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What changed in OPAL Fuels Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of OPAL Fuels Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+478 added−472 removedSource: 10-K (2024-03-15) vs 10-K (2023-03-29)

Top changes in OPAL Fuels Inc.'s 2023 10-K

478 paragraphs added · 472 removed · 310 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

96 edited+39 added−37 removed96 unchanged
Biggest changeBelow is a table setting forth the RNG projects in operation and construction in our portfolio: Design capacity (MMbtus per year) (1) Source of bio gas Ownership (2) RNG projects in operation: Greentree 1,061,712 LFG 100% Imperial 1,061,712 LFG 100% New River 663,570 LFG 100% Noble Road (3) 464,499 LFG 50% Biotown (3) 48,573 Dairy 10% Pine Bend (3) 424,685 LFG 50% Sunoma 192,350 Dairy 90% Sub total 3,917,101 RNG projects in construction: Prince William 1,725,282 LFG 100% Hilltop 255,500 Dairy 100% Vander Schaaf 255,500 Dairy 100% Emerald 1,327,140 LFG 50% Sapphire 796,284 LFG 50% New England 318,514 LFG 100% Sub total 4,678,220 Total 8,595,321 (1) The Design capacity represents the Company's proportional ownership in the project.
Biggest changeBelow is a table setting forth the RNG projects in operation and construction in our portfolio: 9 OPAL's Share of Design Capacity (MMbtus per year) (1) Source of Biogas Ownership Expected Commercial Operation Date (5) RNG Projects in Operation: Greentree 1,061,712 LFG 100% N/A Imperial 1,061,712 LFG 100% N/A Emerald (2) (3) 1,327,140 LFG 50% N/A New River 663,570 LFG 100% N/A Noble Road (2) 464,499 LFG 50% N/A Pine Bend (2) 424,685 LFG 50% N/A Biotown (2) 48,573 Dairy 10% N/A Sunoma (4) 192,350 Dairy 90% N/A Total 5,244,241 RNG Projects in Construction: Prince William 1,725,282 LFG 100% First quarter 2024 Hilltop (6) 255,500 Dairy 100% Not Determined Vander Schaaf (6) 255,500 Dairy 100% Not Determined Polk County 1,060,000 LFG 100% Fourth quarter 2024 Sapphire (2) 796,284 LFG 50% Third quarter 2024 Atlantic (2) 331,785 LFG 50% Mid 2025 Total 4,424,351 (1) Reflects the Company’s ownership share of design capacity for projects that are not 100% owned by the Company (i.e., net of joint venture partners’ ownership).
Management and Project Expertise Our management team has decades of combined experience in the design, development, construction, maintenance, and operation of Biogas Conversion Projects and Fueling Stations that dispense RNG, as well as the monetization of the associated Environmental Attributes. We believe our team’s proven track record and focus give us a strategic advantage in continuing to grow our business.
Management and Project Expertise Our management team has decades of combined experience in the design, development, construction, maintenance, and operation of Biogas Conversion Projects and Fueling Stations that dispense RNG, as well as the monetization of associated Environmental Attributes. We believe our team’s proven track record and focus give us a strategic advantage in continuing to grow our business.
Market participants in the RIN program typically include Obligated Parties and registered RIN market participants. Participants include both domestic and foreign companies. The LCFS programs are state-level market-based programs designed to decrease CI and GHG emissions from the transportation sector. Currently, California and Oregon have established LCFS programs.
Market participants in the RIN program typically include Obligated Parties and registered RIN market participants. Participants include both domestic and foreign companies. LCFS programs are state-level market-based programs designed to decrease CI and GHG emissions from the transportation sector. Currently, California and Oregon have established LCFS programs.
“MBR Authority” refers to (a) authorization by FERC pursuant to the Federal Power Act to sell electric energy, capacity and/or ancillary services at market-based rates, (b) acceptance by FERC of a tariff providing for such sales, and (c) granting by FERC of such regulatory waivers and blanket authorizations as are customarily granted by FERC to holders 17 of market-based rate authority, including blanket authorization under section 204 of the Federal Power Act to issue securities and assume liabilities.
“MBR Authority” refers to (a) authorization by FERC pursuant to the Federal Power Act to sell electric energy, capacity and/or ancillary services at market-based rates, (b) acceptance by FERC of a tariff providing for such sales, and (c) granting by FERC of such regulatory waivers and blanket authorizations as are customarily granted by FERC to holders of market-based rate authority, including blanket authorization under section 204 of the Federal Power Act to issue securities and assume liabilities.
We believe based on (i) our status as one of the largest operators of LFG-to-RNG projects, (ii) our over 20-year track record of operating and developing projects, (iii) our vertically integrated business platform, (iv) our deep relationships with some of the largest landfill owners and (v) our relationships with dairy farms in the country, we are well-positioned to continue to operate and grow its portfolio and respond to competitive pressures.
We believe based on (i) our status as one of the largest operators of LFG-to-RNG projects, (ii) our over 20-year track record of operating and developing projects, (iii) our vertically integrated business platform, (iv) our deep relationships with some of the largest landfill owners and (v) our relationships with dairy farms in the country, we are well-positioned to continue to operate and grow our portfolio and respond to competitive pressures.
If RNG is used to produce hydrogen which is consumed in the transportation 6 market in a state where an LCFS program is available, a LCFS credit may be generated as well. Lastly, LFG-to-Renewable Power projects can create Environmental Attributes, in the form of a REC, in certain states and can be bundled with electricity off-take or monetized separately.
If RNG is used to produce hydrogen which is consumed in the transportation market in a state where an LCFS program is available, an LCFS credit may be generated as well. Lastly, LFG-to-Renewable Power projects can create Environmental Attributes, in the form of a REC, in certain states and can be bundled with electricity off-take or monetized separately.
In 2005, the U.S. federal government enacted the EPACT 2005 conferring new authority for FERC to act to limit wholesale market power if required and strengthening FERC’s civil penalty authority (including the power to assess fines of up to $1.3 million per day per violation, as adjusted due to inflation), and adding certain disclosure requirements.
In 2005, the U.S. federal government enacted the EPACT 2005 conferring new authority for FERC to act to limit wholesale market power if required and strengthening FERC’s civil penalty authority (including the power to assess 13 fines of up to $1.3 million per day per violation, as adjusted due to inflation), and adding certain disclosure requirements.
This allows us to develop a comprehensive 4 understanding of the operational performance of each technology and how to optimize application of the technology to specific projects, including through enhancements and improvements of operating or abandoned projects. At LFG-to-RNG projects, technologies deployed at each project are relatively consistent and mature and management has extensive experience with such technologies.
This allows us to develop a comprehensive understanding of the operational performance of each technology and how to optimize application of the technology to specific projects, including through enhancements and improvements of operating or abandoned projects. At LFG-to-RNG projects, technologies deployed at each project are relatively consistent and mature and management has extensive experience with such technologies.
Our services office and maintenance facility is located in Oronoco, Minnesota, where we own and occupy a 20,000 square foot building of combined office space, maintenance shop and loading dock located on 3.25 acres. The building was acquired in September 2018 and is adequate for our needs for the immediate future.
Our services office and maintenance facility is located in Oronoco, Minnesota, where we own and occupy a 20,000 square foot building of combined office space, maintenance shop and loading dock located on 3.25 acres. The 15 building was acquired in September 2018 and is adequate for our needs for the immediate future.
Our Biogas Conversion Projects provide our landfill and dairy farm partners with a variety of benefits, including (i) a means to monetize biogas from their sites, (ii) 5 regulatory compliance for landfills, (iii) a source of environmentally beneficial waste management practices for dairy farms and (iv) a valuable revenue stream.
Our Biogas Conversion Projects provide our landfill and dairy farm partners with a variety of benefits, including (i) a means to monetize biogas from their sites, (ii) regulatory compliance for landfills, (iii) a source of environmentally beneficial waste management practices for dairy farms and (iv) a valuable revenue stream.
The local distribution of gas to end-use customers by a state- 13 regulated gas utility is also typically outside the scope of FERC’s gas regulatory jurisdiction. The opening and operation of a landfill or dairy farm that is expected to produce gas does not ordinarily require a FERC certificate or the acceptance by FERC of a gas tariff.
The local distribution of gas to end-use customers by a state-regulated gas utility is also typically outside the scope of FERC’s gas regulatory jurisdiction. The opening and operation of a landfill or dairy farm that is expected to produce gas does not ordinarily require a FERC certificate or the acceptance by FERC of a gas tariff.
Biogas is generated by microbes as they break down organic matter in the absence of oxygen, and comprised of non-fossil waste gas, with high concentrations of methane, which is the primary component of RNG and the source for combustion utilized by Renewable Power plants to generate Renewable Power.
Biogas is generated by microbes as they break down organic matter in the absence of oxygen. Biogas is comprised of non-fossil waste gas, with high concentrations of methane, which is the primary component of RNG and the source for combustion utilized by Renewable Power plants to generate electricity.
“BCA” or “Business Combination Agreement” refers to the Business Combination Agreement dated as of December 2, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time), by and among ArcLight, OPAL Fuels and OPAL Holdco. “Business Combination” refers to the transaction contemplated by the BCA. “Bylaws” refers to the bylaws of OPAL.
“BCA” refers to the Business Combination Agreement dated as of December 2, 2021 (as the same has been or may be amended, modified, supplemented or waived from time to time), by and among ArcLight, OPAL Fuels and OPAL Holdco. “Business Combination” refers to the transaction contemplated by the BCA. “Bylaws” refers to the bylaws of OPAL.
Using proven gas purification technology, biogas can be processed onsite to remove impurities, and used at around 50% methane to generate Renewable Power. Biogas can be further processed and upgraded to remove CO 2 as well as remaining contaminants to increase the methane content and reach pipeline quality specifications, creating RNG.
Using proven biogas purification technology, biogas can be processed onsite to remove impurities, and used at around 50% methane to generate Renewable Power. Biogas can be further processed and upgraded to remove CO 2 as well as remaining contaminants to increase the methane content and reach pipeline quality specifications, creating RNG.
We generate RINs when RNG is dispensed into vehicles as transportation fuel, and the RINs can then be sold to, and traded with, market participants who can either retire them or trade them again. By using the RINs, Obligated Parties retire the RINs for compliance purposes.
We generate RINs when RNG is dispensed into vehicles as transportation fuel, and the RINs can then be sold to, and traded with, market participants who can either retire them or trade them again. By using the RINs, Obligated Parties 8 retire the RINs for compliance purposes.
By simultaneously replacing fossil-based fuels and reducing overall methane emissions, our projects have a positive environmental impact. We are committed to the sustainable development, deployment, and utilization of RNG to reduce the country’s 3 dependence on fossil fuels.
By simultaneously replacing fossil-based fuels and reducing overall methane emissions, our projects have a positive environmental impact. We are committed to the sustainable development, deployment, and utilization of RNG to reduce the country’s dependence on fossil fuels.
We exercise financial discipline in pursuing these projects by targeting project returns that are in line with the relative risk of the specific projects. Our current Biogas Conversion Projects generate RNG from landfill sites and dairy farms.
We exercise financial discipline in pursuing these projects by targeting project returns that are in line with the relative risk of the specific projects. 5 Our current Biogas Conversion Projects generate RNG from landfill sites and dairy farms.
Typically, new development opportunities come from our existing relationships with landfill owners and dairy developers who value our long operating history and strong reputation in the biogas conversion industry. This includes new projects or referrals from existing partners .
Typically, new development opportunities come from our existing relationships with landfill owners and dairy developers who value our long operating history and strong reputation in the biogas conversion industry. This includes new projects and referrals from existing partners .
“CNG” refers to compressed natural gas. “CO 2 ” refers to carbon dioxide. “D3” refers to cellulosic biofuel with a 60% GHG reduction requirement. “EHS” refers to environment, health and safety. “EISA” refers to Energy Independence and Security Act of 2007.
“CNG” refers to compressed natural gas. “CO 2 ” refers to carbon dioxide. “D3” refers to cellulosic biofuel with a 60% GHG reduction requirement. “EHS” refers to environment, health and safety. “EISA” refers to the Energy Independence and Security Act of 2007.
Future Regulations The regulations that are applicable to our projects vary according to the type of energy being produced and the jurisdiction of the facility. As part of our growth strategy, we are looking to grow by pursuing development and acquisition opportunities.
Future Regulations 14 The regulations that are applicable to our projects vary according to the type of energy being produced and the jurisdiction of the facility. As part of our growth strategy, we are looking to grow by pursuing development and acquisition opportunities.
“Class B common stock” refers to the shares of Class B common stock, par value $0.0001 per share, of OPAL. “Class B Units” refers to the Class B Units as defined in the Second A&R LLC Agreement. “Class C common stock” refers to the shares of Class C common stock, par value $0.0001 per share, of OPAL.
“Class B Units” refers to the Class B Units as defined in the Second A&R LLC Agreement. “Class C common stock” refers to the shares of Class C common stock, par value $0.0001 per share, of OPAL. “Class D common stock” refers to the shares of Class D common stock, par value $0.0001 per share, of OPAL.
Vertical Integration of Business The combination of Biogas Conversion Projects and Fueling Stations, together with the dispensing, generation, and monetization of the associated Environmental Attributes, differentiates us from our principal competitors.
Vertical Integration of Business Our combination of Biogas Conversion Projects and Fueling Stations, together with our dispensing, generation, and monetization of associated Environmental Attributes, differentiates us from our principal competitors.
Additionally, processing this waste in a digester is significantly more environmentally friendly by reducing GHG emissions. Finally, a byproduct of the production process can be returned to farmers for use as bedding, alleviating the need to purchase other materials for bedding for the cows and/or adding a revenue stream for the dairy farmer when sold to third parties.
Additionally, processing this waste in a digester is environmentally friendly by reducing GHG emissions. Finally, a byproduct of the production process can be returned to farmers for use as bedding, alleviating the need to purchase other materials for bedding for the cows and/or adding a revenue stream for the dairy farmer when sold to third parties.
Our involvement across the RNG value chain, from production to dispensing of RNG, gives us the opportunity to avoid value leakage that competitors may incur by having to rely upon third-parties for either RNG supply or dispensing. The additional value captured benefits us by allowing us to offer better terms to our increasing number of transportation customers.
Our involvement across the RNG value chain, from production to dispensing of RNG, gives us the opportunity to avoid value leakage that competitors may incur by having to rely upon third-parties for either RNG supply or dispensing. The additional value captured benefits us by allowing us to offer better terms to our transportation customers.
These Environmental Attributes are then sold to obligated parties as defined under the RFS promulgated by the U.S. federal government and Low Carbon Fuel Standard Programs established by several states. We also sell Renewable Power to public utilities through long-term power purchase agreements.
These Environmental Attributes are then sold to obligated parties as defined under the RFS promulgated by the U.S. federal government and Low Carbon Fuel Standard Programs established by several states. We also sell Renewable Power to public utilities through power purchase agreements.
We also perform in-house manufacturing and modularized portable CNG compressor packages for smaller dispensing stations, utilizing its patented technology that allows faster and easier station installations. These portable packages can include defueling panels that allow smaller fleet owners to avoid expensive maintenance shop upgrades.
We also perform in-house manufacturing and modularized portable CNG compressor packages for smaller dispensing stations, utilizing our patented technology that allows faster and easier station installations. These portable packages can include defueling panels that allow smaller fleet owners to avoid expensive maintenance shop upgrades.
We differentiate ourself from our competitors based on our vertically integrated business model and long history of working with leading vendors, technologies and utilities. Our competitive advantage is further strengthened by our expertise in designing, developing, constructing and operating Biogas Conversion Projects and Fueling Stations.
We differentiate ourselves from our competitors based on our vertically integrated business model and long history of working with leading vendors, technologies and utilities. Our competitive advantage is further strengthened by our expertise in designing, developing, constructing and operating Biogas Conversion Projects and Fueling Stations.
Collection system operators “tune” or adjust the wellfield to maximize the volume and quality of biogas collected while maintaining environmental compliance. The existing compliance structure for landfills in the United States benefits us since the EPA requires larger landfills to have collection systems in place to collect and destroy biogas emissions.
Collection system operators “tune” or adjust the wellfield to maximize the volume and quality of biogas collected while maintaining environmental compliance. The existing compliance structure for landfills in the United States benefits us because the EPA requires larger landfills to have collection systems in place to collect and destroy biogas emissions.
Our diverse experience and integration of key technical, environmental, and administrative support functions underpin our ability to design and operate projects and execute its day-to-day activities. Our experience and existing project portfolio have provided access to a wide spectrum of available biogas-to-RNG and biogas-to-Renewable Power conversion technologies.
Our diverse experience and integration of key technical, environmental, and administrative support functions underpin our ability to design and operate projects and execute their day-to-day activities. Our experience and existing project portfolio have provided access to a wide spectrum of available biogas-to-RNG and biogas-to-Renewable Power conversion technologies.
In addition to these projects in operation, we are actively pursuing expansion of our RNG-generating capacity and, accordingly, have a portfolio of RNG projects in construction or in development, with four of our current Renewable Power Projects being considered candidates for conversion to RNG projects in the foreseeable future.
In addition to these projects in operation, we are actively pursuing expansion of our RNG-generating capacity and, accordingly, have a portfolio of RNG projects in construction or in development, with eight of our current Renewable Power Projects being considered candidates for conversion to RNG projects in the foreseeable future.
We also work with key vendors on initiatives to develop and test upgrades to existing technologies. Access to Development Opportunities We have many relationships throughout the industry supply chain from technology and equipment providers to feedstock owners to RNG off-takers.
We also work with key vendors on initiatives to develop and test upgrades to existing technologies. Access to Development Opportunities We have many relationships throughout the industry supply chain including technology and equipment providers, feedstock owners and RNG off-takers.
