




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##### Table of Contents

FS Energy and Power Fund Notes to Unaudited Consolidated Financial Statements (continued) (in thousands, except share and per share amounts)   Note 11. Financial
Highlights (continued)  inability to make investments in companies that meet its investment criteria, the interest rates payable on the debt securities the Company acquires, the level of the Companys expenses,
variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which the Company encounters competition in its markets and general economic conditions. As a result of these factors, results for any previous
period should not be relied upon as being indicative of performance in future periods. The total return calculations set forth above represent the total returns on the Companys investment portfolio during the applicable period and do not
represent actual returns to shareholders.  (6)
Weighted average net assets during the applicable period are used for this calculation. Ratios for the three
months ended March 31, 2022 are annualized. Annualized ratios for the three months ended March 31, 2022 are not necessarily indicative of the ratios that may be expected for the year ending December 31, 2022. The ratio of total
operating expenses to average net assets is before the management fee offset. The ratio of net operating expenses to average net assets after the management fee offset for the three months ended March 31, 2022 and the year ended December 31, 2021 is
7.02% and 6.87%, respectively. See Note 4 for a discussion of the management fee offset with FS/EIG Advisor.  (7)
Portfolio turnover for the three months ended March 31, 2022 is not annualized.  (8)
Asset coverage per unit is the ratio of the carrying value of the Companys total consolidated assets, less
liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.  40




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##### Table of Contents

Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations. (in thousands,
except share and per share amounts) The information contained in this section should be read in conjunction with our
unaudited consolidated financial statements and related notes thereto included elsewhere in this quarterly report on Form 10-Q. In this report, we, us and our refer to
FS Energy and Power Fund and FS/EIG Advisor refers to FS/EIG Advisor, LLC. Forward-Looking Statements Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements
because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:  

our future operating results;  

our business prospects and the prospects of the companies in which we may invest, including our and their ability
to achieve our respective objectives as a result of the current COVID-19 pandemic;  

the impact of the investments that we expect to make;  

the ability of our portfolio companies to achieve their objectives;  

our current and expected financing arrangements and investments;  

changes in the general interest rate environment;  

the adequacy of our cash resources, financing sources and working capital;  

the timing and amount of cash flows, distributions and dividends, if any, from our portfolio companies;  

our contractual arrangements and relationships with third parties;  

actual and potential conflicts of interest with FS/EIG Advisor, FS Investments, EIG, or any of their respective
affiliates;  

the dependence of our future success on the general economy and its effect on the industries in which we may
invest;  

general economic and political trends and other external factors, including the current COVID-19 pandemic and related disruptions caused thereby;  

our use of financial leverage;  

the ability of FS/EIG Advisor to locate suitable investments for us and to monitor and administer our
investments;  

the ability of FS/EIG Advisor or its affiliates to attract and retain highly talented professionals;  

our ability to maintain our qualification as a RIC and as a BDC;  

the impact on our business of the Dodd-Frank Act, as amended, and the rules and regulations issued thereunder;  

the effect of changes to tax legislation and our tax position; and  

the tax status of the enterprises in which we may invest. In addition, words such as anticipate, believe, expect and intend indicate a forward-looking
statement, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual
results could differ materially from those implied or expressed in the forward-looking statements for any reason. Factors that could cause actual results to differ materially include:  

changes in the economy;  

geo-political risks;  

risks associated with possible disruption in our operations or the economy generally due to terrorism, natural
disasters or pandemics; and  41




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##### Table of Contents



future changes in laws or regulations and conditions in our operating areas. We have based the forward-looking statements included in this quarterly report on Form 10-Q on
information available to us on the date of this quarterly report on Form 10-Q. Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking
statements, whether as a result of new information, future events or otherwise. Shareholders are advised to consult any additional disclosures that we may make directly to shareholders or through reports that we may file in the future with the SEC,
including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The
forward-looking statements and projections contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Overview We were formed as a Delaware statutory trust under the Delaware Statutory Trust Act on September 16, 2010 and formally commenced
investment operations on July 18, 2011. We are an externally managed, non-diversified, closed-end management investment company that has elected to be regulated as
a BDC under the 1940 Act and has elected to be treated for U.S. federal income tax purposes, and intends to qualify annually, as a RIC under Subchapter M of the Code. In November 2016, we closed our continuous public offering of common shares to new
investors. Our investment activities are managed by FS/EIG Advisor and supervised by our board of trustees, a majority of whom are
independent. Under the FS/EIG investment advisory agreement, we have agreed to pay FS/EIG Advisor an annual base management fee based on the average weekly value of our gross assets and an incentive fee based on our performance. Our investment policy is to invest, under normal circumstances, at least 80% of our total assets in securities of Energy companies. This
investment policy may not be changed without at least 60 days prior notice to holders of our common shares of any such change. Our
investment objective is to generate current income and long-term capital appreciation. We pursue our investment objective by focusing on the following seven investment themes:
(i) basin-on-basin competition in U.S. shale, (ii) globalization of natural gas, (iii) coal retirements and the evolving energy generation mix,
(iv) renewables focused on power grid parity, (v) export infrastructure for emerging U.S. producers, (vi) market liberalization opening new markets and (vii) midstream infrastructure connecting new supplies. However, we may
pursue other investment opportunities if we believe it is in our best interests and consistent with our investment objectives. Within the
above investment themes, we intend to focus on the following investment categories in an effort to generate returns for our investors with an acceptable level of risk. Direct Originations: Through FS/EIG Advisor, we intend to directly source investment opportunities across the Energy industry. Such
investments are typically originated and structured through a negotiated process in which we directly participate and are not generally available to the broader market. These investments may include both debt and equity components. We believe
directly originated investments may offer higher returns and more favorable protections than broadly syndicated transactions. Broadly
Syndicated Loan and Bond Transactions:Although our primary focus is to invest in directly originated transactions, in certain circumstances we will also invest in the broadly syndicated loan and high yield bond markets. Broadly
syndicated loans and bonds are generally more liquid than our directly originated investments and provide a complement to our less liquid strategies. In the case of broadly syndicated investments, we generally intend to capitalize on market inefficiencies by investing in loans, bonds, and
other asset classes where the market price of such investment reflects a lower value than we believe is warranted based on our fundamental analysis, providing us with an opportunity to earn an attractive return on our investment. The majority of our portfolio is comprised of income-oriented securities, which principally refers to debt securities and income-oriented
preferred and common equity interests, of privately-held Energy companies within the United States. Generally, we expect to invest primarily in directly originated investments and primary market transactions, as this will provide us with the ability
to tailor investments to best match a projects or companys needs with our investment objectives. We intend to weight our portfolio towards senior secured debt and directly originated preferred equity investments, which we believe offer
opportunities for superior risk-adjusted returns and income generation. Our debt investments may take the form of corporate or project loans or bonds, may be secured or unsecured and may, in some cases, be accompanied by yield enhancements. These
yield enhancements  42




