# OPAL Fuels Inc. (OPAL) FY 2023 MD&A

Verbatim Item 7 Management's Discussion and Analysis from OPAL Fuels Inc.'s 10-K for fiscal year 2023.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1842279/000184227924000012/wdq-20231231.htm
Accession: 0001842279-24-000012
Filing date: 2024-03-15
Report date: 2023-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/OPAL/
All MD&A years: /company/OPAL/mda/
Previous year: /company/OPAL/mda/fy2022/ (FY 2022)
Next year: /company/OPAL/mda/fy2024/ (FY 2024)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In this Management's Discussion and Analysis of Financial Condition and Results of Operations section, references to "OPAL", "we", "us", "our", and the "Company" refer to OPAL Fuels Inc. and its consolidated subsidiaries. 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. 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. 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). 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. RNG is chemically identical to the natural gas used for cooking, heating homes and fueling natural gas engines, with one significant difference: RNG is produced by recycling harmful methane emissions created by decaying organic waste as opposed to natural gas which is a fossil fuel pumped from the ground. We have participated in the biogas-to-energy industry for over 20 years.

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 electricity. 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. Our principal sources of biogas are (i) landfill gas, which is produced by the decomposition of organic waste at landfills, and (ii) dairy manure, which is processed through anaerobic digesters to produce 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. 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. 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. 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.

Recent developments

Inflation Reduction Act

The Inflation Reduction Act (the "IRA") was signed into law on August 16, 2022. The bill invests nearly $369 billion in energy and climate policies. The provisions of the IRA are intended to, among other things, incentivize domestic clean energy investment, manufacturing, and deployment. The IRA incentivizes the deployment of clean energy technologies by extending and expanding federal incentives such as ITCs and the PTC. We view the enactment of the IRA as favorable for the overall business climate for the renewable energy industry. However, there is uncertainty related to the applicability of the IRA to our current and planned projects and the scope of the IRA and its interpretations may change if there is a change in the U.S. administration or if government agencies’ authority to interpret federal law is restricted as a result of the Supreme Court’s review of the Chevron doctrine under which federal government agencies have been awarded board authority to interpret broad or ambiguous legislation. We may also continue to experience a delay in our sales cycles and new award activity as our customers consider the applicability of the IRA and as financing projects may take longer as

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result of this uncertainty. The IRA may increase the competition in our industry and as such increase the demand and cost for labor, equipment and commodities needed for our projects.

On November 17, 2023, the Treasury and the IRS proposed regulations regarding ITCs on renewable energy projects where IRS specified certain types of RNG equipment are ineligible for ITCs which could negatively impact the profitability of our RNG business and our ability to finance our RNG projects. On February 16, 2024, the Treasury and the IRS released a correction to the proposed regulations clarifying that certain of such equipment may be eligible for ITCs. These regulations are merely proposed, and Treasury and the IRS are collecting and reviewing comments received regarding the proposed regulations. The proposed regulations also contain provisions that we believe create uncertainty relating to the ownership, installation or modification of equipment and property on which ITCs can be claimed.

If the final regulations are enacted in a form that limits, in whole or in part, the amount of ITCs for certain of our construction costs, this would reduce the amount of ITCs available and thus could have a material adverse effect on our operations and our business.

ATM Program

On November 17, 2023, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with each of B. Riley Securities, Inc., Cantor Fitzgerald & Co. and Stifel, Nicolaus & Company, Incorporated (each, an “Agent,” and collectively, the “Agents”) pursuant to which we may issue and sell shares of our Class A common stock having an aggregate offering price of up to $75 million from time to time through the Agents.

The issuance and sale of Class A common stock under the Sales Agreement are effected pursuant to the registration statement on Form S-3 (File No. 333-273584) that we filed with the United States Securities and Exchange Commission (the “SEC”) on August 1, 2023 as amended on August 11, 2023, and declared effective by the SEC on September 6, 2023, together with a related prospectus supplement. Sales of our Class A common stock through the Agents may be made by any method that is deemed an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. We will pay each Agent, upon the sale by such Agent of Class A common stock pursuant to the Sales Agreement, an amount equal to up to 3.0% of the gross proceeds of each such sale of Class A common stock.