“Tax Receivable Agreement” refers to the Tax Receivable Agreement, dated July 21, 2022, by and among OPAL Fuels Inc, Opal Holdco LLC and the Parties named therein as included in Exhibit 10.6 to the Current Report on Form 8-K, filed with the SEC on July 29, 2021, as the same may be amended, modified, supplemented or waived from time to time in accordance with its terms.
“Tax Receivable Agreement” refers to the Tax Receivable Agreement, dated July 21, 2022, by and among OPAL Fuels Inc, Opal Holdco LLC and the Parties named therein as included in Exhibit 10.6 to the Current Report on Form 8-K, filed with the SEC on July 27, 2022, as the same may be amended, modified, supplemented or waived from time to time in accordance with its terms.
Biogas RNG Market Opportunity Biogas can be collected and processed to remove impurities for use as RNG (a form of high-Btu fuel) and injected into existing natural gas pipelines as it is fully interchangeable with fossil natural gas.
Biogas RNG Market Opportunity Biogas can be collected and processed to remove impurities for use as RNG (a form of high-Btu fuel) and can be injected into existing natural gas pipelines because it is fully interchangeable with fossil fuel-based natural gas.
By way of example, the LCFS program in California requires producers of petroleum-based fuels to reduce the CI of their products by at least 10% by 2020 and 20% by 2030 from a 2010 baseline.
By way of example, the LCFS program in California required producers of petroleum-based fuels to reduce the CI of their products by at least 10% by 2020 and requires a reduction of at least 20% by 2030 from a 2010 baseline.
Partially treated biogas can be used directly in heating applications (as a form of medium-Btu fuel) or in the production of Renewable Power. OPAL’s current primary sources of biogas are landfills and dairy farms. 7 Landfill- and livestock-sourced biogas serve as the base to produce RNG, while also reducing GHG emissions.
Partially treated biogas can be used directly in heating applications (as a form of medium-Btu fuel) or in the production of Renewable Power. Our current primary sources of biogas are landfills and dairy farms. Landfill and livestock-sourced biogas serve as the base to produce RNG, while also reducing GHG emissions.
This is an important factor that enables OPAL to design, develop and operate RNG projects to generate value from production of RNG and the associated Environmental Attributes (i.e., RINs and LCFS credits) throughout the United States. Overview of Livestock Sources Livestock are the top agricultural source of GHG worldwide, according to the EPA.
This is an important factor that enables OPAL to design, develop and operate RNG projects to generate value from production of RNG and the associated Environmental Attributes (i.e., RINs and LCFS credits) throughout the United States and exported to international markets. Overview of Livestock Sources Livestock are the top agricultural source of GHG worldwide, according to the EPA.
Additionally, multiple jurisdictions are considering implementation of LCFS programs; for example Canada has proposed programs and Washington State’s program will begin in 2023. The LCFS programs are attractive because the LCFS credits can be additive to RINs. In California, the most established program, the LCFS program is administered by the CARB, which sets annual CI standards.
Additionally, multiple jurisdictions are considering implementation of LCFS programs; for example Canada has proposed programs and Washington state’s program began in 2023. LCFS programs are attractive because LCFS credits can be additive to RINs. In California, the most established program, the LCFS program is administered by CARB, which sets annual CI standards.
Livestock waste, particularly from dairies, produces biomethane which can be converted to RNG. After being converted to RNG, it can be sold as RNG for consumer, industrial and transportation uses, or further converted to renewable hydrogen.
Livestock waste, particularly from dairies, produces methane which can be converted to RNG. After being converted to RNG, it can be sold as RNG for consumer, industrial and transportation uses, or further converted to renewable hydrogen.
II, a blank check company incorporated as a Cayman Islands exempt company, and our previous name prior to the Closing. “Ares” refers to ARRC Beacon LLC, a Delaware limited liability company.
II, a blank check company incorporated as a Cayman Islands exempt company, and our previous name prior to the Closing. “Ares” refers to ARCC Beacon LLC, a Delaware limited liability company.
With our experience and industry expertise, we believe we are well-positioned to take advantage of opportunities to meet the clean energy needs of other industries looking to use renewable energy in their operations. We are actively reviewing opportunities beyond our core LFG and dairy RNG business.
With our experience and industry expertise, we believe we are well-positioned to take advantage of opportunities to meet the clean energy needs of other industries looking to use renewable energy in their operations both domestic and internationally. We are actively reviewing opportunities beyond our core LFG and dairy RNG business.
Biogas can not only be collected and processed to remove impurities for use as RNG (a form of high-Btu fuel) and injected into existing natural gas pipelines as it is fully interchangeable with fossil natural gas, but partially treated biogas can be used directly in heating applications (as a form of medium-Btu fuel) or in the production of Renewable Power.
Biogas can be collected and processed to remove impurities for use as RNG (a form of high-Btu fuel) and injected into existing natural gas pipelines as it is fully interchangeable with fossil fuel-based natural gas. Partially treated biogas can be used directly in heating applications (as a form of medium-Btu fuel) or in the production of Renewable Power.
Based on EPA data, these 470 candidate landfills have the potential to collect a combined 326.7 million standard cubic feet of LFG per day. Based on our industry experience, technical knowledge and analysis, we believe many of these sites are potentially economically viable for RNG project acquisitions.
Based on EPA data, these 470 candidate landfills have the potential to collect a combined 342.9 million standard cubic feet of LFG per day. Based on our industry experience, technical knowledge and analysis we believe many of these sites are potentially economically viable for RNG project acquisitions.
Copies of such documents will be provided to stockholders without charge upon written request to the corporate secretary at the address shown on the cover page of this Annual Report on Form 10‑K. 15 Glossary of Terms The following are definitions of terms used in this Form 10-K. “ArcLight” refers to ArcLight Clean Transaction Corp.
Copies of such documents will be provided to stockholders without charge upon written request to the corporate secretary at the address shown on the cover page of this Annual Report on Form 10‑K. 16 Glossary of Terms The following are definitions of terms used in this Form 10-K. “ArcLight” refers to ArcLight Clean Transition Corp.
With respect to all of our existing or proposed LFG-to-RNG Biogas Conversion Projects currently in operation or under construction (a total of 12 projects), all but one relates to landfills that are currently open and accepting more waste, which we believe provides a high degree of visibility into the long-term volumes of RNG capable of being generated as each of these projects.
With respect to all of our existing or proposed LFG-to-RNG Biogas Conversion Projects currently in operation or under construction (a total of 14 projects), all but one relates to landfills that are currently open and accepting more waste, which we believe 7 provides a high degree of visibility into the long-term volumes of RNG capable of being generated at each of these projects.
Through this RFS program, RINs can be sold to counterparties in order for them to meet their renewable standard requirements.
Through the RFS program, RINs can be sold to counterparties in order for them to meet their renewable standard requirements.
In addition, the following is a glossary of key industry terms used herein: “ADG” refers to anaerobic digester gas. “Advanced Clean Trucks Regulation” refers to the rules adopted by the California Air Resources Board on June 25, 2020 requiring the sale of zero-emission heavy-duty trucks.
In addition, the following is a glossary of key industry terms used herein: “Advanced Clean Trucks Regulation” refers to the rules adopted by the California Air Resources Board on June 25, 2020 requiring the sale of zero-emission heavy-duty trucks.
In addition, we generate revenue from the sale of (i) Renewable Power, (ii) design, development, construction and service of Fueling Stations, and (iii) from sales of RNG produced by OPAL as pipeline quality natural gas. Environmental Attributes. Currently, our Environmental Attributes revenue stream is primarily comprised of RINs, LCFS credits, and renewable energy credits ("RECs").
In addition, we generate revenue from (i) the sale of Renewable Power, (ii) design, development, construction and service of Fueling Stations, and (iii) sales of RNG produced by OPAL and third parties as pipeline quality natural gas. Environmental Attributes. Currently, our Environmental Attributes revenue stream is primarily comprised of RINs, LCFS credits, ISCC Carbon Credits and RECs.
We have demonstrated a track record of strategic flexibility across our over 20-year history which has allowed us to pivot towards projects and markets that we believe deliver optimal returns and shareholder value in response to changes in market, regulatory and competitive pressures. The biogas market is heavily fragmented.
We have demonstrated a track record of strategic flexibility over our greater than 20-year history which has allowed us to pivot towards projects and markets that we believe deliver optimal returns and shareholder value in response to changes in market, regulatory and competitive pressures. The biogas market is highly fragmented.
Specifically, we intend to diversify our project portfolio beyond landfill biogas through the expansion into additional methane producing assets. • Empowering our customers to achieve their sustainability and carbon reduction objectives: We are well positioned to empower our customers to achieve their sustainability and carbon reduction goals, including significantly reducing GHG emissions from their commercial transportation activities, at a cost to customers that is competitive to other fuels like diesel.
Specifically, we intend to diversify our project portfolio beyond landfill biogas through the expansion into additional methane producing assets. 3 • Empowering our customers to achieve their sustainability and carbon reduction objectives: We are well positioned to empower our customers to achieve their sustainability and carbon reduction goals, by, for example, reducing GHG emissions from their commercial transportation activities, at a cost to customers that is competitive to other fuels like diesel.
In addition, we also generate revenues by providing O&M services for customer stations; and by helping our customers obtain federal, state and local tax credits, grants and incentives. Biogas Conversion Projects Typically, a Biogas Conversion Project includes two phases: (i) biogas collection and (ii) processing and purifying biogas.
In addition, we also generate revenues by providing operations and maintenance services for customer stations; and by helping our customers obtain federal, state and local tax credits, grants and incentives. Biogas Conversion Projects 6 Typically, a Biogas Conversion Project includes two phases: (i) biogas collection, and (ii) processing and purifying biogas.
Hydrogen Fuel In the coming years, we believe we will be able to provide hydrogen fuel to vehicle fleets by constructing and servicing hydrogen fueling stations as well as providing RNG for hydrogen production.
Hydrogen Fuel In the coming years, we believe we will be able to provide hydrogen fuel to vehicle fleets by constructing and servicing hydrogen fueling stations as well as providing RNG for hydrogen production. How We Generate Revenue Overview.
“Charter” refers to certificate of incorporation of OPAL. “Class A common stock” refers to the shares of Class A common stock, par value $0.0001 per share, of OPAL. “Class A Units” refers to the Class A Units as defined in the Second A&R LLC Agreement.
“Class A common stock” refers to the shares of Class A common stock, par value $0.0001 per share, of OPAL. “Class A Units” refers to the Class A Units as defined in the Second A&R LLC Agreement. “Class B common stock” refers to the shares of Class B common stock, par value $0.0001 per share, of OPAL.
This partially cleaned biogas can be burned on-site to generate Renewable Power which can be immediately used or deployed into the grid. To further upgrade the gas to pipeline quality RNG, the partially treated biogas then goes through separation of the CO 2 from the methane molecules.
This partially cleaned biogas can be burned on-site to generate Renewable Power which can be immediately used or deployed into the grid. To further upgrade the gas to pipeline quality RNG, the partially treated biogas then goes through a process that separates CO 2 from the methane molecules.
“Sarbanes-Oxley Act” refers to the Sarbanes-Oxley Act of 2002. “Securities Act” refers to the Securities Act of 1933, as amended. “Sponsor” refers to ArcLight CTC Holdings II, L.P., a Delaware limited partnership.
“ Investment Company Act ” refers to the Investment Company Act of 1940 , as amended. 17 “Sarbanes-Oxley Act” refers to the Sarbanes-Oxley Act of 2002. “Securities Act” refers to the Securities Act of 1933, as amended. “Sponsor” refers to ArcLight CTC Holdings II, L.P., a Delaware limited partnership.
Human Capital As of December 31, 2022, OPAL had approximately 298 full-time employees, all of whom are located in the United States. Our employee work force consists of field operations personnel as well as office-based employees.
Human Capital As of December 31, 2023, we had approximately 326 full-time employees, all of whom are located in the United States. Our employee work force consists of field operations personnel as well as office-based employees.
Some of these stations are designed, developed, constructed, operated and maintained by us while others are third party stations where we may only provide maintenance services. “Hillman” refers to Hillman RNG Investments, LLC, an affiliate of Fortistar, a Delaware limited liability company. 16 “ Investment Company Act ” refers to the Investment Company Act of 1940 , as amended.
Some of these stations are designed, developed, constructed, operated and maintained by us while others are third party stations where we may only provide maintenance services. “Hillman” refers to Hillman RNG Investments, LLC, a Delaware limited liability company and an affiliate of Fortistar.
Our full suite of capabilities allows us to serve as a multi-project partner, including through strategic transactions. • Expanding our capabilities to new feedstock sources and technologies: We believe we will be able to enter new markets for our products, such as providing fuel for the production of renewable energy sources.
Our full suite of capabilities allows us to serve as a multi-project partner, including through strategic transactions. • Expanding our capabilities to new feedstock sources and technologies: We believe we will be able to enter new markets for our products.
We believe the strong reputation we have attained in combination with its understanding of the various and complex requirements for generating and monetizing Environmental Attributes gives us a competitive advantage relative to new market entrants.
We believe the strong reputation we have attained and our understanding 4 of the various and complex requirements for generating and monetizing Environmental Attributes gives us a competitive advantage relative to new market entrants.
We also have a network of experienced and creditworthy EPC contractors to perform design, development, procurement and construction services under supervision by us. Typically, our contracts for EPC services contain fixed price, date certain provisions and liquidated damages provisions, which greatly reduce the risks typically associated with construction projects.
We apply our experience and knowledge to identify new sources of biogas. We also have a network of experienced and creditworthy EPC contractors to perform design, development, procurement and construction services under our supervision. Typically, our contracts for EPC services contain fixed price, date certain provisions and liquidated damages provisions, which greatly reduce the risks typically associated with construction projects.
Even when a biogas project does not require a Title V permit, the project may be subject to other federal, state and/or local air quality regulations and permits.
A Title V operating permit must be renewed every five years. Even when a biogas project does not require a Title V permit, the project may be subject to other federal, state and/or local air quality regulations and permits.
We are subject to a qualification process similar to that for RINs, including verification of CI levels and other requirements that currently exists for LCFS credits in California. 11 The EPA under the Clean Air Act (the “ CAA ”) regulates emissions of pollutants to protect the environment and public health and contains provisions for New Source Review (the “ NSR ”) permits and Title V permits.
We are subject to a qualification process similar to that for RINs, including verification of CI levels and other requirements that currently exists for LCFS credits in California. The EPA under the Clean Air Act (the “ CAA ”) regulates emissions of pollutants to protect the environment and public health.
According to the EPA LMOP project database, as of August 2022, there were 538 LFG projects in operation in the United States, including 366 operating LFG-to-electricity projects that may be converted to produce RNG as well as 470 additional candidate landfills.
According to the EPA LMOP project database, as of July 2023, there were 532 LFG projects in operation in the United States, including 359 operating LFG-to-electricity projects that may be converted to produce RNG as well as 470 additional candidate landfills.
We actively seek to extend the term of our contracts at project sites and views our positive relationships with the owners and managers of its host landfills and dairy farms as a contributing factor to our ability to extend contract terms as they come due.
We actively seek to extend the term of our contracts at project sites and views our positive relationships with the owners and managers of host landfills and dairy farms as a contributing factor to our ability to extend contract terms as they come due. Large and Diverse Project Portfolio We have a large, technologically optimized Biogas Conversion Project portfolio.
As of that date, our RNG projects in operation had a design capacity of 3.9 million MMBtus per year and our Renewable Power Projects in operation had a nameplate capacity of 118.6 MW per hour.
As of that date, our RNG projects in operation had a design capacity of 5.2 million MMBtus per year and our Renewable Power Projects in operation had a nameplate capacity of 112.5 MW per hour.
We are an Equal Opportunity Employer in our hiring and promoting practices, benefits and wages. 14 Our values • SAFETY - Passion for safety • INTEGRITY - Straightforward, open and honest • RELATIONSHIPS - Engaging all stakeholders • EXCELLENCE - Quality and creativity Talent management and leadership We take a systemic approach to hiring, training and developing our employees based on our code of ethics.
Our values • SAFETY - Passion for safety • INTEGRITY - Straightforward, open and honest • RELATIONSHIPS - Engaging all stakeholders • EXCELLENCE - Quality and creativity Talent management and leadership We take a systemic approach to hiring, training and developing our employees based on our code of ethics.
This comparative advantage creates significant economic incentives for heavy and medium-duty commercial vehicle owners to favor RNG. Our Projects As of the date of this report, we owned and operated 25 projects, seven of which are RNG projects and 18 of which are Renewable Power Projects.
This comparative advantage creates significant economic incentives for heavy and medium-duty commercial vehicle owners to favor RNG. Our Projects As of December 31, 2023, we owned and operated 25 projects, eight of which are RNG projects and 17 of which are Renewable Power Projects.
None of our employees are subject to a collective bargaining agreement or a labor union and we believe we have a good relationship with our employees. We value a diverse workforce. We are committed to a culture of integrity, inclusivity, and excellence.
None of our employees are subject to a collective bargaining agreement or a labor union and we believe we have a good relationship with our employees. We value a diverse workforce. We are committed to a culture of integrity, inclusivity, and excellence. We are an Equal Opportunity Employer in our hiring and promoting practices, benefits and wages.
In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us, we cannot predict the overall effect of such laws and regulations on our future operations.
Moreover, changes in any of these laws and regulations could have a material adverse effect on our business. In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us, we cannot predict the overall effect of such laws and regulations on our future operations.
In some states that have experienced energy price hikes or market volatility, such as New York, Texas and California, investments in expanding facilities or buying or building additional facilities may be subject to changing regulatory requirements that may encourage competitive market entry.
In some states that have experienced energy price hikes or market volatility, such as New York, Texas and California, investments in expanding facilities or buying or building additional facilities may be subject to changing regulatory requirements that may encourage competitive market entry. The Inflation Reduction Act (the “IRA”) was signed into law on August 16, 2022.
