F-1 1 tm2219901-13_f1.htm F-1 tm2219901-13_f1 - none - 88.6566546s
As filed with the U.S. Securities and Exchange Commission on January 20, 2023.
Registration No. 333-                           
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Enlight Renewable Energy Ltd.
(Exact Name of Registrant as Specified in its Charter)
State of Israel
4911
Not applicable
(State or Other Jurisdiction of
Incorporation or Organization)
(Primary Standard Industrial
Classification Code Number)
(I.R.S. Employer
Identification No.)
Enlight Renewable Energy Ltd.
13 Amal St. Afek Industrial Park,
Rosh Ha’ayin, Israel
972 (3) 900-8700
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Enlight Renewable Energy LLC
800 W. Main St., #900
Boise, Idaho 83702
(208) 440-5719
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Joshua G. Kiernan
Ryan J. Lynch
Latham & Watkins LLP
1271 Avenue of the Americas
New York, New York 10020
Telephone: (212) 906-1200
Fax: (212) 751-4864
Ron Ben-Menachem
Joshua Ravitz
Herzog Fox & Neeman
6 Yitzhak Sadeh Street
Tel Aviv 6777506, Israel
Telephone: (972) (3) 692-2020
Fax: (972) (3) 696-6464
Yossi Vebman
Michael J. Hong
Skadden, Arps, Slate, Meagher & Flom LLP
One Manhattan West
New York, New York 10001
Telephone: (212) 735-3000
Fax: (212) 735-2000
Ian Rostowsky
Daniel Marcovici
Amit, Pollak, Matalon & Co.
18 Raoul Wallenberg St.,
Tel Aviv 6971915, Israel
Telephone: (972) (3) 586-9000
Fax: (972) (3) 586-9001
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject to completion, dated, January 20, 2023
Preliminary prospectus
Ordinary shares
[MISSING IMAGE: lg_enlight-4clr.jpg]
Enlight Renewable Energy Ltd. is offering          ordinary shares. This is our initial public offering in the United States and no public market exists in the United States for our ordinary shares.
Our ordinary shares trade on the Tel Aviv Stock Exchange (“TASE”) under the symbol ENLT. On           , 2023, the closing price of our ordinary shares on the TASE was NIS       per share (or $       based on the exchange rate reported by the Bank of Israel on            , 2023, which was NIS       to US$1.00 (“BOI Exchange Rate”).
We intend to apply to list the ordinary shares on the Nasdaq Stock Market (“Nasdaq”) under the symbol “ENLT.”
We are both an “emerging growth company” and a “foreign private issuer” as defined under the U.S. federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings. See “Summary—Implications of Being an Emerging Growth Company and a Foreign Private Issuer.”
Investing in our ordinary shares involves risks and uncertainties. See “Risk Factors” beginning on page 20.
PRICE $       PER ORDINARY SHARE
Per share
Total
Public offering price $ $
Underwriting discounts and commissions(1) $ $
Proceeds, before expenses, to us $ $
(1) We have agreed to reimburse the underwriters for certain expenses in connection with this offering. See “Underwriting” for additional information regarding underwriter compensation.
We have granted the underwriters the option to purchase up to          additional ordinary shares from us at the initial public offering price, less the underwriting discounts and commissions, for a period of 30 days from the date of this prospectus.
None of the U.S. Securities and Exchange Commission (the “SEC”), any state securities commission or the Israel Securities Authority (the “ISA”) has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the ordinary shares to purchasers on or about,            , 2023.
J.P. Morgan
BofA Securities
Barclays
Credit Suisse
Wolfe | Nomura Alliance
Roth Capital Partners
                 , 2023

 
Table of contents
iii
iii
v
vi
1
15
17
20
58
60
61
62
63
65
91
125
144
146
147
154
155
163
171
172
172
173
174
F-1
Through and including,                 (the 25th day after the date of this prospectus), all dealers that effect transactions in the ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer’s obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Neither we nor the underwriters have authorized anyone to provide any information or to make any representation other than the information contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus prepared by us or on our behalf or to which we may have referred you. Neither we nor the underwriters take any responsibility for, and can provide no assurance as to the reliability of, any information other than the information in this prospectus, any amendment or supplement to this prospectus and any free writing prospectus prepared by us or on our behalf. Neither we nor the underwriters are making an offer to sell the ordinary shares in any jurisdiction where the offer or sale is not permitted. This offering is being made in the United States and elsewhere solely on the basis of the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this
 
i

 
prospectus, regardless of the time of delivery of this prospectus or any sale of the ordinary shares. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus. This prospectus is not an offer to sell or the solicitation of an offer to buy these ordinary shares in any circumstances under which such offer or solicitation is unlawful.
For investors outside the United States: Neither we nor any of the underwriters have taken any action that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.
 
ii

 
ABOUT THIS PROSPECTUS
As used in this prospectus, unless the context otherwise requires, references to “we,” “us,” “our,” “our business,” the “Company,” “Enlight” and similar references refer to Enlight Renewable Energy Ltd. and, where appropriate, its consolidated subsidiaries as a consolidated entity.
BASIS OF PRESENTATION
Presentation of financial information
Our consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). Although our functional currency is NIS, we present our consolidated financial statements in U.S. dollars as permitted under IFRS.
Our fiscal year ends on December 31 of each year.
The terms “shekels,” “Israeli shekels”, “NIS” and “agorot” refer to the lawful currency of the State of Israel, the terms “dollar,” “US$,” “USD,” “U.S. dollar” and “$” refer to the lawful currency of the United States, the terms “Euro,” “EUR” and “€” and refer to the lawful currency of the European Union, the term “HUF” refers to the lawful currency of Hungary and the term “HRK” refers to the lawful currency of Croatia. Unless otherwise indicated, U.S. dollar translations of NIS amounts presented in this prospectus are derived from our financial statements included elsewhere in this prospectus.
Certain monetary amounts, percentages and other figures included elsewhere in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables or charts may not be the arithmetic aggregation of the figures that precede them and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
Certain definitions
As used in this prospectus, except where the context otherwise requires or where otherwise indicated:

Advanced Development Projects” refers to our projects that are expected to commence construction within 13 to 24 months of the Approval Date.

Approval Date” refers to November 22, 2022, the date on which our financial statements for the nine months ended September 30, 2022 were approved by our board of directors.

CEE” refers to central and eastern Europe.

Clēnera” refers to Clēnera Holdings, LLC, a Delaware limited liability company.

Clēnera Acquisition” refers to our acquisition of a 90.1% equity interest in Clēnera in the Approval Date.

COD” refers to the commercial operation date of our projects.

Development Projects” refers to our projects in various stages of development that are not expected to commence construction within 24 months of the Approval Date.

GW” refers to gigawatts measured on a direct current basis.

GWh” refers to gigawatt hours.

Mature Projects” refers to our projects that, as of the Approval Date, were operational, under construction, in pre-construction (meaning, that they are expected to commence construction within 12 months of the Approval Date) or have a signed PPA.

Merchant Model” refers to the sale of electricity into wholesale energy markets at spot market prices without long-term PPAs or committed offtakers.
 
iii

 

Merchant Risk” refers to the risks associated with the Merchant Model, such as the lack of price certainty and the lack of a committed offtaker.

Operational Projects” refers to our Mature Projects that, as of the Approval Date, were operational and producing energy.

MW” refers to megawatts measured on a direct current basis.

MWh” refers to megawatt hours.

PPA” refers to power purchase or similar agreement.
 
iv

 
MARKET AND INDUSTRY DATA
We obtained the industry, market, and competitive position data used throughout this prospectus from our own internal estimates as well as from industry publications and research, surveys and studies conducted by third parties, including Bloomberg New Energy Outlook October 2020 edition (“BNEF”). Industry publications, studies and surveys generally state that they have been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe our internal company research is reliable and the market definitions are appropriate, neither such research nor these definitions have been verified by any independent source. Estimates of historical growth rates in the markets where we operate are not necessarily indicative of future growth rates in such markets. In addition, projections, assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors, including those described in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the projections and estimates made by independent third parties and us contained in this prospectus.
 
v

 
TRADEMARKS
We have proprietary rights to trademarks used in this prospectus that are important to our business. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the “®” or “™” symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies’ trademarks, trade names or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark, trade name or service mark of any other company appearing in this prospectus is the property of its respective holder.
 
vi

 
SUMMARY
This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our ordinary shares. You should read the entire prospectus carefully, including the “Risk Factors,” “Business,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this prospectus and our consolidated financial statements and the accompanying notes thereto included elsewhere in this prospectus before making an investment decision.
Our mission
Our mission is to lead the renewable energy transition globally, by delivering solar energy, wind energy, and energy storage projects at scale. We have created a next-generation global renewables platform and we seek to leverage its capabilities to deliver value for both our shareholders and our planet.
Overview
We are a global renewable energy platform, founded in 2008 and publicly traded on the Tel Aviv Stock Exchange since 2010. We develop, finance, construct, own and operate utility-scale renewable energy projects. We primarily generate revenue from the sale of electricity produced by our renewable energy facilities, pursuant to long-term PPAs. Our control over the entire project life cycle, from greenfield development to ownership and operations, enables us to deliver strong project returns and rapid growth. Furthermore, we distinguish ourselves through our diverse global presence and multi-technology capabilities, which allow us to strategically optimize our capital allocation between geographies and renewable technologies to deliver highly profitable projects at reduced risk. As of the Approval Date, our global portfolio of utility-scale, renewable energy projects included approximately 17.0 GW of multi-technology generation capacity and approximately 15.3 GWh of energy storage capacity, of which approximately 4.0 GW and approximately 2.1 GWh, respectively, are from Mature Projects.
We act as both a project developer and a power producer, controlling the entire project life cycle in between. Our successful track record and expertise in project development, having reached ready to build (“RTB”) status on projects with an aggregate capacity of over 3.5 GW globally (including projects developed by Clēnera prior to the Clēnera Acquisition) from our founding to the Approval Date, enables us to identify and deliver highly profitable projects. Our in-house project development capability, which includes extensive greenfield development capabilities across our largest markets, gives us access to projects that we believe many of our competitors (both strategic and financial investors) either could not access or could not access at an attractive cost. Our development arm also serves as our organic growth engine, providing us with significant levels of visibility into the future of our business through our large project pipeline. Moreover, as a power producer with approximately 1.4 GW of capacity across our Operational Projects as of the Approval Date, we benefit from steady long-term, contracted cash flow, which we believe will increase as our projects under construction, in pre-construction or with signed PPAs, including approximately 2.5 GW of generation capacity and approximately 2.1 GWh of energy storage capacity, reach commercial operation. These long-term cash flows facilitate the financing of our overall activity at a competitive cost of capital.
Since our founding in 2008, we have transformed into a global renewable energy platform, operating across 11 different countries on three continents and across multiple technologies. From a technological perspective, we develop wind energy and solar energy projects, as well as energy storage projects, both collocated with solar energy projects and on a standalone basis. From a geographical perspective, we operate at scale in nine different countries throughout Europe, in 17 U.S. states and in Israel. Our global platform includes what we believe are some of the largest onshore wind and solar projects across the United States, Western Europe, CEE and Israel, which are either operational, under construction, pre-construction or with signed PPAs, highlighting our ability to identify and deliver projects of scale across our global platform. In August 2021, we established our operations in the United States through the acquisition of Clēnera, a U.S.-based greenfield developer of utility-scale solar energy and energy storage projects, with a focus on the Western United States. Of our 4.0 GW of Mature
 
1

 
Projects, 1.7 GW was located in the United States through Clēnera as of the Approval Date. We believe that our unique breadth of market presence and multi-technology capabilities enable us to optimize our capital allocation, based on power market fundamentals, changing regulatory environments, supply chain access and other considerations, while also diversifying our portfolio of projects and limiting our exposure to individual market disruptions.
Our control over the entire project life cycle coupled with our strategic approach to market and technology selection has enabled us to both develop projects with differentiated returns on investment and deliver rapid growth. Multiplying the sum of our Segment Adjusted EBITDA1 for each of the Israel, Central Eastern Europe and Western Europe segments for the three months ended September 30, 2022 (as presented in Note 7 to our consolidated financial statements for the nine months ended September 30, 2022 included elsewhere in this prospectus) by four (in order to have it annualized) and dividing the resulting amount by approximately $1.6 billion, which is the aggregated amount of invested capital in our projects that were operational as of July 1, 2022 (and therefore contributed to our Segment Adjusted EBITDA for the three months ended September 30, 2022), results in a ratio of 11.5%. Additionally, the aggregate capacity of our Mature Projects has increased by an approximate 60% compounded annual growth rate (“CAGR”) from 2016 to 2021.
Figure 1: Consistent growth in Mature Projects capacity
[MISSING IMAGE: tm2219901d3-bc_01fig4c.jpg]
Finally, our management team, led by our co-founder and Chief Executive Officer, Gilad Yavetz, has successfully navigated the evolving global renewables industry for over 14 years. By building a unique global renewable energy platform focused on delivering profitable projects and robust accretive growth, our management has created significant shareholder value. Our ordinary share price on the TASE has increased at an approximate 37% CAGR over the last five years compared to the S&P 500 index, which increased at an approximate 7% CAGR, and the S&P Renewables index which, increased at an approximate 17% CAGR. Over the last five years, Enlight’s share price has increased by approximately 390%, outperforming the S&P Renewables index by more than 275%. We note, however, that the companies included in the S&P 500 index and the S&P Renewables index differ from ours and that the future results of our business and operations may differ from our historical results.
1
We define Segment Adjusted EBITDA as operating profit adjusted to add the Financial Asset Payments, depreciation and amortization, share based compensation and U.S. acquisition expense. For more information see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Information.”
 
2

 
Figure 2: Significant outperformance relative to S&P 500 and S&P renewables index
[MISSING IMAGE: tm2219901d10-lc_02figure4c.jpg]
Source: FactSet (as of September 30, 2022)
Our portfolio
We classify our projects into three categories:

Development Projects, which includes projects in various stages of development that are not expected to commence construction within 24 months of the Approval Date;

Advanced Development Projects, which includes projects that are expected to commence construction within 13 to 24 months of the Approval Date; and

Mature Projects, which includes projects that are operational, under construction, in pre-construction (meaning, that such projects are expected to commence construction within 12 months of the Approval Date) or have a signed PPA.
These three categories are sequential and reflect the progression from being categorized first as a Development Project, then an Advanced Development Project and finally a Mature Project.
Overview of our consolidated portfolio of projects as of the Approval Date
Mature
Projects
Advanced
Development
Projects
Development
Projects
Total
portfolio
Generation capacity (GW)
4.0 3.1 9.9
17.0
Storage capacity (GWh)
2.1 5.2 8.0
15.3
Mature Projects
With a geographically and technologically diverse portfolio of Mature Projects, including 4.0 GW of generation capacity and 2.1 GWh of energy storage capacity as of the Approval Date, we enjoy the benefits of steady cash flow from our Operational Projects and significant visibility into our growth from our Mature Projects under construction, in pre-construction, or contracted with signed PPAs.
As of the Approval Date, approximately 76% of the capacity of our Mature Projects was contracted with an average remaining PPA term of 18 years. Furthermore, approximately 28% of the capacity of our Mature Projects was contracted under inflation-linked PPAs, which we believe could supply us with an additional source of
 
3

 
revenue growth based on the current inflationary environment. In select markets where electricity prices are expected to remain elevated over the medium to long-term, such as Spain, we sell electricity under the Merchant Model. In such markets, we carefully and strategically take on exposure to Merchant Risk but are entering into short-term hedging agreements to actively manage that exposure. As of the Approval Date, approximately 20% of the capacity of our Mature Projects is exposed to Merchant Risk. We believe that these projects have the potential to generate profits on a per MW basis that is superior to the profits that could be achieved under a PPA in such markets.
Mature Project portfolio map
[MISSING IMAGE: tm2219901d10-map_mature4clr.jpg]
Breakdown of Mature Projects by project status, technology, region and contract status as of the Approval Date
[MISSING IMAGE: tm2219901d10-pc_break4c.jpg]
Recent events
As discussed elsewhere in this prospectus, information regarding our projects is presented as of the Approval Date, except as otherwise specified. The following is a summary of significant events that occurred in December 2022:

We completed the Parasol Projects Acquisition and, as a result, we acquired the vast majority of the Parasol projects that we did not acquire in connection with the Clēnera Acquisition. With an aggregate
 
4

 
generation capacity of 1.3 GW and aggregate storage capacity of 4.1 GWh, this newly acquired portfolio includes projects that are adjacent to projects already in our possession and that have reached Advanced Interconnect Status. We target to commence construction on these projects between 2024 and 2026. Following the Parasol Projects Acquisition, 70% of our U.S. portfolio is based in the Western United States and U.S. projects with 7.7 GW generation capacity (out of a total 13.5 GW in the United States) have reached Advanced Interconnect Status.

We acquired the greenfield development rights for a wind energy project called “Serphia,” which is located near two of our existing projects in Serbia and is expected to have a generation capacity of 200 MW.

We acquired the greenfield development rights for three wind energy projects in Italy with an aggregate generation capacity of 90 MW.

We commenced construction on the Atrisco project in New Mexico and placed a $330 million battery order with a U.S.-based supplier.
Taking these recent events into account, our average project size in the U.S. is 235 MW as of the date of this prospectus. Below is an overview of the aggregate generation and storage capacity of our portfolio of projects and a summary of the interconnection status of our projects in the United States as of the date of this prospectus:
Overview of our consolidated portfolio of projects as of the date of this prospectus
Mature
Projects
Advanced
Development
Projects
Development
Projects
Total
portfolio
Generation capacity (GW)
4.0
3.8
10.7
18.6
Storage capacity (GWh)
2.1
7.3
10.1
19.4
Summary of the interconnection status of our U.S. portfolio as of the date of this prospectus
[MISSING IMAGE: tm2219901d10-pht_inter4clr.jpg]
Our industry and market opportunity
Worldwide severe weather events and global awareness of the rapidly accelerating impacts of climate change are driving a systemic global transition away from fossil fuels towards renewable energy. Global renewable energy generation has grown from approximately 30% of global power generation in 2012 to approximately 40% in 2021, an approximate 5% CAGR, and this transition is expected to accelerate with renewable generation forecasted to constitute approximately 52% of global power generation by 2030, according to BNEF.
 