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##### Table of Contents

are typically expected to include royalty interests in mineral, oil and gas properties, warrants, options, net profits interests, cash flow participations or other forms of equity participation
that can provide additional consideration or upside in a transaction. Our preferred equity investments are mostly directly originated and may take the form of perpetual or redeemable securities, typically with a current income component
and minimum base returns. In addition, certain income-oriented preferred or common equity interests may include interests in master limited partnerships and a portion of our portfolio may be comprised of derivatives, including the use of total
return swaps, credit default swaps and other commodity swap contracts. In connection with certain of our debt investments or any restructuring of these debt investments, we may on occasion receive equity interests, including warrants or options, as
additional consideration or otherwise in connection with a restructuring. FS/EIG Advisor will seek to tailor our investment focus as market conditions evolve. Revenues The principal measure of our
financial performance is net increase or decrease in net assets resulting from operations, which includes net investment income, net realized gain or loss on investments, foreign currency, swap contracts and debt extinguishment, net change in
unrealized appreciation or depreciation on investments, net change in unrealized gain or loss on foreign currency and net change in unrealized appreciation or depreciation on swap contracts. Net investment income is the difference between our income
from interest, dividends, fees and other investment income and our operating and other expenses. Net realized gain or loss on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized
cost, including the respective realized gain or loss on foreign currency for those foreign denominated investment transactions. Net realized gain or loss on foreign currency is the portion of realized gain or loss attributable to foreign currency
fluctuations. Net realized gain or loss on swap contracts is the portion of realized gain or loss attributable to the difference between the fixed price specified in the contract and the referenced settlement price. Net change in unrealized
appreciation or depreciation on investments is the net change in the fair value of our investment portfolio, including the respective unrealized gain or loss on foreign currency for those foreign denominated investments. Net change in unrealized
gain or loss on foreign currency is the net change in the value of receivables or accruals due to the impact of foreign currency fluctuations. Net change in unrealized appreciation or depreciation on swap contracts is the net change in the value of
receivables or accruals due to the impact of the difference between the fixed price specified in the contract and the referenced settlement price. We principally generate revenues in the form of interest income on the debt investments we hold. We also generate revenues in the form of
dividends and other distributions on the equity or other securities we may hold. In addition, we may generate revenues in the form of non-recurring commitment, closing, origination, structuring or diligence
fees, fees for providing managerial assistance, consulting fees, prepayment fees and performance-based fees. Expenses Our primary operating expenses include the payment of management and incentive fees and other expenses under the FS/EIG investment advisory
agreement, interest expense from financing arrangements and other indebtedness, and other expenses necessary for our operations. The management and incentive fees compensate FS/EIG Advisor for its work in identifying, evaluating, negotiating,
executing, monitoring and servicing our investments. FS/EIG Advisor oversees our day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, certain government and regulatory affairs activities, and other administrative
services. FS/EIG Advisor also performs, or oversees the performance of, our corporate operations and required administrative services, which includes being responsible for the financial records that we are required to maintain and preparing reports
for our shareholders and reports filed with the SEC. In addition, FS/EIG Advisor assists us in calculating our net asset value, overseeing the preparation and filing of tax returns and the printing and dissemination of reports to our shareholders,
and generally overseeing the payment of our expenses and the performance of administrative and professional services rendered to us by others. We reimburse FS/EIG Advisor for expenses necessary to perform services related to our administration and operations, including FS/EIG
Advisors allocable portion of the compensation and related expenses of certain personnel of FS Investments and EIG providing administrative services to us on behalf of FS/EIG Advisor, and for transactional expenses for prospective investments,
such as fees and expenses associated with performing due diligence reviews of investments that do not close, often referred to as broken deal costs. We reimburse FS/EIG Advisor no less than quarterly for all costs and expenses incurred
by FS/EIG Advisor in performing its obligations and providing personnel under the FS/EIG investment advisory agreement. The amount of this reimbursement is set at the lesser of (1) FS/EIG Advisors actual costs incurred in providing such
services and (2) the amount that we estimate would be required to pay alternative service providers for comparable services in the same geographic location. FS/EIG Advisor allocates the cost of such services to us based on factors such as time
allocations and other  43




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##### Table of Contents

reasonable metrics. Our board of trustees reviews the methodology employed in determining how the expenses are allocated to us and assesses the reasonableness of such reimbursements for expenses
allocated to us based on the breadth, depth and quality of such services as compared to the estimated cost to us of obtaining similar services from third-party service providers known to be available. In addition, our board of trustees considers
whether any single third-party service provider would be capable of providing all such services at comparable cost and quality. Finally, our board of trustees compares the total amount paid to FS/EIG Advisor for such services as a percentage of our
net assets to the same ratio as reported by other comparable BDCs. We do not reimburse FS/EIG Advisor for any services for which it receives a separate fee, or for rent, depreciation, utilities, capital equipment or other administrative items
allocated to a controlling person of FS/EIG Advisor. We bear all other expenses of our operations and transactions, including all other
expenses incurred by FS/EIG Advisor in performing services for us and administrative personnel paid by FS/EIG Advisor, to the extent they are not controlling persons of FS/EIG Advisor or any of its affiliates, subject to the limitations included in
the FS/EIG investment advisory agreement. In addition, we have contracted with State Street to provide various accounting and
administrative services, including, but not limited to, preparing preliminary financial information for review by FS/EIG Advisor, preparing and monitoring expense budgets, maintaining accounting and corporate books and records, processing trade
information provided by us and performing testing with respect to RIC compliance. For information regarding the fee offset with FS/EIG
Advisor, see Note 4 to our unaudited consolidated financial statements included herein. COVID-19 and Energy
Market Developments Recent events such as the rapid spread of the COVID-19 pandemic, global
lockdowns and ongoing negotiations regarding production levels between oil producing countries, have at times resulted in lower demand for crude oil and, as a result, lower commodity prices. Although the energy markets have had a notable recovery in
recent quarters, volatility in the energy markets may persist, recur or worsen, including as a result of other macroeconomic events, such as the current conflict in Ukraine and sanctions imposed on Russia in response thereto. The impact of these
events on the U.S. and global economies (including energy markets), has negatively impacted, and could continue to negatively impact, the business operations of some of our portfolio companies. We cannot at this time fully predict the continued or
future impact of the above events on our business or the business of our portfolio companies, their duration or magnitude or the extent to which they will negatively impact our portfolio companies operating results or our own results of
operations or financial condition. We expect that certain of our portfolio companies may continue to experience economic distress for the foreseeable future and may become insolvent or otherwise significantly limit business operations if subjected
to prolonged economic distress, including as a result of depressed commodity prices or other declines in the energy markets. These developments could result in a further decrease in the value of our investments. These events have previously had adverse effects on our investment income and we expect that such adverse effects may continue for some time.
These adverse effects have required and may again require us to restructure certain of our investments, which could result in further reductions to our investment income or in impairments on our investments. In addition, disruptions in the capital
markets have resulted in illiquidity in certain market areas at times. These market disruptions and illiquidity have had and may continue to have an adverse effect on our business, financial condition, results of operations and cash flows.
Unfavorable economic conditions caused by these events may increase our funding costs and limit our access to the capital markets. These events have previously limited our investment originations, which may continue for the immediate future, and
have also previously had a material negative impact on our operating results for a period of time. In addition, the growth of non-income producing equity investments as a percentage of the portfolio has materially reduced the value of collateral
available to secure our financing arrangements. Consequently, this has adversely impacted our liquidity, may cause us to fall out of compliance with certain portfolio requirements under the 1940 Act that are tied to the value of our investments and,
in each case, may continue to do so in the future. In particular, as a result of these events during 2020 and the early part of 2021, we
needed to sell certain investments to satisfy certain margin obligations, and if such market conditions recur or worsen, we may need to sell additional investments at similarly or even more disadvantageous prices, or enter into other transactions on
terms that are disadvantageous to us, to satisfy obligations under our financing arrangements. In light of such difficult market
conditions and in an effort to preserve our liquidity, our board of trustees determined to suspend for an indefinite period of time our share repurchase program and will reassess our ability to recommence such program in future periods. Although our
board of trustees has not declared or resumed regular cash distributions to shareholders for any period after March 31, 2020, our board of trustees has since declared three cash distributions in 2020, four cash distributions in 2021 and one
cash distribution in 2022, each in the amount of $0.03 per share. FS/EIG Advisor and our board of trustees expect  44