By setting and maintaining high standards in the renewable energy field, we are often able to contribute positively to the safety practices and policies of its host landfills, which reflects favorably on us with potential hosts when choosing a counterparty.
Our corporate culture is built around supporting these priorities, as reflected in our well-established practices and policies. By setting and maintaining high standards in the renewable energy field, we are often able to contribute positively to the safety practices and policies of our host landfills, which reflects favorably on us with potential hosts when choosing a counterparty.
“Obligated Parties” means refiners or importers of gasoline or diesel fuel under the RFS program. “QFs” refers to qualifying small power production facilities under the Federal Power Act and the Public Utility Regulatory Policies Act of 1978, as amended “RECs” refers to renewable energy credits. “Renewable Power” refers to electricity generated from renewable sources.
“Obligated Parties” means refiners or importers of gasoline or diesel fuel under the RFS program. 18 “QFs” refers to qualifying small power production facilities under the Federal Power Act and the Public Utility Regulatory Policies Act of 1978, as amended “RECs” refers to renewable energy credits. "ISCC Carbon Credits" refers to Environmental Attributes associated with renewable biomethane.
During 2022, we dispensed 29.3 million gasoline gallon equivalent ("GGEs") of RNG to the transportation market, generating corresponding Environmental Attributes, utilizing our current network of 242 Fueling Stations in 40 states in the United States, including more than 35 stations in California.
During 2023, we dispensed 35.3 million gasoline gallon equivalent ("GGEs") of RNG to the transportation market, generating corresponding Environmental Attributes, utilizing our current network of Fueling Stations across the United States.
See "Biogas RNG Market Opportunity". Power Purchase Agreements. Our Renewable Power projects generally have associated long-term Power Purchase Agreements (“PPAs”) with creditworthy utility off-takers or municipalities. Nearly all of our Renewable Power off-takers have investment grade credit ratings with either S&P or Moody’s.
See "Biogas RNG Market Opportunity". Power Purchase Agreements. Our Renewable Power projects have associated Power Purchase Agreements (“PPAs”) with creditworthy utility off-takers or municipalities. Nearly all of our Renewable Power off-takers have investment grade credit ratings with either S&P or Moody’s. As discussed above, we also generate RECs from Renewable Power projects through the conversion of biogas to Renewable Power.
With respect to its regulation of the transmission of electricity, FERC requires transmission providers to provide open access transmission services, which supports the 12 development of competitive markets by assuring nondiscriminatory access to the transmission grid.
With respect to its regulation of the transmission of electricity, FERC requires transmission providers to provide open access transmission services, which supports the development of competitive markets by assuring nondiscriminatory access to the transmission grid. FERC has also encouraged the formation of RTOs to allow greater access to transmission services and certain competitive wholesale markets administered by ISOs and RTOs.
The operating permit describes the emission limits and operating conditions that a facility must satisfy and specifies the reporting requirements that a facility must meet to show compliance with all applicable air pollution regulations. A Title V operating permit must be renewed every five years.
Many Biogas Conversion Projects must obtain operating permits that satisfy Title V of the 1990 CAA Amendments. The operating permit describes the emission limits and operating conditions that a facility must satisfy and specifies the reporting requirements that a facility must meet to show compliance with all applicable air pollution regulations.
New Biogas Conversion Projects may be required to obtain construction permits under the NSR program. The combustion of biogas results in emissions of carbon monoxide, oxides of nitrogen, sulfur dioxide, volatile organic compounds and particulate matter. The CAA and state and local laws and regulations impose significant monitoring, testing, recordkeeping and reporting requirements for these emissions.
The CAA contains provisions for New Source Review (the “ NSR ”) permits and Title V permits. New Biogas Conversion Projects may be required to obtain construction permits under the NSR program. The combustion of biogas results in emissions of carbon monoxide, oxides of nitrogen, sulfur dioxide, volatile organic compounds and particulate matter.
We believe the space that we currently lease is adequate for our needs for the immediate future but we will likely seek additional space during the course of 2023 to accommodate future growth, which we believe will be available to us on satisfactory terms.
In March 2022, we entered into an amendment to the lease which extended the lease term to January 2026. We believe the space that we currently lease is adequate for our needs for the immediate future but we may seek additional space to accommodate future growth, which we believe will be available to us on satisfactory terms.
This market dynamic creates the opportunity for consolidation by well capitalized, experienced market participants such as OPAL. While LFG has accounted for most of the growth in Biogas Conversion Projects to date, we believe additional economically viable LFG project opportunities exist.
While LFG has accounted for most of the growth in Biogas Conversion Projects to date, we believe additional economically viable LFG project opportunities exist.
Although it is likely utilities and other consumers will compete with the vehicle fuel market to acquire such RNG, we believe there is adequate potential to continue placing RNG volumes into the transportation market. The legislated D3 RIN requirements are many multiples of current industry production.
RNG production is projected to triple by 2027, increasing the RNG industry share to as much as 2.5%. Although it is likely that utilities and other consumers will compete with the vehicle fuel market to acquire such RNG, we believe there is adequate potential to continue placing RNG volumes into the transportation market.
We encourage near miss reporting from all of our employees so that we can take preventative steps before the accidents occur. We continuously strive to provide a secure working environment for both our office-based and field operations personnel. During COVID-19, we have taken extraordinary measures to protect the health of our employees by allowing them to work from home.
We encourage near miss reporting from all of our employees so that we can take preventative steps before accidents occur. We continuously strive to provide a secure working environment for both our office-based and field operations personnel. Available Information Our website can be found at www.opalfuels.com.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe success of our RNG business depends, in large part, on our ability to (i) secure, on acceptable terms, an adequate supply of RNG and/or Environmental Attributes from third-party producers, (ii) sell RNG in sufficient volumes and at prices that are attractive to counterparties and produce acceptable margins for us, and (iii) generate and monetize Environmental Attributes under applicable federal or state programs at favorable prices.
Biggest changeAn unexpected reduction in RNG production by third-party producers of RNG with whom we maintain marketing agreements to purchase RNG and/or the associated Environmental Attributes, or their inability or refusal to deliver such RNG or Environmental Attributes as provided under such agreements, may have a material adverse effect on our results of operations and could adversely affect or performance under associated dispensing agreements. 33 The success of our RNG business depends, in large part, on our ability to (i) secure, on acceptable terms, an adequate supply of RNG and/or Environmental Attributes from third-party producers, (ii) sell RNG in sufficient volumes and at prices that are attractive to counterparties and produce acceptable margins for us, and (iii) generate and monetize Environmental Attributes under applicable federal or state programs at favorable prices.
We obtain biogas rights to utilize the biogas and the biogas project sites on which our projects operate under contractual arrangements, with the associated biogas rights generally being for fixed terms of 20 years (or more) and certain additional renewal options.
We obtain rights to utilize the biogas and the biogas project sites on which our projects operate under contractual arrangements, with the associated biogas rights generally being for fixed terms of 20 years or more, with certain additional renewal options.
In developing and operating our Biogas Conversion Projects and Fueling Stations, we rely on products meeting our design specifications and components manufactured and supplied by third parties, and on services performed by our subcontractors.
In developing and operating our Biogas Conversion Projects and Fueling Stations, we rely on products meeting our design specifications, components manufactured and supplied by third parties and services performed by our subcontractors.
We are permitted to make wholesale sales (that is, sales for resale) of renewable electricity, capacity, and ancillary services from our QFs with a net generating capacity that does not exceed 20 megawatts or that is an “eligible” facility as defined by section 3(17)(E) of the Federal Power Act without obtaining (a) authorization by FERC pursuant to the Federal Power Act to sell electric energy, capacity and/or ancillary services at market-based rates, (b) acceptance by FERC of a tariff providing for such sales, and (c) granting by FERC of such regulatory waivers and blanket authorizations as are customarily granted by FERC to holders of market-based rate authority, including blanket authorization under section 204 of the Federal Power Act to issue securities and assume liabilities (“MBR Authority”) or any other approval from the U.S.
We are permitted to make wholesale sales (that is, sales for resale) of renewable electricity, capacity, and ancillary services from our QFs with a net generating capacity that does not exceed 20 megawatts or that is an “eligible” facility as defined by section 3(17)(E) of the Federal Power Act without (a) obtaining authorization by FERC pursuant to the Federal Power Act to sell electric energy, capacity and/or ancillary services at market-based rates, (b) acceptance by FERC of a tariff providing for such sales, and (c) granting by FERC of such regulatory waivers and blanket authorizations as are customarily granted by FERC to holders of market-based rate authority, including blanket authorization under section 204 of the Federal Power Act to issue securities and assume liabilities (“MBR Authority”) or any other approval from the U.S.
A severe or prolonged economic downturn could result in a variety of risks, including our ability to raise additional funding on a timely basis or on acceptable terms. A weak or declining economy could also impact third parties upon whom we depend to run our business.
A severe or prolonged economic downturn could result in a variety of risks, including our ability to raise additional funding on a timely basis or on acceptable terms. A weak or declining economy could also impact third parties upon whom we depend on to run our business.
Additional factors that may influence the adoption of natural gas vehicle fuels, many of which are beyond our control, include, among others: • Lack of demand for trucks that use natural gas vehicle fuels due to business disruptions and depressed oil prices; • Adoption of governmental policies or programs or increased publicity or popular sentiment in favor of vehicles or fuels other than natural gas, including long-standing support for gasoline and diesel-powered vehicles, changes to emissions requirements applicable to vehicles powered by gasoline, diesel, natural gas, or other vehicle fuels and/or growing support for electric and hydrogen-powered vehicles; • Perceptions about the benefits of natural gas vehicle fuels relative to gasoline, diesel and other alternative vehicle fuels, including with respect to factors such as supply, cost savings, environmental benefits and safety; • Perceptions about the benefits of natural gas vehicle fuels relative to gasoline, diesel and other alternative vehicle fuels, including with respect to factors such as supply, cost savings, environmental benefits and safety; • The volatility in the supply, demand, use and prices of crude oil, gasoline, diesel, RNG, natural gas and other vehicle fuels, such as electricity, hydrogen, renewable diesel, biodiesel and ethanol; 38 • Inertia among fleets and fleet vehicle operators, who may be unable or unwilling to prioritize converting a fleet to our vehicle fuels over an operator’s other general business concerns, particularly if the operator is not sufficiently incentivized by emissions regulations or other requirements or lacks demand for the conversion from its counterparties or drivers; • Vehicle cost, fuel efficiency, availability, quality, safety, convenience (to fuel and service), design, performance and residual value, as well as operator perception with respect to these factors, generally and in our key customer markets and relative to comparable vehicles powered by other fuels; • The development, production, cost, availability, performance, sales and marketing and reputation of engines that are well-suited for the vehicles used in our key customer markets, including heavy and medium-duty trucks and other fleets; • Increasing competition in the market for vehicle fuels generally, and the nature and effect of competitive developments in such market, including improvements in or perceived advantages of other vehicle fuels and engines powered by such fuels; • The availability and effect of environmental, tax or other governmental regulations, programs or incentives that promote our products or other alternatives as a vehicle fuel, including certain programs under which we generate Environmental Attributes by selling RNG as a vehicle fuel, as well as the market prices for such credits; and • Emissions and other environmental regulations and pressures on producing, transporting, and dispensing our fuels.
Additional factors that may influence the adoption of natural gas vehicle fuels, many of which are beyond our control, include, among others: • lack of demand for trucks that use natural gas vehicle fuels due to business disruptions and depressed oil prices; • adoption of governmental policies or programs or increased publicity or popular sentiment in favor of vehicles or fuels other than natural gas, including long-standing support for gasoline and diesel-powered vehicles, changes to emissions requirements applicable to vehicles powered by gasoline, diesel, natural gas, or other vehicle fuels and/or growing support for electric and hydrogen-powered vehicles; • perceptions about the benefits of natural gas vehicle fuels relative to gasoline, diesel and other alternative vehicle fuels, including with respect to factors such as supply, cost savings, environmental benefits and safety; • perceptions about the benefits of natural gas vehicle fuels relative to gasoline, diesel and other alternative vehicle fuels, including with respect to factors such as supply, cost savings, environmental benefits and safety; • the volatility in the supply, demand, use and prices of crude oil, gasoline, diesel, RNG, natural gas and other vehicle fuels, such as electricity, hydrogen, renewable diesel, biodiesel and ethanol; • inertia among fleets and fleet vehicle operators, who may be unable or unwilling to prioritize converting a fleet to our vehicle fuels over an operator’s other general business concerns, particularly if the operator is not sufficiently incentivized by emissions regulations or other requirements or lacks demand for the conversion from its counterparties or drivers; • vehicle cost, fuel efficiency, availability, quality, safety, convenience (to fuel and service), design, performance and residual value, as well as operator perception with respect to these factors, generally and in our key customer markets and relative to comparable vehicles powered by other fuels; • the development, production, cost, availability, performance, sales and marketing and reputation of engines that are well-suited for the vehicles used in our key customer markets, including heavy and medium-duty trucks and other fleets; • increasing competition in the market for vehicle fuels generally, and the nature and effect of competitive developments in such market, including improvements in or perceived advantages of other vehicle fuels and engines powered by such fuels; • the availability and effect of environmental, tax or other governmental regulations, programs or incentives that promote our products or other alternatives as a vehicle fuel, including certain programs under which we generate Environmental Attributes by selling RNG as a vehicle fuel, as well as the market prices for such credits; and • emissions and other environmental regulations and pressures on producing, transporting, and dispensing our fuels.
Additional risks related to acquiring existing projects, include: • the purchase price we pay could significantly deplete our cash reserves or result in dilution to our existing stockholders; • the acquired companies or assets may not improve our customer offerings or market position as planned; • we may have difficulty integrating the operations and personnel of the acquired companies; • key personnel and counterparties of the acquired companies may terminate their relationships with the acquired companies as a result of or following the acquisition; • we may experience additional financial and accounting challenges and complexities in certain areas, such as tax planning and financial reporting; • we may incur additional costs and expenses related to complying with additional laws, rules or regulations in new jurisdictions; • we may assume or be held liable for risks and liabilities (including for environmental-related costs) as a result of our acquisitions, some of which we may not discover during our due diligence or adequately adjust for in our acquisition arrangements; • our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically diverse enterprises; • we may incur one-time write-offs or restructuring charges in connection with an acquisition; • we may acquire goodwill and other intangible assets that are subject to amortization or impairment tests, which could result in future charges to earnings; • we may acquire goodwill and other intangible assets that are subject to amortization or impairment tests, which could result in future charges to earnings; and • we may not be able to realize the cost savings or other financial benefits we anticipated.
Additional risks related to acquiring existing projects, include: • the purchase price we pay could significantly deplete our cash reserves or result in dilution to our existing stockholders; • the acquired companies or assets may not improve our customer offerings or market position as planned; • we may have difficulty integrating the operations and personnel of the acquired companies; 32 • key personnel and counterparties of the acquired companies may terminate their relationships with the acquired companies as a result of or following the acquisition; • we may experience additional financial and accounting challenges and complexities in certain areas, such as tax planning and financial reporting; • we may incur additional costs and expenses related to complying with additional laws, rules or regulations in new jurisdictions; • we may assume or be held liable for risks and liabilities (including for environmental-related costs) as a result of our acquisitions, some of which we may not discover during our due diligence or adequately adjust for in our acquisition arrangements; • our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically diverse enterprises; • we may incur one-time write-offs or restructuring charges in connection with an acquisition; • we may acquire goodwill and other intangible assets that are subject to amortization or impairment tests, which could result in future charges to earnings; • we may acquire goodwill and other intangible assets that are subject to amortization or impairment tests, which could result in future charges to earnings; and • we may not be able to realize the cost savings or other financial benefits we anticipated.
Our substantial indebtedness and preferred units redemption obligations could have important consequences, including, for example: • being required to accept then-prevailing market terms in connection with any required refinancing of such indebtedness or redemption obligations, which may be less favorable than existing terms; • being required to accept then-prevailing market terms in connection with any required refinancing of such indebtedness or redemption obligations, which may be less favorable than existing terms; • failure to refinance, or to comply with the covenants in the agreements governing, these obligations could result in an event of default under those agreements, which could be difficult to cure or result in our bankruptcy; 41 • our debt service and dividend obligations require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt and dividends on our preferred units, thereby reducing the funds available to us and our ability to borrow to operate and grow our business; • Increase in interest rates on our existing debt facilities or a reduction in the supply of project debt financing could reduce our ability to construct and operate new RNG projects or fueling stations; • our limited financial flexibility could reduce our ability to plan for and react to unexpected opportunities; and • our substantial debt service obligations make us vulnerable to adverse changes in general economic, credit and capital markets, industry and competitive conditions and adverse changes in government regulation and place us at a disadvantage compared with competitors with less debt or mandatory redeemable preferred units.
Our substantial indebtedness and preferred units redemption obligations could have important consequences, including, for example: • being required to accept then-prevailing market terms in connection with any required refinancing of such indebtedness or redemption obligations, which may be less favorable than existing terms; • being required to accept then-prevailing market terms in connection with any required refinancing of such indebtedness or redemption obligations, which may be less favorable than existing terms; • failure to refinance, or to comply with the covenants in the agreements governing, these obligations could result in an event of default under those agreements, which could be difficult to cure or result in our bankruptcy; • our debt service and dividend obligations require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt and dividends on our preferred units, thereby reducing the funds available to us and our ability to borrow to operate and grow our business; • increase in interest rates on our existing debt facilities or a reduction in the supply of project debt financing could reduce our ability to construct and operate new RNG projects or fueling stations; • our limited financial flexibility could reduce our ability to plan for and react to unexpected opportunities; and • our substantial debt service obligations make us vulnerable to adverse changes in general economic, credit and capital markets, industry and competitive conditions and adverse changes in government regulation and place us at a disadvantage compared with competitors with less debt or mandatory redeemable preferred units.