5

 
The forecasted growth in renewable energy generation is driven by a variety of economic, social, regulatory, and policy factors, including:

sweeping renewable energy mandates and regulations as a policy response to the global climate crisis;

utility-scale solar energy and wind energy becoming some of the most competitive sources of electricity generation on a levelized cost of energy (“LCOE”) basis;

the need for energy independence and security;

growing corporate and investor support for net-zero targets and the decarbonization of energy;

widespread electrification of transportation (particularly automotive vehicles) and other infrastructure that has historically been powered by fossil fuels; and

emergence of energy storage, which enhances the ability of solar energy and wind energy generation to serve as load-following generation while providing additional grid resilience and combating extreme weather events.
Furthermore, the energy storage market has witnessed unprecedented growth in recent years and we believe it sits at the epicentre of the energy transition. The ability of energy storage facilities to allow for renewable generation to provide baseload power is critical to enabling the transition from fossil fuels to renewable energy. Global annual energy storage capacity installations, excluding the residential market, grew from 0.6 GW of generation capacity per year in 2015 to 3.8 GW of generation capacity per year in 2020, and are expected to grow to 53.0 GW generation capacity per year by 2030, according to BNEF.
Overview of the U.S. renewable energy industry
The renewable energy sector in the United States is expected to grow approximately 5% per annum between 2021 and 2030, providing approximately 34% of all electricity generated in the United States by 2030, with solar energy and onshore wind energy generation accounting for approximately 10% and approximately 17%, respectively, of all renewable energy generation by 2030, according to BNEF. The Inflation Reduction Act of 2022 (“IRA”) is expected to accelerate the transition to renewable energy by, among other provisions, (i) extending the investment tax credits (“ITCs”) and production tax credits (“PTCs”) through 2032 to address a source of volatility in the expansion of renewables in the United States due to their previously periodic expiration, (ii) enabling solar energy projects to also utilize PTCs (rather than just wind energy projects), increasing the attractiveness of solar projects in locations with high irradiance, (iii) expanding the ITC to include stand-alone energy storage projects, which will support the expansion of renewables as baseload capacity, and (iv) introducing the ability of asset owners to transfer tax credits created under the IRA to third parties, which is expected to help address the lack of sufficient tax equity capacity.
With its headquarters located in Boise, Idaho, Clēnera, our U.S. subsidiary, is focused on developing solar energy and energy storage projects in the Western United States; as of the Approval Date, Clēnera had approximately 64% of its portfolio in the region. The Western United States was the fastest growing region in the country by population from July 2020 to July 2021, accounting for eight out of the 15 fastest growing cities, according to the U.S. Census Bureau. The combined electricity demand for all regions in the Western Interconnection is projected to grow more than 7% from approximately 906 TWh in 2020 to approximately 972 TWh in 2029, while the combined peak hour demand is expected to grow nearly 9% from approximately 162 GW in 2020 to over 176 GW in 2029, according to the Western Electricity Coordinating Council’s Generation Resource Adequacy Forecast December 2020 (“WECC”).
Solar energy and energy storage projects are particularly attractive in the Western United States, in light of:

higher solar irradiance driving higher production levels and enabling greater utilization of PTCs under the IRA, as discussed elsewhere in this prospectus;

growing scarcity of historically important power resources across the Western United States, primarily driven by diminishing availability of hydroelectric power which accounts for more than 25% of all power generation capacity in the western United States versus approximately 6% of all power generation capacity across the
 
6

 
United States on average in 2021, according to the S&P Global Market Intelligence Data Dispatch Report, dated August 2021 (“S&P Global Market”);

accelerated retirement of coal plants with over 10 GW of coal retirement planned from 2019 to 2025 and an incremental 10 GW from 2025 to 2030, bringing total coal capacity to less than 15 GW in the region;

higher renewable energy portfolio standards relative to other markets within the United States;

an increasingly coordinated and regionalized western electricity market;

stronger public support for the transition away from fossil fuel generation; and

community choice aggregation policies.
Figure 3: 2012-2030E renewable energy capacity forecast in the United States (GW)
[MISSING IMAGE: tm2219901d1-bc_03fig4c.jpg]
Source: BNEF
Overview of the European renewable energy industry
The European renewable energy generation market is expected to grow cumulative generation capacity by approximately 72% between 2021 and 2030 and provide up to 58% of all electricity generated in Europe by 2030, with solar energy and onshore wind energy generation accounting for approximately 12% and 32% of all generation by 2030, respectively, according to BNEF. Solar energy generation capacity is expected to grow from approximately 157 GW in 2021 to approximately 350 GW by 2030, an approximate 9% CAGR, and onshore wind energy generation capacity is expected to grow from approximately 178 GW in 2021 to approximately 347 GW by 2030, an approximate 8% CAGR, according to BNEF.
Figure 4: 2012-2030E renewable energy capacity forecast in Europe (GW)
[MISSING IMAGE: tm2219901d1-bc_04fig4c.jpg]
Source: BNEF
The growth of renewable energy generation is supported by regulatory policies and the underlying economics of renewable energy generation. For example, Spain and Sweden, two of our key European markets, have both instituted regulatory policies to support and encourage the growth in renewable generation. In 2021, Spain
 
7

 
approved a clean energy bill that targets carbon neutrality by 2050 and requires renewable sources to account for 74% of the total electricity production by 2030, while also limiting new coal, oil and gas extraction projects. As such, in Spain, renewable generation capacity is expected to grow by approximately 3% per year through 2050, according to BNEF. In 2017, Sweden passed a climate policy framework that targeted a 70% reduction of emissions from domestic transport between 2010 and 2030 and achieving net zero nationally by 2040. As such, in Sweden, renewable generation is expected to grow by approximately 5% per year through 2030, according to the Swedish Energy Agency.
The attractiveness of renewable energy in Europe on an LCOE basis has continued to improve not only due to reductions in the cost of utility-scale solar energy and wind energy projects but also due to regulatory mechanisms within the European Union such as the Emissions Trading System (“ETS”). The ETS imposes a regulatory cap on corporate emissions and requires corporations that use fossil fuels to purchase carbon credits to offset the carbon footprint of the fossil fuel-generated electricity. This increases the all-in cost of fossil fuel generation and, in turn, improves the relative LCOE of renewable energy sources. At its recent peak in April 2022, the carbon price per ton was approximately EUR 100. Assuming approximately 3.9 MWh per 1 ton of carbon dioxide, the cost per MWh imposed by the ETS was approximately EUR 26, increasing the all-in cost of fossil fuel generation and relative LCOE of fossil fuel generation. The carbon price has rallied to new highs as a result of increased gas prices, speculative demand and anticipated market-tightening reforms, which has further incentivized corporations to enter into long duration PPAs in order to secure sufficient renewably sourced electricity. The ETS is expected to remain in place for the foreseeable future.
Figure 5: Evolution of carbon pricing
[MISSING IMAGE: tm2219901d10-lc_05figure4c.jpg]
Source: BNEF
Note:
EUA represents “EU Allowances”
In addition to being competitive with fossil fuel generation on an LCOE basis, renewable energy is expected to be an increasingly critical component of European energy independence. Since the end of 2021, the price of natural gas in Europe has more than tripled from EUR 62 per MWh to as high as EUR 209 per MWh based on Dutch TTF monthly futures in the early stage of Russia’s invasion of Ukraine. This has driven electricity prices to extraordinarily high levels across the continent, the impact of which will increasingly be felt by end-users as pre-existing natural gas futures contracts expire. As a result of this increase in prices, and the growing concern regarding the availability of natural gas across Europe, numerous policy proposals have been announced both on the European Union level and at the member country level in order to accelerate the growth of renewable energy in Europe. This is expected to accelerate existing efforts to redefine the European energy landscape, with major utilities and developers already set to deploy multi-decade capital expenditure investments aligned to the requirements of the energy transition.
 
8

 
Overview of the Israeli renewable energy industry
Israel’s electric grid is not connected to any of the networks of its neighboring countries, requiring the country to be entirely energy self-sufficient. Moreover, the market is characterized by increasing electricity demand. The Israel Electric Corporation (“IEC”), the state-owned national electricity company, anticipates an average annual increase of 3% in peak demand for electricity from 2021 to 2050, driven by a fast-growing population and robust economic growth.
The need to be self-sufficient while also accommodating growing electricity demand has led the Israeli government to undertake significant reforms to the local electricity sector. For example, in June 2018, the Israeli government approved a comprehensive structural reform of the electricity sector, with a focus on increasing competition in the electricity generation market. In addition, the Israeli government has focused on diversifying the country’s energy mix through increased penetration of renewable energy. The Israeli government has set formal additional renewable energy generation targets of 20% and 30% of total energy generation by 2025 and 2030, respectively. For more information, see “Business—Market Overview—Our Industry and Market Opportunity—Overview of the European Renewable Energy Industry.”
Competitive strengths
Experienced renewable energy platform with a proven track record of success
We were founded in 2008 and became publicly listed on the TASE in 2010. Together with projects developed by Clēnera prior to the Clēnera Acquisition, as of the Approval Date, we have successfully reached RTB status on renewable energy projects with an aggregate capacity of over 3.5 GW. Our historical share performance on the TASE reflects our track record of success. Over the last five years, our stock price has increased at an approximate 37% CAGR compared to the S&P 500 index which increased at an approximate 7% CAGR and the S&P Renewables index which increased at an approximate 17% CAGR. We note, however, that the companies included in the S&P 500 index and the S&P Renewables index differ from ours and that the future results of our business and operations may differ from our historical results.
Value creation through our combined greenfield developer, owner and operator business model
Within our vertically-integrated business model, our teams work cohesively to deliver projects with differentiated returns. We are fully staffed to organically identify and develop new projects, steer them through various stages of development and construction and manage and optimize them during operations. We leverage our in-house greenfield development teams to source projects in our largest markets and partner with local developers to source projects in our smaller markets, projects that we believe many of our competitors (both strategic and financial investors) either could not access or could not access at an attractive cost. Additionally, we believe that our business development team that identifies early-stage projects for potential acquisition and sources select M&A opportunities, possesses a unique ability to evaluate such opportunities due to our experience working across the entire project life cycle. Once a project reaches commercial operation, our asset management group provides continuous project optimization through real-time performance monitoring and ongoing operations and maintenance (“O&M”) enhancement. Our end-to-end control of the project life cycle focuses our attention on developing projects with our long-term interests in mind and provides a consistent feedback channel that improves our future developments. Ultimately, the strong and proven capabilities of our integrated teams enables us to generate differentiated project returns while continuously growing our portfolio.
Global company with ability to identify and deliver unique projects of scale across our target markets
With 217 employees across offices in the United States, Europe, and Israel as of September 30, 2022, our global presence enables us to participate in the most attractive renewable energy markets in the developed world. Our teams are structured within each local market to identify opportunities early, streamline our development execution and effectively manage local projects. We are differentiated in our capability to act as both an established global operator as well as a nimble local developer. This flexibility allows us to identify and deliver unique projects of scale across our target markets.
 
9

 
For example, we own what we believe are some of the largest onshore wind energy projects across Western Europe, including two Operational Projects with a consolidated capacity of approximately 701 MW, comprised of the 329 MW Gecama project in Spain and the 372 MW Björnberget project in Sweden. Furthermore, we believe we are a market leader in solar energy across the Western United States. We are currently developing what we believe are some of the largest solar energy and energy storage projects in Arizona, New Mexico, Utah, Idaho and Oregon, and we recently started construction on what is, to our knowledge, the largest solar energy project in Montana. We believe we are the only company to have successfully completed a utility-scale onshore wind energy project in Israel. We believe we were the first company to identify the significant growth potential in the wind energy segment in Israel and pioneered the regulatory framework, PPA pricing regime, and permitting requirements for such projects. Finally, we were one of the first major international players to enter Central-Eastern and South-Eastern Europe to our knowledge, having successfully developed what we believe are two of the largest onshore wind energy projects in Croatia and Serbia, one of the largest solar energy project portfolios in Hungary, and the largest wind energy project in Kosovo as of the date of this prospectus, all of which are currently operational.
For a broader perspective of our global reach, see below for an overview of our corporate structure:
[MISSING IMAGE: tm2219901d10-fc_enlightbw.jpg]
* Co-invest subsidiaries include wholly or partially owned entities which were formed in connection with partnerships with Israeli institutions that co-invest in certain of our renewable energy projects.
** Project subsidiaries include wholly or partially owned entities which were formed in connection with one or more renewable energy projects.
Our diverse portfolio of Mature Projects reduces our exposure to individual market disruptions
Our diverse portfolio of Mature Projects, including solar energy projects with an aggregate capacity of approximately 2.5 GW, wind energy projects with an aggregate capacity of approximately 1.5 GW and energy storage projects with an aggregate capacity of approximately 2.1 GWh, across 11 different countries, mitigates our exposure to any single market. For example, the announcement by the Department of Commerce of its investigation into antidumping and countervailing duties (“AD/CVD”) for solar panels (the “Department of Commerce Investigation”) resulted in uncertainty among market participants in the United States as to the future availability of solar panels. While the Biden administration issued an executive order suspending the collection of AD/CVD in June 2022 for a period of two years, the issue highlighted the risks of idiosyncratic market disruption. In contrast to many of our peers, our exposure to idiosyncratic market disruptions such as this is mitigated by our global, multi-technology renewables platform. Furthermore, from a macroeconomic perspective, our diverse portfolio of Mature Projects offers a mixture of revenue structures, providing us with significant inflation protection with approximately 48% of the capacity of our Mature Projects benefiting from increases in inflation, either through inflation linkage within our PPAs or select use of the Merchant Model.
 
10

 
Significant financing expertise and efficient deployment of capital for growth
As a global enterprise, we have access to diverse sources of capital and have developed and maintained deep relationships with numerous international banking and institutional investment partners. As of September 30, 2022, we had approximately $1.5 billion of non-recourse project finance debt outstanding from a wide range of financial institutions, including the European Bank for Reconstruction and Development (“EBRD”), Bank of America, DekaBank, Erste Bank, KfW, Sabadell, Bank Leumi, Bank Hapoalim and others. Moreover, we have significant experience in raising tax equity. Prior to the Clēnera Acquisition, Clēnera sourced approximately $735 million of tax equity from several major tax equity providers, including PNC, Citibank and M&T. In addition, since the Clēnera Acquisition, we have closed tax equity financing for our first project under construction in the United States with Huntington Bancshares. We are efficient with our capital and strategically bring investors into projects during the construction and development phases. As of September 30, 2022, we had raised approximately $278 million of project-level equity, mostly from Israeli institutional investors, to reduce our project equity requirements. In the future we intend to sell minority interests in projects to recycle capital into new projects.
Moreover, we have a proven track record of issuing debt and equity in public capital markets. Since our initial public offering on the TASE, as of the Approval Date, we have raised approximately $707 million in issued equity and approximately $527 million in issued debt in the form of bonds. These issuances, largely funded by our Israeli institutional partners, have directly funded our growth. As of September 30, 2022, we had approximately $411 million of corporate and convertible bonds outstanding with a weighted average effective interest cost of 3.2%. Our ability to source attractively priced unsecured debt, leveraging our strong credit rating in lsrael (A2 local by Midroog, a subsidiary of Moody’s) coupled with our deep relationships with lsraeli institutional investors, is a distinct competitive advantage we possess. Our finance team is focused on maintaining an efficient and robust balance sheet to minimize our overall cost of capital and provide ample liquidity to fund our growth.
Our growth strategy
Utilize our renewable energy platform to optimize conversion of our Development Projects into Operational Projects
Our growth is predicated on the successful conversion of our large project development pipeline into Operational Projects. Our control over the entire project life cycle—our greenfield development capabilities, engineering expertise and hands-on construction and asset management—enables us to optimize conversion of our projects in our development pipeline into Operational Projects. Furthermore, our diversified development pipeline across multiple end-markets and across multiple technologies creates a strong “internal hedge” across our business. While the path to COD of our projects in any particular geography may be impacted by individual market events, our blended, company-wide conversion rate is less likely to be impacted due to the depth and breadth of our development pipeline.
In addition to being geographically and technologically diverse, a large number of projects in our development pipeline have met key development milestones that substantiates their path to COD with a particular focus on interconnection milestones. As of the Approval Date, (i) our Mature Projects had an aggregate generation capacity of approximately 4.0 GW, which constitutes approximately 23.3% of the overall generation capacity across our portfolio, (ii) our Advanced Development Projects had an aggregate generation capacity of approximately 3.1 GW, of which approximately 1.9 GW from our U.S.-based Advanced Development Projects have secured a system impact study, facility study or a large generator interconnection agreement (“Advanced Interconnect Status”), and (iii) our Development Projects had an aggregate generation capacity of approximately 9.9 GW, of which approximately 3.1 GW from our U.S.-based Development Projects have reached Advanced Interconnect Status.
Expand our pipeline organically, and capitalize on attractive opportunities in our existing markets
Our development team is comprised of over 40 development professionals across our global footprint and we seek to expand our existing in-house team as well as our partnerships with local developers. In our largest markets (United States, Israel and Spain), we source new greenfield projects organically through our in-house greenfield development teams. Specifically, across these markets, we utilize a land and expand strategy, leveraging existing
 
11

 
large and low-cost interconnection positions that we possess to expand our pipeline. In our other target markets (Italy, CEE and the Nordics), we leverage partnerships with a strong network of local developers to source attractive early-stage which we then co-develop. Through our development team and development partners, we maintain a local presence in our target markets, which we believe is essential to identifying profitable projects. In addition, it is our strategy to opportunistically acquire projects from other developers, particularly in situations where there are synergies with our existing portfolio and where we can add value through our greenfield development capabilities. For example, we acquired the Emek Habacha project in Israel, a 109 MW wind energy farm, in the early stages of a then-stalled development process. We subsequently leveraged our capabilities to progress the development and reach COD, making it the largest operational wind energy project in Israel to our knowledge, as of the Approval Date.
Expand laterally through energy storage, entrance into new geographies and investment in new technologies
We are focused on creating multiple growth engines across the solar energy, wind energy and energy storage sectors. Our existing portfolio of projects, particularly solar energy projects in the United States, uniquely positions us to rapidly expand our energy storage portfolio with access to the grid and customer and supply chain relationships. We have an aggregate capacity of approximately 15.3 GWh of battery energy storage projects in our current portfolio, of which approximately 8.1 GWh is based in the United States. We anticipate that energy storage will become a significant portion of our business as energy storage technology continues to advance and becomes essential to grid stabilization and load balancing.
In addition, we are seeking to expand our geographic footprint in new markets across Europe and the Middle East and North Africa (“MENA”). With respect to Europe, we are focused on adding in-house greenfield development capabilities in Northern Europe, either through the hiring of additional personnel or through a potential acquisition of a developer. Additionally, we recently signed a memorandum of understanding to form a joint venture with NewMed Energy LP (TASE: NWMD), a leading oil and gas company in MENA, and its chief executive officer, Yossi Abu, to develop wind energy, solar energy and energy storage projects in the region. We believe that this partnership, for which we will be the largest shareholder with a 46.7% ownership stake if consummated, will enable us to leverage our existing presence and market leadership in the Israeli renewable energy market to expand into other MENA countries such as Egypt, Jordan, Morocco, the United Arab Emirates, Bahrain and Saudi Arabia.
We are also looking to expand our technology focus through partnerships with energy technology companies. In particular, we aim to leverage our access to the robust technology ecosystem in Israel in order to gain early exposure to advances in battery, hydrogen and micro-grid technologies, among others. We expect that continued innovation, combined with our ability to work across numerous technologies, will enable us to capitalize on opportunities for continued robust growth and provide us with visibility into the direction of the broader sector.
Risk factors summary
Investing in our ordinary shares involves substantial risks and uncertainties, and our ability to successfully operate our business and execute our growth plan is subject to numerous risks and uncertainties. You should carefully consider the risks and uncertainties described in “Risk Factors” before deciding to invest in our ordinary shares. If any of these risks or uncertainties actually occur, our business, financial condition, or results of operations could be materially and adversely affected. In such case, the trading price of our ordinary shares would likely decline, and you may lose all or part of your investment. The following is a summary of some of the principal risks and uncertainties we face:

The growth of our business depends upon our ability to continue to source and convert our Development Projects, Advanced Development Projects and Mature Projects (which are under construction, are in pre-construction or have signed a PPA) into Operational Projects.

Projects under development may not be successfully developed, financed or constructed.

The development, construction and operation of our projects require governmental and other regulatory approvals and permits, including environmental approvals and permits.
 
12

 

Disruptions in our supply chain for materials and components and the resulting increase in equipment and logistics costs could adversely affect our financial performance.

Project construction activities may not commence or proceed as scheduled, which could increase our costs and impair our ability to recover our investments.

We face growing competition from traditional and renewable energy companies in developing renewable energy projects.

Attractive offtake terms may become unavailable, which would adversely affect our business and growth.

If our projects fail to meet development, operational or performance benchmarks, our offtakers may have the right to terminate the applicable offtake contract, require us to pay damages or reduce the amount of energy such projects sell.

Operation and maintenance of renewable energy projects involve significant risks that could result in unplanned outages, reduced output, interconnection or termination issues, or other adverse consequences.

Electricity prices are volatile, and decreases in demand for and the price of electricity we sell may harm our business, financial condition, results of operations and cash flows.