From the date of execution of the Sales Agreement through December 31, 2023, we issued and sold 90,103 shares of Class A common stock for total proceeds, net of commissions and related costs of $0.4 million.

Asset Sale and Purchase Agreement

On October 20, 2023, our wholly-owned subsidiary entered into an Asset Purchase and Sale Agreement (for the purposes of this paragraph, the “Agreement”) with Washington Gas Light Company ("WGL"). The subsidiary is currently constructing a production facility (the “Facility”) at the Prince William County landfill located in Manassas, Virginia, on a parcel located on the landfill, to process landfill gas into RNG. The Agreement obligates the subsidiary to develop, plan and permit a gas pipeline extension and associated interconnection facilities (the “Pipeline Project”) to deliver RNG from the Facility to an interconnection point on WGL’s pipeline. Per the terms and conditions of the Agreement, WGL will purchase the Project from the subsidiary after the final completion of the Project at a purchase price of $25 million. The closing is contingent upon approval of the Agreement by the Virginia State Corporation Commission, as well as the satisfaction of customary closing conditions, and the outside closing date is on or prior to October 20, 2024. As of December 31, 2023, the Company recorded capital expenditure of $1.8 million which is included in its Property, Plant and Equipment on our consolidated balance sheet.

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. 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.

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

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application. 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. Revenue is recognized based on contract specified rates per MWh when delivered to the customer, as this considered to be completion of the performance obligation. Certain PPAs contain a lease element which we account for as operating lease revenue on a straight-line basis over the lease term. The Company utilizes commodity swap contracts to hedge against the unfavorable price fluctuations in market prices of electricity. The Company does not apply hedge accounting to these contracts. As such, unrealized and realized gain (loss) is recognized as component of Renewable Power revenues in the consolidated statement of operations.

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. These contracts may contain an embedded lease of the equipment which we account for as operating lease revenue. For some public stations where there is no contract with the customer, we recognize revenue at the point in time that the customer takes control of the fuel.

Interstate Gas Pipeline Delivery

We have agreements with two natural gas producers whereby we are contracted to transport the producers’ gas to an agreed delivery point on an interstate gas pipeline via our RNG gathering system. Revenue is recognized over time using the output method which is based on quantity of natural gas transported.

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. We also provide Environmental Attributes generation and monetization services to customers that own renewable gas generation facilities and we recognize revenues from these services when the credits are minted on behalf of the customer.

Operation and Maintenance

We have operating and maintenance agreements pursuant to which we operate, maintain, and repair landfill site gas collection systems. 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. 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.

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.

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. 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

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carrying value. Significant judgment is required when identifying the reporting units for goodwill allocation, during our assessment of relevant events and circumstances for qualitative impairment indicators, and when estimating the undiscounted cash flows of reporting unit(s) for quantitative impairment assessments.

Our goodwill impairment assessment is performed during the fourth quarter of each year or at the time facts or circumstances indicate that a reporting unit’s goodwill may be impaired. In conformity with GAAP, we generally first perform a qualitative assessment over whether it is more likely than not that a reporting unit’s fair value is less than its carrying value to determine if a quantitative assessment is required. If, after performing the qualitative assessment, we conclude it is more likely than not that the fair value of the reporting unit is less than its carrying value, then a quantitative test is required. Our qualitative assessment includes evaluation of relevant events and circumstances, such as, macroeconomic conditions, industry and market considerations, cost factors, overall performance, and other relevant events.

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. Our assumptions include future cash flow projections, a discount rate range based on the weighted average cost of capital, and a terminal value based on a range of terminal earnings before interest, taxes, depreciation, and amortization.

As of December 31, 2023, we performed a qualitative assessment for Goodwill in our RNG Fuel and Fuel Station Services segments and determined that there are no impairment triggers present and therefore no quantitative assessment was performed. Based on the qualitative assessment, we determined that no impairment is necessary on the goodwill recorded in the books as of December 31, 2023.