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that future regular cash distributions to shareholders will remain suspended until such time that our board of trustees and FS/EIG Advisor believe that market conditions and our financial
condition support the resumption of such distributions. Our board of trustees has and will continue to evaluate our ability to pay any distributions in the future. There can be no assurance that we will be able to pay distributions in the future. We will continue to carefully monitor the impact of the COVID-19 pandemic; the current conflict in
Ukraine and government responses thereto; and other disruptions in the energy markets on our business and the business of our portfolio companies. Because the full effects of these events are not capable of being known at this time, we cannot
estimate the impacts on our future financial condition, results of operations or cash flows. We do, however, expect that these events may have a negative impact on our business and the financial condition of certain of our portfolio companies. Portfolio Investment Activity for the Three Months Ended March 31, 2022 and for the Year Ended December 31, 2021 Total Portfolio Activity The following
tables present certain selected information regarding our portfolio investment activity for the three months ended March 31, 2022:  Net Investment Activity

For the ThreeMonthsEndedMarch 31,2022


For the YearEndedDecember 31,2021Purchases

$
124,090


$
1,010,496Sales and Repayments


(240,335
)


(998,391
)Net Portfolio Activity

$
(116,245
)

$
12,105  For the Three MonthsEnded March 31, 2022


For the Year EndedDecember 31, 2021New Investment Activity by Asset Class

Purchases


Percentage


Purchases


PercentageSenior Secured LoansFirst Lien

$
17,642



14
%

$
423,495



42
%Senior Secured LoansSecond Lien


63,250



51
%


18,750



2
%Senior Secured Bonds










169,298



17
%Unsecured Debt


34,041



28
%


334,396



33
%Preferred Equity










11,942



1
%Equity/Other


9,157



7
%


52,615



5
%Total

$
124,090



100
%

$
1,010,496



100
% The following table summarizes the composition of our investment portfolio at cost and fair value as of
March 31, 2022 and December 31, 2021:  March 31, 2022(Unaudited)


December 31, 2021AmortizedCost(1)


Fair Value


Percentageof Portfolio


AmortizedCost(1)


Fair Value


Percentageof PortfolioSenior Secured LoansFirst Lien

$
694,232


$
696,726



28
%

$
832,257


$
812,335



34
%Senior Secured LoansSecond Lien


129,504



130,401



5
%


83,322



84,083



3
%Senior Secured Bonds


77,248



85,452



3
%


77,266



81,646



3
%Unsecured Debt


384,783



381,509



16
%


425,715



397,068



17
%Preferred Equity


503,010



483,647



20
%


515,711



497,288



21
%Sustainable Infrastructure Investments, LLC


54,514



52,100



2
%


54,514



50,770



2
%Equity/Other


371,634



642,537



26
%


364,272



472,033



20
%Total

$
2,214,925


$
2,472,372



100
%

$
2,353,057


$
2,395,223



100
%  (1)
Amortized cost represents the original cost adjusted for the amortization of premiums and/or accretion of
discounts, as applicable, on investments.  45




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##### Table of Contents

The following table presents certain selected information regarding the composition of our
investment portfolio as of March 31, 2022 and December 31, 2021:  March 31,2022


December 31,2021Number of Portfolio Companies


69



71% Variable Rate (based on fair value)


30.6
%


35.1
%% Fixed Rate (based on fair value)


21.8
%


22.3
%% Income Producing Preferred Equity and Equity/Other Investments (based on fair value)


13.1
%


14.1
%% Non-Income Producing Preferred Equity and Equity/Other
Investments (based on fair value)


34.5
%


28.5
%Weighted Average Purchase Price of Debt Investments (as a % of par value)


99.4
%


98.5
%% of Investments on Non-Accrual (based on fair
value)


8.5
%


10.4
%Gross Portfolio Yield Prior to Leverage (based on amortized cost)


5.7
%


5.5
%Gross Portfolio Yield Prior to Leverage (based on amortized cost)Excluding Non-Income Producing Assets


8.0
%


7.8
% Although our board of trustees has not declared or resumed regular cash distributions to shareholders for any
period after March 31, 2020, our board of trustees has since declared three cash distributions in 2020, four cash distributions in 2021 and one cash distribution in 2022, each in the amount of $0.03 per share. FS/EIG Advisor and our board of
trustees expect that future regular cash distributions to shareholders will remain suspended until such time that our board of trustees and FS/EIG Advisor believe that market conditions and our financial condition support the resumption of such
distributions. Our board of trustees has and will continue to evaluate our ability to pay any distributions in the future. There can be no assurance that we will be able to pay distributions in the future and any annualized distribution rate
provided in this report may not be representative of the actual distribution rate for any period. For the three months ended March 31, 2022 and the year ended December 31, 2021, our total return was 11.98% and 14.22%, respectively, and our
total return without assuming reinvestment of distributions was 11.98% and 14.15%, respectively. Our estimated gross portfolio yield and
annualized distribution rate to shareholders do not represent actual investment returns to shareholders. Our gross annual portfolio yield and distribution rate to shareholders are subject to change and in the future may be greater or less than the
rates set forth above. See the sections entitled Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2021 and in our other periodic reports filed with
the SEC for a discussion of the uncertainties, risks and assumptions associated with these statements. Direct Originations We define Direct Originations as any investment where FS/EIG Advisor or its affiliates negotiates the terms of the transaction beyond just the
price, which, for example, may include negotiating financial covenants, maturity dates or interest rate terms. These Direct Originations include participation in other originated transactions where there may be third parties involved, or a bank
acting as an intermediary, for a closely held club, or similar transactions. The following table presents certain selected information regarding our Direct Originations as of March 31, 2022 and December 31, 2021:  Characteristics of All Direct Originations held in Portfolio