We depend on certain Operational Projects for a substantial portion of our cash flows.
Corporate information
We are incorporated in Israel under the Israeli Companies Law, 5759-1999 (the “Companies Law”). Our principal executive offices are located at 13 Ha’amal St. Afek Industrial Park, Rosh Ha’ayin, Israel. Our website address is https://www.enlightenergy.co.il. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus and is not incorporated by reference herein. We have included our website address in this prospectus solely for informational purposes. Our agent for service of process in the United States is Enlight Renewable Energy LLC.
Implications of being an emerging growth company and a foreign private issuer
We qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). An emerging growth company may take advantage of specified exemptions from various requirements that are otherwise applicable generally to U.S. public companies. These provisions include:

an exemption that allows the inclusion in an initial public offering registration statement of only two years of audited financial statements and selected financial data and only two years of management’s discussion and analysis of financial condition and results of operations disclosure;

reduced executive compensation disclosure; and

an exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), in the assessment of the emerging growth company’s internal control over financial reporting.
We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company.
We will remain an emerging growth company until the earliest of:

the last day of our fiscal year during which we have total annual gross revenue of at least $1.07 billion;

the last day of our fiscal year following the fifth anniversary of the closing of this offering;

the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or
 
13

 

the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which would occur if the market value of our ordinary shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter.
We may choose to take advantage of some but not all of these reduced requirements. We cannot predict if investors will find our ordinary shares less attractive because we will rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price may be more volatile.
In addition, upon the closing of this offering, we will report under the Exchange Act as a “foreign private issuer.” As a foreign private issuer, we may take advantage of certain provisions under the rules that allow us to follow Israeli law for certain corporate governance matters. Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

the rules under Section 14 of the Exchange Act that impose disclosure obligations and procedural requirements for the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

for our directors and principal shareholders, the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules to file public reports with respect to their share ownership and purchase and sale of our ordinary shares;

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events; and

Regulation Fair Disclosure (“Regulation FD”), which regulates selective disclosures of material information by issuers.
In addition, we will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic issuers. Foreign private issuers, like emerging growth companies, also are exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company, but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of public companies that are neither an emerging growth company nor a foreign private issuer.
We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We are required to determine our status as a foreign private issuer on an annual basis at the end of our second fiscal quarter. We would cease to be a foreign private issuer at such time as more than 50.0% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies:

the majority of our executive officers or directors are U.S. citizens or residents;

more than 50% of our assets are located in the United States; or

our business is administered principally in the United States.
We have chosen to take advantage of certain of the reduced disclosure requirements and other exemptions described above in the registration statement of which this prospectus forms a part and intend to continue to take advantage of certain exemptions in the future. As a result, the information that we provide may be different than the information you receive from other public companies in which you hold stock. As a result, some investors may find our ordinary shares less attractive than they would have otherwise. The result may be a less active trading market for our ordinary shares, and the price of our ordinary shares may be more volatile. We will be a foreign private issuer, and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
 
14

 
THE OFFERING
Ordinary shares offered by us
         ordinary shares.
Option to purchase additional ordinary shares
We have granted the underwriters an option for a period of 30 days after the date of this prospectus to purchase up to               additional ordinary shares.
Ordinary shares to be outstanding after this offering
         ordinary shares (or               ordinary shares if the underwriters exercise in full their option to purchase additional ordinary shares).
Use of proceeds
We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $       million (or approximately $       million if the underwriters exercise in full their option to purchase additional ordinary shares), assuming an initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on          , 2023.
We intend to use the net proceeds from this offering for the uses as set forth in the “Use of Proceeds” section of this prospectus.
Dividend policy
We do not anticipate paying any dividends in the foreseeable future. Our board of directors has sole discretion whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our directors may deem relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends. See “Dividend Policy.”
Risk factors
Investing in our ordinary shares involves a high degree of risk. See “Risk Factors” and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ordinary shares.
Listing
Our ordinary shares are listed on the TASE under the symbol “ENLT.” We intend to apply to list our ordinary shares on Nasdaq under the symbol “ENLT.”
The number of our ordinary shares to be outstanding immediately after this offering gives effect to the one for 10 reverse split of our ordinary shares, which will occur prior to the closing of this offering (the “Reverse Share Split”), and is based on 101,582,446 ordinary shares outstanding as of September 30, 2022 after giving effect to the Reverse Share Split, and excludes the following ordinary shares (each after giving effect to the Reverse Share Split):
 
15

 

8,110,271 ordinary shares issuable upon the exercise of options outstanding under our share option plans as of September 30, 2022, at a weighted average exercise price of NIS 5.66 (or approximately $      based on the BOI Exchange Rate) per ordinary share;

5,905,478 ordinary shares issuable prior to January 1, 2024 upon conversion of the Series C Debentures, the principal balance of which was approximately $103.7 million as of September 30, 2022;

2,214,929 ordinary shares issuable between January 1, 2024 and August 22, 2028 upon conversion of the Series C Debentures, the principal balance of which was approximately $46.4 million as of September 30, 2022;

6,889,729 ordinary shares reserved for issuance pursuant to future grants under our share option plans, as described in “Management—Share Option Plans.
Unless otherwise indicated, all information in this prospectus neither assumes nor gives effect to the Reverse Share Split.
Unless otherwise indicated, all information in this prospectus assumes or gives effect to:

an initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023;

no exercise of the underwriters’ option to purchase additional ordinary shares; and

the adoption of our amended and restated articles of association prior to the closing of the offering, which will replace our amended and restated articles of association currently in place.
 
16

 
SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA
The following tables present our summary consolidated financial and other data. We prepare our consolidated financial statements in accordance with IFRS. The summary historical consolidated financial data for the years ended December 31, 2020 and 2021 has been derived from our audited consolidated financial statements, which are included elsewhere in this prospectus. The summary consolidated financial data for the nine months ended September 30, 2021 and 2022 and as of September 30, 2022 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The unaudited consolidated financial statements have been prepared on a consistent basis as our audited consolidated financial statements. In the opinion of management, the unaudited data reflects all adjustments, consisting only of normal recurring adjustments, necessary for the fair statement of the financial information in those statements. Our historical results for any prior period are not necessarily indicative of results expected in any future period.
The financial data set forth below should be read in conjunction with, and is qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and accompanying notes thereto included elsewhere in this prospectus.
Consolidated statement of operations data:
Nine months ended September 30,
Year ended December 31,
2022
2021
2021
2020
(in thousands, except share and per share data)
      (unaudited)
Revenues
$ 131,303 $ 67,424 $ 102,461 $ 70,324
Cost of sales
(28,154) (14,293) (21,777) (14,730)
Depreciation and amortization
(27,544) (13,602) (19,446) (15,226)
Gross profit
75,605 39,529 61,238 40,368
General and administrative expenses
(21,774) (9,085) (15,569) (9,018)
Selling, marketing and project promotion expenses
(2,458) (2,314) (3,617) (2,257)
Development expenses
(1,804) (1,099) (719)
Transaction costs in respect of acquisition of
activity in the United States
(6,990) (7,331)
Other income
18,269 396 778
Operating profit
67,838 21,536 34,400 28,374
Finance income
19,181 22,897 30,333 17,214
Finance expenses
(50,465) (28,316) (37,175) (31,408)
Total finance expenses, net before early prepayment fee 
(31,284) (5,419) (6,842) (14,194)
Pre-tax profit before early prepayment
fee
36,554 16,117 27,558 14,180
Early prepayment fee
(67,594)
Profit (loss) before tax and equity gains (loss)
36,554 16,117 27,558 (53,414)
Share of (loss) profits of equity accounted
investees
(72) (139) (189) 26
Profit (loss) before income taxes
36,482 15,978 27,369 (53,388)
Taxes on income
(9,324) (2,419) (5,694) 12,353
 
17

 
Nine months ended September 30,
Year ended December 31,
2022
2021
2021
2020
(in thousands, except share and per share data)
      (unaudited)
Profit (loss) for the year
$ 27,158 $ 13,559 $ 21,675 $ (41,035)
Profit (loss) for the year attributed to:
Owners of the Company
19,436 7,455 11,217 (43,869)
Non-controlling interests
7,722 6,104 10,458 2,834
Earnings (loss) per share attributable to ordinary shareholders:
Basic earnings (loss) per share
$ 0.02 $ 0.01 $ 0.01 $ (0.06)
Diluted earnings (loss) per share
$ 0.02 $ 0.01 $ 0.01 $ (0.06)
Weighted average shares used in the calculation of earnings (loss):
Basic per share
959,047,390 897,066,785 937,492,190 782,977,562
Diluted per share
985,699,275 930,626,143 981,086,687 782,977,562
Consolidated balance sheet data:
As of September 30, 2022
Actual
Pro forma
as adjusted(1)
(in thousands)
(unaudited)
Cash and cash equivalents
$ 242,760 $        
Restricted cash
112,178
Total current assets
506,532
Restricted cash
37,009
Fixed assets, net
1,945,647
Total assets
3,274,377
Credit and current maturities of loans from banking corporations and other financial institutions
161,093
Total current liabilities
383,186
Loans from banking corporations and other financial institutions
1,268,848
Total liabilities
2,322,512
Non-controlling interests
214,980
Equity attributable to owners of the Company
736,885
Total equity
951,865
(1) The pro forma as adjusted balance sheet information gives further effect to the Reverse Share Split and the issuance of           ordinary shares in this offering at the assumed initial public offering price of $      per ordinary share, USD equivalent of NIS            (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. A $1.00 increase or decrease in the assumed initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate) would increase or decrease the as adjusted amount of each of cash and cash equivalents, total assets, total liabilities and total equity by approximately $      million, assuming the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. An increase or decrease of 1,000,000 shares in the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, would increase or decrease the as adjusted amount of each of cash and cash equivalents, total assets, total liabilities and total equity by approximately $      million, assuming no change in the assumed initial public offering price of $      per ordinary share, the USD equivalent of NIS       (based on the BOI Exchange Rate).
 
18

 
Consolidated statement of cash flow data:
Nine months ended September 30,
Year Ended December 31,
2022
2021
2021
2020
(in thousands)
      (unaudited)
Net cash provided by (used in) operating activities
$ 53,404 $ 27,521 $ 52,023 $ 38,810
Net cash provided by (used in) investing activities
(648,238) (482,660) (644,638) (492,450)
Net cash generated from financing activities
606,128 636,334 752,314 343,528
 
19

 
Risk factors
You should carefully consider the risks and uncertainties described below and the other information in this prospectus before deciding to invest in our ordinary shares. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations. Our business, financial condition or results of operations could be materially and adversely affected by any of these risks and uncertainties. The trading price and value of our ordinary shares could decline due to any of these risks and uncertainties, and you may lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks and uncertainties faced by us described below and elsewhere in this prospectus.
Risks related to development and construction of our renewable energy projects
The growth of our business depends upon our ability to continue to source and convert our Development Projects, Advanced Development Projects and Mature Projects (which are under construction, are in pre-construction or have signed a PPA) into Operational Projects.
We may not be successful in converting our Development Projects, Advanced Development Projects and Mature Projects (which are under construction, are in pre-construction or have signed a PPA) into Operational Projects. The completion of renewable energy projects involves numerous risks and uncertainties, including the risks set forth elsewhere in this “Risk Factors” section. These risks and uncertainties may prevent some projects from progressing to construction and/or operational phases altogether, in a timely manner and on acceptable terms. In addition, for a variety of reasons, we may elect not to proceed with the development or construction of a project currently in our portfolio. Our growth depends on our continued ability to progress projects to the operational phase, and our results in the future may not be consistent with our expectations or historical results. If we are not successful in doing so, we will not continue to grow our portfolio and cash flows.
Projects under development may not be successfully developed, financed or constructed.
The development of renewable energy projects involves numerous risks. We may be required to spend significant resources for land and interconnection rights, preliminary engineering, permitting, legal services and other expenses before we can determine whether a project is feasible, economically attractive and capable of being built. Success in developing a particular project is contingent upon, among other things:

obtaining financeable land rights, including land rights for the project site that allow for eventual construction and operation without undue burden, cost or interruption;

entering into financeable arrangements for the sale of the electrical output, and, in certain cases, capacity, ancillary services and renewable energy attributes, generated by or attributable to the project;

obtaining economically feasible interconnection positions with Independent System Operators (“ISOs”), regional transmission organizations and regulated utilities;

accurately estimating, and where possible mitigating, costs arising from potential transmission grid congestion, limited transmission capacity and grid reliability constraints, which may contribute to significant interconnection upgrade costs that could render certain of our projects uneconomic;

providing letters of credit or other forms of payment and performance security required in connection with the development of the project, which security requirements may increase over time;

accurately estimating our costs and revenues over the life of the project years before its construction and operation, while taking into consideration the possibility that markets may shift during that time;

receiving required environmental, land-use, and construction and operation permits and approvals from governmental agencies in a timely manner and on reasonable terms, which permits and approvals are governed by statutes and regulations that may change between issuance and construction;
 
20

 

avoiding or mitigating impacts to protected or endangered species or habitats, migratory birds, wetlands or other water resources, and/or archaeological, historical or cultural resources;

securing necessary rights-of-way for access, as well as water rights and other necessary utilities for project construction and operation;

securing appropriate title coverage, including coverage for mineral rights and mechanics’ liens;

negotiating development agreements, public benefit agreements and other agreements to compensate local governments for project impacts;

negotiating tax abatement and incentive agreements, whenever applicable;

obtaining financing, including debt, equity, and tax equity financing;

negotiating satisfactory energy, procurement and construction (“EPC”) or balance of plant (“BoP”) agreements, including agreements with third-party EPC or BoP contractors; and

completing construction on budget and on time.
In addition, our projects depend upon obtaining, in a timely and economic manner, interconnection to electric transmission facilities to deliver the electricity we generate. A failure or delay in the operation, development of, or interconnection to, these interconnection or transmission facilities could result in our losing revenues because such a failure or delay could limit the amount of power our Operational Projects deliver or delay the completion of our construction projects. The requests for processing interconnection and transmission requests and conducting the associated studies may become backlogged causing delays in determining interconnection and transmission rights and costs. The costs of such interconnection and transmission facilities for which our projects may be responsible could be significant, uncertain and subject to change, including after a project commences operation. The absence of availability and access to interconnection facilities and transmissions systems, our inability to obtain them in a timely manner, at a reasonable cost and at reasonable terms and conditions, the lack of adequate capacity on such interconnection or transmission facilities, curtailment as a result of transmission facility downtime, or the failure of any relevant jurisdiction to expand transmission facilities may have a material adverse effect on our ability to develop our projects, which could materially and adversely affect our results of operations and cash flow.
If we fail to complete the development of a renewable energy project in accordance with applicable contracts or fail to fulfill other contract obligations, we may be subject to forfeiture of significant deposits under, or the termination of, offtake contracts, incur significant liquidated damages, penalties and/or other obligations under other project-related agreements and may not be able to recover our investment in the project. If we are unable to complete the development of a renewable energy project, we may impair some or all of the capitalized investments we have made relating to the project. We expense development costs for a project as long as we estimate that the probability of realization of such project is less than 50%. Once we determine a project has a greater than 50% probability of realization, development costs incurred for such project are capitalized. Should the probability of realization subsequently fall below 50%, the capitalized amounts are recognized as project development expenses, which would have an adverse impact on our results of operations in the period in which the loss is recognized.
We may not be able to site sufficient suitable land for our projects.
We intend to pursue greenfield opportunities to develop new renewable energy projects consistent with our business strategy. Various factors regarding land suitability could affect our ability to develop new projects and otherwise grow our business, including:

the availability of, or inability to obtain, sufficient land suitable for solar energy and wind energy project development. In many markets, topography, existing land use and/or transmission constraints limit the availability of sites for solar energy and wind energy development. For these reasons, attractive and commercially feasible sites may become a scarce commodity, and we may be unable to site our projects at all or on terms as favorable as those applicable to our current projects;
 
21

 

the presence or potential presentence of waking or shadowing effects caused by neighboring activities, which reduce potential energy production by decreasing wind speeds or reducing available insolation; and

due to the large amount of land required to site solar energy and wind energy projects, there may be greater risk of the presence or occurrence of one or more of the following: (i) pollution, contamination or other wastes at the project site; (ii) protected plant or animal species; (iii) archaeological or cultural resources; or (iv) local opposition to wind energy and solar energy projects in certain markets due to concerns about noise, health environmental or other alleged impacts of such projects the presence or potential presence of land use restrictions and other environment-related siting factors.
We do not own all of the land on which the projects in our portfolio are located.
As a project developer, we require land rights in order to successfully develop, finance and construct our projects. We do not own all of the land on which the projects in our portfolio are located, and our current projects generally are, and our future projects may be, located on land occupied under long-term easements, leases and rights of way. The ownership interests in the land subject to these easements, leases and rights of way may be subject to mortgages securing loans or other liens and other easement, lease rights and rights of way of third parties that were created prior to our projects’ easements, leases and rights of way. As a result, some of our projects’ rights under such easements, leases or rights of way may be subject to the rights of these third parties. While we perform title searches, obtain title insurance, record our interests in the real property records of the projects’ localities and enter into non-disturbance agreements to protect ourselves against these risks, such measures may be inadequate to protect against all risk that our rights to use the land on which our projects are or will be located and our projects’ rights to such easements, leases and rights of way could be lost or curtailed. Any such loss or curtailment of our rights to use the land on which our projects are or will be located could have a material adverse effect on our business, financial condition and results of operations.
Our ability to successfully develop projects is impacted by the availability of, and access to, interconnection facilities and transmissions systems.
The absence of availability and access to interconnection facilities and transmissions systems, our inability to obtain them in a timely manner, at a reasonable cost and at reasonable terms and conditions, the lack of adequate capacity on such interconnection or transmission facilities, curtailment as a result of transmission facility downtime, or the failure of any relevant jurisdiction to expand transmission facilities may have a material adverse effect on our ability to develop our projects, which could materially and adversely affect our results of operations and cash flow.
The development, construction and operation of our projects require governmental and other regulatory approvals and permits, including environmental approvals and permits.
The development, construction and operation of renewable energy projects, including the transmission and sale of electricity and associated products, are highly regulated, require various governmental approvals and permits, including environmental approvals and permits, and may be subject to the imposition of related conditions that vary by jurisdiction. In some cases, these approvals and permits require periodic renewal and the terms of a subsequently issued permit may not be consistent with the terms of the permit initially issued. In addition, some permits and approvals require ongoing compliance with terms and conditions, some of which can change over time. We cannot predict whether all permits and approvals required for a given project will be granted, or granted on a timely basis, or whether the conditions associated with them will be achievable, as such conditions may change over time.
Failure to comply with such conditions, our inability to obtain and maintain existing or newly imposed permits and approvals, or the imposition of impractical or burdensome conditions upon issuance, renewal or over time, could impair our ability to, develop, construct or operate a project. In addition, we cannot predict whether seeking any permit will attract significant opposition or whether the process for obtaining any permit will become more expensive or lengthened due to complexities, legal claims or appeals. Delay in the review and process for obtaining
 
22

 
any permit for a project can impair or delay the ability to develop, construct or operate a project or increase the cost such that the project is no longer profitable for us. There is no assurance that we will obtain and maintain these governmental permits and approvals, or that we will be able to obtain them in a timely manner and on reasonable terms. Any impediment could have a material adverse effect on our business.
Disruptions in our supply chain for materials and components and the resulting increase in equipment and logistics costs could adversely affect our financial performance.
We are subject to risk from fluctuating market prices of certain raw materials, particularly steel, aluminum, polycrystalline silicon and lithium, which are used in the construction and maintenance of our solar energy, wind energy and battery storage projects. Prices of these raw materials may be affected by supply restrictions or other market factors from time to time. Some of the components and materials related to the equipment we purchase are sourced from outside of markets where we operate through arrangements with various vendors, and there have been delays in obtaining these components and materials as a result of the ongoing coronavirus (“COVID-19”) pandemic, shipping and transportation constraints, and other supply chain disruptions.
Political, social or economic instability in regions where these components and materials are made could cause future disruptions in trade. For example, concerns about forced labor in China’s Xinjiang Uyghur Autonomous Region (“XUAR”), where certain components and materials are manufactured, have led to legislation in countries such as the United States restricting imports from such region. Specifically, on December 23, 2021, the United States enacted the Uyghur Forced Labor Prevention Act (“UFLPA”), which presumptively prohibits imports of any goods made either wholly or in part in the XUAR. The law, which went into effect on June 21, 2022, creates a rebuttable presumption against “the importation of goods made, manufactured, or mined in the XUAR (and certain other categories of persons in China)” unless the importer meets certain due diligence standards, responds to all inquiries from U.S. Customs and Border Protection (“CBP”) related to forced labor and the CBP determines, based on “clear and convincing evidence,” that the goods in question were not produced wholly or in part by forced labor. CBP has identified silica-based and polysilicon as high-priority sectors for enforcement. We have implemented policies and controls to mitigate the risk of forced labor in our supply chain, and we do not believe that our suppliers source materials for our supply chain from the XUAR, but we cannot guarantee that our suppliers and partners will always comply with our policies. Enforcement of the UFPLA against us or our suppliers could lead to our products being held for inspection by CBP and delayed or rejected for entry into the United States, resulting in other supply chain disruptions, or cause us to be subject to penalties, fines or sanctions. Broader policy uncertainty, including actions in various countries, such as China, have created uncertainty with respect to tariff impacts on the costs of some of these components and materials, and could also reduce Chinese panel production, affecting supplies and/or prices for panels, regardless of supplier. Even if we were not subject to penalties, fines or sanctions or supply chain disruption, if products we source are linked in any way to forced labor in the XUAR, our reputation could be harmed. In the future, these trade restrictions may extend beyond the United States. In September 2022, the European Union announced a similar proposal targeting goods within Europe created with forced labor, without specifying particular countries or sectors. The European Union proposal, if passed and implemented, could similarly impact our supply chain.
In addition, the United States currently imposes AD/CVD on certain imported crystalline silicon photovoltaic (“PV”) cells and modules from China and Taiwan. Such AD/CVD can change over time pursuant to annual reviews conducted by the U.S. Department of Commerce, and an increase in duty rates could have an adverse impact on our operating results. In February 2022, Auxin Solar Inc., a U.S. producer of crystalline silicon PV products, petitioned the U.S. Department of Commerce (“USDOC”) to investigate alleged circumvention of AD/CVD on Chinese imports by crystalline silicon PV cells and module imports assembled and completed in Cambodia, Malaysia, Thailand and Vietnam. On March 28, 2022, the USDOC announced that it would investigate the circumvention alleged in the petition. President Biden’s June 6, 2022, Executive Order on clean energy reiterated the independence and integrity of these ongoing investigations while suspending the collection of duties for a period of two years.
In its preliminary ruling, the USDOC made negative circumvention determination. As the timing and progress of many of our projects depend upon the supply of PV cells and modules, the extent to which our operating results
 