Impairment of Long-Lived Assets

Our long-lived assets held and used with finite useful lives including plant equipment, buildings, patents, and PPAs are reviewed for impairment whenever events or changes in circumstances indicate that the asset group may not be recoverable. In determining the asset group, we assess the interdependency of revenues between assets, shared cost structures, the interchangeability of assets used in operations, and how assets are managed and utilized by the business. Events that may trigger a recoverability assessment include a significant adverse change in the extent or manner in which the long-lived asset group is being used or in its physical condition, and the expectation that, more likely than not, the long-lived asset or asset group will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset group to future net undiscounted cash flows expected to be generated by the asset group. Our cash flow estimates reflect conditions and assumptions that existed as of the measurement date which is the same as the triggering event date. The assets are considered recoverable and an impairment loss is not recognized when the undiscounted net cash flows exceed the net carrying value of the asset group. If the assets are not recoverable, then an impairment loss is recognized to the extent that the carrying value of the asset group exceeds its fair value. We base the fair value of our assets or asset groups off of the estimated discounted future cash flows using market participant assumptions. Assets disposed of are reported at the lower of the carrying amount or fair value less selling costs. 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.

Fair Value Measurements

The objective of a fair value measurement is to estimate the exit price, which is the price that would be received to sell an asset or paid to transfer a liability that the Company holds, in an orderly market transaction at the measurement date. We follow GAAP guidance which establishes a three-tier hierarchy for inputs used in fair value measurements, as well as prioritizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs. In summary, level 1 inputs are considered the most observable inputs and are more specifically the unadjusted quoted price for identical assets or liabilities in an active market the Company has access to. Level 2 inputs are considered less observable inputs such as quoted prices for similar assets or liabilities in an active market the Company has access to. 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,

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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. 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. Derivative Financial Instruments and Fair Value Measurements, to our consolidated financial statements, for details on our assets and liabilities regularly recorded at fair value and the respective placements in the fair value hierarchy.

Income Taxes

The Company accounts for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes (“ASC Topic 740”), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company’s consolidated balance sheets as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. 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.

Emerging Growth Company Status

We are an emerging growth company as defined in the JOBS Act. The JOBS Act provides emerging growth companies with certain exemptions from public company reporting requirements for up to five fiscal years while a company remains an emerging growth company. As part of these exemptions, we need only provide two fiscal years of audited financial statements instead of three, we have reduced disclosure obligations such as for executive compensation, and we are not required to comply with auditor attestation requirements from Section 404(b) of the Sarbanes-Oxley Act regarding our internal control over financial reporting. Additionally, the JOBS Act has allowed us the option to delay adoption of new or revised financial accounting standards until private companies are required to comply with new or revised financial accounting standards.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. 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.

Key Factors and Trends Influencing our Results of Operations

The principal factors affecting our results of operations and financial condition are the markets for RNG, Renewable Power, and associated Environmental Attributes, and access to suitable biogas production resources. Additional factors and trends affecting our business are discussed in "Risk Factors" elsewhere in this report.

Market Demand for RNG

Demand for our converted biogas and associated Environmental Attributes, including RINs and LCFS credits, is heavily influenced by United States federal and state energy regulations together with commercial interest in renewable energy products. Markets for RINs and LCFS credits arise from regulatory mandates that require refiners and blenders to incorporate renewable content into transportation fuels. 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. 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

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programs in California and Oregon (with several other states also actively considering LCFS initiatives similar to those in California, Washington and Oregon). Federal and state regulatory developments could result in significant future changes to market demand for the RINs and LCFS credits we produce. This would have a corresponding impact to our revenue, net income, and cash flow.

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.

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. 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.