These provisions, among other things: • authorize our board to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to the existing shares of common stock; • eliminate the ability of stockholders to call special meetings of stockholders; • eliminate the ability of stockholders to fill vacancies on our board; • establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; • permit our board to establish the number of directors; • provide that our board is expressly authorized to make, alter or repeal the Bylaws; and • limit the jurisdictions in which certain stockholder litigation may be brought.
These provisions, among other things: 49 • authorize our board to issue new series of preferred stock without stockholder approval and create, subject to applicable law, a series of preferred stock with preferential rights to dividends or our assets upon liquidation, or with superior voting rights to the existing shares of common stock; • eliminate the ability of stockholders to call special meetings of stockholders; • eliminate the ability of stockholders to fill vacancies on our board; • establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at annual stockholder meetings; • permit our board to establish the number of directors; • provide that our board is expressly authorized to make, alter or repeal the Bylaws; and • limit the jurisdictions in which certain stockholder litigation may be brought.
These executive orders (i) direct federal agencies to review and reverse more than one hundred actions taken by the previous US presidential administration on or relating to the environment, (ii) instruct the Director of National Intelligence to prepare a national intelligence estimate on the security implications of the climate crisis and direct all agencies to develop strategies for integrating climate considerations into their international work, (iii) establish the National Climate Task Force, which assembles leaders from across twenty one federal agencies and departments, (iv) commit to environmental justice and new, clean infrastructure projects, (v) commence development of emissions reduction targets and (vi) establish the special presidential envoy for climate on the National Security Council.
These executive orders (i) direct federal agencies to review and reverse more than one hundred actions taken by the previous US 22 presidential administration on or relating to the environment, (ii) instruct the Director of National Intelligence to prepare a national intelligence estimate on the security implications of the climate crisis and direct all agencies to develop strategies for integrating climate considerations into their international work, (iii) establish the National Climate Task Force, which assembles leaders from across twenty one federal agencies and departments, (iv) commit to environmental justice and new, clean infrastructure projects, (v) commence development of emissions reduction targets and (vi) establish the special presidential envoy for climate on the National Security Council.
While we have generally been successful in renewing biogas rights and in securing the additional rights necessary in connection with conversion from production of Renewable Power to RNG on specific projects, we cannot guarantee that this success will continue in the future on commercial terms that are attractive to us or at all, and any failure to do so, or any other disruption in the relationship with any of the biogas conversion project site owners and operators from whose biogas project sites our Biogas Conversion Projects obtain biogas or for whom we operate biogas facilities, may have a material adverse effect on our business operations, financial condition and operational results.
While we have generally been successful in renewing biogas rights and in securing additional rights necessary in connection with conversion from production of Renewable Power to RNG, we cannot guarantee that this success will continue in the future on commercial terms that are attractive to us or at all, and any failure to do so, or any other disruption in the relationship with any of the site owners and operators from whose biogas project sites our Biogas Conversion Projects obtain biogas or for whom we operate biogas facilities, may have a material adverse effect on our business operations, financial condition and operational results.
Moreover, even if such family relationship does not create an actual conflict, the perception of a conflict in the press or the financial or business community generally could create negative publicity or other reaction with respect to the business opportunity or other matters to be decided by us through our board, standing committees thereof, and management, which could adversely affect the business generated by us and our relationships with its existing customers and other counterparties, impact the behavior of third party participants or other persons in the proposed business opportunity or other matter to be decided, otherwise negatively impact our business prospects related to such matter, or negatively impact the trading market for our securities.
Moreover, even if such family relationship does not create an actual conflict, the perception of a conflict in the press or the financial or business community generally could create negative publicity or other reaction with respect to the business opportunity or other matters to be decided by us through our board, standing committees thereof, and management, which could adversely affect 47 the business generated by us and our relationships with its existing customers and other counterparties, impact the behavior of third party participants or other persons in the proposed business opportunity or other matter to be decided, otherwise negatively impact our business prospects related to such matter, or negatively impact the trading market for our securities.
Our ability to acquire, convert, develop and operate Biogas Conversion Projects, as well as expand production at current Biogas Conversion Projects, is subject to several additional risks, including: • regulatory changes that affect the value of RNG and the associated Environmental Attributes, which could have a significant effect on the financial performance of our Biogas Conversion Projects and the number of potential Biogas Conversion Projects with attractive economics; • changes in energy commodity prices, such as natural gas and wholesale electricity prices, which could have a significant effect on our revenues and expenses; • changes in pipeline gas quality standards or other regulatory changes that may limit our ability to transport RNG on pipelines for delivery to third parties or increase the costs of processing RNG to allow for such deliveries; • changes in the broader waste collection industry, including changes affecting the waste collection and biogas potential of the landfill industry, which could limit the LFG resource that we currently target for our Biogas Conversion Projects; • substantial construction risks, including the risk of delay, that may arise due to forces outside of our control, such as those related to engineering and environmental problems, inclement weather, inflationary pressures on materials and labor, and supply chain and labor disruptions; • operating risks and the effect of disruptions on our business, including the effects of global health crises, such as the COVID-19 pandemic, weather conditions, catastrophic events, such as fires, explosions, earthquakes, droughts and acts of terrorism, and other force majeure events that impact us, our counterparties, suppliers, distributors and subcontractors; • accidents involving personal injury or the loss of life; • entering into markets where we have less experience, such as our Biogas Conversion Projects for biogas recovery at livestock farms; • the ability to obtain financing for a Biogas Conversion Project on acceptable terms or at all and the need for substantially more capital than initially budgeted to complete Biogas Conversion Projects and exposure to liabilities as a result of unforeseen environmental, construction, technological or other complications; • failures or delays in obtaining desired or necessary land rights, including ownership, leases, easements, zoning rights and building permits; • a decrease in the availability, increased pricing on, and a delay in the timeliness of delivery of raw materials and components, necessary for the Biogas Conversion Projects to function or necessary for the conversion of a Biogas Conversion Projects from Renewable Power to RNG production; • obtaining and keeping in good standing permits, authorizations and consents from local city, county, state and US federal government agencies and organizations; • penalties, including potential termination, under short-term and long-term contracts for failing to produce or deliver a sufficient quantity and acceptable quality of RNG in accordance with our contractual obligations; • unknown regulatory changes related to the transportation of RNG, which may increase the transportation cost for delivering under our contracts then in effect; • the consent and authorization of local utilities or other energy development off-takers to ensure successful interconnection to energy grids to enable power and gas sales; and • difficulties in identifying, obtaining and permitting suitable sites for new Biogas Conversion Projects.
Our ability to acquire, convert, develop and operate Biogas Conversion Projects, as well as expand production at current Biogas Conversion Projects, is subject to several additional risks, including: • regulatory changes that affect the value of RNG and the associated Environmental Attributes, which could have a significant effect on the financial performance of our Biogas Conversion Projects and the number of potential Biogas Conversion Projects with attractive economics; • changes in energy commodity prices, such as natural gas and wholesale electricity prices, which could have a significant effect on our revenues and expenses; • changes in pipeline gas quality standards or other regulatory changes that may limit our ability to transport RNG on pipelines for delivery to third parties or increase the costs of processing RNG to allow for such deliveries; • changes in the broader waste collection industry, including changes affecting the waste collection and biogas potential of the landfill industry, which could limit the LFG resource that we currently target for our Biogas Conversion Projects; • substantial construction risks, including the risk of delay, that may arise due to forces outside of our control, such as those related to engineering and environmental problems, inclement weather, inflationary pressures on materials and labor, and supply chain and labor disruptions; • operating risks and the effect of disruptions on our business, including the effects of global health crises, weather conditions, catastrophic events, such as fires, explosions, earthquakes, droughts and acts of terrorism, and other force majeure events that impact us, our counterparties, suppliers, distributors and subcontractors; 31 • accidents involving personal injury or the loss of life; • entering into markets where we have less experience, such as our Biogas Conversion Projects for biogas recovery at livestock farms; • the ability to obtain financing for a Biogas Conversion Project on acceptable terms or at all and the need for substantially more capital than initially budgeted to complete Biogas Conversion Projects and exposure to liabilities as a result of unforeseen environmental, construction, technological or other complications; • failures or delays in obtaining desired or necessary land rights, including ownership, leases, easements, zoning rights and building permits; • a decrease in the availability, increased pricing on, and a delay in the timeliness of delivery of raw materials and components, necessary for the Biogas Conversion Projects to function or necessary for the conversion of a Biogas Conversion Projects from Renewable Power to RNG production; • obtaining and keeping in good standing permits, authorizations and consents from local city, county, state and US federal government agencies and organizations; • penalties, including potential termination, under short-term and long-term contracts for failing to produce or deliver a sufficient quantity and acceptable quality of RNG in accordance with our contractual obligations; • unknown regulatory changes related to the transportation of RNG, which may increase the transportation cost for delivering under our contracts then in effect; • the consent and authorization of local utilities or other energy development off-takers to ensure successful interconnection to energy grids to enable power and gas sales; and • difficulties in identifying, obtaining and permitting suitable sites for new Biogas Conversion Projects.
Additionally, even if preferred sites can be located, we may encounter land use or zoning difficulties, problems with utility services, challenges obtaining and retaining required permits and approvals or local resistance, including due to reduced operations of permitting agencies because of the COVID-19 pandemic, any of which could prevent us or our counterparties from building new stations on such sites or limit or restrict the use of new or existing stations.
Additionally, even if preferred sites can be located, we may encounter land use or zoning difficulties, problems with utility services, challenges obtaining and retaining required permits and approvals or local resistance, including due to 40 reduced operations of permitting agencies because of the COVID-19 pandemic, any of which could prevent us or our counterparties from building new stations on such sites or limit or restrict the use of new or existing stations.
The declaration, amount and payment of any future 51 dividends on shares of common stock will be at the sole discretion of our board, who may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our its stockholders or by our subsidiaries to us and such other factors our board may deem relevant.
The declaration, amount and payment of any future dividends on shares of common stock will be at the sole discretion of our board, who may take into account general and economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax, and regulatory restrictions, implications on the payment of dividends by us to our its stockholders or by our subsidiaries to us and such other factors our board may deem relevant.
The calculation of the hypothetical future payments would be made using certain assumptions and deemed events set forth in the Tax Receivable Agreement, including (i) the sufficiency of taxable income to fully utilize the tax benefits, (ii) any OPAL Fuels Common Units (other than those held by us) outstanding on the termination date are exchanged on the 52 termination date and (iii) the utilization of certain loss carryovers over a certain time period.
The calculation of the hypothetical future payments would be made using certain assumptions and deemed events set forth in the Tax Receivable Agreement, including (i) the sufficiency of taxable income to fully utilize the tax benefits, (ii) any OPAL Fuels Common Units (other than those held by us) outstanding on the termination date are exchanged on the termination date and (iii) the utilization of certain loss carryovers over a certain time period.
If the agencies that administer and enforce these programs disagree with our judgments, otherwise determine that we are not in compliance, conduct reviews of our activities or make changes to the programs, then our ability to generate or sell these credits could be temporarily restricted pending completion of reviews or as a penalty, permanently limited or lost entirely, and we could also be subject to fines or other sanctions.
If the agencies that administer and enforce these programs disagree with our judgments, otherwise determine that we are not in compliance, 23 conduct reviews of our activities or make changes to the programs, then our ability to generate or sell these credits could be temporarily restricted pending completion of reviews or as a penalty, permanently limited or lost entirely, and we could also be subject to fines or other sanctions.
Many complex laws, 24 rules, orders and interpretations govern environmental protection, health, safety, land use, zoning, transportation and related matters. At times, such governmental regulations and policies may require biogas conversion project site owners and operators to curtail their operations or close sites temporarily or permanently, which may adversely impact our business, investments and results of operations.
Many complex laws, rules, orders and interpretations govern environmental protection, health, safety, land use, zoning, transportation and related matters. At times, such governmental regulations and policies may require biogas conversion project site owners and operators to curtail their operations or close sites temporarily or permanently, which may adversely impact our business, investments and results of operations.
These pricing pressures could also impact the profitability of prospective Biogas Conversion Projects, and, accordingly, negatively impact our overall financial condition, results of operations and prospects. We currently face declining market prices for LCFS credits specifically within California as well as significant upward pressure on the costs associated with dispensing RNG specifically within California to generate the LCFS credits.
These pricing pressures could also impact the profitability of prospective Biogas Conversion Projects, and, accordingly, negatively impact our overall financial condition, results of operations and prospects. 29 We currently face declining market prices for LCFS credits specifically within California as well as significant upward pressure on the costs associated with dispensing RNG specifically within California to generate the LCFS credits.
If such projects that had MBR Authority were later to lose their MBR Authority, they would be required to obtain FERC’s acceptance of a cost-of-service rate schedule and could become subject to the significant accounting, record-keeping, and reporting requirements that are typically imposed on vertically-integrated utilities with cost-based rate schedules.
If such projects that had MBR 24 Authority were later to lose their MBR Authority, they would be required to obtain FERC’s acceptance of a cost-of-service rate schedule and could become subject to the significant accounting, record-keeping, and reporting requirements that are typically imposed on vertically-integrated utilities with cost-based rate schedules.
The invalidity of, or any default or termination under, any of our gas rights agreements, leases, easements, licenses and rights-of-way may interfere with our rights to the underlying biogas and our ability to use and operate all or a portion of certain of our Biogas Conversion Projects facilities, which may have an adverse impact on our business, financial condition and results of operations.
The invalidity of, or any default or termination under, any of our gas rights agreements, leases, easements, licenses and rights-of-way may interfere with our rights to the underlying biogas and our ability to use and operate all or a portion of our Biogas Conversion Projects facilities, which may have an adverse impact on our business, financial condition and results of operations.
A failure by biogas conversion project site owners and operators to comply with extensive federal, state and local regulations and policies, including permitting requirements, may result in the suspension or cessation of waste site operations, which would reduce or halt Renewable Power or RNG production and generation of the associated Environmental Attributes.
A failure by biogas conversion project site owners and operators to comply with extensive federal, state and local regulations and policies, including permitting requirements, may result in the suspension or cessation of site operations, which would reduce or halt Renewable Power or RNG production and generation of the associated Environmental Attributes.
In addition, there are other factors currently 36 unknown to us that may affect the commercial viability of other types of feedstock. Moreover, fluctuations in manure supply, the end use markets and the spread of diseases among herds could have a material impact on the success and completion of our Biogas Conversion Projects.
In addition, there are other factors currently unknown to us that may affect the commercial viability of other types of feedstock. Moreover, fluctuations in manure supply, the end use markets and the spread of diseases among herds could have a material impact on the success and completion of our Biogas Conversion Projects.
Despite our ongoing and anticipated cybersecurity efforts, a successful cybersecurity incident could lead to additional material costs, including those related to the loss of sensitive information, repairs to infrastructure or capabilities essential to our operations, responding to litigation or regulatory investigations, and those related to a material and adverse impact on our reputation, financial position, results of operations, or cash flows.
Despite our ongoing and anticipated cybersecurity efforts, a successful cybersecurity incident could lead to additional material costs, including those related to the loss of sensitive information, 51 repairs to infrastructure or capabilities essential to our operations, responding to litigation or regulatory investigations, and those related to a material and adverse impact on our reputation, financial position, results of operations, or cash flows.
Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us. 21 Environmental laws, rules and regulations have changed rapidly in recent years and generally have become more stringent over time, and we expect this trend to continue.
Our insurance may not cover all environmental risks and costs or may not provide sufficient coverage if an environmental claim is made against us. Environmental laws, rules and regulations have changed rapidly in recent years and generally have become more stringent over time, and we expect this trend to continue.
In addition, if we are unable to avail ourselves of warranties and other contractual protections with our suppliers and service providers, we may incur liability to our counterparties or additional costs related to the affected products and services, which could adversely affect our business, financial condition and results of operations.
In addition, if we are unable to avail ourselves of warranties and other contractual protections with our suppliers and service providers, we may incur liability to our counterparties or additional costs related to the affected products and services, which could adversely affect 21 our business, financial condition and results of operations.
FERC regulations limit using a transmission project for proprietary purposes, and we may be required to offer others (including competitors) open-access to our transmission asset, should we acquire one. Such acquisitions could have a material adverse effect on our business, financial condition and results of operations.
FERC regulations limit using a transmission project for proprietary purposes, and we may be required to offer others (including competitors) 37 open-access to our transmission asset, should we acquire one. Such acquisitions could have a material adverse effect on our business, financial condition and results of operations.
If the market for natural gas vehicle fuels does not develop at improved rates or levels, or if a market develops but we are not able to capture a significant share of the market or the market subsequently declines, our business, growth potential, financial condition, and operating results would be harmed.
If the market for natural gas vehicle fuels does not develop at improved rates or levels, or if a market develops but we are not able to capture a 38 significant share of the market or the market subsequently declines, our business, growth potential, financial condition, and operating results would be harmed.
Any compromise of our security could result in a violation of applicable domestic and foreign security, privacy or data protection, consumer and other laws, regulatory or other 53 governmental investigations, enforcement actions, and legal and financial exposure, including potential contractual liability that could have a material adverse effect on our business.
Any compromise of our security could result in a violation of applicable domestic and foreign security, privacy or data protection, consumer and other laws, regulatory or other governmental investigations, enforcement actions, and legal and financial exposure, including potential contractual liability that could have a material adverse effect on our business.
If actively quoted market prices and pricing information from external sources are not available, the valuation of such contracts would involve judgment or the use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of such contracts.
If actively quoted market 30 prices and pricing information from external sources are not available, the valuation of such contracts would involve judgment or the use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of such contracts.
Any unexpected operational or mechanical failure, including failure associated with breakdowns and forced outages, could reduce our 35 facilities’ generating capacity below expected levels, reducing our revenues and jeopardizing our ability to earn profits and adversely affect our business, financial condition and results of operations.