23

 
could be adversely impacted depends on (among other things) the type of materials, rates imposed and timing of the tariffs. In addition, to the extent legislation is passed that requires or incentivizes companies to source more equipment or components from particular sources or domestic sources, it could result in increased costs. Significant price increases for these raw materials could reduce the profitability of our projects, and could harm our business, financial condition and results of operations.
We cannot predict whether the countries in which the components and materials are sourced, or may be sourced in the future, will be subject to new or additional trade restrictions imposed by the governments of countries in which our projects are located, including the likelihood, type or effect of any such restrictions. Trade restrictions, including embargoes, safeguards and customs restrictions against certain components and materials, as well as labor strikes and work stoppages or boycotts, could increase the cost or reduce or delay the supply of components and materials available to us and our vendors, which could delay or adversely affect the scope of our projects under development or construction and adversely affect our business, financial condition or results of operations.
Our suppliers may not perform existing obligations or be available or able to perform future obligations, which could have a material adverse effect on our business.
We often rely on a small number of suppliers, such as solar panel suppliers, tracker suppliers and wind turbine manufacturers, to provide equipment, technology and other services required to construct and operate our projects. A number of factors, including the credit quality of our suppliers and import and export restrictions, may affect their ability to perform under our supply agreements. Not all of our equipment suppliers are investment grade entities, and we cannot guarantee that any of our suppliers will sufficiently honor the terms of our contracts in every situation. If any of these suppliers cannot, or does not, perform under its agreements with us, we may need to seek alternative suppliers. Alternative suppliers, products and services may not perform similarly, and replacement agreements may not be available on terms as favorable as those in our current agreements or at all. Using alternative suppliers may result in higher costs and/or inability to meet our project schedules or to provide equipment of the same quality as that provided by our existing suppliers. We may be required to make significant capital contributions to remove, replace or redesign equipment that cannot be supported or maintained by replacement suppliers. The failure of any supplier to fulfill its contractual obligations to us could have a material adverse effect on our business, financial condition and results of operations. Further, the acquisition of a supplier by one of our competitors or its affiliates could also limit our access to equipment, technology and other services or negatively affect our existing business relationships, which would have a material adverse effect on our business.
Project construction activities may not commence or proceed as scheduled, which could increase our costs and impair our ability to recover our investments.
The construction of renewable energy projects involves numerous risks. Success in constructing a particular project is contingent upon or may be affected by, among other things:

timely implementation and satisfactory completion of construction;

obtaining and maintaining required governmental permits and approvals, including making appeals of, and satisfying obligations in connection with, approvals obtained;

permit and litigation challenges from project stakeholders, including local residents, environmental organizations, labor organizations, tribes and others who may oppose the project;

grants of injunctive relief to stop or prevent construction of a project in connection with any permit or litigation challenges;

delivery of modules, wind turbines or battery energy storage systems on-budget and on-time;

discovery of unknown impacts to protected or endangered species or habitats, migratory birds, wetlands or other jurisdictional water resources, and/or cultural resources at project sites;

discovery of title defects or environmental conditions that are not currently known, unforeseen engineering problems, construction delays, contract performance shortfalls and work stoppages;
 
24

 

material supply shortages, failures or disruptions of labor, equipment or supplies;

increases to labor costs beyond our expectation upon entering into construction agreements as a result of enhanced local or national requirements regarding the use of union labor on-site;

insolvency or financial distress on the part of our service providers, contractors or suppliers;

cost overruns and change orders;

cost or schedule impacts arising from changes in federal, state, or local land-use or regulatory policies;

changes in electric utility procurement practices;

project delays that could adversely affect our ability to secure or maintain interconnection rights;

unfavorable tax treatment or adverse changes to tax policy;

adverse environmental and geological or weather conditions, including water shortages and climate change, which may in some cases force work stoppages due to the risk of heat, fire or other extreme weather events;

force majeure and other events outside of our control;

changes in laws affecting the project;

accidents on constructions sites; and

damage to consumers triggered by blackouts caused by damage to transmission infrastructure during construction.
If we fail to complete the construction of a renewable energy project, fail to meet one or more agreed target construction milestone dates, or fail to perform other contract terms, we may be subject to payment obligations arising under significant letters of credit required to be maintained under offtake contracts or interconnection agreements or termination of such agreements, incur significant liquidated damages, penalties and/or other obligations under other project-related agreements, and may not be able to recover our investment in the project. If we are unable to complete the construction of a renewable energy project, we may impair some or all of the capitalized investments we have made relating to the project, which could have an adverse effect on our results of operations in the period in which the loss is recognized.
Risks related to the offtake of our renewable energy projects
We face growing competition from traditional and renewable energy companies in developing renewable energy projects.
The solar energy and wind energy industries are highly competitive. A growing number of companies are seeking to develop and originate such projects, driven by the growth of the total addressable market for such projects and the increased level of interest from investors in environmental, social and governance focused ventures. In addition to developers, independent power producers, unregulated utility affiliates, renewable energy companies, and pension and private equity funds, we also compete with traditional oil and gas companies and incumbent utilities. We may not be able to enter into or renew long-term contracts for the sale of power produced by our projects at prices and on other terms favorable to us. If we cannot offer compelling value to our offtakers, then our business will not grow at our anticipated pace or at all. Traditional utilities generally have, and certain of our other competitors have, substantially greater financial, technical, operational and other resources than we do. In addition, growing corporate and investor support for renewable energy has increased the amount of money being allocated to developers that compete with us. Such competitors may be able to build and own solar energy projects at lower costs than us, enabling them to submit bids for PPAs or similar energy purchase agreements at more competitive and appealing terms to potential customers than ours. Traditional utilities could also offer other value-added products or services that could help them compete with us even if the cost of electricity they offer is higher than ours.
 
25

 
Attractive offtake terms may become unavailable, which would adversely affect our business and growth.
Intense competition for offtake contracts may result in downward pressure on offtake pricing. Downward pressure on equipment pricing over the long term, may also create downward pressure on offtake pricing. If falling offtake pricing results in forecasted project revenue that is insufficient to generate returns higher than our cost of capital, our business, financial condition and results of operations could be adversely affected.
Alternatively, if we pursue offtake contracts with pricing that we assume will be attractive based on expectations of falling equipment or construction pricing or other cost or revenue expectations that ultimately prove to be inaccurate, or the value of a project is less than expected at the time of execution of the related offtake contract, our business, financial condition and results of operations could be adversely affected, including through payment obligations to issuing banks in connection with any posted letters of credit.
In addition, competition for offtake contracts and other market factors may result in new market terms that may not be favorable to us and could adversely affect the economics of our projects and, in turn, our ability to obtain sufficient financing and grow our business. This trend may require us to seek new offtake counterparties, which could expose us to risks in new markets or associated with having less creditworthy counterparties. Similarly, our competitors are increasingly willing to accept short duration offtake terms, which may put pressure on us to accept shorter duration offtake contracts, thereby increasing our exposure to market volatility and inaccuracy in the third-party prediction of energy pricing during the merchant tail period of operations after expiration of the offtake contract.
In addition, the availability of offtake contracts depends on utility and corporate energy procurement practices that may change over time. Offtake contract availability and terms are a function of a number of economic, regulatory, tax and public policy factors, each of which is also subject to change.
If our projects fail to meet development, operational or performance benchmarks, our offtakers may have the right to terminate the applicable offtake contract, require us to pay damages or reduce the amount of energy such projects sell.
If certain of our projects fail to meet development, operational or performance benchmarks related to, among other things, energy production and project availability, within specified time periods, such failure may give rise to a default or event of default under one or more of the offtake contracts in our portfolio or offtake contracts we may enter into in the future. These contracts may provide the applicable counterparties with rights to, among other things: terminate the applicable offtake contracts; require us to pay damages under such offtake contracts; or reduce the amount of energy our projects can sell under such offtake contracts. If our projects fail to meet applicable development or operational benchmarks, such as minimum production requirements, and our offtakers or other counterparties elect to take any such action against us under our offtake contracts, it could materially and adversely affect the development of our renewable energy projects, our results of operations and cash flow unless and until we are able to replace the offtake contract on similar terms. We may not be able to enter into a replacement offtake contract on favorable terms or at all, which may have an adverse impact on our growth strategy and may negatively affect our business.
Our offtakers could become unwilling or unable to fulfil or renew their contractual obligations to us or they may otherwise terminate their agreements with us.
Once we enter into offtake contracts or other long-term contracts, we are exposed to the risk that our counterparties will become unwilling or unable to fulfill or renew their contractual obligations and, if any such agreement is terminated, we cannot guarantee that we will enter into a replacement agreement on substantially similar terms or at all. Any or all of our offtakers may fail to fulfill or renew their obligations to us under their contracts or otherwise, including as a result of the occurrence of any of the following factors:

Events beyond our control or the control of an offtaker that may temporarily or permanently excuse the offtaker from its obligation to accept and pay for delivery of energy generated by a project. These events could include a system emergency, a transmission failure or curtailment, adverse weather condition, a change in law, a change in permitting requirements or conditions, or a labor dispute.
 
26

 

The ability of our offtakers to fulfill their contractual obligations to us depends on their creditworthiness. Due to the long-term nature of our offtake contracts, we are exposed to the credit risk of our offtakers over an extended period of time. Any of these counterparties could become subject to insolvency or liquidation proceedings or otherwise suffer a deterioration of its creditworthiness, including when it has not yet paid for energy delivered, any of which could result in a default under their agreements with us, and an insolvency or liquidation of any of these counterparties could result in the termination of any applicable agreements with such counterparty.

The ability of any of our offtakers to extend, renew or replace its existing offtake contract with us depends on a number of factors beyond our control, including: whether the offtaker has a continued need for energy or capacity at the time of expiration, which could be affected by, among other things, the presence or absence of governmental incentives or mandates, prevailing market prices or the availability of other energy sources; the satisfactory performance of our delivery obligations under such offtake contracts; the regulatory environment applicable to our offtakers at the time; and macroeconomic factors present at the time, such as population, business trends and related energy demand.
If our offtakers are unwilling or unable to fulfill or renew their contractual obligations to us, or if they otherwise terminate such agreements prior to their expiration, we may not be able to recover contractual payments and commitments due to us. Since the number of counterparties that purchase wholesale bulk energy is limited, we may be unable to find a new energy purchaser on terms similar to or at least as favorable as those in our current agreements or at all. Any interruption in or termination of payments by any of our counterparties could adversely affect our ability to pay project lenders and tax equity investors, could cause a default under the applicable project debt and tax equity financing arrangements, and could trigger cross-defaults under our other financing arrangements. In such a case, the cash flows we receive could be adversely affected. In addition, our ability to finance additional projects with offtake contracts from such counterparties would be adversely affected, undermining our ability to grow our business. The loss of or a reduction in sales to any of our offtakers could have a material adverse effect on our business, financial condition and results of operations.
Risks related to the operation and management of our renewable energy projects
Operation and maintenance of renewable energy projects involve significant risks that could result in unplanned outages, reduced output, interconnection or termination issues, or other adverse consequences.
There are risks associated with the operation of our projects. These risks include, but are not limited to:

greater or earlier than expected degradation, or in some cases failure, of solar panels, inverters, transformers, turbines, gear boxes, blades and other equipment;

technical performance below projected levels, including the failure of solar panels, inverters, wind turbines, gear boxes, blades and other equipment to produce energy as expected, whether due to incorrect measures of performance provided by equipment suppliers, improper operation and maintenance, or other reasons;

design or manufacturing defects or failures, including defects or failures that are not covered by warranties or insurance;

insolvency or financial distress on the part of any of our service providers, contractors or suppliers, or a default by any such counterparty for any other reason under its warranties or other obligations to us;

increases in the cost of Operational Projects, including costs relating to labor, equipment, unforeseen or changing site conditions, insurance, regulatory compliance, and taxes;

loss of interconnection capacity, and the resulting inability to deliver power under our offtake contracts, due to grid or system outages or curtailments beyond our or our counterparties’ control;

breaches by us and certain events, including force majeure events, under certain offtake contracts and other contracts that may give rise to a right of the applicable counterparty to terminate such contract;
 
27

 

catastrophic events, such as fires, earthquakes, severe weather, tornadoes, ice or hail storms or other meteorological conditions, landslides, and other similar events beyond our control, which could severely damage or destroy a project, reduce its energy output, result in property damage, personal injury or loss of life, or increase the cost of insurance even if these impacts are suffered by other projects as is often seen following events like high-volume wildfire and hurricane seasons;

storm water or other site challenges;

the discovery of unknown impacts to protected or endangered species or habitats, migratory birds, wetlands or other jurisdictional water resources, and/or cultural resources at project sites;

the discovery or release of hazardous or toxic substances or wastes and other regulated substances, materials or chemicals;

errors, breaches, failures, or other forms of unauthorized conduct or malfeasance on the part of operators, contractors or other service providers;

cyber-attacks targeted at our projects as a way of attacking the broader grid, or a failure by us or our operators or contractual counterparties to comply with cyber-security regulations aimed at protecting the grid from such attacks;

failure to obtain or comply with permits, approvals and other regulatory authorizations and the inability to renew or replace permits or consents that expire or are terminated in a timely manner and on reasonable terms;

the inability to operate within limitations that may be imposed by current or future governmental permits and consents;

changes in laws, particularly those related to land use, environmental or other regulatory requirements;

disputes with government agencies, special interest groups, or other public or private owners of land on which our projects are located, or adjacent landowners;

changes in tax, environmental, health and safety, land use, labor, trade, or other laws, including changes in related governmental permit requirements;

government or utility exercise of eminent domain power or similar events;

existence of liens, encumbrances, or other imperfections in title affecting real estate interests; and

failure to obtain or maintain insurance or failure of our insurance to fully compensate us for repairs, theft or vandalism, and other actual losses.
These and other factors could have adverse consequences on our solar energy, wind energy or energy storage projects. For example, these factors could require us to shut down or reduce the output of such projects, degrade equipment, reduce the useful life of the project, or materially increase O&M and other costs. Unanticipated capital expenditures associated with maintaining or repairing our projects would reduce profitability. Congestion, emergencies, maintenance, outages, overloads, requests by other parties for transmission service, including on our facilities, actions or omissions by other projects with which we share facilities, and certain other events, including events beyond our control, could give rise to a partial or complete curtailment of generation or transmission of energy from our projects and could lead to one or more of our customers terminating their offtake contracts with us. Any termination of a project’s interconnection or transmission arrangements or non-compliance by an interconnection provider, an owner or operator of shared facilities, or another third party with its obligations under an interconnection, shared facilities, or transmission arrangement may delay or prevent our projects from delivering energy to our offtakers. If an interconnection, shared facilities or transmission arrangement for a project is terminated, we may not be able to replace it on terms as favorable as those of the existing arrangement, or at all, or we may experience significant delays or costs in connection with such replacement. In addition, due to supply chain disruptions, replacement and spare parts for solar panels, wind turbines and other key pieces of equipment may be difficult or costly to acquire or may be unavailable.
 
28

 
Any of the risks described above could significantly decrease or eliminate the revenues of a project, significantly increase a project’s operating costs, cause us to default under our financing agreements, or give rise to damages or penalties owed by us to an offtaker, another contractual counterparty, a governmental authority or another third party, or cause defaults under related contracts or permits. Any of these events could have a material adverse effect on our business financial condition and results of operations.
Energy production and revenues from our solar energy and wind energy projects depend heavily on suitable meteorological and environmental conditions and our ability to accurately predict meteorological conditions.
The energy produced, and revenue and cash flows generated, by a solar energy or wind energy project depend on suitable climatic conditions, particularly solar and wind conditions, both of which are beyond our control. Our solar energy projects require strong, consistent exposure to sunlight to achieve the predicted power generation and weather, geological or other conditions at our project sites, as well as climatological phenomena not experienced directly at our sites, may prevent adequate amounts of sunlight from reaching some or all of our solar energy projects. Also, our wind energy projects will only operate within certain wind speed ranges that vary by turbine model and manufacturer, and the wind resource at any given project site may not fall within such specifications.
Furthermore, components of our solar energy systems, such as panels and inverters, and wind energy projects, such as turbines and blades, could be damaged by severe weather or natural catastrophes, the exposure of our projects to which varies greatly due to the number of diverse regions in which our projects are located, examples of which include snowstorms, ice storms, hailstorms, lightning strikes, tornadoes and derechos, fires, earthquakes, landslides, mudslides, sandstorms, drought, dust-storms, floods, hurricanes or other inclement weather. In these circumstances, the provision of O&M or other services may be adversely affected. In particular, materials may not be delivered as scheduled and labor may not be available, and we may be obligated to bear the expense of repairing the damaged solar energy and wind energy systems that we own. Such extreme weather conditions or natural catastrophes may also severely affect our operations by greatly reducing energy output from our systems, and in cases of severe damage, to zero, causing a reduction in revenue in addition to increased costs due to damages. Replacement and spare parts for key components may be costly, or otherwise difficult or unavailable to obtain. Moreover, natural disasters may adversely affect the economy, infrastructure and communities in the regions where we conduct our business and regions and countries where we source our materials.
We base our investment decisions with respect to projects on the findings of solar or wind resource studies as well as remote modelling of solar or wind resources conducted by third-party engineers, all of which are used to generate predictions as to solar or wind resource over future periods and forecast methodologies used by third-party engineers may change over time. Actual weather, resource and other climatic conditions at a project site may not conform to the findings of these studies, and our projects may not meet anticipated production or transmission levels. Climatic conditions and resource expectations will continue to change over time, and we cannot accurately predict such changes. Further, weather patterns change in scope and magnitude in ways that diverge from historic trends, making it harder to predict the average annual amount of sunlight striking each of our solar energy project locations or prevailing wind patterns and speeds at our wind energy projects. Climate change also affects the severity and frequency of weather or other natural catastrophes and the geographical regions in which they are experienced. Our inability to accurately predict availability of solar or wind resources could adversely affect our profitability and, as a result, harm our business, financial condition and results of operations.
Our projects may not perform as we expect, and the protection afforded by warranties provided by our counterparties may be limited by the ability or willingness of a counterparty to satisfy its warranty obligations or by the expiration of applicable time or liability limits.
Although we expect to benefit from various warranties, including construction, product quality and performance warranties, provided by our counterparties in connection with the construction of our projects, the purchase of equipment necessary to operate our projects, and certain other matters, our counterparties may become insolvent, cease operations or otherwise default on their warranty obligations. Even if a counterparty fulfills its obligations,
 