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. 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. Government policies can increase demand for our products by providing incentives to purchase RNG and Environmental Attributes. These government policies are modified and in flux constantly and any adverse changes to these policies could have a material effect the demand for our products. For more information, see our risk factor titled "The financial performance of our business depends upon tax and other government incentives for the generation of RNG and Renewable Power, any of which could change at any time and such changes may negatively impact our growth strategy." Government regulations have become increasingly stringent and complying with changes in regulations may result in significant additional operating expenses.

Seasonality

We experience seasonality in our results of operations. Sale of RNG may be impacted by higher consumption by some of our customers during summer months. Additionally, the price of RNG is higher during the fall and winter months due to increase in overall demand for natural gas during the winter months. Revenues generated from our renewable electricity projects in the northeast U.S., all of which sell electricity at market prices, are affected by warmer and colder weather, and therefore a portion of our quarterly operating results and cash flows are affected by pricing changes due to regional temperatures. 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. These revenue sources are presented in our statement of operations under the following captions:

•RNG Fuel. 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.

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•Fuel Station Services. 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 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. 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.

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. 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.

Project development and start up costs includes certain development costs such as legal, consulting fees for joint venture structuring, royalties to the landfill owner, fines, settlements, site lease expenses and certification costs on our RNG projects under construction. Additionally, the Company also incurs certain expenses on new RNG projects that went operational for the first two years such as virtual pipeline costs (incurred until a physical interconnect pipeline is built) and ramp up costs incurred during the certification period.

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.

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.

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. No other single customer accounted for 10% or greater of our consolidated accounts receivables in these periods:

[[GREPCENT_TABLE]]
[["","","Twelve Months Ended December 31,"],["","","2023","","2022"],["Customer A (1)","","40","%","","29","%"],["Customer B","","14","%","","\u2014","%"],["Customer C","","\u2014","%","","16","%"]]
[[/GREPCENT_TABLE]]

(1) Relates to sales of environmental attributes under Purchase and Sale agreement with NextEra.

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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:

[[GREPCENT_TABLE]]
[["","","Twelve Months Ended December 31,"],["","","2023","","2022"],["Customer A","","36","%","","35","%"],["Customer B","","11","%","","14","%"]]
[[/GREPCENT_TABLE]]

Results of Operations for the years ended December 31, 2023 and 2022:

Operational data

The following table summarizes the operational data achieved for the years ended December 31, 2023 and 2022:

Landfill RNG Facility Capacity and Utilization Summary

[[GREPCENT_TABLE]]
[["","","Three Months Ended December 31,","Twelve Months Ended December 31,"],["","","2023","","2022","2023","","2022"],["Landfill RNG Facility Capacity and Utilization(1)(2)(3)(4)"],["Design Capacity (Million MMBtus)","","1.3","","","0.9","","4.1","","","3.2"],["Volume of Inlet Gas (Million MMBtus)","","1.0","","","0.7","","3.2","","","2.4"],["Inlet Design Capacity Utilization %","","80","%","","75","%","78","%","","75","%"],["RNG Fuel volume produced (Million MMBtus)","","0.7","","","0.6","","2.6","","","2.0"],["Utilization of Inlet Gas %","","79","%","","84","%","83","%","","86","%"]]
[[/GREPCENT_TABLE]]

(1) Design Capacity for RNG facilities is measured as the volume of feedstock biogas that the facility is capable of accepting at the inlet and processing during the associated period. Design Capacity is presented as OPAL’s ownership share (i.e., net of joint venture partners’ ownership) of the facility and is calculated based on the number of days in the period. New facilities that come online during a quarter are pro-rated for the number of days in commercial operation.

(2) Inlet Design Capacity Utilization is measured as the Volume of Inlet Gas for a period, divided by the total Design Capacity for such period. The Volume of Inlet Gas varies over time depending on, among other factors, (i) the quantity and quality of waste deposited at the landfill, (ii) waste management practices by the landfill, and (iii) the construction, operations and maintenance of the landfill gas collection system used to recover the landfill gas. The Design Capacity for each facility will typically be correlated to the amount of landfill gas expected to be generated by the landfill during the term of the related gas rights agreement. The Company expects Inlet Design Capacity Utilization to be in the range of 75-85% on an aggregate basis over the next several years. Typically, newer facilities perform at the lower end of this range and demonstrate increasing utilization as they mature and the biogas resource increases at open landfills.