Any unexpected operational or mechanical failure, including failure associated with breakdowns and forced outages, could reduce our facilities’ generating capacity below expected levels, reducing our revenues and jeopardizing our ability to earn profits and adversely affect our business, financial condition and results of operations.
We have a number of Biogas Conversion Projects under construction that will begin production over the next 18-24 months. Therefore, our expectations of the operating performance of these facilities are based on assumptions 40 and estimates made without the benefit of operating history.
We have a number of Biogas Conversion Projects under construction that will begin production over the next 18-24 months. Therefore, our expectations of the operating performance of these facilities are based on assumptions and estimates made without the benefit of operating history.
The personal and financial interests of such persons described above may be in conflict with the interests of ours and 49 influence their motivation in identifying and selecting our business opportunities, their support or lack thereof for pursuing such business opportunities and our operations. The existence of a family relationship between Mr.
The personal and financial interests of such persons described above may be in conflict with the interests of ours and influence their motivation in identifying and selecting our business opportunities, their support or lack thereof for pursuing such business opportunities and our operations. The existence of a family relationship between Mr.
However, the regulations that govern the RPS programs, including pricing incentives for renewable energy, or reasonableness guidelines for pricing that increase valuation compared to conventional power (such as a projected value for carbon reduction or consideration of avoided integration costs), may change.
However, the regulations that govern the RPS programs, including pricing incentives for renewable energy and reasonableness guidelines for pricing that increase valuation compared to conventional power (such as a projected value for carbon reduction or consideration of avoided integration costs), may change.
Operation of our 32 Biogas Conversion Projects also involves risks that we will be unable to transport our product to our counterparties in an efficient manner due to a lack of capacity or other problems with third party interconnection and transmission facilities.
Operation of our Biogas Conversion Projects also involves risks that we will be unable to transport our product to our counterparties in an efficient manner due to a lack of capacity or other problems with third party interconnection and transmission facilities.
The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operations of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, prohibit the 50 issuance of stock options and impose certain governance requirements.
The Investment Company Act and the rules thereunder contain detailed parameters for the organization and operations of investment companies. Among other things, the Investment Company Act and the rules thereunder limit or prohibit transactions with affiliates, impose limitations on the issuance of debt and equity securities, prohibit the issuance of stock options and impose certain governance requirements.
Nevertheless, were we to do so, eligibility for MBR Authority is predicated on a variety of factors, primarily including the overall market power that the power seller — together with all of its FERC-defined “affiliates” — has in the relevant market.
Nevertheless, if we were to do so, eligibility for MBR Authority is predicated on a variety of factors, primarily including the overall market power that the power seller — together with all of its FERC-defined “affiliates” — has in the relevant market.
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law.
We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which are charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new 45 and evolving regulatory measures under applicable law.
The actual amount of deferred tax assets and related liabilities that we will recognize will differ based on, among other things, the timing of the exchanges, the price of the shares of Class A common stock at the time of the exchange, and the tax rates then in effect.
The actual amount of deferred tax assets and related liabilities that we will recognize will differ based on, among other things, the timing of the exchanges, the price of the shares of Class A common 50 stock at the time of the exchange, and the tax rates then in effect.
The agreements governing such financings typically contain financial and other restrictive covenants that limit a project subsidiary’s ability to make distributions to its parent or otherwise engage in activities that may be in its long-term best interests.
The agreements governing such financings typically contain financial and other restrictive covenants that 42 limit a project subsidiary’s ability to make distributions to its parent or otherwise engage in activities that may be in its long-term best interests.
If these facilities fail to provide us with adequate capacity or have 25 unplanned disruptions, we may be restricted in our ability to deliver Renewable Power and RNG to our counterparties and we may either incur additional costs or forego revenues.
If these facilities fail to provide us with adequate capacity or have unplanned disruptions, we may be restricted in our ability to deliver Renewable Power and RNG to our counterparties and we may either incur additional costs or forego revenues.
During the conversion of existing projects, there may be a gap in revenue while the electricity project is offline until 30 the conversion is completed and the new RNG facility commences operations, which may adversely affect our financial condition and results of operations.
During the conversion of existing projects, there may be a gap in revenue while the electricity project is offline until the conversion is completed and the new RNG facility commences operations, which may adversely affect our financial condition and results of operations.
These vehicle and engine manufacturers may decide not to expand or maintain, or may decide to discontinue or curtail, their product lines for a variety of reasons, including, without limitation, as a result of the adoption of governmental policies or programs such as the rules adopted by the California Air Resources Board on June 25, 2020 requiring the sale of zero-emission heavy-duty trucks (the “Advanced Clean Trucks Regulation”) and Executive Order N-79-20 issued by the Governor of the State of California in September 2020 (the “September 2020 Executive Order”).
These manufacturers may decide not to expand or maintain, or may decide to discontinue or curtail, their product lines for a variety of reasons, including, without limitation, as a result of the adoption of governmental policies or programs such as the rules adopted by the California Air Resources Board on June 25, 2020 requiring the sale of zero-emission heavy-duty trucks (the “Advanced Clean Trucks Regulation”) and Executive Order N-79-20 issued by the Governor of the State of California in September 2020 (the “September 2020 Executive Order”).
Because of rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available.
Because of rising insurance costs and changes in the 34 insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at all or at rates or on terms similar to those presently available.
If we and our third party suppliers are unable to meet applicable quality standards, 34 through one or more of the factors discussed above or otherwise, we could be subject to financial penalties under such contracts.
If we and our third party suppliers are unable to meet applicable quality standards, through one or more of the factors discussed above or otherwise, we could be subject to financial penalties under such contracts.
In addition, we typically need approval from landfill owners in order to implement Renewable Power-to-RNG conversion projects, 37 and we are also dependent on landfill owners for additional gas rights as well as land leases and easements for these conversion projects.
In addition, we typically need approval from landfill owners in order to implement Renewable Power-to-RNG conversion projects, and we are also dependent on landfill owners for additional gas rights as well as land leases and easements for these conversion projects.
For example, increased rates of recycling or increased use of waste incineration could decrease the volume of waste sent to 29 landfills, while organics diversion strategies such as composting can reduce the amount of organic waste sent to landfills.
For example, increased rates of recycling or increased use of waste incineration could decrease the volume of waste sent to landfills, while organics diversion strategies such as composting can reduce the amount of organic waste sent to landfills.
It is possible that some 48 investors will find our Class A common stock less attractive as a result, which may result in a less active trading market for our Class A common stock and higher volatility in our stock price.
It is possible that some investors will find our Class A common stock less attractive as a result, which may result in a less active trading market for our Class A common stock and higher volatility in our stock price.
Adam Comora, as our Co-Chief Executive Officer, may result in a conflict of interest on the part of such persons between what he, in his capacity as Chairman or Co-Chief Executive Officer, respectively, may believe is in our best interests and the interests of our stockholders in connection with a decision to be made by us through our board, standing committees thereof, and management and what he may believe is best for himself or his family members in connection with the same decision.
Adam Comora, as our Co-Chief Executive Officer, may result in a conflict of interest on the part of such persons between what they, in their capacity as Chairman or Co-Chief Executive Officer, respectively, may believe is in our best interests and the interests of our stockholders in connection with a decision to be made by us through our board, standing committees thereof, and management and what he may believe is best for himself or his family members in connection with the same decision.
The estimation of biogas production volume is an inexact process and dependent on many site-specific conditions, including the estimated annual waste volume, composition of waste, regional climate and the capacity and construction of the site.
The estimation of biogas production volume is an inexact process and dependent on many site-specific conditions, including the estimated annual waste volume, composition of waste, regional climate and the capacity and construction of 36 the site.
The acquisition of existing Biogas Conversion Projects involves numerous risks, many of which may be indiscoverable through the due diligence process, including exposure to previously existing liabilities and unanticipated costs associated with the pre-acquisition period; difficulty in integrating the acquired projects into our existing business; and, if the projects are in new markets, the risks of entering markets where we have limited experience, less knowledge of differences in market terms for gas rights agreements and dispensing agreements, and, for international projects, possible exposure to exchange-rate risk to the extent we need to finance development and operations of foreign projects to repatriate earnings generated by such projects.
The acquisition of existing Biogas Conversion Projects involves numerous risks, many of which may not be discoverable through the due diligence process, including exposure to previously existing liabilities and unanticipated costs associated with the pre-acquisition period; difficulty in integrating the acquired projects into our existing business; and, if the projects are in new markets, the risks of entering markets where we have limited experience, less knowledge of differences in market terms for gas rights agreements and dispensing agreements, and, for international projects, possible exposure to exchange-rate risk to the extent we need to finance development and operations of foreign projects to repatriate earnings generated by such projects.
We from time to time face disputes or disagreements with owners and operators of biogas project sites which could materially impact our ability to continue to develop and/or operate an existing Biogas Conversion Project on its 19 current basis, or at all, and could materially delay or eliminate our ability to identify and successfully secure the rights to construct and operate other future Biogas Conversion Projects.
From time to time, we face disputes or disagreements with owners and operators of biogas project sites which could materially impact our ability to continue to develop and/or operate an existing Biogas Conversion Project on its current 20 basis, or at all, and could materially delay or eliminate our ability to identify and successfully secure the rights to construct and operate other future Biogas Conversion Projects.
Claims can be asserted by such persons relating to personal injury or property damage, and resolving such claims can be expensive and time consuming, even if there is little or no basis for the claim. We have a history of accounting losses and may incur additional losses in the future. The Company has incurred net losses historically.
Claims can be asserted by such persons relating to personal injury or property damage, and resolving such claims can be expensive and time consuming, even if there is little or no basis for the claim. We have a history of accounting losses and may incur additional losses in the future. We have incurred net losses historically.
Market Risks Related to Our Business A reduction in the prices we can obtain for the Environmental Attributes generated from RNG, which include RINs, LCFS credits, and other incentives, could have a material adverse effect on our business prospects, financial condition and results of operations .
Market Risks Related to Our Business A reduction in the prices we can obtain for the Environmental Attributes generated from RNG, which include RINs, ISCC Carbon Credits, LCFS credits, and other incentives, could have a material adverse effect on our business prospects, financial condition and results of operations .
If we are unable to maintain good relationships with these site owners and operators, or if they take any actions that disrupt or halt production of RNG or Renewable Power, our business, growth strategy, financial condition and results of operations could be materially and adversely affected.
If we are unable to maintain good relationships with these site owners and operators, or if they take any actions that disrupt or halt production of RNG or Renewable Power, our business, financial condition and results of operations could be materially and adversely affected.
To the extent that we needs funds, and any of our direct or indirect subsidiaries is restricted from making such distributions under these debt agreements or applicable law or regulation, or is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition.
To the extent that we need funds, and any of our direct or indirect subsidiaries is restricted from making such distributions under these debt agreements or applicable law or regulation, or is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition.
Nevertheless, if the prices of crude oil, gasoline and diesel decline again, or if the price of RNG or natural gas increases without corresponding increases in the prices of crude oil, gasoline and diesel or Environmental Attributes, we may not be able to offer our counterparties an attractive price advantage for our vehicle fuels.
If the prices of crude oil, gasoline and diesel decline, or if the price of RNG or natural gas increases without corresponding increases in the prices of crude oil, gasoline and diesel or Environmental Attributes, we may not be able to offer our counterparties an attractive price advantage for our vehicle fuels.
Currently, we do not have a business relationship with any of the banking institutions mentioned above, and our cash, cash equivalents and short term investments have been unaffected by the turmoil in the financial industry; however, we cannot guaranty that the banking institution with which we do business will not face similar circumstances in the future, or that the third parties with whom we do business will not be negatively affected by such circumstances. 54 ITEM 1B.
Currently, we do not have a business relationship with any of the banking institutions mentioned above, and our cash, cash equivalents and short term investments have been unaffected by the turmoil in the financial industry; however, we cannot guaranty that the banking institution with which we do business will not face similar circumstances in the future, or that the third parties with whom we do business will not be negatively affected by such circumstances.
Sequestering CO 2 is subject to numerous laws and regulations with uncertain permitting timelines and costs. We also intend to explore the production of renewable hydrogen sourced from a number of our projects’ RNG, and we may enter into long-term fixed price off-take contracts for green hydrogen that we may produce at our projects.
Sequestering CO2 is subject to numerous laws and regulations with uncertain permitting timelines and costs. We also intend to explore the production of renewable hydrogen sourced from a number of our projects’ RNG, and we may enter into long-term fixed price off-take contracts for green hydrogen that we may produce at our projects.
Our ability to generate revenue from sales of RINs and LCFS credits depends on our strict compliance with such federal and state programs, which are complex and can involve a significant degree of judgment.
Our ability to generate revenue from sales of RINs and LCFS credits depends on our strict compliance with these federal and state programs, which are complex and can involve a significant degree of judgment.
Our operations are subject to stringent and complex federal, state and local EHS laws and regulations, including those relating to (i) the release, emission or discharge of materials into the air, water and ground, (ii) the generation, storage, handling, use, transportation and disposal of hazardous materials and wastes, and (iii) the health and safety of our employees and other persons.
Our operations are subject to stringent and complex federal, state and local EHS laws and regulations, including those relating to the release, emission or discharge of materials into the air, water and ground, the generation, storage, handling, use, transportation and disposal of hazardous materials and wastes, and the health and safety of our employees and other persons.
Significant deterioration in the financial condition of any biogas conversion project waste site could cause the biogas conversion project site owners and operators to unilaterally decide to shut down or reduce their landfill or livestock waste operations.
Significant deterioration in the financial condition of any biogas conversion project waste site could cause the biogas conversion project site owners and operators to shut down or reduce their landfill or livestock waste operations.
To the extent that OPAL is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid, which could negatively impact OPAL’s results of operations and could also affect its liquidity in periods in which such payments are made.
To the extent that OPAL is unable to make payments under the Tax Receivable Agreement for any reason, such payments will be deferred and will accrue interest until paid, which could negatively impact our results of operations and could also affect our liquidity in periods in which such payments are made.
These laws and regulations impose numerous obligations applicable to our operations, including (i) the acquisition of permits before construction and operation of our Biogas Conversion Projects and Fueling Stations; (ii) the restriction of types, quantities and concentration of materials that can be released into the environment; (iii) the limitation or prohibition of our activities on certain lands lying within wilderness, wetlands and other protected areas; (iv) the application of specific health and safety criteria addressing worker protection; and (v) the imposition of substantial liabilities for pollution resulting from the operation of our Biogas Conversion Projects and Fueling Stations.
These laws and regulations impose numerous obligations applicable to our operations, including the acquisition of permits before construction and operation of our Biogas Conversion Projects and Fueling Stations; the restriction of types, quantities and concentration of materials that can be released into the environment; the limitation or prohibition of our activities on certain lands lying within wilderness, wetlands and other protected areas; the application of specific health and safety criteria addressing worker protection; and the imposition of substantial liabilities for pollution resulting from the operation of our Biogas Conversion Projects and Fueling Stations.
Biogas Conversion Projects that produce RNG often experience unpredictable production levels or other difficulties due to a variety of factors, including, among others, (i) problems with equipment, (ii) severe weather, pandemics, or other health crises, including the ongoing COVID-19 pandemic, (iii) construction delays, (iv) technical difficulties, (v) high operating costs, (vi) limited availability, or unfavorable composition of collected feedstock gas, and (vii) plant shutdowns caused by upgrades, expansion or required maintenance.
Biogas Conversion Projects that produce RNG often experience unpredictable production levels or other difficulties due to a variety of factors, including, among others, (i) problems with equipment, (ii) severe weather, pandemics, or other health crises, (iii) construction delays, (iv) technical difficulties, (v) high operating costs, (vi) limited availability, or unfavorable composition of collected feedstock gas, and (vii) plant shutdowns caused by upgrades, expansion or required maintenance.
These changes are ongoing, and we cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory environment will have on our business. Our biogas conversion project site owners and operators are also subject to extensive federal, state and local regulations and policies, including permitting requirements, on account of their separate operations.
These changes are ongoing, and we cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory environment will have on our business. Our biogas conversion project site owners and operators are also subject to extensive federal, state and local regulations and policies, including permitting requirements.
Failure to comply with such laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, the imposition of investigatory or remedial obligations, and the issuance of orders limiting or prohibiting some or all of our operations.
F ailure to comply with such laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, the imposition of investigatory or remedial obligations, and the issuance of orders limiting or prohibiting some or all of our operations.
In addition, any such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, delisting of our securities and harm to our reputation and financial condition, or diversion of financial and management resources from the operation of our business.
In addition, any such failures could result in litigation or regulatory actions by the SEC or other regulatory authorities, delisting of our securities and harm to our reputation and financial condition, or diversion of financial and management resources from the operation of our business.
For example, assuming no material changes in the relevant tax law, we expect that if we experienced a change of control the estimated Tax Receivable Agreement lump-sum payment would range from approximately $192.0 million depending on OPAL Fuels’s rate of recovery of the tax basis increases associated with the deemed exchange of the OPAL Fuels Common Units (other than those held by us).
For example, assuming no material changes in the relevant tax law, we expect that if we experienced a change of control the estimated Tax Receivable Agreement lump-sum payment would be approximately $133.0 million depending on OPAL Fuels’s rate of recovery of the tax basis increases associated with the deemed exchange of the OPAL Fuels Common Units (other than those held by us).
Accordingly, we may be affected by operational issues encountered by biogas conversion project site owners and operators in operating their facilities, such as, among other things: (i) their ability to perform in accordance with their commitments to third parties (other than us) under agreements and permits; (ii) transportation of source materials, (iii) herd health and labor issues at the dairy farms generating the manure to be processed at our digester facilities; (iv) gas collection issues at landfill projects such as broken pipes, ground water accumulation, inadequate land cover and labor issues, and (v) the particular character and mix of trash received, at the biogas conversion project site facilities.