29

 
many of our warranties do not cover reimbursement for lost revenue, and we cannot guarantee any warranties will be sufficient to compensate us for all of our losses. Further, there are limitations in most warranties, including limits on liability. Many warranties have exclusions rendering them inapplicable if, for example, the owner does not follow the manufacturer’s operating instructions. We may disagree with a counterparty about whether a particular product defect, performance shortfall or other similar matter is covered by a warranty, in whole or in part, as well as the manner in which any such matter should be resolved. As a result, enforcing any such warranty may be costly or impossible. Such costs may include significant out-of-pocket and internal expenses, some or all of which may not be recovered. The failure of some or all of our projects to perform according to our expectations and limitations to our warranty coverage could have a material adverse effect on our business, financial condition and results of operations.
Our projects are subject to curtailment and other production restriction risks.
Our projects may be subject to curtailment or other production restrictions under various circumstances. Under the terms of certain of our offtake contracts, our projects’ delivery of electricity is subject to curtailment or other restrictions, including by our offtakers, regional transmission organizations or ISOs, for various reasons, including for system maintenance or reliability and stability purposes, over-generation, or due to transmission limitations, emergencies, force majeure or geopolitical circumstances. For example, as a result of reduced energy needs due to COVID-19, the government of Serbia partially curtailed offtake from project Blacksmith in 2020. Additionally, under the terms of certain of our interconnection agreements, our projects may bear the risk of curtailment or other restrictions on production required by the regional transmission organization, balancing authority, transmission owner or ISO for similar reasons. As the penetration of renewable energy increases in electric transmission systems around the world, the risk of congestion leading to curtailment increases, particularly at the times of day and year when our projects are generating the most energy due to common resource availability among us and our competitors. In addition, the determination as to whether compensation for curtailments will be paid is made under contracts which may be subject to differing interpretations or may be breached by counterparties. Any curtailment or restriction could have a material adverse effect on our business, financial condition and results of operations.
Electricity prices are volatile, and decreases in demand for and the price of electricity we sell may harm our business, financial condition, results of operations and cash flows.
The amount of electricity consumed is affected primarily by overall demand for electricity, which may fluctuate in response to macroeconomic conditions, absolute and relative prices, availability of energy from various sources, energy conservation and demand-side management, as well as environmental and other governmental regulations. Decreases in the price of electricity may negatively impact our business and results of operations. The price of electricity could decrease as a result of:

construction of new, lower-cost power generation plants, including plants utilizing renewable energy or other generation technologies;

relief of transmission constraints that enable lower-cost and/or geographically distant generation to access transmission lines less expensively or in greater quantities;

reductions in the price of natural gas or other fuels;

the amount of excess generating capacity relative to load in a particular market;

decreased electricity demand, including from energy conservation technologies and public initiatives to reduce electricity consumption;

development of smart-grid technologies that reduce peak energy requirements;

development of new or lower-cost customer-sited energy storage technologies that have the ability to reduce a customer’s average cost of electricity by shifting load to off-peak times;

changes in the cost of controlling emissions of pollution, including the cost of emitting carbon dioxide and the prices for renewable energy certificates;
 
30

 

the structure of the electricity market;

weather conditions and seasonal fluctuations that impact electrical load; and

development of new energy generation technologies which could allow our competitors and their customers to offer electricity at costs lower than those that can be achieved by us and our facilities.
We seek to minimize our exposure to electricity price volatility through the use of long-term offtake contracts. In select countries such as Sweden and Spain, where we sell electricity in the open market, we seek to hedge our market exposure through a wide range of products, including but not limited to forward sales of electricity.
Our hedging activities may not adequately manage our exposure to electricity prices.
We sell or intend to sell a significant portion of the electricity we generate in Sweden and Spain on the open market at spot-market prices and other select markets in future. In order to stabilize a portion of the revenue from such sales, we enter into hedging arrangements through a wide range of product types, including but not limited to forward sales and purchases of electricity. Hedging products may consist of physical power, financial swaps and options or structured transactions. If a project does not generate the volume of electricity covered by associated hedging arrangements, we could incur significant losses if electricity prices in the market rise substantially above the fixed price provided for in the hedging arrangement. If a project generates more electricity than is contracted in the hedging arrangement, the excess production will not be hedged and the related revenues will be exposed to market price fluctuations.
We may incur significant financial losses as a result of adverse changes in the mark-to-market values of the financial swaps or if the counterparties to our hedging contracts fail to make payments when due. In addition, if we have to unwind a hedging arrangement that has become uneconomical or for any other reason, we may be unable to hedge at all, which would expose our revenues to market price fluctuations. We could also experience a reduction in cash flow if we are required to post margin in the form of cash collateral to secure our delivery or payment obligations under these hedging agreements.
General business risks
We depend on certain Operational Projects for a substantial portion of our cash flows.
We depend on certain Operational Projects, and expect to depend on certain future projects, for a substantial portion of our cash flows. For example, one of our largest Operational Projects, Blacksmith, accounted for approximately 34% and 15% of our revenue for the year ended December 31, 2021 and the nine months ended September 30, 2022, respectively. Similarly, one of our Operational Projects, Gecama, which we operate on a Merchant Model without a PPA, accounted for 0% and 15.7% of our revenue for the year ended December 31, 2021 and the nine months ended September 30, 2022, respectively. While our dependence on Blacksmith is expected to continue to decline, and our dependence on Gecema is not expected to materially increase, as new projects reach commercial operation, we may not be able to successfully complete projects under construction and/or develop projects from our development pipeline in order to further diversify our sources of cash flow and reduce our portfolio concentration. Consequently, the impairment or loss of any one or more of the projects in our operating portfolio, such as Blacksmith or Gecama, could materially and disproportionately reduce our total energy generation and cash flows and, as a result, have a material adverse effect on our business, financial condition and results of operations.
Our business strategy includes growing our portfolio of projects through acquisitions, which involves numerous risks.
Our strategy includes growing our business through acquisitions. Acquisitions involve numerous risks, including exposure to existing and future liabilities and unanticipated post-acquisition costs, dependence on approvals by regulatory bodies across various jurisdictions (including, with respect to certain acquisitions in the United States, the Committee on Foreign Investment in the United States), difficulty in integrating the acquired projects into our
 
31

 
business and, if the projects operate in new markets, the risks of entering markets where we have limited experience. For example, projects may be acquired from parties that have made inaccurate representations, which exposes us to existing and future liabilities.
Additionally, we risk overpaying for such projects (or not making acquisitions on an accretive basis) and failing to retain the offtake agreements or other commercial agreements in place for such projects. While we have customarily and will continue to perform due diligence on prospective acquisitions, we may not have discovered, or may not in the future discover, all potential risks, operational issues or other problems affecting such projects. Future acquisitions might not perform as expected or the returns from such acquisitions might not support the financing utilized to acquire them or maintain them. A failure to achieve the financial returns we expect when we acquire renewable energy projects and assets could have a material adverse effect on our ability to grow our business.
Finally, we may not have sufficient availability under our credit facilities or have access to project-level financing, including, in some instances, tax equity financing, on commercially reasonable terms when acquisition opportunities arise. An inability to obtain the required or desired financing could significantly limit our ability to consummate future acquisitions and effectuate our growth strategy. If financing is available, it may be available only on terms that could significantly increase our costs, impose additional or more restrictive covenants, or reduce cash flow.
Solar energy and wind energy may not remain primary sources of renewable energy.
Solar energy and wind energy have been the leading sources of clean electricity generation to date due to the low cost of electricity and the ability to access these resources in some form in many geographies. Our generation pipeline consists entirely of solar energy and wind energy Development Project, and therefore our growth is premised on solar energy and wind energy continuing to be the technology of choice for clean electricity generation. Should alternative technologies emerge that limit the demand for solar energy and wind energy technologies, our long-term growth may be adversely impacted.
There can be no guarantee that newly developed technologies that we invest in will perform as anticipated.
We may invest in and use newly developed, less proven, technologies in our Development Project or in maintaining or enhancing our existing assets. There is no guarantee that such new technologies will perform as anticipated. The failure of a new technology to perform as anticipated may materially and adversely affect the profitability of a particular Development Project.
The ongoing coronavirus pandemic or any other pandemic could adversely affect our business, financial condition and results of operations.
The COVID-19 pandemic has reached every region of the world and has resulted in widespread adverse impacts on the global economy. In response, we have modified certain business and workforce practices to conform to government restrictions and best practices encouraged by governmental and regulatory authorities. However, the quarantine of personnel or the inability to access our facilities could adversely affect our operations. Also, we have a limited number of highly skilled employees and third-party contractors operating our facilities, as well as developing and constructing assets in our development pipeline. If a large proportion of our employees or contractors in those critical positions were to contract COVID-19 at the same time, we would rely upon our business continuity plans in an effort to continue operations at our facilities and our development activities, but there is no certainty that such measures will be sufficient to mitigate the adverse impact to our operations that could result from shortages of highly skilled employees.
There is considerable uncertainty regarding how long the COVID-19 pandemic will persist and affect economic conditions, including as a result of new variants of the virus that are potentially more infectious or lethal, as well as whether governmental and other measures implemented to try to slow the spread of the virus, such as large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government shutdowns that exist as of the date of this prospectus will be effective or whether new measures will
 
32

 
be implemented or reinstated. Restrictions of this nature may cause us, our suppliers, construction contractors and other business counterparties to experience operational delays and delays in the delivery of materials and supplies and may cause milestones or deadlines relating to development of various projects to be missed, or delay the maintenance or repair of operating assets.
We have in the past experienced, and may continue to experience, offtake curtailments, delays in obtaining certain components and materials required for the construction of our projects and delays in the actual construction of our projects, in part as a result of the COVID-19 pandemic. As a result, we could experience reductions in our revenues in future periods, or could fail to complete our Development Project in the manner and on the timeline described in this prospectus or at all.
In addition, worsening economic conditions could result in our customers, contractors or suppliers being unable or unwilling to fulfill their contractual obligations over time, or as contracts expire, to replace them with agreements on similar terms, which would impact our future financial performance. The effects of COVID-19 or any other pandemic on the global economy could adversely affect our ability to access the capital and other financial markets, and if so, we may need to consider alternative sources of funding for some of our operations and for working capital, which may increase our cost of, as well as adversely impact our access to, capital.
Our projects depend, and will depend, on third-party service providers.
We have retained and will in the future retain third-party service providers to perform EPC, O&M and other services related to our projects. Outsourcing these functions involves the risk that third parties may not perform to our standards (including as a result of errors, breaches, failures, or other forms of unauthorized conduct or malfeasance), may not produce results in a timely manner or may fail to perform at all. Although we have not experienced any significant difficulties with our third-party service providers to date, it is possible that we could experience difficulties in the future, which could: (i) cause us to default on our contractual, financing, regulatory and other obligations; (ii) reduce our capacity to generate power from one or more projects on a temporary or permanent basis; (iii) lead to litigation or arbitration; or (iv) expose us to liquidated damages.
If a third-party service provider is terminated or resigns, or if we lose a provider through consolidation, or otherwise, it may be difficult or impossible to locate a suitable replacement. We may have limited access to alternative service providers or experience difficulty finding a replacement on a cost-efficient basis if the service providers on which we generally rely are unable to perform for any reason. Further, as the EPC and O&M service industries continue to consolidate, we may experience additional cost pressure from our service providers. We also may not be able or desire to retain third-party service providers on the same terms in the future, and, as a result, we may be forced to take on additional risk, such as cost inflation and other cost increases that would otherwise be covered by third-party providers and/or responsibilities associated with the construction and the operation and management of our projects. Any of these events could have a material adverse effect on our business, financial condition and results of operations.
Cost inflation could adversely affect our business and results of operations.
The renewable energy industry has seen long periods of declining equipment costs, which may not continue, or may reverse. Inflation or the absence of cost decreases could adversely affect us by increasing the actual or expected costs of land, raw materials and labor, and other goods and services needed to construct our projects, potentially reducing project profitability. Future increases in actual or expected costs may have an adverse impact on our business, financial condition and results of operations.
Our ability to effectively operate our business could be impaired if we fail to attract and retain key personnel.
Our ability to operate our business and implement our strategies effectively depends on the efforts of our executive officers and other key employees. Our management team has significant industry experience and would be difficult to replace. These individuals possess development, construction, operational, management, legal, engineering, financial and administrative skills that are critical to the operation of our business. With the growth of the renewable energy industry, we have seen an increase in the need for experienced personnel with applicable
 
33

 
experiences. In addition, the market for personnel with the required industry and technical expertise to succeed in our business is highly competitive, and we may be unable to attract and retain qualified personnel to replace or succeed key employees should the need arise. In order to remain competitive in attracting and retaining such personnel, we may need to increase the compensation of our employees, including new hires, beyond our current expectations. The loss of the services of any of our key employees or the failure to attract or retain other qualified personnel could have a material adverse effect on our business, financial condition and results of operations.
We are subject to organizational and legal risks associated with our complex corporate structure and global operations.
Our corporate structure and operating model require coordination of business activities with multiple subsidiaries, joint ventures and partnerships across various jurisdictions as described elsewhere in this prospectus. Failure to properly manage such business activities could have a material adverse effect on our business.
In addition, our operations are subject to risks inherent in conducting business globally. In addition to the cross-border regulatory and legal risks described elsewhere in this prospectus, our business is subject to risks associated with management communication and integration problems resulting from cultural and geographic dispersion. Compliance with laws and regulations applicable to our global operations also substantially increases our cost of doing business in foreign jurisdictions. If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business, results of operations and financial condition may suffer. We may be unable to comply with changes in government requirements and regulations, which could harm our business. In many countries, it is common for others to engage in business practices that are prohibited by our internal policies and procedures or other regulations applicable to us. Although we have implemented policies and procedures designed to ensure compliance with these laws and policies, there can be no assurance that all of our employees, contractors, partners and agents will comply with these laws and policies. Violations of laws or key control policies by our employees, contractors, partners or agents could result in delays in revenue recognition, financial reporting misstatements, investigations and enforcement actions, reputational harm, disgorgement of profits, fines, civil and criminal penalties, damages, injunctions, other collateral consequences or the prohibition of the importation or exportation of our platform and could harm our business, results of operations and financial condition.
We are not able to insure against all potential risks, and we may become subject to higher insurance premiums or may not obtain insurance at all.
We are exposed to numerous risks inherent in the operation of renewable energy projects, including equipment failure, manufacturing defects, natural disasters, pandemics, terrorist attacks, cyber-attacks, sabotage, theft, vandalism, political risks in developing markets and environmental risks. Further, with respect to any projects that are under construction or development, we are, or will be, exposed to risks inherent in the construction and development of these projects. The occurrence of any one of these events may result in us being named as a defendant in lawsuits or in regulatory actions asserting claims for substantial monetary damages and/or other forms of relief, including those associated with environmental clean-up or other remediation or compliance costs, personal injury, property damage, fines and penalties.
Some of the risks to which we are exposed may not be insurable, including some risks related to terrorism. Even if the risks are generally insurable, we may not maintain or obtain insurance of the type and amount we desire at reasonable rates or at all, and we may elect to self-insure a portion of our portfolio. The insurance coverage we do obtain may contain large deductibles or insufficient coverage or fail to cover all risks or potential losses across our global footprint. We often cannot obtain full coverage at economic rates and are instead limited to probable maximum loss coverage subject to commercially reasonable limits. In addition, our insurance policies are subject to annual review by our insurers and may not be renewed on similar or favorable terms, including with respect to coverage, deductibles or premiums, or at all.
As the renewable energy industry grows, insurance providers may reassess the risks associated with solar energy and wind energy projects and we may experience higher insurance costs, including as the result of industry-wide increases in insurance premiums. Industry-wide increases in insurance premiums have recently and may in
 
34

 
the future arise as the result of cost spreading efforts from major insurance providers following major natural disasters such as hurricanes or widespread wildfires. Finally, even if we believe that insurance should cover any particular claim, there may be litigation with insurance companies or others regarding the claim, and we may not prevail. The occurrence of any such natural disaster may result in our being named as a defendant in lawsuits asserting claims for substantial monetary damages, including those associated with environmental cleanup costs, personal injury, property damage, fines and penalties. If a significant accident or event occurs for which we are not fully insured, or if we are unable to obtain or retain a sufficient level of insurance, which could constitute a breach under our offtake contracts, we may experience a material adverse effect on our business, financial condition and results of operations.
We are subject to risks associated with litigation or administrative proceedings that could materially affect us.
We are subject to risks and costs, including potential negative publicity, associated with lawsuits, claims or administrative proceedings, including lawsuits, claims or proceedings relating to our business or the, development, construction or operation of our projects. In addition, we may become subject to legal or administrative proceedings or claims contesting the issuance of a permit or seeking to enjoin the construction or operation of our projects. The result and costs of defending any such proceedings or claims, regardless of the merits and eventual outcome, may be material. Any such proceedings or claims could also materially delay our ability to complete construction of a project in a timely manner or at all or could otherwise materially adversely affect a completed project’s operations. Further, we have little control over whether third-party claims will be brought by one or more third parties, including public and private landowners, offtakers, equipment suppliers, construction firms, labor unions, and O&M and other service providers or their employees or contractors. Defending litigation, delays caused by litigation, and the costs of settling or other unfavorable outcomes, including judgments for monetary damages, injunctions, or denial or revocation of permits, could have a material adverse effect on our business, financial condition and results of operations.
We and third parties with which we do business may be subject to cyber-attacks, disruptions and security incidents, as well as acts of terrorism or war that could have a material adverse effect on our business, financial condition and results of operations, as well as result in significant physical damage to our projects.
Our operations rely on computer systems, hardware, software infrastructure and networks (collectively, “IT Systems”) that we manage or that are managed by third parties with which we do business, such as O&M and other service providers, and on the secure processing, storage and transmission of proprietary, confidential, financial and other sensitive information. We also rely heavily on IT Systems to operate our solar energy and wind energy projects. Failures and disruptions or compromises to our or our critical third parties’ IT Systems may be caused by natural disasters, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, bugs or vulnerabilities, physical or electronic break-ins, human error, intentional conduct, targeted cyberattacks, or similar events or incidents. Attacks, including those targeting IT Systems, such as electronic control systems used to operate our energy projects or the facilities of third parties on which our projects rely, could severely disrupt business operations and result in loss of service to offtakers and significant expense to repair or remediate system damage.
We process certain personal information about our employees. Although we have taken steps to protect our IT Systems and information maintained in those systems, we have experienced cyberattacks in the past and we expect attacks and security incidents to increase in the future. For example, in 2021, cybercriminals launched an attack on our IT Systems and managed to gain control over the control system in one of our small facilities in Israel. The attackers were not able to disrupt the production of electricity or cause any material damage. In 2022, several of our corporate email accounts were compromised, which resulted in a payment being made to a fraudulent third-party actor. Global threat actors and terrorists have targeted and will continue to target entities and projects like ours that operate in the energy and infrastructure sectors, including through disruptive attacks, such as those involving ransomware. We cannot guarantee the security or protection of our IT Systems, information or projects and we have little or no control over the IT Systems and facilities of third parties on which our projects rely. Additionally, energy-related facilities, such as substations and related infrastructure, are protected by limited security measures, in most cases only perimeter fencing and security cameras. Threat actors
 
35

 
(such as ransomware groups) are becoming increasingly sophisticated and using tools and techniques that are designed to circumvent security controls, to evade detection and to remove or obfuscate forensic evidence. Our defensive measures, including back-up systems and those of critical third parties may fail to timely or effectively anticipate, detect, prevent or allow us to recover from cyberattacks. As a result of the COVID-19 pandemic, we also face increased cybersecurity risks due to the number of our employees and our third-party providers’ who are (and may continue to be) working remotely, which creates additional opportunities for cybercriminals to launch social engineering attacks and exploit vulnerabilities in non-corporate IT environments. Our costs to adequately counter the risk of cyber-attacks and to comply with contractual and/or regulatory compliance requirements may increase significantly in the future.
If our security measures or those of critical third parties are disrupted or fail, valuable information may be lost; our development, construction, O&M and other operations may be disrupted; we may be unable to fulfill our customer obligations; and our reputation may suffer. These risks may subject us to litigation, regulatory action and fines, remedial expenses, loss of current or future customers or project opportunities and financial losses beyond the scope or limits of our insurance coverage which could, individually or in the aggregate, have a material adverse effect on our business, financial condition and results of operations. In addition, the White House, the SEC and other regulators have increased their focus on cybersecurity vulnerabilities and risk management, which may result in new rules, regulations or standards that could increase our costs of compliance, decrease revenues and have other adverse effects on our results.
Our current portfolio, as well as projects we may develop or acquire and the facilities of third parties on which our projects rely, may be targets of attacks, burglaries or terrorist attacks (particularly our project portfolio in Israel, which are at greater risk due to various conflicts in the region) and may be affected by responses to terrorist attacks, each of which could fully or partially disrupt our projects’ ability to produce, transmit, transport and distribute energy. To the extent such acts constitute force majeure events under our offtake contracts or interconnection agreements, the applicable offtaker generally may reduce or cease making payments to us and may terminate such offtake contract or interconnection agreement if such force majeure event continues for a period typically ranging from six to 12 months as specified in the applicable agreement. Any such attack could result in significant reconstruction or remediation costs, or otherwise disrupt our business operations, any of which could have a material adverse effect on our business, financial condition and results of operations.
We may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts, inadequate or failed internal processes or systems, or from external events.
We may suffer a significant loss resulting from fraud, bribery, corruption, other illegal acts, inadequate or failed internal processes or systems, or from external events, such as the occurrence of disasters or security threats affecting our ability to operate. We operate in different markets and rely on our employees to follow our policies and processes as well as applicable laws in their activities. Risk of illegal acts or failed systems is managed through our infrastructure, controls, systems and people, complemented by central groups focusing on enterprise-wide management of specific operational risks such as fraud, trading, outsourcing and business disruption, as well as personnel and systems risks. Specific programs, policies, standards and methodologies have been developed to support the management of these risks. These risks can result in direct or indirect financial loss, reputational impact or regulatory censure.
We may be subject to geopolitical risks resulting from Russia’s ongoing invasion of Ukraine.
Geopolitical risks and associated military action may result in, among other things, global security issues that may adversely affect international business and economic conditions, and economic sanctions which may impact the global economy. For example, the outbreak of hostilities between Russia and Ukraine in February 2022 led to global sanctions that have impacted the international economy and given rise to potential global security issues that may adversely affect international business and economic conditions. Additional geopolitical and macroeconomic consequences of this invasion and associated sanctions cannot be predicted, and future geopolitical events, including further hostilities in Ukraine or elsewhere, could negatively impact global financial markets and our business and cause the price of our ordinary shares to decline.
 