(3) Utilization of Inlet Gas is measured as RNG Fuel Volume Produced divided by the Volume of Inlet Gas. Utilization of Inlet Gas varies over time depending on availability and efficiency of the facility and the quality of landfill gas (i.e., concentrations of methane, oxygen, nitrogen, and other gases). The Company generally expects Utilization of Inlet Gas to be in the range of 80% to 90%.

(4) Data not available for the Company's dairy projects, i.e., Sunoma and Biotown. Total RNG fuel design capacity for the three and twelve months ended December 31, 2023 is 1.3 million MMBtu and 4.3 million MMBtu, respectively. Including Sunoma and Biotown, RNG fuel volume produced is 0.8 and 2.7 million MMBtu for the three and twelve months ended December 31, 2023, respectively.

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[[GREPCENT_TABLE]]
[["","","Twelve Months Ended December 31,"],["","","2023","","2022"],["Renewable Power"],["Nameplate Capacity (MW per hour)(1)","","112.5","","","112.5"],["Nameplate Capacity for the period (Millions MWh) (1)","","0.98","","","0.98"],["Renewable Power produced ( Millions MWh)","","0.44","","","0.47"],["Design Capacity Utilization (%) (2)","","45","%","","48","%"]]
[[/GREPCENT_TABLE]]

(1) Design Capacity for Renewable Power facilities 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, including dispatch and maintenance downtime and (iii) actual efficiency of the facility.

(2) Design Capacity Utilization for Renewable Power facilities is measured as Renewable Power Produced divided by Design Capacity for the period. Given (i) built-in un-utilized capacity from historical designs, (ii) availability (a function of higher maintenance requirements compared to RNG facilities) and (iii) commencement of operations of the Emerald RNG facility, which will result in low levels of dispatch for the Arbor Hills facility (which will operate on a standby basis but remain in the operating portfolio), the Company’s Design Capacity Utilization is expected to remain below 50%.

[[GREPCENT_TABLE]]
[["","","Twelve 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"]]
[[/GREPCENT_TABLE]]

RNG projects

Below is a table setting forth the RNG projects in operation and construction in our portfolio:

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[[GREPCENT_TABLE]]
[["","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"]]
[[/GREPCENT_TABLE]]

(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). 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.

(2) We record our ownership interests in these projects as equity method investments in our consolidated financial statements.

(3) Emerald completed commissioning and commenced operations during the third quarter of 2023.

(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.

(5) Expected Commercial Operation Date (“COD”) for commencement of the RNG projects in construction is based on the Company’s estimate as of the date of this report. CODs are estimates and are subject to change as a result of, among other factors out of the Company’s control: (i) regulatory/permitting approval timing, (ii) disruption in supply chains and (iii) construction timing.

(6) Please see Item 3: Legal Proceedings and Note 17 - Commitments and Contingencies to the financial statements.

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Renewable Power Projects

Below is a table setting forth the Renewable Power projects in operation in our portfolio:

[[GREPCENT_TABLE]]
[["","Nameplate capacity (MW per hour) (1)","Current RNG conversion candidate (2)"],["Renewable Power projects in operation:"],["Sycamore","5.2","","Yes"],["Lopez","3.0","","\u2014"],["Miramar Energy","3.2","","Yes"],["San Marcos","1.8","","\u2014"],["Santa Cruz","1.6","","\u2014"],["San Diego - Miramar","6.5","","Yes"],["West Covina","6.5","","\u2014"],["Port Charlotte","2.9","","\u2014"],["Taunton","3.6","","\u2014"],["Arbor Hills (3)","28.9","","N/A"],["C&C","6.3","","Yes"],["Albany","5.9","","\u2014"],["Concord and CMS","14.4","","Yes"],["Pioneer","8.0","","\u2014"],["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","","\u2014"]]
[[/GREPCENT_TABLE]]

(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.

