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Table of Contents
<br />Supply Chain Disruptions and Other Global Factors
<br />We continue to monitor the impact of global economic conditions on our operations, financial results, and liquidity, including the result of supply chain challenges, war in
<br />Ukraine and the Middle East, evolving relations between the U.S. and China, and other geopolitical tensions. The impact to our future operations and results of operations as a
<br />result of these global trends remains uncertain and the challenges we face, including increases in costs for logistics and supply chains, intermittent supplier delays, and shortages
<br />of certain components needed for our business, such as lithium -ion battery cells, semiconductors, and other components required for our clean energy solutions may continue or
<br />become more pronounced.
<br />During the year ended December 31, 2023, we were impacted by supply chain disruptions and varying levels of inflation, as a result macroeconomic conditions, causing delays
<br />in the timely delivery of material to customer sites and delays and disruptions in the completion of certain projects, including those pursuant to the SCE Agreement, and
<br />increased shipping and transportation costs, as well as increased component and labor costs. This negatively impacted our results of operations during the year ended December
<br />31, 2023. We expect the trends of supply chain challenges to continue beyond this year. We continue to monitor macroeconomic conditions to remain flexible and to optimize
<br />and evolve our business as appropriate to address the challenges presented from these conditions.
<br />In August 2023, the U.S. Department of Commerce issued a final ruling in the Auxin Solar trade case related to solar tariff imports that will lead to higher tariffs on certain
<br />imported solar products from Malaysia, Vietnam, Thailand, and Cambodia beginning in June 2024. Similarly, other changes in trade regulations and the enforcement of the
<br />Uyghur Forced Labor Prevention Act, could disrupt the solar panel supply chain, increase the cost for solar cells and panels, and ultimately impact the demand for clean energy
<br />solutions. We are closely monitoring the investigation and any regulations issued in connection with it.
<br />Climate Change and Effects of Seasonality
<br />The global emphasis on climate change and reducing carbon emissions has created opportunities for our industry. Sustainability has been at the forefront of our business since
<br />its inception and we are committed to staying at the leading edge of innovation taking place in the energy sector. We believe the next decade will be marked by dramatic
<br />changes in the power infrastructure with resources shifting to more distributed assets, storage, and microgrids to increase overall reliability and resiliency. The sustainability
<br />efforts are impacted by regulations, and changes in the regulatory climate may impact the demand for our products and offerings. See "Our business depends in part on federal,
<br />state, provincial and local government support or the imposition of additional taxes, tariffs, duties, or other assessments on renewable energy or the equipment necessary to
<br />generate or deliver it, for energy efficiency and renewable energy, and a decline in such support could harm our business" and "Compliance with environmental laws could
<br />adversely affect our operating results" in Item 1 A, Risk Factors.
<br />Climate change also brings risks, as the impacts have caused us to experience more frequent and severe weather interferences, and this trend is expected to continue. We are
<br />subject to seasonal fluctuations and construction cycles, particularly in climates that experience colder weather during the winter months, such as the northern United States and
<br />Canada, and climates that experience extreme weather events, such as wildfires, storms or flooding, hurricanes, or at educational institutions, where large projects are typically
<br />carried out during summer months when their facilities are unoccupied. In addition, government customers, many of which have fiscal years that do not coincide with ours,
<br />typically follow annual procurement cycles and appropriate funds on a fiscal -year basis even though contract performance may take more than one year. Further, government
<br />contracting cycles can be affected by the timing of, and delays in, the legislative process related to government programs and incentives that help drive demand for energy
<br />efficiency and renewable energy projects. As a result, our revenues and operating income in the third and fourth quarter are typically higher, and our revenues and operating
<br />income in the first quarter are typically lower, than in other quarters of the year, however, this may become harder to predict with the potential effects of climate change. As a
<br />result of such fluctuations, we may occasionally experience declines in revenues or earnings as compared to the immediately preceding quarter, and comparisons of our
<br />operating results on a period -to -period basis may not be meaningful.
<br />Our annual and quarterly financial results are also subject to significant fluctuations as a result of other factors, many of which are outside our control. See "Our business is
<br />affected by seasonal trends and construction cycles, and these trends and cycles could have an adverse effect on our operating results" and "Extreme weather events and other
<br />natural disasters, particularly those exacerbated by climate change, could materially affect our ability to complete our projects and develop our assets" in Item 1A, Risk Factors.
<br />The Southern California Edison (` SCE') Agreement
<br />In October 2021, we entered into a contract with SCE to design and build three grid scale BESS at three sites near existing substation parcels throughout SCE's service territory
<br />in California with an aggregate capacity of 537.5 MW ("the SCE Agreement"). The engineering, procurement and construction price is approximately $892.0 million, in the
<br />aggregate, including two years of O&M revenues, subject to customary potential adjustments for changes in the work. As previously disclosed, due to
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