March 31,2022

December 31,2021Number of Portfolio Companies

43

43% of Investments on Non-Accrual (based on fair
value)

12.0%

15.4%Total Cost of Direct Originations

$1,489,778

$1,586,099Total Fair Value of Direct Originations

$1,757,562

$1,621,482% of Total Investments, at Fair Value

71.1%

67.7%Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct
Originations

5.4%

5.1%Gross Portfolio Yield Prior to Leverage (based on amortized cost) of Funded Direct
OriginationsExcluding Non-Income Producing Assets

9.3%

8.4% Portfolio Composition by Strategy The table below summarizes the composition of our investment portfolio by strategy and enumerates the percentage, by fair value, of the total
portfolio assets in such strategies as of March 31, 2022 and December 31, 2021:  March 31, 2022


December 31, 2021Portfolio Composition by Strategy

Fair Value


Percentage ofPortfolio


Fair Value


Percentageof PortfolioDirect Originations

$
1,757,562



71
%

$
1,621,482



68
%Broadly Syndicated/Other


714,810



29
%


773,741



32
%Total

$
2,472,372



100
%

$
2,395,223



100
%  46




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##### Table of Contents

See Note 7 to our unaudited consolidated financial statements included herein for additional
information regarding our investment portfolio. Portfolio Asset Quality In addition to various risk management and monitoring tools, FS/EIG Advisor uses an investment rating system to characterize and monitor the
expected level of returns on each investment in our portfolio. FS/EIG Advisor uses an investment rating scale of 1 to 5. The following is a description of the conditions associated with each investment rating:  InvestmentRating

Summary Description1

Investment exceeding expectations and/or capital gain expected.2

Performing investment generally executing in accordance with the portfolio companys business planfull return of principal and interest expected.3

Performing investment requiring closer monitoring.4

Underperforming investmentsome loss of interest or dividend possible, but still expecting a positive return on investment.5

Underperforming investment with expected loss of interest and some principal. The following table shows the distribution of our investments on the 1 to 5 investment rating scale at fair
value as of March 31, 2022 and December 31, 2021:  March 31, 2022


December 31, 2021Investment Rating

FairValue


Percentageof Portfolio


FairValue


Percentageof Portfolio1

$







$




2


1,913,834



77
%


1,771,346



74
%3


178,155



7
%


232,319



10
%4


309,781



13
%


284,055



12
%5


70,602



3
%


107,503



4
%Total

$
2,472,372



100
%

$
2,395,223



100
% The amount of the portfolio in each grading category may vary substantially from period to period resulting
primarily from changes in the composition of the portfolio as a result of new investment, repayment and exit activities. In addition, changes in the grade of investments may be made to reflect our expectation of performance and changes in investment
values. Results of Operations Comparison of the
Three Months Ended March 31, 2022 and 2021 Revenues Our investment income for the three months ended March 31, 2022 and 2021 was as follows:  Three Months Ended March 31,2022


2021Amount


Percentageof TotalIncome


Amount


Percentageof TotalIncomeInterest income

$
27,087



76
%

$
29,165



77
%Paid-in-kind
interest income


5,128



14
%


8,480



22
%Fee income


1,233



3
%


516



1
%Dividend income


2,461



7
%






Total investment income(1)

$
35,909



100
%

$
38,161



100
%  (1)
Such revenues represent $28,752 and $26,154 of cash income earned as well as $7,157 and $12,007 in non-cash portions relating to accretion of discount and PIK interest for the three months ended March 31, 2022 and 2021, respectively. Cash flows related to such non-cash
revenues may not occur for a number of reporting periods or years after such revenues are recognized. The level of
interest income we receive is generally related to the balance of income-producing investments multiplied by the weighted average yield of our investments. We may experience volatility in the amount of interest income that we earn as the  47




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##### Table of Contents

accrual status of existing portfolio investments may fluctuate due to ongoing restructuring activity in the portfolio. The decrease in the amount of interest income and PIK income for the three
months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to an increase in repayments on higher-yielding debt investments which were reinvested into assets with lower yields. Fee income is transaction based, and typically consists of prepayment fees and structuring fees. As such, future fee income is generally
dependent on new direct origination investments and the occurrence of events at existing portfolio companies resulting in such fees. The increase in the amount of fee income for the three months ended March 31, 2022 compared to the three months
ended March 31, 2021 was primarily due to an increase in prepayment fees. The increase in the amount of dividend income for the three
months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to the increase in dividends paid with respect to our investments in certain common equity and Sustainable Infrastructure Investments, LLC. Expenses Our operating expenses for
the three months ended March 31, 2022 and 2021 were as follows:  Three Months EndedMarch 31,2022


2021Management fees

$
10,735


$
10,650Administrative services expenses


1,420



1,581Share transfer agent fees


720



718Accounting and administrative fees


177



186Interest expense


13,694



15,490Trustees fees


227



207Expenses associated with our independent audit and related fees


111



111Legal fees






3Printing fees


333



187Other


1,000



371Total operating expenses


28,417



29,504Less: Management fee offset


(698
)


(2
)Net operating expenses

$
27,719


$
29,502 The following table reflects selected expense ratios as a percent of average net assets for the three months
ended March 31, 2022 and 2021 (not annualized):  Three Months EndedMarch 31,2022


2021Ratio of operating expenses to average net assets


1.76
%


1.94
%Ratio of management fee offset to average net assets


(0.04
)%


0.00
%Ratio of net operating expenses to average net assets


1.72
%


1.94
%Ratio of interest expense to average net assets


(0.85
)%


(1.02
)%Ratio of net operating expenses, excluding interest expense, to average net assets


0.87
%


0.92
% Interest expense may increase or decrease our expense ratios relative to comparative periods depending on
changes in benchmark interest rates such as LIBOR, utilization rates and the terms of our financing arrangements, among other factors. Management Fee
Offset Structuring or other upfront fees received by FS/EIG Advisor which were offset against management fees due to FS/EIG Advisor
from us were $698 and $2 for the three months ended March 31, 2022 and 2021, respectively. See Note 4 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q for
a discussion of the management fee offset for the three months ended March 31, 2022 and 2021.  48