36

 
Risks related to government regulation
Our projects and the industry in which we operate are highly regulated and may be adversely affected by legislative or regulatory changes or a failure to comply with energy regulations.
Our projects and the industry in which we operate are highly regulated, and the scope and nature of regulation may vary depending on jurisdiction. The sale of electric energy from our projects, either at wholesale or retail, and the transmission of electric energy therefrom, may be subject to varying levels of regulation. In addition, our processing of information about individuals is subject to a patchwork of complex and ever-evolving data privacy and security laws and frameworks. Therefore, we may need certain authorizations, exemptions or waivers prior to making any sales from our projects, transmitting electric energy from our projects, and issuing securities. We may be required to file updates and comply with certain requirements relating to, among other things, ownership, affiliation and market power, including changes thereto, to maintain such authorizations, exemptions or waivers, and failure to do so may result in our projects losing such authorization, exemptions or waivers. The loss or impairment of such authorizations, exemptions or waivers could have a material adverse effect on our business.
For example, we require certain licenses to produce and sell electricity in Israel, and may need further licenses in the future. The Israel Electricity Authority (the “EA”) determines the tariff we will receive for the electricity we generate on the date of tariff approval (as well as fees we are required to pay to the IEC, for system operation services provided to us), requiring that we sign a purchase agreement with the IEC to purchase the electricity we produce as a condition for our receipt of a license. We are required to operate exclusively in accordance with the license terms, and are not entitled to withdraw from the PPAs, or to cancel the licenses, without the EA’s approval. Any change in license terms requires the approval of the EA or other regulators. In the event of breach of the terms of our license agreements, we could be subject to a variety of sanctions, including revocation or suspension of the license or loss of the guarantee provided by the license.
Our projects and certain upstream owners may be subject to books and records requirements and accounting and recordkeeping requirements. Our projects may also be subject to certain reliability standards, administrative compliance obligations, reporting requirements and burdens. We and our projects could be exposed to criminal and civil penalties, sanctions, disgorgement of projects and substantial monetary penalties for failure to comply with any such regulatory requirements.
A failure by us, our subsidiaries or projects to comply with applicable energy laws, regulations and rules could have a material adverse effect on our business, including any existing or future financing arrangements. In addition, changes in law, policy, regulation or rule could adversely affect the rates, terms and conditions of services from our projects and, therefore, our revenues.
Government interventions in response to current high energy prices may negatively impact revenues or increase our tax burden.
At both the European Union and member country levels, European countries have responded to the increased energy prices experienced in the last year by bringing forward a number of measures including the imposition of caps on energy prices, changes to price formulations and the proposal of windfall taxes on energy companies, including companies that generate renewable energy. These measures are aimed at protecting customers from increased prices and, with relevance to our business, by reducing and/or taxing revenue from energy generation. The scope of these measures is currently evolving but, of those already announced, we anticipate that revenues from our Operational Projects in Spain and Sweden may be negatively affected by the European Union’s electricity price cap. It is possible that these measures may intensify in the future such that they materially affect our performance. It is also possible that other countries in which we operate will adopt analogous measures.
Government regulations in the United States, Europe and globally, that currently provide incentives and subsidies for renewable energy, particularly the current production and investment tax credits, could change at any time.
Our strategy to grow our business partly depends on current government policies in the United States, Europe and globally that promote and support renewable energy and enhance the economic viability of developing,
 
37

 
investing in, constructing, owning and operating renewable energy projects. In the United States, renewable energy projects currently benefit from various federal, state and local governmental incentives, such as ITCs, PTCs and Renewable Portfolio Standards (“RPS”) programs, accelerated tax depreciation, and other incentives provided for under the Inflation Reduction Act. In the European Union, the Renewable Energy Directive provides an economy-wide target for renewable energy use that is sought to be achieved, with individual member states of the European Union (“Member States”) introducing domestic legislation including incentives to encourage higher uptake. Other jurisdictions may also implement policies to incentivize renewable energy projects.
These policies have had a significant positive effect on the development of renewable energy projects in the United States, in other relevant jurisdictions and on the renewable energy industry more generally. These incentives make the development of renewable energy projects more competitive by providing tax credits and accelerated depreciation for a significant portion of the development costs, decreasing the costs associated with developing such projects, and creating demand for renewable energy assets through such programs.
Governmental incentives that promote the development of renewable energy projects could change at any time, and any loss or reduction in any or all of these renewable energy incentives and subsidies may reduce our willingness to pursue or develop certain renewable energy projects due to higher development costs or less attractive financing opportunities. Notably, the European Union is in the process of revising the Renewable Energy Directive, with a new position to be adopted by the end of 2022. The specific nature of any new targets and/or proposal adopted in the revision to the Renewable Energy Directive may have a material impact on the economic attractiveness of our projects to investors. In addition, a high level of governmental involvement in this sector, including with respect to promotion domestic renewable energy production, can mean that this sector is the subject of trade disputes and resulting import/export restrictions, including tariffs.
Additionally, some jurisdictions in the United States with RPS targets and a number of European Union Member States with national targets for renewable energy use pursuant to the Renewable Energy Directive, have met, or in the near future will meet, their renewable energy targets. If these jurisdictions do not increase their targets in the near future, demand for additional renewable energy could decrease. To the extent other jurisdictions do not adopt targets (including RPS targets), programs, or goals, demand for renewable energy could decrease in the future. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and ability to grow our business.
We may be negatively affected by tariffs or trade relations between the United States, China, the European Union, Israel and other countries.
We may be negatively affected by tariffs or adverse developments in trade relations between the United States, China, the European Union, Israel and other countries, including any actions that may be taken by other countries in retaliation. Tariffs, the adoption and expansion of trade restrictions, the occurrence or exacerbation of a trade war, or other governmental action related to tariffs, trade agreements or related policies could adversely affect our supply chain, access to equipment, costs and ability to economically serve certain markets. For example, the Section 201 tariffs introduced by the United States in January 2018 (which do not apply to bifacial panels) significantly increased the cost of importing components from China to construct projects in the United States. In February 2022, the Section 201 tariffs were extended for an additional four years. We have no control over the trade policies of the United States or other countries and we may be negatively affected by additional restrictive economic measures, such as tariffs or other changes to U.S. trade policies. Additional tariffs and extensions of existing tariffs are currently being considered by the U.S. government. This includes the potential for future additional tariffs following an announcement by the U.S. Department of Commerce in March 2022 that it will conduct circumvention inquiries with respect to solar cells and modules imported from Malaysia, Thailand, Vietnam and Cambodia. Any further cost increases or decreases in availability caused by trade policies could slow our growth and cause our financial results and performance metrics to suffer.
Our cross-border operations expose us to risks from sanctions and export control laws.
Our business must be conducted in compliance with applicable economic and trade sanctions laws and regulations, such as those administered and enforced by the U.S. Department of Treasury’s Office of Foreign Assets Control,
 
38

 
the U.S. Department of State, the U.S. Department of Commerce, the United Nations Security Council, the European Union, Her Majesty’s Treasury of the United Kingdom or other relevant sanctions authorities. Our global operations expose us to the risk of violating, or being accused of violating, economic and trade sanctions laws and regulations. Our failure to comply with these laws and regulations may expose us to reputational harm as well as significant penalties, including criminal fines, imprisonment, civil fines, disgorgement of profits, injunctions and debarment from government contracts, as well as other remedial measures. Investigations of alleged violations can be expensive and disruptive. Despite our compliance efforts and activities we cannot assure compliance by our employees or representatives for which we may be held responsible, and any such violation could materially adversely affect our reputation, business, financial condition and results of operations.
Our cross-border operations require us to comply with anti-bribery and anti-corruption laws.
Our international business requires us to comply with anti-corruption, anti-bribery and other similar laws, including but not limited to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery Act 2010, Chapter 9 (sub-chapter 5) of the Israeli Penal Law, 1977, and other anti-corruption and anti-bribery laws in countries in which we (or third parties acting on our behalf) conduct activities. These laws generally prohibit companies and their officers, directors, employees, agents and anyone else acting on their behalf, from offering, promising, authorizing or providing anything of value to government officials for the purposes of influencing official decisions or otherwise securing an improper advantage to obtain or retain business. The FCPA also requires U.S. issuers to make and keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. The U.K. Bribery Act 2010 also prohibits “commercial” bribery not involving government officials, the receipt of bribes, and requires companies to implement adequate procedures to prevent bribery.
We currently have interactions with government entities around the world which expose us to potential risks under anti-corruption and anti-bribery laws. As we increase our international sales and business, our risks under these laws may increase. In addition, we may participate in relationships with third parties whose conduct could potentially subject us to liability under the FCPA other anti-corruption laws even if we do not explicitly authorize or have actual knowledge of such activities. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures, and may also result in collateral litigation. We have established policies and procedures designed to assist us and personnel acting on our behalf in complying with applicable anti-bribery and anti-corruption laws and regulations; however, these policies and procedures may not prevent violation of these legal requirements, inadvertent or otherwise.
We may fail to comply with the conditions in, or may not be able to maintain, our governmental permits.
Our Operational Projects and projects under construction are required to comply with numerous statutory and regulatory standards and to maintain numerous licenses, permits and governmental approvals required for operation. Some of the licenses, permits and governmental approvals that have been issued to our operations (or may be issued in the future will) contain conditions and restrictions, or may have limited terms. If we fail to satisfy the conditions or comply with the restrictions imposed by our licenses, permits and governmental approvals, or the restrictions imposed by any statutory or regulatory requirements, we may become subject to regulatory enforcement action and the operation of the assets could be adversely affected or be subject to significant fines, penalties or additional costs or revocation of regulatory approvals, permits or licenses. In addition, we may not be able to renew, maintain or obtain all necessary licenses, permits and governmental approvals required for the continued operation or further development of our projects, as a result of which the operation or development of our assets may be limited or suspended. Our failure to renew, maintain, obtain or comply with the conditions of all necessary licenses, permits or governmental approvals may have a material adverse effect on our assets, liabilities, business, financial condition, results of operations and cash flow.
Our business is subject to liabilities and operating restrictions arising from environmental, health and safety laws, regulations, and permits.
Our projects are subject to various environmental, health and safety laws (“EHS”), regulations, guidelines, policies, directives, permits, and other requirements governing or relating to, among other things:
 
39

 

the protection of wildlife, including migratory birds, bats, and threatened and endangered species, such as desert tortoises, or protected species such as eagles, and other protected plants or animals whose presence or movements often cannot be anticipated or controlled;

water use, and discharges of silt-containing or otherwise polluted waters into nearby wetlands or navigable waters;

hazardous or toxic substances or wastes and other regulated substances, materials or chemicals, including those existing on a project site prior to our use of the site or the releases thereof into the environment;

land use, zoning, building, and transportation laws and requirements, which may mandate conformance with sound levels, radar and communications interference, hazards to aviation or navigation, or other potential nuisances such as the flickering effect, known as shadow flicker, caused when rotating wind turbine blades periodically cast shadows through openings such as the windows of neighboring properties;

the presence or discovery of archaeological, historical, religious, or cultural artifacts at or near our projects;

the protection of workers’ health and safety; and

the proper decommissioning of the site at the end of its useful life.
If our projects do not comply with such laws, regulations, requirements or permits, each of which may vary across the jurisdictions in which we operate projects, we may be required to pay penalties or fines, curtail or cease operations of the affected projects, make costly modifications to such projects or seek new or amended permits for our projects. Violations of environmental and other laws, regulations, and permit requirements, including certain violations of laws protecting wetlands, migratory birds, and threatened or endangered species, may also result in criminal sanctions or injunctions. The global EHS regulatory environment continues to change, and significant changes in the legislative or regulatory EHS environment in jurisdictions in which we operate may have a material impact on our business.
Our projects also carry inherent EHS risks, including the potential for related civil litigation, regulatory compliance, remediation orders, fines, and other penalties. For instance, equipment or machinery at our projects could malfunction or experience other unplanned events that cause spills that exceed permitted levels, resulting in personal injury, fines, or property damage. EHS laws and regulations have generally become more stringent over time, and we expect this trend to continue. We may need to incur significant capital and operating costs to keep our projects in compliance with EHS laws and regulations. If it is not economical to make those expenditures, or if we violate any of these laws and regulations, it may be necessary to retire or suspend operations at our facilities or restrict or modify our operations to obtain or maintain compliance, either of which could have a material adverse effect on our business, financial condition and results of operations.
Additionally, we may be held liable for related investigatory and clean-up costs for any property where there has been a release or potential release of a hazardous substance, regardless of whether we knew of or caused the release or potential release, even in the absence of negligence. We could also be liable for other costs, including fines, personal injury, property damage or damage to natural resources. In addition, some environmental laws place a lien on a contaminated site in favor of the government as security for damages and costs it may incur relating to contamination and clean-up. Contained or uncontained hazardous substances on, under, or near our projects, regardless of whether we own or lease the property, or the inability to remove or otherwise remediate such substances may restrict or eliminate our ability to operate our projects.
Our projects are designed specifically for the landscape of each project site and cover a large area. Despite the fact that we conduct studies of project sites prior to construction, problems may arise, such as the discovery of archaeological, historical or cultural artifacts, threatened or endangered species or their habitat, or hazardous materials at our project sites. Such discoveries could result in the restriction or elimination of our ability to operate our business at a particular project site or, if during construction, could result in delays or termination of construction. Landscape-scale projects and operations may also cause effects to certain landscape views, trails or traditional cultural activities. Such effects may trigger claims from members of local communities alleging that
 
40

 
our projects are infringing upon their legal rights or other claims, which could result in the in the restriction or elimination of our ability to operate our business at any project site.
Violations of environmental and other laws, regulations and permit requirements, the discovery of archaeological, historical or cultural artifacts, threatened or endangered species or their habitat, or hazardous materials at our project sites, or adverse effects on public or private lands could also result in negative publicity for us, which could, in turn, limit our ability to develop our solar energy and wind energy projects and acquire interests in additional renewable energy projects on favorable terms or at all.
Risks related to our financing activities
We are exposed to interest rate risk.
Our activities are, and are expected to continue to be, financed through project debt, bonds and credit facilities and, as such, we are exposed to risk resulting from changes in the base interest rate of loans in the various markets in which we operate. While the existing debt of our subsidiaries largely accrues interest at fixed rates, some of our subsidiaries’ debt accrues interest at variable rates. We expect that our subsidiaries will continue to incur debt that accrues interest at both fixed and variable rates in connection with the financing of future projects. Moreover, as a result of widespread inflation in the global economy, certain governmental authorities responsible for administering monetary policy have recently increased, and are likely to continue to increase, applicable central bank interest rates, which could increase the costs required to obtain debt financing in the future or refinance current indebtedness. We manage our interest rate exposure by monitoring current interest rates, entering into interest rate swap contracts and continuing to use a combination of fixed-rate and variable-rate debt. Interest rate swaps are used to mitigate or adjust interest rate exposure when appropriate based upon market conditions or when required by financing agreements. As of September 30, 2022, we had approximately $108.8 million of consolidated variable-rate debt outstanding net of deferred financing costs and $1.7 billion of fixed-rate debt outstanding. Variable rate debt largely included draws on a short-term construction loan for Apex Solar and draws on a short-term VAT facility for project Björnberget. Assuming no change in the variable-rate debt amount outstanding, the impact on interest expense of a 1% increase or decrease in the average interest rate would be approximately $305,000 per year.
Our subsidiaries’ substantial amount of indebtedness may adversely affect our ability to operate our business, and our failure to comply with the terms of our indebtedness could have a material adverse effect on our financial condition.
As of September 30, 2022 our consolidated indebtedness, net of deferred financing costs, was approximately $1.8 billion. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our subsidiaries’ substantial indebtedness could have consequences on our business operations. For example,

if our subsidiaries are unable to fulfill payment or other obligations or comply with their covenants under the agreements governing our indebtedness, such subsidiaries could default under such agreements or be rendered insolvent, or lenders may exercise rights and remedies under the terms of such agreements, such as foreclosure on us, our subsidiaries, or our and their projects or other assets, which could materially adversely affect our business, financial condition and results of operations;

our subsidiaries’ substantial indebtedness could limit our ability to fund operations of future acquisitions and our financial flexibility, which could reduce our ability to plan for and react to unexpected opportunities and contingencies;

our subsidiaries’ substantial debt service obligations and maturities make us vulnerable to adverse changes in general economic, industry and competitive conditions, credit markets, capital markets, and government regulation that could place us at a disadvantage compared to competitors with less debt or more capital resources;
 
41

 

the financing arrangements of certain of our subsidiaries are subject to cross-collateralization or other similar credit support arrangements that could heighten the risks associated with defaults under our and their debt obligations, increase the potential that adverse events relating to individual projects could materially affect our financing arrangements on a broader scale, or limit our ability to freely sell or finance some or all of our projects; and

our subsidiaries’ substantial indebtedness could limit our ability to obtain financing for working capital, including collateral postings, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes.
If our subsidiaries do not comply with their obligations under their debt instruments, they may be subject to acceleration of the obligations thereunder, requiring them to refinance all or a part of the indebtedness under such instruments, which may force us to accept then-prevailing market terms that may be less favorable and could reduce our cash flow. If, for any reason, our subsidiaries are unable to refinance such indebtedness of our projects, those projects may be in default of their existing obligations, which may result in a foreclosure on the collateral and loss of the applicable projects. In addition, if for any reason our subsidiaries are unable to refinance the existing indebtedness of our projects with new debt, we may issue additional ordinary shares or other equity interests in us or any of our subsidiaries, which may dilute our the then-existing holders of ordinary shares in our net assets, or we may be required to guarantee the obligations of our subsidiaries, which could subject us to increased credit risk. Any such events could have a material adverse effect on our business, financial condition and results of operations.
In addition, increases in interest rates and changes in debt covenants may reduce the amounts that we can borrow, reduce our cash flows and increase the equity investment we may be required to make in any projects we may develop or acquire. If our subsidiaries are not able to generate sufficient operating cash flows to repay their outstanding indebtedness or otherwise are unable to comply with the terms of their indebtedness, we could be required to reduce capital expenditures and operating expenditures, reduce the scope of our projects, sell some or all of our projects, or delay construction of projects we may develop or acquire, all of which could have a material adverse effect on our business, financial condition and results of operations.
We or our subsidiaries may not be able to obtain project financing on attractive terms, or at all, which may adversely affect our ability to fund the development and construction of our projects. We expect to be dependent on tax equity financing arrangements in the United States, which may not be available in the future.
We rely heavily on third-party project finance, including tax equity arrangements for our U.S. projects, to finance our business and the development and construction costs of our projects and other capital expenditures. The terms of our financing arrangements and the amount of financing available to us is dependent on a variety of factors, including general market conditions and assumptions with respect to the value of our projects and anticipated future cash flows. If we are unable to raise additional funds when needed, we may be required to delay or abandon development and construction of projects, reduce the scope of projects or sell some of our projects, or default on our existing contractual commitments. We also may be unable to refinance existing arrangements at their contractual maturity, which may cause us to default on such obligations and be subject to foreclosure by the project’s lenders. We may not be successful in locating suitable financing transactions in the time period required or at all, or on terms we find attractive, and we may not obtain the capital we require by other means, all of which could have a material adverse effect on our business, financial condition, and results of operations.
Our U.S. projects will often rely on third-party tax equity funding to capitalize on available tax incentives because we do not have sufficient tax capacity to make use of all such credits, and the market for those tax equity investors is particularly restricted to a small number of investors. We intend to develop or acquire projects in the future that utilize tax equity financing to monetize tax benefits available to certain renewable energy assets. However, no assurance can be given that tax equity investors will be available or willing to provide financing on acceptable terms at the time of any such development or acquisition or that the tax incentives and benefits that are needed to make tax equity financing available will remain in place. For example, the tax equity financing market
 