(2) We have determined that some of our Renewable Power Projects are currently RNG conversion candidates. The Company identifies suitable RNG conversion candidates based on highest return of capital which is driven by certain factors including, but not limited to (i) the quantity and quality of LFG, (ii) the proximity to pipeline interconnect and (iii) the ability to enter into contracts, including site leases and gas rights agreements, with host sites. The Company may change its decision to convert a Renewable Power Project into an RNG project in the future. The Company believes disclosing renewable power conversion candidates provides visibility into the effect of those conversions on the existing Renewable Power portfolio.

(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.

(6) It is expected to complete construction in fourth quarter of 2024.

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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 .

[[GREPCENT_TABLE]]
[["","","Twelve Months Ended December 31,","","$ Change","","% Change"],["(in thousands)","","2023","","2022"],["Revenues:"],["RNG fuel","","$","66,292","","","$","73,158","","","$","(6,866)","","","(9)","%"],["Fuel station services","","135,012","","","117,415","","","17,597","","","15","%"],["Renewable Power","","54,804","","","44,958","","","9,846","","","22","%"],["Total revenues","","256,108","","","235,531","","","20,577","","","9","%"],["Operating expenses:"],["Cost of sales - RNG fuel","","32,028","","","32,367","","","(339)","","","(1)","%"],["Cost of sales - Fuel station services","","115,322","","","98,845","","","16,477","","","17","%"],["Cost of sales - Renewable power","","36,550","","","31,580","","","4,970","","","16","%"],["Project development and start up costs","","4,866","","","6,438","","","(1,572)","","","(24)","%"],["Selling, general, and administrative","","51,262","","","51,386","","","(124)","","","\u2014","%"],["Depreciation, amortization, and accretion","","14,565","","","13,136","","","1,429","","","11","%"],["Income from equity method investments","","(5,525)","","","(5,784)","","","259","","","(4)","%"],["Total expenses","","249,068","","","227,968","","","21,100","","","9","%"],["Operating income","","7,040","","","7,563","","","(523)","","","(7)","%"],["Other income (expense)"],["Interest and financing expense, net","","(9,306)","","","(6,640)","","","(2,666)","","","(40)","%"],["Change in fair value of derivative instruments, net","","7,346","","","33,081","","","(25,735)","","","(78)","%"],["Other income","","124,472","","","1,943","","","122,529","","","6306","%"],["Loss on debt extinguishment","","(2,190)","","","\u2014","","","(2,190)","","","100","%"],["Loss on warrant exchange","","(338)","","","(3,368)","","","3,030","","","90","%"],["Net income before provision for income taxes","","127,024","","","32,579","","","94,445","","","290","%"],["Provision for income taxes","","\u2014","","","\u2014","","","\u2014","","","\u2014","%"],["Net income","","127,024","","","32,579","","","94,445","","","290","%"],["Net income attributable to redeemable non-controlling interests","","97,426","","","22,409","","","75,017","","","335","%"],["Net loss attributable to non-redeemable non-controlling interests","","(349)","","","(1,153)","","","804","","","70","%"],["Dividends on Redeemable preferred non-controlling interests","","11,011","","","7,932","","","3,079","","","39","%"],["Net income attributable to common stockholders","","$","18,936","","","$","3,391","","","$","15,545","","","458","%"]]
[[/GREPCENT_TABLE]]