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##### Table of Contents

Net Investment Income Our net investment income totaled $8,190 ($0.02 per share) and $8,659 ($0.02 per share) for the three months ended March 31, 2022 and
2021, respectively. Net Realized Gains or Losses Our net realized gains (losses) on investments, foreign currency, swap contracts and debt extinguishment for the three months ended
March 31, 2022 and 2021, were as follows:  Three MonthsEndedMarch 31,2022


2021Net realized gain (loss) on
investments(1)

$
(29,044
)

$
(440
)Net realized gain (loss) on swap contracts


(416
)


Net realized gain (loss) on debt extinguishment


(746
)


Total net realized gain (loss)

$
(30,206
)

$
(440
)  (1)
We sold investments and received principal repayments of $68,762 and $171,573, respectively, during the three
months ended March 31, 2022 and $111,368 and $173,361, respectively, during the three months ended March 31, 2021. Net
Change in Unrealized Appreciation (Depreciation) on Investments and Swap Contracts and Unrealized Gain (Loss) on Foreign Currency Our
net change in unrealized appreciation (depreciation) on investments, swap contracts and foreign currency for the three months ended March 31, 2022 and 2021 were as follows:  Three Months EndedMarch 31,2022


2021Net change in unrealized appreciation (depreciation) on investments

$
215,281


$
131,563Net change in unrealized appreciation (depreciation) on swap contracts


(3,482
)


Net change in unrealized appreciation (depreciation) on foreign currency






4Total net change in unrealized appreciation (depreciation)

$
211,799


$
131,567 During the three months ended March 31, 2022, the net change in unrealized appreciation (depreciation) on
our investments was primarily driven by the performance of our directly originated assets and certain of our upstream equity/other investments and the conversion of unrealized depreciation to realized losses. During the three months ended
March 31, 2021, the net change in unrealized appreciation (depreciation) on our investments was primarily driven by the performance of our directly originated assets. Net Increase (Decrease) in Net Assets Resulting from Operations For the three months ended March 31, 2022 and 2021, the net increase (decrease) in net assets resulting from operations was $189,783
($0.42 per share) and $139,786 ($0.32 per share), respectively. This Results of Operations section should be read in
conjunction with COVID-19 and Energy Market Developments above. Financial Condition, Liquidity and
Capital Resources Overview As of
March 31, 2022, we had $93,452 in cash, which we held in custodial accounts. As of March 31, 2022, we also had broadly syndicated investments that could be sold to create additional liquidity. As of March 31, 2022, we had seven senior
secured loan investments with aggregate unfunded commitments of $50,657 and unfunded commitments of $7,625 in U.S. dollars and $858 in Canadian dollars to contribute capital to Sustainable Infrastructure Investments, LLC. We maintain sufficient cash
on hand, available borrowings and/or liquid securities to fund such unfunded commitments should the need arise.  49




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##### Table of Contents

We generate cash primarily from the issuance of shares under our distribution reinvestment
plan and from cash flows from fees, interest and dividends earned from our investments as well as principal repayments and proceeds from sales of our investments. To seek to enhance our returns, we also employ leverage as market conditions permit
and at the discretion of FS/EIG Advisor, but unless and until we elect otherwise, as permitted by the 1940 Act, in no event will leverage employed exceed 50% of the value of our assets, as required by the 1940 Act. See Financing
Arrangements. Prior to investing in securities of portfolio companies, we invest the net proceeds from the issuance of shares under
our distribution reinvestment plan as well as from sales and paydowns of existing investments primarily in cash, cash equivalents, including money market funds, U.S. government securities, repurchase agreements and high-quality debt instruments
maturing in one year or less from the time of investment, consistent with our BDC election and our election to be taxed as a RIC. In light
of difficult market conditions, we took several steps in 2020 to seek to enhance our liquidity by, among other things, suspending our share repurchase program, suspending regular cash distributions and reducing leverage by paying down borrowings.
The share repurchase program and regular cash distributions currently remain suspended. We believe the net result of such measures resulted in an improved liquidity position for us. This Financial Condition, Liquidity and Capital Resources section should be read in conjunction with
COVID-19 and Energy Market Developments above and Financing Arrangements below. Financing Arrangements The following
table presents a summary of information with respect to our outstanding financing arrangements as of March 31, 2022:  Arrangement(1)

Type of
Arrangement

Rate(2)


AmountOutstanding


AmountAvailable


Maturity DateJPMorgan Facility

Revolving/Term


L+3.00%


$
305,676


$




February 16, 2023Senior Secured Notes(3)

Bond


7.50%



466,617







August 15, 2023Total







$
772,293


$
  (1)
The carrying amount outstanding under the facility approximates its fair value, unless otherwise noted.  (2)
LIBOR is subject to a 0.00% floor.  (3)
As of March 31, 2022, the fair value of the Senior Secured Notes was approximately $478,357. For additional information regarding our financing arrangements, see Note 9 to our unaudited consolidated financial
statements included herein. RIC Tax Treatment and Distributions We have elected to be treated for U.S. federal income tax purposes, and intend to qualify annually, as a RIC under Subchapter M of the
Code. As a RIC, we generally do not have to pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that we distribute as dividends to our shareholders. To maintain our qualification as a RIC, we must, among other
things, meet certain source-of-income and asset diversification requirements. In addition, in order to maintain RIC tax treatment, we must distribute to our
shareholders, for each tax year, dividends generally of an amount at least equal to 90% of our investment company taxable income, which is generally the sum of our net ordinary income plus the excess, if any, of realized net short-term
capital gains over realized net long-term capital losses, determined without regard to any deduction for dividends paid. In addition, we may, in certain cases, satisfy the Annual Distribution Requirement by distributing dividends relating to a tax
year after the close of such tax year under the spillover dividend provisions of Subchapter M of the Code. If we distribute a spillover dividend, such dividend will be included in a shareholders gross income for the tax year in
which the spillover distribution is paid. We intend to make sufficient distributions to our shareholders to maintain our RIC tax treatment each tax year. We will also be subject to nondeductible U.S. federal excise taxes on certain undistributed
income unless we distribute in a timely manner to our shareholders of an amount at least equal to the sum of (1) 98% of our net ordinary taxable income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2%
of our capital gain net income, which is the excess of capital gains over capital losses (adjusted for certain ordinary losses), for the one-year period ending October 31 of that calendar year and
(3) 100% of any ordinary income and capital gain net income recognized for the preceding years that were not distributed during such years and on which we paid no U.S. federal income tax. Any distribution declared by us during October, November
or December of any calendar year, payable to our shareholders of record on a specified date in such a month and actually paid during January of the following calendar year, will be treated as if it had been paid by us, as well as received by our
U.S. shareholders, on December 31 of the calendar year in which the distribution was declared.  50