Accordingly, we may be affected by operational issues encountered by biogas conversion project site owners and operators in operating their facilities that may affect the quantity and quality of biogas, including, among other things: (i) their ability to perform in accordance with their commitments to third parties (other than us) under agreements and permits; (ii) transportation of source materials, (iii) herd health and labor issues at the dairy farms generating the manure to be processed at our digester facilities; (iv) gas collection issues at landfill projects such as broken pipes, ground water accumulation, inadequate landcover and labor issues, and (v) the particular character and mix of trash received.
We cannot predict whether our dual class structure, which affords the shares of Class A common stock and Class B common stock one vote per share while affording the shares of Class C common stock and Class D common stock with five votes per share, combined with our concentrated voting control by OPAL Holdco due to its ownership of shares of Class D common stock, will result in a lower or more volatile market price of the shares of Class A common stock or in adverse publicity or other adverse consequences.
The dual-class structure of our common stock may adversely affect the trading market for the shares of Class A common stock. 48 We cannot predict whether our dual class structure, which affords the shares of Class A common stock and Class B common stock one vote per share while affording the shares of Class C common stock and Class D common stock with five votes per share, combined with our concentrated voting control by OPAL Holdco due to its ownership of shares of Class D common stock, will result in a lower or more volatile market price of the shares of Class A common stock or in adverse publicity or other adverse consequences.
As a result, certain of our Biogas Conversion Projects’ rights under these licenses, easements, leases or rights-of-way may be subject, and subordinate, to the rights of those third parties in certain instances.
As a result, certain of our rights under these licenses, easements, leases or rights-of-way may be subject, and subordinate, to the rights of those third parties in certain instances.
Our Fueling Station construction activities for commercial fleets and other counterparties are subject to business and operational risks, including predicting demand in a particular market or markets, land use, permitting or zoning difficulties, responsibility for actions of sub-contractors on jobs in which we serve as general contractor, potential labor shortages due to the COVID-19 pandemic or otherwise, and cost overruns.
Our Fueling Station construction activities for commercial fleets and other counterparties are subject to business and operational risks, including predicting demand in a particular market or markets, land use, permitting or zoning difficulties, responsibility for actions of sub-contractors on jobs in which we serve as general contractor, potential labor shortages and cost overruns.
Changes to the use of our assets, divestitures, changes to the structure of our business, significant negative industry or economic trends, disruptions to our operations, inability to effectively integrate any acquired businesses, further market capitalization declines, or other similar actions or conditions could result in additional asset impairment or goodwill impairment charges or other adverse consequences, any of which could have material adverse effects on our financial condition, our results of operations and the trading price of common stock.
Changes to the use of our assets, divestitures, changes to the structure of our business, significant negative industry or economic trends, disruptions to our operations, inability to effectively integrate any acquired businesses, further market capitalization declines, or other similar actions or conditions could result in additional asset impairment or goodwill impairment charges or other adverse consequences, any of which could have material adverse effects on our financial condition, our results of operations and the trading price of common stock. 43 Loss of our key management could adversely affect our business performance.
A change in law or in governmental policies concerning renewable fuels, landfill or animal waste site biogas or the sale of RINs and LCFS could be expected to affect the market for, and the pricing of, the RINs and LCFS credits that we can generate through production at our Biogas Conversion Projects.
A change in law or in governmental policies concerning renewable fuels, landfill or animal waste site biogas or the sale of Environmental Attributes could be expected to affect the market for, and the pricing of, the Environmental Attributes that we can generate through production at our Biogas Conversion Projects.
The supply of engines or vehicle product lines by these vehicle and engine manufacturers may also be disrupted due to delays, restrictions or other business impacts related to the COVID-19 pandemic and supply chain disruptions or crises.
The supply of engines or vehicle product lines by these vehicle and engine manufacturers may also be disrupted due to delays, restrictions or other business impacts related to supply chain disruptions, crises or other developments.
It could also expose us to the risk of increased interest rates and limit our ability to react to changes in the economy or our industry. We may be unable to obtain additional financing to fund our operations or growth. As of December 31, 2022, our total indebtedness was $170 million, excluding deferred financing costs.
It could also expose us to the risk of increased interest rates 41 and limit our ability to react to changes in the economy or our industry. We may be unable to obtain additional financing to fund our operations or growth. As of December 31, 2023, our total indebtedness was $209.1 million, excluding deferred financing costs.
The occurrence of any of these risks could have a material adverse effect on our results of operations and financial condition. Our level of indebtedness and our redeemable preferred non-controlling interests' redemption obligations could adversely affect our ability to raise additional capital to fund our operations and acquisitions.
The occurrence of any of these risks could have a material adverse effect on our results of operations and financial condition. Our level of indebtedness and preferred stock redemption obligations could adversely affect our ability to raise additional capital to fund our operations and acquisitions.
Finally, because we are a holding company with no operations of its own, its ability to make payments under the Tax Receivable Agreement depends on the ability of OPAL Fuels to make distributions to it.
Finally, because we are a holding company with no operations of our own, our ability to make payments under the Tax Receivable Agreement depends on the ability of OPAL Fuels to make distributions to us.
There can be no assurance that the EPA will timely set annual RVOs or that the RVOs will continue to increase or be sufficient to satisfy the growing supply of RNG which may be targeted for the US transportation fuel market.
There can be no assurance that the EPA will timely set annual RVOs in the future or that the RVOs will continue to increase or be sufficient to satisfy the growing supply of RNG which may be targeted for the U.S. transportation fuel market.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Removed
LEGAL PROCEEDINGS Ohio Edison Arbitration Demand Noble Road RNG LLC (“Noble Road”), a subsidiary of Opal Fuels, and Ohio Edison Company (“Ohio Edison”) entered into several contracts pursuant to which Ohio Edison agreed to, among other things furnish to Noble Road alternating current, sixty cycle, three phase electrical energy at approximately 12,500 volts, up to approximately 2,100 kW of capacity, and agreed to construct upgrades to Ohio Edison’s facilities to serve the required load to Noble Road’s RNG facility.
Added
ITEM 3. LEGAL PROCEEDINGS From time to time, we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business, some of which may be material. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us.
Removed
Noble Road sent Ohio Edison an arbitration demand on January 24, 2022 alleging that, as a result of Ohio Edison’s failure to perform under the contracts, Noble Road was substantially delayed in completing its commission activities at its RNG facility and, although it has been able to maintain operations through use of generators, is unable to operate the equipment at its RNG facility at expected capacity.
Added
We do not believe that the outcome of any of our current legal proceedings will have a material adverse impact on our business, financial condition and results of operations. Set forth below is information related to the Company’s material pending legal proceedings as of the date of this report, other than ordinary routine litigation incidental to the business.
Removed
In addition, Noble Road asserts that Ohio Edison’s breach of the contracts has caused and continues to cause substantial damage.
Added
Central Valley Project In September 2021, an indirect subsidiary of the Company, MD Digester, LLC, entered into a fixed-price Engineering, Procurement and Construction Contract (an “EPC Contract”) with VEC Partners, Inc. d/b/a CEI Builders (“Contractor”) for the design and construction of a turn-key renewable natural gas production facility using dairy cow manure as feedstock.
Removed
In its demand, Noble Road has stated that it is willing to defer arbitration in order to allow the parties to focus on reaching a consensual resolution and has proposed that the parties agree to hold the arbitration in abeyance while current efforts to resolve the problems are ongoing.
Added
In December 2021, a second indirect subsidiary of the Company, VS Digester, LLC entered into a nearly identical EPC Contract for the design and construction of a second facility in connection with the same project.
Removed
Noble Road and Ohio Edison have entered into a tolling agreement with respect to this matter which is in effect until October 3, 2023. See Note 18. Commitments and Contingencies , to the Company’s consolidated financial statements set forth in Item 8.
Added
Contractor has submitted a series of change order requests seeking to increase the EPC Contract price under each contract by approximately $14 million (i.e., approximately $28 million in total), primarily due to modifications to Contractor’s design drawings that are required to meet its contracted performance guaranties and a termination (for default) of one of Contractor’s major equipment manufacturers.
Removed
Financial Statements and Supplementary Data of this Form 10-K, for information regarding legal proceedings in which we are involved. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Added
The Company disputes substantially all of the change order requests. On January 5, 2024, the Company filed a civil lawsuit captioned, MD Digester, LLC. et. al. vs. VEC Partners, Inc. et. al.; California Superior Court, County of San Joaquin; Action No.
Added
STK-CV-UCC-2024-0000185 and commenced a related arbitration proceeding in order to obtain a formal determination on the claims, AAA Case No. 01-24-0000-0775. The Superior Court Action will be stayed, pending an award in the AAA proceeding. The AAA proceeding has not been set for hearing.
Added
Contractor is required to select an arbitrator who will in concert with the Company’s selected arbitrator nominate a Chair for the AAA, three-person arbitration panel. As a result of the procedural status of these matters, no discovery has occurred.
Added
The EPC Agreement provides that Contractor is obligated to continue working during the course of 54 the litigation and related arbitration proceedings. Contractor’s performance under both of the EPC Contracts is fully bonded by licensed sureties. Despite informal settlement discussions with Contractor, the parties have not been able as of yet to resolve the claims.
Added
The Company believes its claims against Contractor have substantial merit, and intends to prosecute its claims vigorously.
Added
However, due to the incipient stage of the litigation and related arbitration, its ongoing status, and the uncertainties involved in all litigation and arbitration, the Company does not believe it is feasible at this time to assess the likely outcome of the litigation and related arbitration, the timing of its resolution, or its ultimate impact on the Central Valley projects or the Company's business, financial condition or results of operations.
Added
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn March 27, 2023, the closing sale price of our shares of Class A common stock, as reported on the Nasdaq Stock Market LLC, was $7.26 per share. The number of shareholders of record of our shares of Class A common stock was approximately 18 on March 27, 2023.
Biggest changeOn March 13, 2024, the closing sale price of our shares of Class A common stock, as reported on the Nasdaq Stock Market LLC, was $4.91 per share. The number of shareholders of record of our shares of Class A common stock was approximately 11 on March 13, 2024.
Payment of Dividends 55 We have never declared or paid cash dividends on our capital stock. Our Board of Directors currently intends to retain any future earnings to support operations and to finance the growth and development of our business, and therefore does not intend to pay cash dividends on our common stock in the near term.
Payment of Dividends We have never declared or paid cash dividends on our capital stock. Our Board of Directors currently intends to retain any future earnings to support operations and to finance the growth and development of our business, and therefore does not intend to pay cash dividends on our common stock in the near term.
Removed
Equity Compensation Plan Information On July 21, 2022, the Company adopted the OPAL Fuels Inc. 2022 Omnibus Equity Incentive Plan (the "2022 Equity Compensation Plan"). Under the terms of the 2022 Equity Compensation Plan, a maximum of 19,811,726 shares of Class A common stock may be issued.
Added
Unregistered Sales of Equity Securities; Use of Proceeds from Registered Offerings None Purchases of Equity securities by the Issuer and Affiliated Purchasers None. ITEM 6. RESERVED 55
Removed
Any director, officer, employee or consultant of the Company or any of its subsidiaries (including any prospective officer or employee) is eligible to be designated to participate in the 2022 Equity Compensation Plan. The following table sets forth certain information as of December 31, 2022 regarding the 2022 Equity Compensation Plan.
Removed
The 2022 Equity Compensation Plan was approved by our shareholders on July 21, 2022.
Removed
Plan Category Securities to be issued upon exercise of outstanding restricted stock units, options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Remaining securities for future issuance under equity compensation plans Equity compensation plan approved by security holders 422,349 19,389,377 Unregistered Sales of Equity Securities; Use of Proceeds from Registered Offerings None Purchases of Equity securities by the Issuer and Affiliated Purchasers None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeNo other single customer accounted for 10% or greater of our consolidated accounts receivable,net as of December 31, 2022 and 2021. 63 December 31, 2022 December 31, 2021 Customer A 16 % 11 % Customer B 29 % — % Customer D — % 15 % The following table summarizes the percentage of consolidated revenues from customers that equal 10% or greater of the consolidated revenues in the period (no other single customer accounted for more than 10% of consolidated revenues in these periods): Twelve Months Ended December 31, 2022 2021 Customer A 14 % 16 % Customer B 35 % — % Customer C — % 11 % Customer D — % 18 % Results of Operations for the years ended December 31, 2022 and 2021: Operational data The following table summarizes the operational data achieved for the years ended December 31, 2022 and 2021: Twelve Months Ended December 31, 2022 2021 RNG Fuel volume produced (Million MMBtus) 2.2 1.6 RNG Fuel volume sold (Million GGEs) 29.4 20.8 Total volume delivered (Million GGEs) 115.9 96.4 RNG projects Below is a table setting forth the RNG projects in operation and construction in our portfolio: 64 OPAL's Share of Design capacity (MMbtus per year) (1) Source of bio gas Ownership (2) RNG projects in operation: Greentree 1,061,712 LFG 100% Imperial 1,061,712 LFG 100% New River 663,570 LFG 100% Noble Road (3) 464,499 LFG 50% Biotown (3) 48,573 Dairy 10% Pine Bend (3) 424,685 LFG 50% Sunoma 192,350 Dairy 90% Sub total 3,917,101 RNG projects in construction: Prince William 1,725,282 LFG 100% Hilltop 255,500 Dairy 100% Vander Schaaf 255,500 Dairy 100% Emerald 1,327,140 LFG 50% Sapphire 796,284 LFG 50% New England 318,514 LFG 100% Sub total 4,678,220 Total 8,595,321 (1) The Design capacity represents the Company's proportional ownership in the project.
Biggest changeTwelve Months Ended December 31, 2023 2022 RNG Fuel volume produced (Million MMBtus) 2.7 2.2 RNG Fuel volume sold (Million GGEs) 43.8 29.4 Total volume delivered (Million GGEs) 133.2 115.9 RNG projects Below is a table setting forth the RNG projects in operation and construction in our portfolio: 64 OPAL's Share of Design Capacity (MMbtus per year) (1) Source of Biogas Ownership Expected Commercial Operation Date (5) RNG Projects in Operation: Greentree 1,061,712 LFG 100% N/A Imperial 1,061,712 LFG 100% N/A Emerald (2) (3) 1,327,140 LFG 50% N/A New River 663,570 LFG 100% N/A Noble Road (2) 464,499 LFG 50% N/A Pine Bend (2) 424,685 LFG 50% N/A Biotown (2) 48,573 Dairy 10% N/A Sunoma (4) 192,350 Dairy 90% N/A Sub total 5,244,241 RNG Projects in Construction: Prince William 1,725,282 LFG 100% First quarter 2024 Hilltop (6) 255,500 Dairy 100% Not Determined Vander Schaaf (6) 255,500 Dairy 100% Not Determined Polk County 1,060,000 LFG 100% Fourth quarter 2024 Sapphire (2) 796,284 LFG 50% Third quarter 2024 Atlantic (2) 331,785 LFG 50% Mid 2025 Sub total 4,424,351 (1) Reflects the Company’s ownership share of design capacity for projects that are not 100% owned by the Company (i.e., net of joint venture partners’ ownership).
Commercial transportation, including heavy-duty trucking, generates approximately 30% emissions of overall CO₂ and other climate-harming GHGs in the United States, and transitioning this sector to low and negative carbon fuels is a critical step towards reducing overall global GHG emissions. The adoption rate of RNG-powered vehicles by commercial transportation fleets will significantly impact demand for our products.
Transportation, including heavy-duty trucking, generates approximately 30% of overall CO₂ and other climate-harming GHG emissions in the United States, and transitioning this sector to low and negative carbon fuels is a critical step towards reducing overall global GHG emissions. The adoption rate of RNG-powered vehicles by commercial transportation fleets will significantly impact demand for our products.
On the same day, we entered into a subscription agreement with NextEra for up to 1,000,000 Series A preferred units, which were issued to NextEra during first and second quarters of 2022 for total proceeds of $100.0 million. Upon completion of the Business Combination, these were converted to redeemable preferred non-controlling interests.
On the same day, we entered into a subscription agreement with NextEra for up to 1,000,000 Series A preferred units, which were issued to NextEra during first and second quarters of 70 2022 for total proceeds of $100.0 million. Upon completion of the Business Combination, these were converted to redeemable preferred non-controlling interests.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based upon our interim unaudited consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and the rules and regulations of the SEC, which apply to interim financial statements.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") and the rules and regulations of the SEC, which apply to interim financial statements.
Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies, because they generally involve a comparatively higher degree of judgment in their application.
Critical accounting policies are those that reflect significant judgments of uncertainties and potentially result in materially different results under different assumptions and conditions. We have described below what we believe are our most critical accounting policies, because they generally involve a comparatively higher degree of judgment in their 57 application.
The preparation of those financial statements requires us to make estimates and judgments that affect the 58 reported amounts of assets and liabilities, revenues, expenses and warrants and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.
The preparation of those financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues, expenses and warrants and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions and conditions.
For a detailed description of all our accounting policies, see Note 2 Significant Accounting Policies , to our consolidated financial statements included herein. Revenue Recognition Renewable Power We sell Renewable Power produced from LFG fueled power plants to utility companies through our PPAs.
For a detailed description of all our accounting policies, see Note 2. Summary of Significant Accounting Policies , to our consolidated financial statements included herein. Revenue Recognition Renewable Power We sell Renewable Power produced from LFG-fueled power plants to utility companies through our PPAs.
Lastly, level 3 inputs are unobservable inputs in which little to no market activity exists for the asset or liability at the 60 measurement date. As such, level 3 estimates are subject to a more significant level of estimation uncertainty.
Lastly, level 3 inputs are unobservable inputs in which little to no market activity exists for the asset or liability at the measurement date. As such, level 3 estimates are subject to a more significant level of estimation uncertainty.
Furthermore, when multiple inputs are used and are categorized in different levels of the input hierarchy, then the fair value measurement in its entirety is categorized in the same level as its lowest level input that is significant to the fair value measurement.