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Revenues

[[GREPCENT_TABLE]]
[["(in thousands)","","Twelve Months Ended December 31,"],["","","2023","","2022","","$ Change"],["RNG Fuel"],["Brown gas sales","","$","4,231","","","$","11,863","","","$","(7,632)"],["Environmental Attributes (1)","","61,221","","","61,049","","","172"],["Other","","840","","","246","","","594"],["Total RNG Fuel","","$","66,292","","","$","73,158","","","$","(6,866)"],["Fuel Station Services"],["OPAL owned stations","","$","18,958","","","$","19,263","","","$","(305)"],["RNG marketing (1)","","45,277","","","28,912","","","16,365"],["Third party station service and maintenance","","21,857","","","19,602","","","2,255"],["Construction","","48,920","","","49,638","","","(718)"],["Total Fuel Station Services","","$","135,012","","","$","117,415","","","$","17,597"],["Renewable Power"],["Electricity sales","","$","34,680","","","$","39,461","","","$","(4,781)"],["Environmental Attributes (2)","","20,124","","","5,497","","","14,627"],["Total Renewable Power","","$","54,804","","","$","44,958","","","$","9,846"],["Total Revenues","","$","256,108","","","$","235,531","","","$","20,577"]]
[[/GREPCENT_TABLE]]

(1) Revenues from Environmental Attributes in RNG Fuel segment and RNG marketing in Fuel Station Services segment relate to revenues earned from sales of RINs and LCFSs.

(2) Revenues from Environmental Attributes in Renewable Power segment include revenues earned from sales of ISCC carbon sales and RECs.

RNG Fuel

Revenue from RNG Fuel decreased by $6.9 million, or 9%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. This is primarily due to a decrease of $7.1 million in pricing and $0.5 million due to decrease in volumes relating to brown gas sales. The revenues from sale of Environmental Attributes remained flat year over year as lower RIN pricing was offset by higher volumes of sales. 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 was primarily attributable to increase of $16.4 million in RNG marketing revenues due to higher Environmental Credit sales and marketing services, $2.3 million increase in service and maintenance revenues from increase in number of sites offset by decrease in construction revenues of $0.7 million.

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 change was attributable primarily to an increase of $14.6 million from sale of ISCC Carbon Credits and REC sales, offset by decrease of $2.6 million from shutdown of one of our facilities and $2.7 million decrease in revenues at two of our Renewable Power facilities due to conversion into RNG facilities. Additionally, the increase also resulted from one facility which was shut down for maintenance for majority of the year in 2022 but was operational in 2023.

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Cost of sales

RNG Fuel

Cost of sales from RNG Fuel marginally decreased by $0.3 million, or 1%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.

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. This change was attributable primarily to an increase of $13.4 million of dispensing fees to generate Environmental Attributes, $0.9 million in construction costs, $2.7 million in service related costs offset by decrease in $1.2 million due to lower brown gas pricing.

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. This is primarily due to an increase of $1.3 million due to PPA termination expense, $2.5 million in planned maintenance expense and an $0.7 million increase in royalty expense at one of our facilities related to royalties on ISCC Carbon Credit sales.

Project development and start up costs

Project development and start up costs decreased by $1.6 million or 24%, for the year ended December 31, 2023compared to the year ended December 31, 2022. This is primarily due to decrease in virtual pipeline costs incurred on New River in 2022 which were not incurred after first quarter of 2023.

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. 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.

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. This is primarily due to the recording of a $3.2 million gain on settlement of commodity swap contracts as our portion from GREP in the third quarter of 2022 and an increase in net income from Pine Bend and Noble Road offset by the amortization of basis differences of $3.0 million in 2023.

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. 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.

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. 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. 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.

Loss on debt extinguishment

On May 30, 2023, OPAL Intermediate Holdco 2 assigned to Paragon its rights and obligations under OPAL Term Loan II. The joint venture partner of Paragon reimbursed OPAL Intermediate Holdco 2 $0.8 million as its portion of the transaction costs incurred.

The Company expensed the remaining deferred financing costs of $1.9 million as loss on debt extinguishment in its consolidated statement of operations for the year ended December 31, 2023. Additionally, we completed a debt restructuring of the OPAL Term Loan in third quarter of 2023 which was accounted for as a debt modification for the existing lenders by performing an analysis on a lender by lender basis under ASC 470-50 Debt modifications and exchanges. As a result, the Company recorded debt extinguishment of $0.3 million representing the fees allocated to the lenders who were repaid in full as part of loss on debt extinguishment in the consolidated statement of operations for the year ended December 31, 2023.