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##### Table of Contents

In general, when we pay regular cash distributions, we intend to declare them on a quarterly
or monthly basis and pay them on a monthly basis. We will calculate each shareholders specific distribution amount for the period using record and declaration dates and each shareholders distributions will begin to accrue on the date
that common shares are issued to such shareholder. From time to time, we may also pay special interim distributions in the form of cash or common shares at the discretion of our board of trustees. The timing and amount of any future distributions to
shareholders are subject to applicable legal restrictions and the sole discretion of our board of trustees. Our distribution proceeds have
exceeded and in the future may exceed our earnings. Therefore, portions of the distributions that we have made represented, and may make in the future may represent, a return of capital to shareholders, which lowers their tax basis in their common
shares. A return of capital generally is a return of an investors investment rather than a return of earnings or gains derived from our investment activities and will be made after deducting the fees and expenses payable in connection with our
continuous public offering, including any fees payable to FS/EIG Advisor. Moreover, a return of capital will generally not be taxable, but will reduce each shareholders cost basis in our common shares, and will result in a higher reported
capital gain or lower reported capital loss when the common shares on which such return of capital was received are sold. Each year a statement on Form 1099-DIV identifying the sources of the distributions
will be mailed to our shareholders. We intend to make any regular distributions in the form of cash, out of assets legally available for
distribution, unless shareholders elect to receive their cash distributions in additional common shares under our distribution reinvestment plan. Any distributions reinvested under the plan will nevertheless remain taxable to a U.S. shareholder. Although our board of trustees has not declared or resumed regular cash distributions to shareholders for any period after March 31,
2020, our board of trustees has since declared three cash distributions in 2020, four cash distributions in 2021 and one cash distribution in 2022, each in the amount of $0.03 per share. FS/EIG Advisor and our board of trustees expect that future
regular cash distributions to shareholders will remain suspended until such time that our board of trustees and FS/EIG Advisor believe that market conditions and our financial condition support the resumption of such distributions. Our board of
trustees has and will continue to evaluate our ability to pay any distributions in the future. There can be no assurance that we will be able to pay distributions in the future. The timing and amount of any future distributions to shareholders are
subject to applicable legal restrictions and the sole discretion of our board of trustees. Furthermore, the JPMorgan Facility restricts our ability to make certain discretionary cash dividends and distributions and other restricted payments. The following table reflects the cash distributions per share that we have declared on our common shares during the three months ended
March 31, 2022 and 2021:  DistributionFor the Three Months Ended

Per Share


AmountFiscal 2021March 31, 2021

$
0.03


$
13,249Fiscal 2022March 31, 2022

$
0.03


$
13,426 See Note 5 to our unaudited consolidated financial statements included herein for additional information
regarding our distributions. Critical Accounting Policies and Estimates Our financial statements are prepared in conformity with GAAP, which requires us to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management has utilized available information, including our past history, industry standards
and the current economic environment, among other factors, in forming the estimates and judgments, giving due consideration to materiality. Actual results may differ from these estimates. In addition, other companies may utilize different estimates,
which may impact the comparability of our results of operations to those of companies in similar businesses. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is
integral to understanding our financial statements. We describe our most significant accounting policies in Note 2 to our unaudited consolidated financial statements included herein. Critical accounting policies are those that require the
application of managements most difficult, subjective or complex judgments, often because of the need to make estimates about the effect of matters that are inherently uncertain and that may change in subsequent periods. We evaluate our
critical accounting estimates and judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions. We have identified one of our accounting policies, valuation of portfolio investments, as critical
because it involves significant judgments  51




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##### Table of Contents

and assumptions about highly complex and inherently uncertain matters, and the use of reasonably different estimates and assumptions could have a material impact on our reported results of
operations or financial condition. As we execute our operating plans, we will describe additional critical accounting policies in the notes to our future financial statements in addition to those discussed below. Valuation of Portfolio Investments We
determine the fair value of our investment portfolio each quarter. Securities are valued at fair value as determined in good faith by our board of trustees. In connection with that determination, FS/EIG Advisor provides our board of trustees with
portfolio company valuations which are based on relevant inputs, including, but not limited to, indicative dealer quotes, values of like securities, recent portfolio company financial statements and forecasts, and valuations prepared by independent
third-party valuation services. Accounting Standards Codification Topic 820,Fair Value Measurements and Disclosure, or ASC
Topic 820, issued by the Financial Accounting Standards Board, or the FASB, clarifies the definition of fair value and requires companies to expand their disclosure about the use of fair value to measure assets and liabilities in interim and annual
periods subsequent to initial recognition. ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
ASC Topic 820 also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, which
includes inputs such as quoted prices for similar securities in active markets and quoted prices for identical securities where there is little or no activity in the market; and Level 3, defined as unobservable inputs for which little or no
market data exists, therefore requiring an entity to develop its own assumptions. With respect to investments for which market quotations
are not readily available, we undertake a multi-step valuation process each quarter, as described below:  

our quarterly fair valuation process begins with FS/EIG Advisor reviewing and documenting preliminary valuations
of each portfolio company or investment;  

such preliminary valuations for each portfolio company or investment are compared to a valuation range that is
obtained from an independent third-party valuation service;  

FS/EIG Advisor then provides the valuation committee of our board of trustees, or the valuation committee, its
valuation recommendation for each portfolio company or investment, along with supporting materials;  

preliminary valuations are then discussed with the valuation committee;  

the valuation committee reviews the preliminary valuations and FS/EIG Advisor, together with our independent
third-party valuation services, if applicable, supplements the preliminary valuations to reflect any comments provided by the valuation committee;  

following its review, the valuation committee will recommend that our board of trustees approve our fair
valuations; and  

our board of trustees discusses the valuations and determines the fair value of each such investment in our
portfolio in good faith based on various statistical and other factors, including the input and recommendation of FS/EIG Advisor, the valuation committee and any independent third-party valuation services, if applicable. Determination of fair value involves subjective judgments and estimates. Accordingly, the notes to our consolidated financial statements refer
to the uncertainty with respect to the possible effect of such valuations and any change in such valuations on our consolidated financial statements. In making its determination of fair value, our board of trustees may use any approved independent
third-party pricing or valuation services. However, our board of trustees is not required to determine fair value in accordance with the valuation provided by any single source, and may use any relevant data, including information obtained from
FS/EIG Advisor or any approved independent third-party valuation or pricing service that our board of trustees deems to be reliable in determining fair value under the circumstances. Below is a description of factors that FS/EIG Advisor, any
approved independent third-party valuation services and our board of trustees may consider when determining the fair value of our investments.  52