Furthermore, 59 when multiple inputs are used and are categorized in different levels of the input hierarchy, then the fair value measurement in its entirety is categorized in the same level as its lowest level input that is significant to the fair value measurement.
Significant judgment is required when determining asset group composition, during our assessment of relevant events and circumstances, when determining an appropriate discount rate, and when estimating the undiscounted and discounted future cash flows of the asset group. Based on our assessment for the year ended December 31, 2022, there is no impairment recorded on our Plant, Property and Equipment.
Significant judgment is required when determining asset group composition, during our assessment of relevant events and circumstances, when determining an appropriate discount rate, and when estimating the undiscounted and discounted future cash flows of the asset group. Based on our assessment for the year ended December 31, 2023, there is no impairment recorded on our Plant, Property and Equipment.
The Company calculates the interim tax provision in accordance with the provisions of ASC Subtopic 740-270, Income Taxes; Interim Reporting. For interim periods, the Company estimates the annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. Refer to Note 16. Income taxes, to our consolidated financial statements, for additional information.
The Company calculates the interim tax provision in accordance with the provisions of ASC Subtopic 740-270, Income Taxes; Interim Reporting. For interim periods, the Company estimates the annual effective income tax rate and applies the estimated rate to the year-to-date income or loss before income taxes. Refer to Note 15. Income Taxes, to our consolidated financial statements, for additional information.
Environmental Attributes We generate RECs, RINs, and LCFS credits. These Environmental Attributes are sold to third parties that utilize these credits in order to comply with federal and state requirements. Revenue is recognized at the point in time when the credits are transferred to and accepted by the third party buyer.
Environmental Attributes We generate RECs, RINs, ISCC Carbon Credits and LCFS credits. These Environmental Attributes are sold to third parties that utilize these credits in order to comply with federal and state requirements. Revenue is recognized at the point in time when the credits are transferred to and accepted by the third party buyer.
In addition to these projects in operation, we are actively pursuing expansion of our RNG-generating capacity and, accordingly, have a portfolio of RNG projects in construction or in development, with four of our current Renewable Power Projects being considered candidates for conversion to RNG projects in the foreseeable future.
In addition to these projects in operation, we are actively pursuing expansion of our RNG-generating capacity and, accordingly, have a portfolio of RNG projects in construction or in development, with eight of our current Renewable Power Projects being considered candidates for conversion to RNG projects in the foreseeable future.
Changes in the price we receive for RECs and Renewable Power, together with the revenue opportunities and conversion costs associated with converting our LFG sites to RNG production, could have a significant impact on our future profitability. Regulatory landscape We operate in an industry that is subject to and currently benefits from environmental regulations.
Changes in the price we receive for Renewable Power, associated ISCC Carbon Credits and RECs, together with the revenue opportunities and conversion costs associated with converting our LFG sites to RNG production, could have a significant impact on our future profitability. Regulatory landscape We operate in an industry that is subject to and currently benefits from environmental regulations.
Loss on warrant exchange On December 22, 2022, the Company completed the exchange offer of outstanding Public Warrants and Private Warrants and issued 3,309,296 shares of Class A common stock in exchange for the warrants tendered in the Offer.
Loss on warrant exchange On December 22, 2022, we completed the exchange offer of outstanding Public Warrants and Private Warrants and issued 3,309,296 shares of Class A common stock in exchange for the warrants tendered in the Offer.
Concentration of customers and associated credit risk The following table summarizes the percentage of consolidated accounts receivable, net by customers that equal or exceed 10% of the consolidated accounts receivable, net as of December 31, 2022 and 2021.
Concentration of customers and associated credit risk The following table summarizes the percentage of consolidated accounts receivable, net by customers that equal or exceed 10% of the consolidated accounts receivable, net as of December 31, 2023 and 2022.
Our assessment of the significance of an input to a fair value measurement requires judgment and may affect the fair value measurement’s placement in the fair value hierarchy. Refer to Note 10.
Our assessment of the significance of an input to a fair value measurement requires judgment and may affect the fair value measurement’s placement in the fair value hierarchy. Refer to Note 9.
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes set forth in Item 8. Financial Statements and Supplementary Data and the risk factors identified in Item 1A. Risk Factors of this Annual Report.
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes set forth in Part II, Item 8 - "Financial Statements and Supplementary Data" and the risk factors identified in Part I, Item 1A - "Risk Factors" of this Annual Report.
Pursuant to the Warrant Amendment dated December 21, 2022, the Company exercised its right to exchange the remaining outstanding Warrants and issued 497,080 shares of Class A common stock on December 23, 2022. Following the completion of the exchange, the Public Warrants were suspended from trading on the Nasdaq and delisted. There are no longer any Warrants outstanding.
Pursuant to the Warrant Amendment dated December 21, 2022, we exercised our right to exchange the remaining outstanding Warrants and issued 497,080 shares of Class A common stock on December 23, 2022. Following the completion of the exchange, the Public Warrants were suspended from trading on the Nasdaq and delisted. There are no longer any Warrants outstanding.
For purposes of impairment testing, GAAP requires goodwill to be allocated to reporting unit(s) at the acquisition date and to be tested for impairment at least annually, and in between annual tests whenever events or changes in circumstances indicate that the respective reporting unit’s fair value is less than its carrying value.
GAAP requires goodwill to be allocated to reporting unit(s) at the acquisition date and to be tested for impairment at least annually, and in between annual tests whenever events or changes in circumstances indicate that the respective reporting unit’s fair value is less than its 58 carrying value.
Gas — Fuel Purchase Agreements We own Fueling Stations for use by customers under fuel sale agreements. We bill these customers at an agreed upon price for each gallon sold and recognize revenue based on the amounts invoiced in according with the “right to invoice” practical expedient.
Transportation fuel — Fuel Purchase Agreements We own Fueling Stations for use by customers under fuel sale agreements. We bill these customers at an agreed upon price for each gallon sold and recognize revenue based on the amounts invoiced in accordance with the “right to invoice” practical expedient.
We are also exposed to the commodity prices of natural gas and diesel, which serve as alternative fuel for RNG and therefore impact the demand for RNG. Renewable Power Markets We also generate revenues from sales of RECs and Renewable Power generated by our biogas-to-Renewable Power projects.
We are also exposed to the commodity prices of natural gas and diesel, which serve as alternative fuel for RNG and therefore impact the demand for RNG. Renewable Power Markets We also generate revenues from sales of Renewable Power generated by our biogas-to-Renewable Power projects, and associated ISCC Carbon Credits and RECs.
Paid-in-kind preferred dividends On November 29, 2021, we entered into an exchange agreement with Hillman whereby Hillman exchanged its ownership interests in the four RNG projects of $30.0 million into 300,000 series A-1 preferred units at a par value of $100 per unit and 1.4% of the common units of OPAL Fuels.
Dividends on redeemable preferred non-controlling interests On November 29, 2021, we entered into an exchange agreement with Hillman whereby Hillman exchanged its ownership interests in the four RNG projects of $30.0 million into 300,000 series A-1 preferred units at a par value of $100 per unit and 1.4% of the common units of OPAL Fuels.
We expect that our available cash together with our other assets, expected cash flows from operations, available lines of credit under various debt facilities and access to expected sources of capital will be sufficient to meet our existing commitments for a period of at least twelve months from the date of this report.
We expect that our available cash together with our other assets, expected cash flows from operations, and access to expected sources of capital will be sufficient to meet our existing commitments for a period of at least twelve months from the date of this report.
As part of our quantitative assessment, we estimate a reporting unit’s fair value based on the income approach. With this approach, the fair value measurement is based on significant inputs that are not observable in the market and thus the fair value measurement is categorized within Level 3 of the fair value hierarchy.
If applying a quantitative assessment, we would estimate a reporting unit’s fair value based on the income approach. With this approach, the fair value measurement is based on significant inputs that are not observable in the market and thus the fair value measurement is categorized within Level 3 of the fair value hierarchy.
The EPA annually sets proposed renewable volume obligations 61 ("RVOs") for D3 (cellulosic biofuel with a 60% greenhouse gas (“GHG”) reduction requirement) RINs in accordance with the mandates established by the Energy Independence and Security Act of 2007.
The EPA annually sets proposed renewable volume obligations ("RVOs") for D3 (cellulosic biofuel with a 60% greenhouse gas (“GHG”) reduction requirement) RINs in accordance with the mandates established by the Energy Independence and Security Act of 2007. In June 2023, the EPA set RVOs for 2023 through 2025 via a new Set rule.
As of that date, our RNG projects in operation had a design capacity of 3.9 million MMBtus per year and our Renewable Power Projects in operation had a nameplate capacity of 118.6 MW per hour.
As of that date, our RNG projects in operation had a design capacity of 5.2 million MMBtus per year and our Renewable Power Projects in operation had a nameplate capacity of 112.5 MW per hour.
This change was attributable primarily to gain of $37.1 million on our earnout liabilities, change in fair value of contingent payment to a non-controlling interest of one our VIEs, change in fair value of interest rate swaps and put option, offset by negative change in fair value of warrant liabilities.
This change was attributable primarily to a decrease in gain of $30.2 million on our earnout liabilities, change in the fair value of a contingent payment to a non-controlling interest in one of our VIEs of $4.3 million, change in fair value of interest rate swaps and put option, offset by a negative change in fair 69 value of warrant liabilities of $9.0 million.
This segment includes: ◦ Service and maintenance contracts for RNG/CNG Fueling Stations. ◦ Manufacturing division that builds compact fueling systems and defueling systems. ◦ Design/build contracts where the Company serves as general contractor for construction of Fueling Stations, typically structured as guarantee maximum price or fixed priced contracts for customers, generally lasting less than one year. • Renewable Power Portfolio.
This segment includes: ◦ Manufacturing division that builds Compact Fueling Systems and Defueling systems; ◦ Design/Build contracts where we serve as general contractor for construction of Fueling Stations, typically structured as Guarantee Maximum Price or fixed priced contracts for customers, generally lasting less than one year; ◦ Service and maintenance contracts for RNG/CNG Fueling Stations; and ◦ RNG and CNG Fuel Dispensing Stations - This includes both the dispensing (or sale) of RNG, CNG, and environmental credit generation and monetization.
Renewable Power Cost of sales from Renewable Power marginally increased by $0.4 million, or 1%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Renewable Power Cost of sales from Renewable Power increased by $5.0 million, or 16%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
These liabilities were recorded in the consolidated balance sheet upon completion of the Business Combination. Other income Other income increased by $1.9 million, or 100%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. This change is primarily related to a gain recognized on redemption of Note receivable.
These liabilities were recorded in the consolidated balance sheet upon completion of the Business Combination. Other income Other income increased by $122.5 million, or 6306%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This change is primarily related to a gain $122.9 million recognized on deconsolidation of VIEs, Emerald and Sapphire.
Key Components of Our Results of Operations We generate revenues from the sale of RNG fuel, Renewable Power, and associated Environmental Attributes, as well as from the construction, fuel supply, and servicing of Fueling Stations for commercial transportation vehicles using natural gas to power their fleets.
These seasonal variances are managed in part by certain off-take agreements at fixed prices. Key Components of Our Results of Operations We generate revenues from the sale of RNG fuel, Renewable Power, and associated Environmental Attributes, as well as from the construction, fuel supply, and servicing of Fueling Stations for commercial transportation vehicles using natural gas to power their fleets.
The RNG Fuel segment includes RNG supply and dispensing activities as well as the associated generation and sale of commodity natural gas and environmental credits, and consists of: ◦ RNG Production Facilities – the design, development, construction, maintenance and operation of facilities that convert raw biogas into pipeline quality natural gas ◦ Included here are the Company's interests in both operating and construction projects. ◦ RNG and CNG Fuel Dispensing Stations - This includes both the dispensing (or sale) of RNG, commodity natural gas, and environmental credit generation and monetization.
The RNG Fuel segment includes RNG supply as well as the associated generation and sale of commodity natural gas and environmental credits, and consists of: ◦ RNG Production Facilities – the design, development, construction, maintenance and operation of facilities that convert raw biogas into pipeline quality natural gas; and ◦ Our interests in both operating and construction projects. 61 • Fuel Station Services.
Revenue from these contracts, including change orders, are recognized over time, with progress measured by the percentage of cost incurred to date to estimated total cost for each contract.
Construction Type Contracts — Third Party We have various fixed price contracts for the construction of fueling stations for customers. Revenue from these contracts, including change orders, are recognized over time, with progress measured by the percentage of cost incurred to date to estimated total cost for each contract.
Net loss attributable to non-redeemable non-controlling interests 69 Net loss attributable to non-redeemable non-controlling interests for the year ended December 31, 2022 increased by $0.3 million or 43%, compared to the year ended December 31, 2021.
Net loss attributable to non-redeemable non-controlling interests Net loss attributable to non-redeemable non-controlling interests for the year ended December 31, 2023 decreased by $0.8 million or 70%, compared to the year ended December 31, 2022.
Includes royalty payments to biogas site owners for the biogas we use; service provider costs; salaries and other indirect expenses related to the production process, utilities, transportation, storage, and insurance; and depreciation of production facilities. • Fuel Station Services. Includes equipment supplier costs; service provider costs; and salaries and other indirect expenses. • Renewable Power.
Our costs of sales associated with each revenue category are as follows: • RNG Fuel. Includes royalty payments to biogas site owners for the biogas we use; service provider costs; salaries and other indirect expenses related to the production process, utilities, transportation, storage, and insurance; and depreciation of production facilities. • Fuel Station Services.
Renewable Power Revenue from Renewable Power decreased by $5.9 million, or 13%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Renewable Power Revenue from Renewable Power increased by $9.8 million, or 22%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This revenue is recognized as Renewable Power revenue when landfill gas is collected and Renewable Power is delivered. In addition, we have O&M agreements in which we are contracted to maintain and repair Fueling Stations. Revenue is based on the volumes of GGEs of gas dispensed at the site.
In addition, we have operations and maintenance agreements in which we are contracted to maintain and repair Fueling Stations. Revenue is based on the volumes of gas dispensed at the site. This revenue is recognized as Fuel Station Services revenue when the site dispenses gas.
In addition, we have recently begun implementing design, development, and construction services for hydrogen Fueling Stations, and we are pursuing opportunities to diversify our sources of biogas to other waste streams.
In addition, we have recently begun implementing design, development, and construction services for hydrogen fueling stations, and we are pursuing opportunities to diversify our sources of biogas to other waste streams. As of December 31, 2023, we owned and operated 25 projects, eight of which are RNG projects and 17 of which are Renewable Power Projects.
Impairment of Goodwill and Long-Lived Assets 59 Impairment of Goodwill When a business is acquired, goodwill is recognized to reflect any future economic benefits that are not separately recognized, such as synergies.
Impairment of Goodwill When a business is acquired, goodwill is recognized to reflect any future economic benefits that are not separately recognized, such as synergies. For the purposes of impairment testing, U.S.
Change in fair value of derivatives, net Change in fair value of derivatives, net increased by $33.0 million, or 333%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Change in fair value of derivatives, net Change in fair value of derivatives, net decreased by $25.7 million, or 78%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Net Cash Provided by Financing Activities Net cash provided from financing activities for the year ended December 31, 2022 was $220.6 million, an increase of $95.5 million compared to the $125.0 million provided from financing activities for the year ended December 31, 2021.
Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $5.9 million, a decrease of $214.7 million compared to the $220.6 million provided from financing activities for the year ended December 31, 2022.
Borrowings and Note 9. Leases to our consolidated financial statements for additional information. We plan to fund these expenditures primarily through cash on hand, cash generated from operations and availability under existing debt facilities.
We plan to fund these expenditures primarily through cash on hand, cash generated from operations and availability under existing debt facilities.
The entities accounted for as non-redeemable non-controlling interests for the year ended December 31, 2021 were Sunoma and Central Valley.
These entities for the year ended December 31, 2023, were Sunoma, Central Valley and Emerald, Sapphire for the first four months of 2023. The entities accounted for as non-redeemable non-controlling interests for the year ended December 31, 2022 were Sunoma, Emerald, Sapphire and Central Valley.
Design capacity may not reflect actual production of RNG from the projects, which will depend on many variables including, but not limited to, quantity and quality of the biogas, operational up-time of the facility, and actual productivity of the facility.
Design capacity is measured as the volume of feedstock biogas that the plant is capable of accepting at the inlet and processing and may not reflect actual production of RNG from the projects, which will depend on many variables including, but not limited to, (i) quantity and quality of the biogas, (ii) operational up-time of the facility and (iii) actual efficiency of the facility.
Until the rules and RVOs are finalized, this may create additional uncertainty as to RIN pricing. On the state level, the economics of RNG are enhanced by low-carbon fuel initiatives, particularly well-established programs in California and Oregon (with several other states also actively considering LCFS initiatives similar to those in California and Oregon).
This 3 year RVO is expected to reduce volatility in RIN pricing for the associated period. On the state level, the economics of RNG are enhanced by low-carbon fuel initiatives, particularly well-established 60 programs in California and Oregon (with several other states also actively considering LCFS initiatives similar to those in California, Washington and Oregon).
Depreciation and amortization primarily relate to depreciation associated with property, plant, and equipment and amortization of acquired intangibles arising from PPAs and interconnection contracts. We are in the process of expanding our RNG and Renewable Power production capacity and expect depreciation costs to increase as new projects are placed into service.
We are in the process of expanding our RNG and Renewable Power production capacity and expect depreciation costs to increase as new projects are placed into service.
Cost of sales RNG Fuel Cost of sales from RNG Fuel increased by $37.9 million, or 92%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Fuel Station Services Cost of sales from Fuel Station Services increased by $16.5 million, or 17%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Selling, general, and administrative Selling, general, and administrative expenses increased by a total of $19.2 million, or 65%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Selling, general, and administrative Selling, general, and administrative expenses remained flat for the year ended December 31, 2023 compared to the year ended December 31, 2022. Depreciation, amortization, and accretion Depreciation, amortization, and accretion expense increased by a total of $1.4 million, or 11%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Net Cash Used in Investing Activities Net cash used in investing activities for the year ended December 31, 2022 was $184.0 million, an increase of $66.8 million compared to the $117.2 million used in investing activities for the year ended December 31, 2021.