42

 
was constrained during 2020 as a result of COVID-19 because tax equity investors were unable to estimate their estimated tax capacity due to volatility in the economy, and the market is just beginning to return to pre-COVID-19 capacity. Furthermore, as the renewable energy industry expands, the cost of tax equity financing may increase and there may not be sufficient tax equity financing available to meet the total demand in any year. Our business strategy depends on the availability of tax equity financing to develop and acquire additional assets. Therefore, our inability to enter into tax equity financing agreements with attractive pricing terms, or at all, could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Further, there is a limited number of potential tax equity investors. Such investors have limited appetite for tax equity financing and renewable energy developers, operators and investors compete against one another and with others for their capital.
We may be unable to secure refinancing of indebtedness on favorable terms or at all upon the maturity thereof and may be required to incur significant costs to novate existing swap arrangements in connection with a refinancing.
The outstanding project-level indebtedness for all of our projects is scheduled to mature prior to the anticipated end of such projects’ useful life and the full amortization of such loans. In addition, we have substantial other indebtedness, which is scheduled to mature in the next several years. Upon the maturity of such indebtedness, our ability to obtain refinancing on attractive terms is contingent on a number of factors, including changes to the prevailing market terms on which indebtedness is generally available, changes to the industry in which we operate, local market conditions in the jurisdictions in which our projects are located, the continued operating performance of our assets, future electricity market prices, the level of future interest rates, lenders’ appetite for investments in renewable energy and infrastructure assets, and assessment of our credit risk at the time. It may not be possible to secure refinancing on terms that we think are attractive or at all. Adverse terms may negatively affect our ability to operate our projects or may require us to use a significant portion of the project’s cash flow to make payments related to the debt financing. Further, the process of identifying new financing sources and agreeing on all relevant business and legal terms could be lengthy and could require us to slow the rate of the growth of our business until such new financing arrangements were in place. In connection with any refinancing, we could also be required to incur potentially significant costs associated with the novation or cash settlement of any outstanding swaps or other financial derivatives executed in connection with indebtedness being refinanced. Our failure to secure refinancing of indebtedness or inability to do so on terms that we think are commercially acceptable, and the costs associated with novating or settling any related derivatives in connection with any such refinancing, could materially adversely affect our business, results of operations and financial conditions. We have historically used cash from refinancing to help fund our business and we may be adversely affected if we are unable to have continued access to this source of funding of our business.
We are exposed to risks inherent in our use of financial derivative arrangements, including interest rate swaps.
Most of our subsidiaries’ indebtedness accrues interest at variable rates, and such subsidiaries are parties to interest rate swaps that attempt to reduce the impact of interest rate volatility on such subsidiaries’ related payment obligations. In the vast majority of cases, our project lenders require us to enter into swaps to provide an economic hedge for our variable rate debt. The use of interest rate swaps, however, does not eliminate the possibility of fluctuations in the value of the position or prevent losses if the value of the position declines. Such transactions may also limit the opportunity for gain if the value of a position increases. In addition, to the extent that actively quoted market prices and pricing information from external sources are not available, the valuation of these contracts will 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 these contracts. We are also exposed to the risk of default by a swap counterparty, which may become a particularly pronounced risk in the case of a large-scale financial crisis.
If our interest rate swaps or any other financial derivative arrangements that we may enter into in the future perform in a manner that we do not anticipate, it could materially adversely affect our business, financial condition and results of operations.
 
43

 
We guarantee certain of the obligations of our projects and other subsidiaries, and a requirement to make a payment under such guarantee may have a material adverse effect on our financial condition or liquidity.
Our subsidiaries incur various types of debt and other obligations. Project non-recourse debt or obligations are repayable solely from the applicable project’s or entity’s future revenues and, in some cases, are secured by the project’s or entity’s physical assets, major contracts, cash accounts and our ownership interests in other entities. While we seek to secure project non-recourse debt for our projects, in certain cases we are unable to do so or unable to do so on favorable terms, and thus may be liable for some or all of our subsidiaries’ obligations on a recourse basis. To satisfy these obligations, we may be required to use amounts distributed by our other subsidiaries, as well as other sources of available cash, reducing the cash available to execute our business plan. In addition, if our subsidiaries default on their obligations under non-recourse financing or other agreements, we may decide to make payments to prevent the creditors of these subsidiaries from foreclosing on the relevant collateral (which foreclosure would result in a loss of our ownership interest in the subsidiary or in some or all of its assets). Such payments or losses could have a material adverse effect on our business, financial condition and results of operations.
The use of tax equity arrangements to finance projects will limit certain management rights and operational flexibility with respect to those projects, as well as our rights to cash flows, tax credits and depreciation deductions generated by those projects.
We expect that all of our U.S. projects will have tax equity financing arrangements in place. Under many of these arrangements, a tax equity investor acquires an equity interest in the company that directly or indirectly owns the project, which entitles the tax equity investor to a significant percentage of the tax credits and depreciation deductions generated by the project, as well as a percentage of the project’s cash flows (which may be significant in certain transactions), until a certain point in time. If a project underperforms, it could delay such point in time and, as a consequence, a tax equity investor may become entitled to receive a greater percentage or, in some cases, all of the project’s cash flows until such point in time. The tax equity investor also has the right to approve most major management decisions with respect to the applicable project. These approval rights include decisions regarding material capital expenditures, replacement of major contracts, bankruptcy and the sale of the applicable project. To the extent we want to incur project-level debt at a project in which we co-invest with a tax equity investor, we may be required to obtain the tax equity investor’s consent prior to such incurrence. In addition, the amount of debt that could be incurred by an entity in which we have a tax equity co-investor may be further constrained because even if the tax equity investor consents to the incurrence of the debt at the entity or project level, the tax equity investor may not agree to pledge its interest in the project, which could reduce the amount that can be borrowed by the entity. As a result, compliance with our obligations to our tax equity investors may prevent us from making certain business decisions.
Indemnification claims by a tax equity investor, project lender or other counterparty may reduce our right to cash flows generated by a project and could result in a cross-default under project-level debt financing.
Certain of our project subsidiaries may make representations, warranties and covenants to tax equity investors, project lenders or other counterparties with respect to, among other things, a project’s initial and continued eligibility for tax credits, the tax basis of those assets and accelerated tax depreciation, and fulfillment of obligations under construction contracts, purchase and sale agreements, tax equity financing documents, and certain other project and finance agreements. The potential exposure of our project subsidiaries under such representations, warranties or covenants is significant, and in certain cases, we or our subsidiaries provide guarantees or undertakings with respect to such obligations that could result in substantial liabilities that are recourse to us or our subsidiaries and not limited to the specific project. If any representation, warranty or covenant is untrue or breached, we or our subsidiary may be required to indemnify the tax equity investors and the project subsidiary may be required to pay all of the project’s operating cash flow to the tax equity investors until such indemnity obligation is satisfied. Any such indemnity obligation or cash sweep by us or our project subsidiary could result in a cross-default under the terms of the project’s senior debt or impose material liabilities on us or our other subsidiaries, and correspondingly have a material adverse effect on our business, financial condition and results of operations.
 
44

 
We do not wholly own certain of our projects. If we are unable to find suitable partners or investors, or experience disagreements with our existing partners or investors, our business plans, including our ability to recycle capital in our business, and results of operations, could be adversely affected.
Many projects in our portfolio are owned through certain joint ventures or with other partners. In particular, we have sold minority interests in several of our projects to major Israeli institutional bodies. Our strategy going forward is to occasionally sell minority interests (up to 49.9%) in our projects near the completion of construction. In some cases, all or a portion of our projects are owned by an investment fund we manage, and in some cases our management decisions are subject to investor consent rights. Our co-owners and fund investors may have interests that are different from ours which may result in conflicting views as to the conduct and management of the projects. Although we currently control these and expect to control future projects, we may not be able to favorably resolve disagreements with our partners or investors arising from a particular issue to come before the project, or as to the operation or management of the project, and such disagreements could hinder the operations of such project, or require additional management resources and attention. Any disagreements with our partners or investors could adversely affect our business plans, including our ability to recycle capital in our business, and results of operations.
We may not be able to fund our business through sales of existing assets or equity in our existing projects, which could adversely affect our liquidity to fund future growth.
We may seek to fund future acquisitions and the development and construction of new projects by selling assets or equity interests in our projects. Our ability to sell such assets or interests, and the prices we receive upon a sale, may be affected by many factors, and we may be unable to execute our strategy. In particular, these factors could arise from weakness in or the lack of demand, changes in the financial condition or prospects of prospective purchasers and the availability of financing to potential purchasers on reasonable terms, the number of prospective purchasers, the number of competing properties on the market, unfavorable local, national or international economic conditions, including as a result of the COVID-19 pandemic, industry trends, and changes in laws, regulations or fiscal policies of jurisdictions in which the asset is located. We may not be able to sell such assets or interests, the terms of any such sales may not meet our expectations, and we may incur losses in connection with those sales, which could result in less liquidity to fund future growth. Failure to complete such sales may cause us to seek liquidity from alternative sources, such as raising additional debt or equity and diluting existing shareholders, which may be less favorable to our shareholders and could have a material adverse impact on our business, financial condition and results of operations.
Risks related to our financial condition
Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes.
We are an Israeli company and therefore subject to Israeli corporate income tax. Based on our current corporate structure and operations, we are also subject to taxation in several other jurisdictions around the world. Tax laws in Israel and these other jurisdictions are increasingly complex, the application of which can be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents. The authorities in these jurisdictions could review our tax returns or require us to file tax returns in jurisdictions in which we are not currently filing, and could impose additional tax, interest and penalties. These authorities could also claim that various withholding requirements apply to us or our subsidiaries, assert that benefits of tax treaties are not available to us or our subsidiaries, or challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing. The relevant taxing authorities may determine that the reported tax treatment does not reflect the manner in which we operate our business. If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties. Such authorities could claim that various withholding requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries. Any increase in the
 
45

 
amount of taxes we pay or that are imposed on us could increase our worldwide effective tax rate and adversely affect our business, financial condition and results of operations.
As a result of plans to expand our business operations, including to jurisdictions in which tax laws may not be favorable, our tax obligations may change or fluctuate, become significantly more complex or become subject to greater risk of examination by taxing authorities.
We operate currently in several jurisdictions in addition to Israel. In the event that our business expands to additional jurisdictions, our effective tax rates may fluctuate widely in the future. Future effective tax rates could be affected by operating losses in jurisdictions where no tax benefit can be recorded under IFRS, changes in deferred tax assets and liabilities, or changes in tax laws. Factors that could materially affect our future effective tax rates include, but are not limited to: (a) changes in tax laws or the regulatory environment, (b) changes in accounting and tax standards or practices, (c) changes in the composition of operating income by tax jurisdiction and (d) pre-tax operating results of our business.
Outcomes from audits or examinations by taxing authorities could have an adverse effect on our after-tax profitability and financial condition. Additionally, the Israel Tax Authority (the “ITA”) and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the use of intangibles. Tax authorities could disagree with our intercompany charges, cross-jurisdictional transfer pricing or other matters and assess additional taxes. If we do not prevail in any such disagreements, our profitability may be affected.
Our after-tax profitability and financial results may also be adversely affected by changes in relevant tax laws and tax rates, treaties, regulations, administrative practices and principles, judicial decisions and interpretations thereof, in each case, possibly with retroactive effect.
Our access to cash may be reduced as a result of restrictions on our subsidiaries’ cash distributions to us under the terms of their indebtedness.
We require cash to serve our long term debt and for our ongoing operations, and the ability of our subsidiaries to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness.
The agreements governing our subsidiaries’ project-level debt contain financial tests and covenants that our subsidiaries must satisfy prior to making distributions and restrict our subsidiaries from making more than one distribution per quarter or per six-month period. If any of our subsidiaries is unable to satisfy any of these tests or covenants or is otherwise in default under such agreements, it would be prohibited from making distributions that could, in turn, limit our available cash. Also, upon the occurrence of certain events, including our subsidiaries’ inability to satisfy distribution conditions for an extended period of time, our subsidiaries’ revenues may be swept into one or more accounts for the benefit of the lenders under the subsidiaries’ debt agreements and the subsidiaries may be required to prepay indebtedness. Restrictions preventing our subsidiaries’ cash distributions could have a material adverse effect on our business, financial condition and results of operations.
Currency exchange rate fluctuations may affect our operations.
We are exposed to currency exchange rate fluctuations. For example, 51% of our revenue for the year ended December 31, 2021 was denominated in EUR and approximately 22% was denominated in NIS. Moreover, the cash on our balance sheet as of September 30, 2022 is largely held in NIS, while our future investments in projects will largely be denominated in EUR and USD. We expect revenue from the European and Israeli markets to continue to represent a meaningful portion of our revenue, though we also expect revenue denominated in U.S. dollars from projects located in the United States to increase in the coming years. Given that a significant portion of our headquarter expenses are denominated in NIS and USD while our revenue is denominated in multiple currencies, we are exposed to the risks inherent in currency exchange rate fluctuations.
To the extent that we engage in hedging activities to reduce our currency exchange rate exposure, we may be prevented from realizing the full benefits of exchange rate increases above the level of the hedges. However,
 
46

 
because we are not fully hedged, we will continue to have exposure on the unhedged portion of the currency we exchange. Additionally, our hedging activities may not be as effective as we anticipate at reducing the volatility of our future cash flows. Our hedging activities can result in substantial losses if hedging arrangements are imperfect or ineffective or our hedging policies and procedures are not followed properly or do not work as intended. Further, hedging contracts are subject to the credit risk that the other party may prove unable or unwilling to perform its obligations under the contracts, particularly during periods of weak and volatile economic conditions. Certain of the financial instruments we use to hedge our exchange rate exposure must be accounted for on a mark-to-market basis. In addition, foreign currency translation risk arises upon the translation of the financial statements of our subsidiaries whose functional currency is the NIS, EUR or other foreign currency into U.S. dollars for the purpose of preparing our combined financial statements included elsewhere in this prospectus. The assets and liabilities of our non-U.S. subsidiaries are translated at the closing rate at the date of reporting and income statement items are translated at the average rate for the period. These currency translation differences may have significant negative impacts. Foreign currency transaction risk also arises when we or our subsidiaries enter into transactions where the settlement occurs in a currency other than ours or our subsidiaries’ functional currency. Exchange differences arising from the settlement or translation of monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognized as profit or loss in the period in which they arise, which could materially impact our net income. Any measures that we may implement to reduce the effect of currency exchange rate fluctuations and other risks of our multinational operations may not be effective or may be overly expensive. Any exposure to adverse currency exchange rate fluctuations could materially and adversely affect our financial condition, results of operations and cash flows.
We are subject to operating and financial restrictions through covenants in our loan, debt and security agreements.
We and our subsidiaries are or will in the future be subject to operating and financial restrictions through covenants in our loan, debt and security agreements. These restrictions may prohibit or limit our ability to, among other things, incur additional debt, provide guarantees for indebtedness, create liens, dispose of assets, liquidate, dissolve, amalgamate, consolidate or effect corporate or capital reorganizations, issue equity interests, enter into material or affiliate contracts and create subsidiaries. Financial covenants in our bonds and in our corporate credit facilities limit our overall indebtedness to a percentage of total capitalization and require us to maintain certain other financial ratios which may limit our ability to obtain additional financing, withstand downturns in our business and take advantage of business and development opportunities. If we breach our covenants, our credit facilities may be terminated or come due, and such event may cause our credit rating to deteriorate and subject us to higher interest and financing costs. We may also be required to seek additional debt financing on terms that include more restrictive covenants, require repayment on an accelerated schedule or impose other obligations that limit our ability to grow our business, acquire needed assets or take other actions that we might otherwise consider appropriate or desirable.
Risks related to this offering and ownership of our ordinary shares
An active, liquid trading market for our ordinary shares may not develop in the United States.
Prior to this offering, there has been no public market for our ordinary shares in the United States, though our ordinary shares are publicly traded on the TASE. Although we expect to list our ordinary shares on           , we cannot guarantee an active public market for our ordinary shares will develop or be sustained after this offering. If an active and liquid trading market does not develop in the United States, you may have difficulty selling or may not be able to sell any of the ordinary shares that you purchase.
Our share price may decline or may be volatile regardless of our operating performance, and you may not be able to resell your ordinary shares at or above the initial public offering price.
The market price of our ordinary shares could be subject to significant fluctuations. The price of our ordinary shares may change in response to our results of operations in future periods and also may change in response to
 
47

 
other factors, including factors specific to companies in our industry. As a result, our share price may experience significant volatility that is not necessarily reflective the value of our expected performance. Among other factors that could affect our share price are:

changes in laws or regulations applicable to our industry or offerings;

speculation about our business in the press or investment community;

investor interests in environmental, social and governance-focused companies;

price and volume fluctuations in the overall stock market;

volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable;

sales of our ordinary shares by us or our principal shareholders, officers and directors;

the expiration of contractual lock-up agreements;

the development and sustainability of an active trading market for our ordinary shares;

success of competitive products or services;

the public’s response to press releases or other public announcements by us or others, including our filings with the SEC, announcements relating to litigation or significant changes in our key personnel;

the effectiveness of our internal controls over financial reporting;

changes in our capital structure, such as future issuances of debt or equity securities;

our entry into new markets;

tax developments in the United States or other countries;

strategic actions by us or our competitors, such as acquisitions or restructurings; and

changes in accounting principles.
Further, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. The stock prices of many energy-related companies have experienced wide fluctuations that have often been unrelated to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may cause the market price of our ordinary shares to decline.
You may not be able to resell any of our ordinary shares at or above the initial public offering price. The initial public offering price will be determined by negotiations between us and the representative of the underwriters and may not be indicative of prices that will prevail in the trading market, if a trading market develops, after this offering. If the market price of our ordinary shares after this offering does not exceed the initial public offering price, you may not realize any return on your investment and may lose some or all of your investment.
We do not expect to pay any dividends in the foreseeable future.
We have never declared or paid any dividends on our ordinary shares, and we do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand our business. Consequently, investors who purchase ordinary shares in this offering may be unable to realize a gain on their investment except by selling such shares after price appreciation, which may never occur.
Our board of directors has sole discretion whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our directors
 
48

 
may deem relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends. See “Description of Share Capital and Articles of Association—Dividend and liquidation rights” for additional information.
Payment of dividends may also be subject to Israeli withholding taxes. See “Taxation and Government Programs” for additional information.
The price of our ordinary shares could decline if securities analysts do not publish research or if securities analysts or other third parties publish unfavorable research about us.
The trading of our ordinary shares is likely to be influenced by the reports and research that industry or securities analysts publish about us, our business, our market or our competitors. We do not currently have and may never obtain research coverage by securities or industry analysts. If no or few securities or industry analysts commence coverage of us, the trading price for our ordinary shares could be negatively affected. If we obtain securities or industry analyst coverage but one or more analysts downgrade our ordinary shares or publish unfavorable research about our business, our share price would likely decline. If one or more securities or industry analysts ceases to cover us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.
The issuance by us of additional ordinary shares or the issuance by us of, or exercise of, convertible or other equity securities may dilute your ownership of us and incurrence of indebtedness may restrict our operations, both of which could adversely affect our share price.
We intend to file a registration statement with the SEC on Form S-8 providing for registration of our ordinary shares issued or reserved for issuance under the 2010 Employee Option Allocation Plan (as may be amended from time to time, the “2010 Plan”) in connection with this offering. Subject to the satisfaction of vesting conditions and the expiration of lock-up agreements, shares registered under the registration statement on Form S-8 will be available for resale immediately in the public market without restriction. From time to time in the future, we may also issue additional ordinary shares, securities convertible into ordinary shares, or other equity securities to raise additional capital or pursuant to a variety of transactions, including acquisitions. The issuance by us of additional ordinary shares or securities convertible into our ordinary shares would dilute your ownership of us and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of our ordinary shares. We may also seek additional capital through debt financings. The incurrence of indebtedness would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on our ability to incur additional debt, to make capital expenditures, to create liens or to redeem shares or declare dividends, that could adversely affect our ability to conduct our business.
Future sales, or the perception of potential future sales, by us in the public market following this offering could cause the market price for our ordinary shares to decline.
The sale of substantial amounts of shares of our ordinary shares in the public market, or the perception that such sales could occur, could harm the prevailing market price of our ordinary shares. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. Upon the closing of this offering, we will have a total of            ordinary shares outstanding (                 shares if the underwriters exercise their option to purchase additional ordinary shares in full).
All of the ordinary shares sold in this offering will be freely tradeable without restriction or further registration under the Securities Act of 1933 (the “Securities Act”), except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act (“Rule 144”) may be sold only in compliance with the limitations described under “Shares Eligible for Future Sale.” We, our directors and executive officers will sign lock-up agreements with the underwriters that will, subject to certain exceptions, restrict the sale of ordinary shares held by them for 180 days following the date of this prospectus. J.P. Morgan Securities LLC and BofA Securities, Inc., in their sole discretion, may release the securities subject to any of the lock-up agreements with the underwriters described above, in whole or in part at any time. See “Underwriting” for a description of these lock-up agreements.
 