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##### Table of Contents

Valuation of fixed income investments, such as loans and debt securities, depends upon a
number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, call features, put features and other relevant terms of the debt. For investments without readily available market prices, we
may incorporate these factors into discounted cash flow models to arrive at fair value. Other factors that may be considered include the borrowers ability to adequately service its debt, the fair market value of the portfolio company in
relation to the face amount of its outstanding debt and the quality of collateral securing our debt investments. For convertible debt
securities, fair value generally approximates the fair value of the debt plus the fair value of an option to purchase the underlying security (i.e., the security into which the debt may convert) at the conversion price. To value such an option,
a standard option pricing model may be used. Our equity interests in portfolio companies for which there is no liquid public market are
valued at fair value. Our board of trustees, in its determination of fair value, may consider various factors, such as multiples of EBITDA, cash flows, net income, revenues or, in limited instances, book value,
PV-10 multiples or liquidation value. All of these factors may be subject to adjustments based upon the particular circumstances of a portfolio company or our actual investment position. For example,
adjustments to EBITDA may take into account compensation to previous owners or acquisition, recapitalization, restructuring or other related items. FS/EIG Advisor, any approved independent third-party valuation services and our board of trustees may also consider private merger and
acquisition statistics, public trading multiples discounted for illiquidity and other factors, valuations implied by third-party investments in the portfolio companies or industry practices in determining fair value. FS/EIG Advisor, any approved
independent third-party valuation services and our board of trustees may also consider the size and scope of a portfolio company and its specific strengths and weaknesses, and may apply discounts or premiums, where and as appropriate, due to the
higher (or lower) financial risk and/or the smaller size of portfolio companies relative to comparable firms, as well as such other factors as our board of trustees, in consultation with FS/EIG Advisor and any approved independent third-party
valuation services, if applicable, may consider relevant in assessing fair value. Generally, the value of our equity interests in public companies for which market quotations are readily available is based upon the most recent closing public market
price. Portfolio securities that carry certain restrictions on sale are typically valued at a discount from the public market value of the security. When we receive warrants or other equity securities at nominal or no additional cost in connection with an investment in a debt security, the
cost basis in the investment will be allocated between the debt securities and any such warrants or other equity securities received at the time of origination. Our board of trustees subsequently values these warrants or other equity securities
received at their fair value. Swap contracts typically are valued at their daily prices obtained from an independent third party. The
aggregate settlement values and notional amounts of the swap contracts are not recorded in the statements of assets and liabilities. Fluctuations in the value of the swap contracts are recorded in the statements of assets and liabilities as gross
assets and gross liabilities and in the statements of operations as unrealized appreciation (depreciation) until closed, when they will be recorded as net realized gain (loss). The fair values of our investments are determined in good faith by our board of trustees. Our board of trustees is solely responsible for the
valuation of our portfolio investments at fair value as determined in good faith pursuant to our valuation policy and consistently applied valuation process. Our board of trustees has delegated day-to-day responsibility for implementing our valuation policy to FS/EIG Advisor, and has authorized FS/EIG Advisor to utilize independent third-party valuation and pricing services that have been approved
by our board of trustees. The valuation committee is responsible for overseeing FS/EIG Advisors implementation of the valuation process. See Note 8 to our unaudited consolidated financial statements included herein for additional information regarding the fair value of our
financial instruments. Contractual Obligations We have entered into an agreement with FS/EIG Advisor to provide us with investment advisory and administrative services. Payments for
investment advisory services under the FS/EIG investment advisory agreement are equal to 1.75% of the average weekly value of our gross assets and an incentive fee based on our performance. Base management fees are generally paid on a quarterly
basis in arrears. See Note 4 to our unaudited consolidated financial statements included herein for a discussion of this agreement and for the amount of fees and expenses accrued under these agreements during the three months ended March 31,
2022 and 2021.  53




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##### Table of Contents

Recently Issued Accounting Standards In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic
848), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts,
hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January 2021, the FASB issued ASU No. 2021-01,
Reference Rate Reform (Topic 848), which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition. ASU 2020-04 and ASU
2021-01 are effective for all entities through December 31, 2022. The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or
evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship. We are currently
evaluating the impact of the adoption of ASU 2020-04 and 2021-01 on our consolidated financial statements.  Item 3.
Quantitative and Qualitative Disclosures About Market Risk. We are subject to financial market risks, including changes in interest rates. As of March 31, 2022, 30.6% of our portfolio investments
(based on fair value) paid variable interest rates, 21.8% paid fixed interest rates, 13.1% were income producing preferred equity and equity/other investments and the remaining 34.5% consisted of non-income
producing preferred equity and equity/other investments. A rise in the general level of interest rates can be expected to lead to higher interest rates applicable to the variable rate investments we hold and to declines in the value of any fixed
rate investments we hold. However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount. To the extent that
a substantial portion of our investments may be in variable rate investments, an increase in interest rates beyond this threshold would make it easier for us to meet or exceed the hurdle rate applicable to the subordinated incentive fee on income
and may result in a substantial increase in our net investment income and to the amount of incentive fees payable to FS/EIG Advisor with respect to our increased pre-incentive fee net investment income. Pursuant to the terms of the JPMorgan Facility, we borrow at a floating rate based on a benchmark interest rate. Under the indenture governing
the Senior Secured Notes, we pay interest to the holders of such notes at a fixed rate. To the extent that any present or future credit facilities or other financing arrangements that we or any of our subsidiaries enter into are based on a floating
interest rate, we will be subject to risks relating to changes in market interest rates. In periods of rising interest rates when we or our subsidiaries have such debt outstanding or financing arrangements in effect, our interest expense would
increase, which could reduce our net investment income, especially to the extent we hold fixed rate investments. The following table shows
the effect over a twelve-month period of changes in interest rates on our interest income, interest expense and net interest income, assuming no changes in the composition of our investment portfolio, including the accrual status of our investments,
and our borrowing arrangements in effect as of March 31, 2022 (dollar amounts are presented in thousands):  Basis Point Change in Interest Rates

Increase(Decrease)in InterestIncome


Increase(Decrease)in InterestExpense


Increase(Decrease) inNet InterestIncome


PercentageChange inNet InterestIncomeDown 96 basis points

$
(3,312
)

$
(2,818
)

$
(494
)


(0.6
)%No change














Up 100 basis points

$
6,697


$
2,967


$
3,730



4.9
%Up 300 basis points

$
21,120


$
8,900


$
12,220



15.9
%Up 500 basis points

$
35,544


$
14,833


$
20,711



27.0
% We expect that our long-term investments will be financed primarily with equity and debt. If deemed prudent, we
may use interest rate risk management techniques in an effort to minimize our exposure to interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments
resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial condition and results of operations. During the three months ended March 31, 2022 and 2021, we did not engage in
interest rate hedging activities. In addition, we may have risks regarding portfolio valuation and the potential inability of
counterparties to meet the terms of their contracts. See Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies and EstimatesValuation of Portfolio
Investments.  54




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##### Table of Contents

Item 4.
Controls and Procedures. As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation under the
supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2022. Based
on the foregoing, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective to provide reasonable assurance that we would meet our disclosure obligations. There was no change in our internal control over financial reporting (as defined in
Rules 13a-15(f) or 15d-15(f) under the Exchange Act) that occurred during the three month period ended March 31, 2022 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.  55