Net Cash Used in Investing Activities Net cash used in investing activities for the year ended December 31, 2023 was $74.1 million, a decrease of $109.9 million compared to the $184.0 million used in investing activities for the year ended December 31, 2022.
In addition to historical information, this discussion and analysis includes certain forward-looking statements which reflect our current expectations. The Company's actual results may materially differ from these forward-looking statements.
In addition to historical information, this discussion and analysis includes certain forward-looking statements which reflect our current expectations. The Company's actual results may materially differ from these forward-looking statements. Overview The Company is a vertically integrated leader in the capture and conversion of biogas into low carbon intensity Renewable Power and renewable natural gas (RNG).
Borrowings, to our consolidated financial statements. 70 Cash Flows The following table presents the Company's cash flows for the years ended December 31, 2022 and 2021: Twelve Months Ended December 31, (in thousands) 2022 2021 Net cash (used in) provided from operating activities $ (1,355) $ 18,856 Net cash used in investing activities (184,028) (117,204) Net cash provided from financing activities 220,550 125,014 Net increase in cash, restricted cash, and cash equivalents $ 35,167 $ 26,666 Net Cash Provided by Operating Activities Net cash used in operating activities for the year ended December 31, 2022 was $1.4 million, a decrease of $20.2 million compared to net cash provided of $18.9 million for the year ended December 31, 2021.
Cash Flows The following table presents the Company's cash flows for the years ended December 31, 2023 and 2022: Twelve Months Ended December 31, (in thousands) 2023 2022 Net cash provided by (used in) operating activities $ 38,269 $ (1,355) Net cash used in investing activities (74,147) (184,028) Net cash provided by financing activities 5,899 220,550 Net (decrease) increase in cash, restricted cash, and cash equivalents $ (29,979) $ 35,167 Net Cash Provided by Operating Activities Net cash provided by operating activities for the year ended December 31, 2023 was $38.3 million, an increase of $39.6 million compared to net cash used in operating activities of $1.4 million for the year ended December 31, 2022.
(2) Certain projects have provisions that will adjust, or “flip,” the percentage of distributions to be made to us over time, typically triggered by achievement of hurdle rates that are calculated as internal rates of return on capital invested in the project. (3) We record our ownership interests in these projects as equity method investments in our consolidated financial statements.
(4) This project has provisions that will adjust or “flip” the percentage of distributions to be made to us over time, typically triggered by achievement of hurdle rates that are calculated as internal rates of return on capital invested in the project.
As of December 31, 2022, we had total indebtedness excluding deferred financing costs of $170.4 million which primarily consists of $22.8 million under the Senior Secured Credit Facility, $28.5 million under the Convertible Note Payable, $96.1 million under the OPAL Term Loan, $0.1 million under the Municipality loan and $23.0 million under Sunoma Loan.
As of December 31, 2023, we had total indebtedness excluding deferred financing costs of $209.1 million which primarily consists of $186.6 million under the OPAL Term Loan and $22.5 million under Sunoma Loan.
Liquidity and Capital Resources Liquidity As of December 31, 2022, our liquidity consisted of cash and cash equivalents including restricted cash of $77.2 million and $65.0 million of short term investments. Additionally, we entered into the OPAL Term Loan II where we have undrawn availability of $105.0 million.
Liquidity and Capital Resources Liquidity As of December 31, 2023, our liquidity consisted of cash and cash equivalents including restricted cash of $47.2 million and $9.9 million of short term investments. Additionally, we have availability of $263.4 million under the delayed draw term loan and $36.2 million under the revolver facility under the OPAL Term Loan.
(3) See RNG Projects Table above, reference “Prince William” under “RNG Projects In Construction.” (4) See RNG Projects Table above, reference “Prince William” under “RNG Projects In Construction.” 66 Comparison of the Years Ended December 31, 2022, and 2021 The following table presents the period-over-period change for each line item in the Company's consolidated statements of operations for the twelve months ended months ended December 31, 2022 and 2021 .
(6) It is expected to complete construction in fourth quarter of 2024. 66 Comparison of the Years Ended December 31, 2023 and 2022 The following table presents the period-over-period change for each line item in the Company's consolidated statements of operations for the twelve months ended months ended December 31, 2023 and 2022 .
This reflects the joint venture partners' loss in those entities we sold a portion of our membership interests in certain RNG facilities which are consolidated in our financial statements. These entities for the year ended December 31, 2022, were Sunoma, Emerald, Sapphire and Central Valley.
This reflects the joint venture partners' loss in those entities we sold a portion of our membership interests in certain RNG facilities which are consolidated in our financial statements. The decrease is primarily due to deconsolidation of Emerald and Sapphire which were previously recorded as non-controlling interests but are now accounted for as equity method investments.
RECs exist because of legal and governmental regulatory requirements, and a change in law or in governmental policies concerning Renewable Power, landfill gas ("LFG"), or the sale of RECs could affect the market for, and the pricing of, the RECs that we generate through production at our Biogas Conversion Projects.
ISCC Carbon Credits and RECs exist because of legal and governmental regulatory requirements in Europe and the United States, respectively, and a change in law or in governmental policies concerning Renewable Power, LFG, or ISCC Carbon Credits or RECs could affect the market for, and the pricing of, such power and credits.
The Company recorded $3,368 as loss on exchange of Warrants. Income from equity method investments Net income attributable to equity method investments increased by $3.5 million, or 155%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Income from equity method investments Net income attributable to equity method investments decreased by $0.3 million, or 4%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
We also design, develop, construct, operate and service Fueling Stations for trucking fleets across the country that use natural gas to displace diesel as their transportation fuel. The Biogas Conversion Projects currently use LFG and dairy manure as the source of the biogas.
We also design, develop, construct, operate and service Fueling Stations for trucking fleets across the country that use natural gas to displace diesel as their transportation fuel. We have participated in the alternative vehicle fuels industry for approximately 13 years and have established an expanding network of Fueling Stations for dispensing RNG.
They primarily relate to our development of new RNG facilities and the purchase of equipment used in our Fueling Station services and Renewable Power operations . 71 In addition to the above, we also have lease commitments on our vehicle fleets and office leases and quarterly amortization payment obligations under various debt facilities. Please see Note 8.
In addition to the above, we also have lease commitments on our vehicle fleets and office leases and quarterly amortization payment obligations under various debt facilities. Please see Note 7. Borrowings and Note 8. Leases to our consolidated financial statements for additional information.
Redeemable preferred non-controlling interests carry an interest of 8% dividend payable quarterly either in cash or paid-in-kind for the first eight quarters at the option of the Company. The Company recorded the dividend payable of $7.9 million and $0.2 million for the years ended December 31, 2022 and 2021, respectively as paid-in-kind dividends.
Redeemable preferred non-controlling interests carry an 8% dividend payable quarterly either in cash or paid-in-kind for the first eight quarters at our option. During the third quarter of 2023, the Company repaid $16.5 million of paid-in-kind preferred dividend.
The significant estimates and assumptions of the Company relate to the useful lives of property, plant and equipment, the value of stock-based compensation and the fair value of derivatives including warrant liabilities, earnout liabilities, put option on a forward purchase agreement, interest rate swaps and commodity swap contracts. Actual results could differ from those estimates.
The significant estimates and assumptions of the Company relate to the useful lives of property, plant and equipment, goodwill impairment, fair value of the deconsolidated VIEs, the value of stock-based compensation, asset retirement obligations and the fair value of derivatives including earnout liabilities and commodity swap contracts.
We periodically evaluate opportunities to convert existing biogas-to-Renewable Power projects to RNG production. This strategy has been an increasingly attractive avenue for growth when RNG from landfills become eligible for D3 RINs. We have been negotiating with several of our Renewable Power off-takers to enter arrangements that would free up the LFG resource to produce RNG.
We periodically evaluate opportunities to convert existing Renewable Power projects to RNG production. We have been negotiating with several of our landfill and Renewable Power counterparties to enter into arrangements that would enable the LFG resource to produce RNG.
Operation and Maintenance We have operating and maintenance agreements in which we are contracted to operate, maintain, and repair landfill site gas collection systems. Revenue is based on the volume of per million British thermal units (“ MMBtu ”) of landfill gas collected and the MWhs produced at that site.
Revenue is based on the volume per million British thermal units (“ MMBtu ”) of landfill gas collected and the MWhs produced at that site. This revenue is recognized as Renewable Power revenue when landfill gas is collected and Renewable Power is delivered.
Renewable Power Projects Below is a table setting forth the Renewable Power projects in operation in our portfolio: 65 Nameplate capacity (MW per hour) (1) RNG conversion candidate Stage of RNG conversion California 1 5.2 Yes In Advanced Development Pipeline California 2 6.1 No N/A California 3 3.0 No N/A California 4 3.2 No N/A California 5 1.8 No N/A California 6 1.6 No N/A California 7 6.5 No N/A California 8 6.5 No N/A Florida 2.9 No N/A Massachusetts 2 3.6 No N/A Michigan 1E (2) 28.9 Yes In Construction Michigan 3 6.3 Yes In Advanced Development Pipeline New York 5.9 No N/A North Carolina 1 14.4 Yes In Advanced Development Pipeline Pennsylvania 8.0 No N/A Prince William 1E (3) 1.9 Yes In Construction Prince William 2E (4) 4.8 Yes In Construction Virginia - Richmond 8.0 Yes In Advanced Development Pipeline Total 118.6 (1) Nameplate capacity is the maximum permitted output for each facility and may not reflect actual MW production from the projects, which depends on many variables including, but not limited to, quantity and quality of the biogas, operational up-time of the facility, and actual productivity of the facility.
(6) Please see Item 3: Legal Proceedings and Note 17 - Commitments and Contingencies to the financial statements. 65 Renewable Power Projects Below is a table setting forth the Renewable Power projects in operation in our portfolio: Nameplate capacity (MW per hour) (1) Current RNG conversion candidate (2) Renewable Power projects in operation: Sycamore 5.2 Yes Lopez 3.0 — Miramar Energy 3.2 Yes San Marcos 1.8 — Santa Cruz 1.6 — San Diego - Miramar 6.5 Yes West Covina 6.5 — Port Charlotte 2.9 — Taunton 3.6 — Arbor Hills (3) 28.9 N/A C&C 6.3 Yes Albany 5.9 — Concord and CMS 14.4 Yes Pioneer 8.0 — Prince William I (4) 1.9 Yes Prince William II (5) 4.8 Yes Old Dominion 8.0 Yes Total 112.5 Renewable Power projects in construction: Fall River (6) 2.4 — (1) Nameplate capacity is the manufacturer’s expected capacity at ISO conditions for each facility and may not reflect actual production from the projects, which depends on many variables including, but not limited to, (i) quantity and quality of the biogas, (ii) operational up-time of the facility and (iii) actual productivity of the facility.
For further discussion regarding our results of operations for the year ended December 31, 2021 as compared to the year ended December 31, 2020, refer to the audited consolidated financial statements and notes thereto included in the Company's Current Report on Form 8-K, which was filed with Securities and Exchange Commission (the "SEC") on July 27, 2022.
For further discussion regarding our results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021, refer to Part II, Item 7 - "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 29, 2023.
The net income for the year ended December 31, 2022 reflects the net income belonging to OPAL Fuels equity holders prior to Business Combination for the period January 1, 2022 through July 21, 2022 and portion of net income belonging to OPAL Fuels equity holders from July 21, 2022 through December 31, 2022 based on pro-rata ownership.
Net income attributable to redeemable non-controlling interests Net income attributable to redeemable non-controlling interests for the year ended December 31, 2023 and 2022 is $97.4 million and $22.4 million, respectively. The net income for the years ended December 31, 2023 and 2022 reflects the net income belonging to OPAL Fuels equity holders based on pro-rata ownership.
(2) See RNG Projects Table above, reference “Michigan 1” under “RNG Projects In Construction.” It is currently contemplated that the Michigan 1E renewable power plant will continue limited operations on a stand-by, emergency basis through March of 2031.
(3) Although the RNG conversion is completed, it is currently contemplated that the Arbor Hills renewable power plant will continue limited operations on a stand-by, emergency basis through March of 2031. (4) Prince William I renewable power plant discontinued operations in Q1 2024. (5) Prince William II discontinued operations in Q1 2024.
We may be unable to obtain any such additional financing on acceptable terms or at all.
The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our project development efforts. We may be unable to obtain any such additional financing on acceptable terms or at all.
Includes land usage costs; service provider costs; salaries and other indirect expenses related to the production process; utilities; and depreciation of production facilities. Selling, general, and administrative expense consists of costs involving corporate overhead functions, including the cost of services provided to us by an affiliate, and marketing costs.
Includes equipment supplier costs; service provider costs; and salaries and other indirect expenses. • Renewable Power. Includes royalty payments, land usage costs; service provider costs; salaries and other indirect expenses related to the production process; utilities; and depreciation of production facilities.
The Renewable Power portfolio segment generates Renewable Power through combustion of biogas from landfills and digester gas collection systems which is then sold to public utilities throughout the United States. The Renewable Power portfolio operates primarily in Southern California. Our costs of sales associated with each revenue category are as follows: • RNG Fuel.
We operate Fueling Stations that dispense both CNG and RNG fuel for vehicles. • Renewable Power. The Renewable Power segment generates renewable power and associated Environmental Attributes such as ISCC Carbon Credits and RECs through combustion of biogas from landfills which is then sold to public utilities throughout the United States.
Additionally, revenues increased by $3.1 million from 67 methanol pathway credits, $9.0 million increase from brown gas sales and $26.4 million increase from sale of environmental credits. Fuel Station Services Revenue from Fuel Station Services increased by $18.8 million, or 37%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Additionally, there was $0.6 million increase in revenues earned from providing management services to unconsolidated entities. Fuel Station Services Revenue from Fuel Station Services increased by $17.6 million, or 15%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
This change was primarily due to $2.0 million increase from two new RNG facilities coming online - Sunoma and New River, $0.4 million increase from amortization of right-of-use assets for finance leases from adoption of ASC 842, $0.6 million increase from downstream dispensing sites becoming operational offset by decrease in depreciation for Renewable Power business by $0.3 million. 68 Interest and financing expense, net Interest and financing expenses, net decreased by $0.8 million, or 11%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
This change was primarily due to an $0.3 million increase from New River as depreciation for New River represented a partial year in 2022, $1.0 million increase in Beacon and our Renewable Power facilities and a $0.2 million increase from amortization of right-of-use assets for finance leases and increase in depreciation expense in our Fuel Station Services segment due to increase in the number of owned stations.
The Company operates Fueling Stations that dispense both CNG and RNG fuel for vehicles. • Fuel Station Services. Through its Fuel Station Services segment , the Company provides construction and maintenance services to third-party owners of Fueling Stations.
Through our Fuel Station Services segment, we provide construction and maintenance services to third-party owners of vehicle Fueling Stations and performs fuel dispensing activities including generation and minting of environmental credits.
This was primarily driven by cash invested in short term investments of $65.0 million, payments made for the construction of various RNG generation and dispensing facilities of $131.4 million as compared to $89.6 million in the prior year.
This was primarily driven by a decrease in cash invested in short term investments of $120.1 million, deconsolidation of VIEs net cash of $11.9 million, an increase in distribution from equity method investment of $2.7 million, a decrease in payments made for the construction of various RNG generation and dispensing facilities of $17.6 million offset by an increase in cash paid for investments in other entities of $7.7 million and the repayment of Note receivable of $10.8 million in the third quarter of 2022.
These savings were offset by $1.0 million higher expense on the Senior Secured Credit Facility, $0.2 million higher interest expense on the OPAL Term Loan, $0.9 million increase in amortization of deferred financing costs, $1.8 million increase in Sunoma Loan as interest on Sunoma Loan was capitalized in 2021.
This is primarily due to an increase in interest expense on the OPAL Term Loan of $3.3 million primarily due to an increase in outstanding debt, $1.2 million on the Convertible Note Payable (we recorded a gain of $2.9 million in 2022) and $0.5 million in commitment fees offset by a decrease of $3.5 million in interest expense on our Senior Secured Credit Facility as the debt was repaid in full in March 2023.
Additionally, there were savings of $1.2 million from deconsolidation of Pine Bend and Noble Road as of December 31, 2021. Fuel Station Services Cost of sales from Fuel Station Services increased by $18.7 million, or 44%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Interest and financing expense, net Interest and financing expenses, net increased by $2.7 million, or 40%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Removed
Overview We are a renewable energy company specializing in the capture and conversion of biogas for the (i) production of RNG for use as a vehicle fuel for heavy and medium-duty trucking fleets, (ii) generation of electricity generated from renewable sources ("Renewable Power") for sale to utilities, (iii) generation and sale of Environmental Attributes (as defined below) associated with RNG and Renewable Power, and (iv) sales of RNG as pipeline quality natural gas.
Added
OPAL Fuels is also a leader in the marketing and distribution of RNG to heavy duty trucking and other hard to de-carbonize industrial sectors.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAny realized or unrealized gains or losses from our derivative transactions are reported within corporate revenue and other income/expense in our consolidated financial statements. For information about our gains or losses with respect to our derivative transactions and the fair value of such financial instruments, see Note 10. Derivative Financial Instruments and Fair Value Measurements, to our consolidated financial statements.
Biggest changeAny realized or unrealized gains or losses from our derivative transactions 72 are reported within corporate revenue and other income/expense in our consolidated financial statements. For information about our gains or losses with respect to our derivative transactions and the fair value of such financial instruments, see Note 9.
Added
Derivative Financial Instruments and Fair Value Measurements, to our consolidated financial statements.

Other OPAL 10-K year-over-year comparisons