There was no loss on debt extinguishment for the year ended December 31, 2022.

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. 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. We recorded $3.4 million as a loss on exchange of Warrants in our consolidated statement of operations for the year ended December 31, 2022.

In March 2023, we issued 49,633 shares to certain warrant holders as consideration for their prior agreement to tender all warrants held by the warrant holders in the voluntary exchange offer which closed on December 22, 2022. We recorded $338 thousand representing the fair value of the shares issued based on the closing price on March 30, 2023 as part of Loss on warrant exchange on its consolidated statement of operations for the year ended December 31, 2023.

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.

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. 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. 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.

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. 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.

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. As of December 31, 2023, there was $2.6 million of accrued dividend for the fourth quarter of 2023 which was paid in January 2024.

The dividends on redeemable preferred non-controlling interests for the year ended December 31, 2023 increased by $3.1 million or 39% primarily due to full year of dividends on Series A preferred units with NextEra compared to partial year in 2022.

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.

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. Any reduction in demand for our products or our ability to manage our production facilities may result in lower cash flows from operations which may impact our ability to make investments and may require changes to our growth plan.

To fund future growth, we anticipate seeking additional capital through equity or debt financings. 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. Our ability to access capital when needed is not assured and, if capital is not available when, and in the amounts, needed, we could be required to delay, scale back or abandon some or all of our development programs and other operations, which could materially harm our business, prospects, financial condition, and operating results.

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.

As part of our operations we have arrangements for office space for our corporate headquarters under the Administrative Services Agreement as well as operating leases for office space, warehouse space, and our vehicle fleet.

We intend to make payments under our various debt instruments when due and pursue opportunities for earlier repayment and/or refinancing if and when these opportunities arise.

See Note 7. Borrowings, to our consolidated financial statements.

Cash Flows

The following table presents the Company's cash flows for the years ended December 31, 2023 and 2022:

[[GREPCENT_TABLE]]
[["","","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"]]
[[/GREPCENT_TABLE]]

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. The

71

increase in cash provided by operating activities was primarily attributable to positive capital changes primarily related to accounts receivable, accounts receivable, related party, accounts payable, related party, environmental credits held for sale and contract assets.

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. 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.

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. This was primarily due to a decrease of $138.9 million from closing of the Business Combination and $100.0 million decrease from proceeds from issuance of Redeemable Preferred Units to NextEra in the prior year, the repurchase of $16.4 million of shares of our Class A common stock in connection with the exercise of the put option and decrease of $10.4 million proceeds from non-redeemable non-controlling interests.This was offset by an increase in proceeds of $144.1 million from OPAL Term Loan post amendment in September 2023, accompanied by repayment of existing balance of $87.6 million on the OPAL Term Loan, Convertible Note Payable of $30.1 million and paid-in-kind preferred dividends of $16.6 million. Additionally, the Company paid $10.9 million in transaction fees.

Capital expenditures and other cash commitments

We require cash to fund our capital expenditures, operating expenses, working capital and other requirements, including costs associated with fuel sales; outlays for the design and construction of new Fueling Stations and RNG production facilities; debt repayments and repurchases; maintenance of our electrification production facilities supporting our operations, including maintenance and improvements of our infrastructure; supporting our sales and marketing activities, including support of legislative and regulatory initiatives; any investments in other entities; any mergers or acquisitions, including acquisitions to expand our RNG production capacity; pursuing market expansion as opportunities arise, including geographically and to new customer markets; to fund other activities or pursuits and for other general corporate purposes.

As of December 31, 2023, we anticipate spending approximately $179.3 million in capital expenditures for the next 12 months for projects and fuel stations currently under construction and our share of contributions in our equity method investment projects. These expenditures do not include any expected contributions from our joint venture partners and primarily relate to our development and construction of new renewable energy facilities and the purchase of equipment used in our Fueling Station services and Renewable Power operations.

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.

We plan to fund these expenditures primarily through cash on hand, cash generated from operations and availability under existing debt facilities.