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##### Table of Contents

PART IIOTHER INFORMATION  Item 1.
Legal Proceedings. We are not currently subject to any material legal proceedings and, to our knowledge, no material legal proceedings are threatened against us.
From time to time, we may be party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. While the outcome of any legal
proceedings cannot be predicted with certainty, we do not expect that any such proceedings will have a material effect upon our financial condition or results of operations.  Item 1A.
Risk Factors. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should
carefully consider the risk factors that appeared under Item 1A. Risk Factors in our most recent Annual Report on Form 10-K. There are no material changes from the risk factors included within our
most recent Annual Report on Form 10-K other than the risks described below. The Russian invasion of Ukraine
and sanctions on Russian energy exports may have a material adverse impact on us and our portfolio companies. The conflict between
Russia and Ukraine could lead to disruption, instability and volatility in global markets and commodity prices, economies and industries that could negatively impact our business, results of operations and financial condition. The conflict has
already resulted in significant volatility in certain equity, debt and currency markets, material increases in certain commodity prices, and economic uncertainty. The conflict may escalate and its resolution is unclear. The U.S. government, the European Union and other governments have imposed severe sanctions against Russia and Russian interests and threatened
additional sanctions and controls, which could contribute to a shortage of raw materials and commodities. Sanctions and export control laws and regulations are complex, frequently changing, and increasing in number, and compliance with them may
impose additional legal compliance costs or business risks associated with our operations. Sanctions on Russian energy exports have disrupted crude oil markets, reducing supply and propelling spot prices above $100 per barrel for the first time
since 2014. Global energy market participants have increased production to respond to the oil supply deficit, but commodity supply and price outlook remains uncertain. High gas prices may also result in short- or longer-term consumer switching to
alternative energy solutions, such as coal and nuclear.  Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds. Not applicable. See Note 3 to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q for a more detailed discussion of the terms of our share repurchase program and de minimis account liquidation.  Item 3.
Defaults upon Senior Securities. Not applicable.  Item 4.
Mine Safety Disclosures. Not applicable.  Item 5.
Other Information. Effective May 10, 2022, Kathleen A. McGinty resigned from our board of trustees and the valuation committee of our board so that she may focus
on other endeavors. Ms. McGintys resignation from our board and the valuation committee was not due to any disagreement on any matter relating to our operations, policies or practices.  Item 6.
Exhibits.  3.1

Third Amended and Restated Declaration of Trust of FS Energy and Power Fund. (Incorporated by reference to Exhibit 3.1 to FS Energy and Power
 Funds Quarterly Report on Form 10-Q filed on August 10, 2017.)3.2

Amendment No. 
1 to the Third Amended and Restated Declaration of Trust of FS Energy and Power Fund. (Incorporated by reference to Exhibit 3.2 to FS Energy and Power Funds Quarterly Report on Form 10-Q filed on August 10,
 2017.)3.3

Second Amended and Restated Bylaws of FS Energy and Power Fund. (Incorporated by reference to Exhibit 3.1 to FS Energy and Power Funds Current
 Report on Form 8-K filed on June 1, 2017.)  56




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##### Table of Contents

4.1

Second Amended and Restated Distribution Reinvestment Plan of FS Energy and Power Fund. (Incorporated by reference to Exhibit 4.1 to FS Energy and Power
Funds Current Report on Form 8-K filed on October 17, 2016.)4.2

Indenture, dated August 
16, 2018, by and between FS Energy and Power Fund, U.S. Bank National Association, as trustee, and the guarantors named therein. (Incorporated by reference to Exhibit 4.1 to FS Energy and Power Funds Current Report on Form 8-K filed on August 22, 2018.)4.3

Form of 7.500% Senior Secured Notes due 2023 (included as Exhibit A to Exhibit 4.1 hereto) (Incorporated by reference
 to Exhibit 4.1 to FS Energy and Power Funds Current Report on Form 8-K filed on August 22, 2018.)10.1

Investment Advisory and Administrative Services Agreement, dated as of April 
9, 2018, by and between FS Energy and Power Fund and FS/EIG Advisor, LLC. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Funds Current Report on Form 8-K filed on April 9, 2018.)10.2

Custodian Agreement, dated as of November 
14, 2011, by and between State Street Bank and Trust Company and FS Energy and Power Fund. (Incorporated by reference to Exhibit 10.6 to FS Energy and Power Funds Quarterly Report on Form 10-Q filed on November 14,
 2011.)10.3

Senior Secured Credit Agreement, dated August 
16, 2018, by and among FS Energy and Power Fund, the Lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent and the other parties signatory thereto. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power
 Funds Current Report on Form 8-K filed on August 22, 2018.)10.4

Amendment No. 1 and Waiver, dated as of April 
9, 2020, among FS Energy and Power Fund, each of the subsidiary guarantors party thereto, each of the lenders and conduit support providers party thereto, and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Funds
Current Report on Form 8-K filed on April 9, 2020.)10.5

Amendment No. 2, dated as of July 
6, 2020, among FS Energy and Power Fund, each of the subsidiary guarantors party thereto, each of the lenders and conduit support providers party thereto, and JPMorgan Chase Bank, N.A. (Incorporated by reference to Exhibit 10.1 to FS Energy and Power Funds
Current Report on Form 8-K filed on July 21, 2020.)10.6

Guarantee and Security Agreement, dated August 
16, 2018, made by FS Energy and Power Fund and certain of FS Energy and Power Funds subsidiaries in favor of JPMorgan Chase Bank, N.A. as collateral agent. (Incorporated by reference to Exhibit 10.2 to FS Energy and Power Funds Current Report
 on Form 8-K filed on August 22, 2018.)10.7

Collateral Agency and Intercreditor Agreement, dated August 
16, 2018, by and among FS Energy and Power Fund, FS Energy and Power Funds subsidiaries parties thereto, JPMorgan Chase Bank, N.A., as the initial credit facility representative, U.S. Bank National Association as the initial secured notes representative
 and JPMorgan Chase Bank, N.A., as collateral agent. (Incorporated by reference to Exhibit 10.3 to FS Energy and Power Funds Current Report on Form 8-K filed on August 22, 2018.)31.1*

Certification of Chief Executive Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.31.2*

Certification of Chief Financial Officer pursuant to Rule 13a-14 under the Securities Exchange Act of 1934, as amended.32.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 
906 of the Sarbanes-Oxley Act of 2002.  *
Filed herewith.  57




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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized on May 10, 2022.  FS Energy and Power FundBy:

/s/ MICHAEL C. FORMANMichael C. Forman
Chief Executive Officer
(Principal Executive Officer)By:

/s/ EDWARD T. GALLIVAN, JR.Edward T. Gallivan, Jr.
Chief Financial Officer
(Principal Financial and Accounting Officer)
  58