49

 
Investors in this offering will experience immediate and substantial dilution of $         per share.
The assumed initial public offering price of $          per ordinary share exceeds the pro forma as adjusted net tangible book value of $          per ordinary share as of September 30, 2022. Therefore, based on the assumed initial public offering price of $          per ordinary share, as of September 30, 2022, investors will incur immediate and substantial dilution of $          per ordinary share. See “Dilution.”
We will incur increased costs as a result of operating as a U.S. public company, and our management will be required to devote substantial time to new compliance initiatives and corporate governance practices.
As a U.S. public company, and particularly after we are no longer an emerging growth company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform, the Consumer Protection Act, the listing requirements of Nasdaq and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and make it more difficult for us to attract and retain qualified members of our board of directors.
We are evaluating these rules and regulations and cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
Our operating results and our ability to grow may fluctuate from quarter to quarter and year to year, which could make our future performance difficult to predict and could cause our operating results for a particular period to fall below expectations.
Our quarterly and annual operating results and our ability to grow are difficult to predict and may fluctuate significantly in the future. We have experienced seasonal and quarterly fluctuations in the past and expect to experience such fluctuations in the future. In addition to the other risks described in this “Risk Factors” section, the following factors could cause our operating results to fluctuate:

fluctuations in demand for solar energy or wind energy;

our ability to complete our wind energy and solar energy projects in a timely manner;

the availability, terms and costs of suitable financing;

our ability to continue to expand our operations and the amount and timing of expenditures related to this expansion;

announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, or capital-raising activities or commitments;

expiration or initiation of any governmental rebates or incentives;

actual or anticipated developments in our competitors’ businesses, technology or the competitive landscape; and

natural disasters or other weather or meteorological conditions.
For these or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indications of our future performance.
 
50

 
Our actual financial results may differ materially from any guidance we may publish from time to time.
We may, from time to time, provide guidance regarding our future performance that represents our management’s estimates as of the date such guidance is provided. Any such guidance would be based upon a number of assumptions with respect to future business decisions (some of which may change) and estimates, while presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and contingencies (many of which are beyond our control). Guidance is necessarily speculative in nature and it can be expected that some or all the assumptions that inform such guidance will not materialize or will vary significantly from actual results. Our ability to meet any forward-looking guidance is affected by a number of factors, including, but not limited to, our ability to complete our wind energy and solar energy projects in a timely manner, the number and pricing of offtake contracts we enter into, changes in construction and operating costs, changes in electricity prices, the availability of financing on acceptable terms, the availability of rebates, tax credits and other incentives, changes in policies and regulations, the availability and cost of solar panels, wind turbines, inverters, batteries and other raw materials, as well as the other risks to our business described in this “Risk Factors” section. Accordingly, our guidance is only an estimate of what management believes is realizable as of the date such guidance is provided. Actual results may vary from such guidance and the variations may be material. Investors should also recognize the reliability of any forecasted financial data diminishes the farther into the future the data is forecast. In light of the foregoing, investors should not place undue reliance on our financial guidance and should carefully consider any guidance we may publish in context.
If our long-lived assets or project-related assets become impaired, we may be required to record significant charges to earnings.
We may be required to record significant charges to earnings should we determine that our long-lived assets or project-related assets are impaired. Such charges may have a material impact on our financial position and results of operations. We review long-lived and project-related assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If our projects are not considered commercially viable, we would be required to impair the respective assets, which may have a material adverse effect on our business, financial condition and results of operations.
We may allocate the net proceeds from this offering in ways with which you and other shareholders may disagree.
Our management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes described in the section titled “Use of Proceeds.” Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management might not apply our net proceeds in ways that ultimately increase the value of your investment, and the failure by our management to apply these funds effectively could harm our business. If we do not apply the net proceeds from this offering in ways that enhance shareholder value, we may fail to achieve expected results, which could cause our share price to decline.
We are eligible to be treated as an emerging growth company, as defined in the Securities Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors because we may rely on these reduced disclosure requirements.
We are eligible to be treated as an emerging growth company, as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised financial accounting standards until such time as those standards apply to private companies. We intend to take advantage of this extended transition period under the JOBS Act for adopting new or revised financial accounting standards.
For as long as we continue to be an emerging growth company, we may also take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including presenting only limited selected financial data and not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result, our shareholders
 
51

 
may not have access to certain information that they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if our total annual revenue exceeds $1.07 billion, if we issue more than $1.0 billion in non-convertible debt securities during any three-year period, or if before that time we are a “large accelerated filer” under U.S. securities laws. We cannot predict if investors will find our ordinary shares less attractive because we may rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share price may be more volatile.
We will be a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
Upon the closing of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (2) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, although we are subject to Israeli laws and regulations with regard to certain of these matters and intend to furnish quarterly information on Form 6-K. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers from making selective disclosures of material information. As a result of all of the above, you may not have the same protections afforded to shareholders of a company that is not a foreign private issuer.
As we are a “foreign private issuer” and intend to follow certain home country corporate governance practices, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all corporate governance rules of Nasdaq governance requirements.
As a foreign private issuer, we have the option to follow certain home country corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following and describe the home country practices we are following. We intend to rely on this “foreign private issuer exemption” with respect to Nasdaq rules for shareholder meeting quorums. We may in the future elect to follow home country practices with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all corporate governance rules of Nasdaq.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
As discussed above, we qualify as a foreign private issuer, and therefore, we are exempt from certain periodic disclosures and current reporting requirements under the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and therefore, we will re-evaluate our qualification as a foreign private issuer on June 30, 2023. In the future, we would lose our foreign private issuer status if (1) more than 50% of our outstanding voting securities are owned by U.S. residents and (2) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If we no longer qualify as a foreign private issuer, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of
 
52

 
Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance rules of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer.
Prior authorization from the Federal Energy Regulatory Commission (“FERC”) may be required in the future for the direct or indirect transfer, sale, acquisition or other disposition of 10% or greater of our securities.
U.S. federal law requires our subsidiaries that become FERC-jurisdictional public utilities either to (1) obtain prior authorization from FERC or (2) qualify for a blanket authorization granted by FERC order or available under FERC’s regulations, in each case for the direct or indirect transfer, sale or other disposition of 10% or greater of our voting securities or the voting securities in any of our FERC-jurisdictional public utility companies. Similar restrictions imposed by U.S. federal law apply to a purchaser of our securities who is a holding company under the Public Utility Holding Company Act of 1935 in a holding company system that includes a transmitting utility or an electric utility. Accordingly, as a general matter, absent prior authorization by FERC or qualification for a blanket authorization granted by FERC order or available under FERC’s regulations, no purchaser, together with its affiliates (as defined in FERC’s regulations), can legally acquire, directly or indirectly, 10% or more of a FERC-jurisdictional public utility subsidiary’s issued and outstanding securities or otherwise acquire control over a FERC-jurisdictional public utility subsidiary. A violation of these requirements could subject the party in violation to substantial civil or criminal penalties under U.S. federal law, including possible sanctions and FERC rendering the transaction void.
There can be no assurance that we will not be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to United States Holders of our ordinary shares.
We would be classified as a passive foreign investment company (“PFIC”) for any taxable year if, after the application of certain look-through rules, either: (i) 75% or more of our gross income for such year is “passive income” ​(as defined in the relevant provisions of the Internal Revenue Code of 1986, as amended (the “Code”)); or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For these purposes, cash and other assets readily convertible into cash or that do or could generate passive income are categorized as passive assets, and the value of goodwill and other unbooked intangible assets is generally taken into account. Goodwill is treated as an active asset under the PFIC rules to the extent attributable to activities that produce active income. Passive income generally includes, among other things, rents, dividends, interest, royalties, gains from the disposition of passive assets and gains from commodities and securities transactions. For purposes of this test, we will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock. Based on our anticipated market capitalization and the current and anticipated composition of our income, assets, and operations, we do not expect to be a PFIC for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. However, our PFIC status for the current or any other taxable year is subject to considerable uncertainties. For example, it is expected that our annual PFIC status for any taxable year will depend in large part on the extent to which our gross income from sales of energy is considered to be active business commodities gains under the Code. Based on the manner in which we currently operate and intend to operate, we believe it reasonable for United States Holders (as defined in “Taxation and Government Programs—U.S. Federal Income Tax Considerations”) to take the position that our gross income from energy sales is active. However, because we outsource to independent contractors certain operation and maintenance functions that may be treated as significant with respect to our projects, there can be no assurance that the United States Internal Revenue Service (“IRS”) or a court will agree with this position. If our income from sales of energy is not treated as derived from an active commodities business, we will likely be a PFIC. Moreover, whether we are a PFIC is a factual determination that must be made annually after the close of each taxable year. This determination will depend on, among other things, the composition of our income and assets, as well as the value of our ordinary shares and assets. The aggregate value of our assets for purposes of the PFIC determination may be determined by reference to the public offering price of our ordinary shares at this initial public offering
 
53

 
and future trading value of our ordinary shares, which could fluctuate significantly. In addition, the extent to which our goodwill will be characterized as an active asset is not entirely clear and we cannot give assurance that the entire amount of our goodwill will be treated as an active asset. It is possible that the IRS may take a contrary position with respect to our PFIC determination in any particular year, and therefore, there can be no assurance that we will not be classified as a PFIC in the current taxable year or in the future. Certain adverse U.S. federal income tax consequences could apply to a United States Holder if we are treated as a PFIC for any taxable year during which such United States Holder holds our ordinary shares. United States Holders should consult their tax advisors about the potential application of the PFIC rules to their investment in our ordinary shares. For further discussion, see “Taxation and Government Programs—U.S. Federal Income Tax Considerations—Passive Foreign Investment Company.”
If a United States person is treated as owning 10% or more of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States shareholder” with respect to each controlled foreign corporation (“CFC”) in our group (if any). Because our group includes a U.S. subsidiary, certain of our non-U.S. subsidiaries will be treated as CFCs (regardless of whether we are treated as a CFC). A United States shareholder of a CFC may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in U.S. property by CFCs, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether we are or any of our non-U.S. subsidiaries is treated as CFC or whether any investor is treated as a United States shareholder with respect to any such CFC or furnish to any United States shareholder information that may be necessary to comply with the aforementioned reporting and tax paying obligations. The IRS has provided limited guidance on situations in which investors may rely on publicly available information to comply with their reporting and tax paying obligations with respect to foreign-controlled CFCs. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our ordinary shares.
The dual listing of our ordinary shares following this offering may adversely affect the liquidity and value of our ordinary shares.
Following this offering and after our ordinary shares begin trading on Nasdaq, our ordinary shares will continue to be admitted to trading on the TASE in a different currency (USD on Nasdaq and NIS on the TASE), and at different times (resulting from different time zones and different public holidays in the United States and Israel). We cannot predict the effect of this dual listing on the value of our ordinary shares. However, the dual listing of our ordinary shares may dilute the liquidity of these securities in one or both markets and may adversely affect the development of an active trading market for our ordinary shares in the United States. The price of our ordinary shares could also be adversely affected by trading in our ordinary shares on the TASE.
Our amended and restated articles of association to be effective upon the closing of this offering will provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims arising under the Securities Act.
Our amended and restated articles of association to be effective upon the closing of this offering will provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any claims arising under the Securities Act (the “Federal Forum Provision”). Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims. Alternatively, if a court were to find the Federal Forum Provision inapplicable to, or unenforceable in
 
54

 
respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. The Federal Forum Provision will not relieve us of our duties to comply with U.S. federal securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived our compliance with these laws, rules and regulations. While the Federal Forum Provision does not restrict the ability of our shareholders to bring claims under the Securities Act, nor does it affect the remedies available thereunder if such claims are successful, we recognize that it may limit shareholders ability to bring a claim in the judicial forum that they find favorable and may increase certain litigation costs which may discourage the filing of claims under the Securities Act against the us, our directors and officers.
Risks related to our incorporation and location in israel
As some of our wind energy and solar energy projects are located in Golan Heights, rising political tensions and negative publicity may negatively impact our business.
Some of our wind energy and solar energy projects are located in the Golan Heights. The Golan Heights are currently under Israeli jurisdiction and authority. While the United States recognizes Israeli sovereignty over the Golan Heights, the European Union does not. There has been negative publicity, primarily in Western Europe, against companies operating in the Golan Heights.
We conduct operations in Israel and, therefore, political, economic and military instability in Israel may adversely affect our business.
We are incorporated under Israeli law, and our principal offices and a significant portion of our manufacturing facilities are located in Israel. Accordingly, political, economic and military conditions in Israel directly affect our business. In recent years, Israel has been engaged in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah, an Islamist terrorist group that controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria. In addition, Iran has threatened to attack Israel and may be developing nuclear weapons. Some of these hostilities were accompanied by missiles being fired from the Gaza Strip against civilian targets in various parts of Israel, including areas in which our employees are located, and negatively affected business conditions in Israel. Continued hostilities between Israel and its neighbors and any future armed conflict, terrorist activity or political instability in the region could adversely affect our operations in Israel and adversely affect the market price of our ordinary shares. Further escalation of tensions or violence might result in a significant downturn in the economic or financial condition of Israel, which could have a material adverse effect on our operations in Israel and our business.
In addition, several countries restrict doing business with Israel. The State of Israel and Israeli companies have been and are today subjected to economic boycotts. The interruption or curtailment of trade between Israel and its present trading partners could adversely affect our business, financial condition and results of operations.
It may be difficult to enforce the judgment of a U.S. court against us, our officers and directors and the Israeli experts named in this prospectus in Israel or the United States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors and these experts.
Most of our directors or officers are not residents of the United States, and most of their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against us or our non-U.S. directors and executive officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in
 
55

 
Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.
Moreover, an Israeli court will not enforce a non-Israeli judgment if (among other things) it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in absence of due process, if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought. For more information, see “Enforceability of Civil Liabilities.”
Your rights and responsibilities as our shareholder will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.
We are incorporated under Israeli law. The rights and responsibilities of holders of our ordinary shares are governed by our amended and restated articles of association to be effective upon the closing of this offering and the Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Companies Law, each shareholder of an Israeli company has to act in good faith and in a customary manner in exercising his or her rights and fulfilling his or her obligations toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things, in voting at the general meeting of shareholders and class meetings, on amendments to a company’s articles of association, increases in a company’s authorized share capital, mergers and transactions requiring shareholders’ approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in the company, or has other powers toward the company has a duty of fairness toward the company. However, Israeli law does not define the substance of this duty of fairness. There is limited case law available to assist in understanding the implications of these provisions that govern shareholder behavior.
Provisions of our articles of association and of Israeli law may delay, prevent or make undesirable an acquisition of all or a significant portion of our shares or assets.
Provisions of Israeli law and our amended and restated articles of association to be effective upon the closing of this offering could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or our shareholders to elect different individuals to our board of directors, even if doing so would be considered to be beneficial by some of our shareholders, which may limit the price that investors may be willing to pay in the future for our ordinary shares. Among other things:

the Companies Law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased;

the Companies Law requires special approvals for certain transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions;

the Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;

our amended and restated articles of association to be effective upon the closing of this offering generally do not permit a director to be removed from office except by a vote of the holders of at least (65%) of our outstanding shares entitled to vote at a general meeting of shareholders, except that a simple majority will be required if a single shareholder holds more than 50% of the voting rights in the Company; and

our amended and restated articles of association to be effective upon the closing of this offering provide that director vacancies may be filled by unanimous resolution of our board of directors.
Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such
 
56

 
shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including a holding period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to a certain share swap transaction, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no disposition of the shares has occurred.
Our amended and restated articles of association to be effective upon the closing of this offering provide that, unless we consent otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes between us and our shareholders under the Companies Law and the Israeli Securities Law, which could limit our shareholders’ ability to bring claims and proceedings against, as well as obtain a favorable judicial forum for disputes with, us and our directors, officers and other employees.
The competent courts of Tel Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on our behalf (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies Law or the Israeli Securities Law, 5728-1968 (the “Israeli Securities Law”). These exclusive forum provisions (the “Israeli Forum Provisions”) are intended to apply to claims arising under Israeli Law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have exclusive jurisdiction. The Israeli Forum Provisions will not relieve us of our duties to comply with U.S. federal securities laws and the rules and regulations thereunder, and our shareholders will not be deemed to have waived our compliance with these laws, rules and regulations. The Israeli Forum Provisions may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with us or our directors or other employees which may discourage lawsuits against us or our directors, officers and employees. An Israeli court may decide not to enforce the Israeli Forum Provisions in whole or in part, depending on the circumstances, and has broad authority to choose substitute provisions that will govern. If an Israeli court were to find the Israeli Forum Provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
 
57

 
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains estimates and “forward-looking statements,” principally in the sections entitled “Summary,” “Risk Factors,” “Use of Proceeds,” “Dividend Policy,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.” Our estimates and forward-looking statements are mainly based on our management’s current expectations and estimates of future events and trends, which affect or may affect our business, operations, and industry. Although these estimates and forward-looking statements are based upon our management’s current reasonable beliefs and assumptions, they are subject to numerous risks and uncertainties, and are made in light of information currently available to us. Many important factors, in addition to the factors described in this prospectus, may adversely affect our results as indicated in forward-looking statements. You should read this prospectus and the documents we have filed as exhibits to the registration statement of which this prospectus is a part completely, and with the understanding that our actual future results may be materially different and worse from what we expect. Additionally, since becoming a publicly listed company on the TASE in 2010, we have filed various documents with TASE, but such documents and the statements contained therein do not form a part of this prospectus and due to the passage of time, changes to our business, and the differences between the financial reporting standards in the jurisdictions in which we operate, investors are cautioned not to consider those statements in deciding whether to purchase or sell our ordinary shares.
All statements other than statements of historical fact are forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” or similar words, as well as their negatives. Statements regarding our future results of operations and financial position, growth strategy and plans and objectives of management for future operations, including, among others, expansion in new and existing markets, development and introductions of new solutions, capital expenditures and debt service obligations, are forward-looking statements.
Our estimates and forward-looking statements may be influenced by many factors, including, but not limited to:

slowed demand for renewable energy projects;

changes to existing renewable energy industry policies and regulations that present technical, regulatory and economic barriers to renewable energy projects;

electricity price volatility, unusual weather conditions (including wind and solar conditions), catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission system constraints and the possibility that we may not have adequate insurance to cover losses as a result of such hazards;

our ability to enter into new offtake contracts on acceptable terms and prices as current offtake contracts expire;

actual or threatened health epidemics, such as the COVID-19 pandemic, and other outbreaks;

operational delays and supply chain disruptions or increased costs of materials required for the construction of our projects, as well as cost overruns and delays related to disputes with construction contractors;

the reduction, elimination or expiration of government incentives for, or regulations mandating the use of, renewable energy;

our ability to effectively comply with EHS and other laws and regulations and receive and maintain all necessary licenses, permits and authorizations;

a drop in the price of electricity derived from the utility grid or from alternative energy sources;

receipt of necessary land use, environmental, regulatory, construction and zoning permissions we need, on favorable terms;
 
58

 

advances in technology that impair or eliminate the competitive advantage of our projects;

the impact of adverse weather patterns and climate change;

the requirements of being a public company the attending diversion of management’s attention; and

certain provisions in our articles of association and certain applicable regulations that may delay or prevent a change of control.
In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time period or at all. Moreover, we operate in an evolving environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any estimates or forward-looking statements. We qualify all of our estimates and forward-looking statements by these cautionary statements.
The estimates and forward-looking statements contained in this prospectus speak only as of the date of this prospectus. Except as required by applicable law, we undertake no obligation to publicly update or revise any estimates or forward-looking statements contained in this prospectus, whether as a result of any new information, future events or otherwise, or to reflect the occurrence of unanticipated events or otherwise.
 
59

 
USE of PROCEEDS
We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $      million (or approximately $      million if the underwriters exercise in full their option to purchase additional ordinary shares), assuming an initial public offering price of $      per ordinary share, the USD equivalent of NIS      ( based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023.
A $1.00 increase (decrease) in the assumed initial public offering price of $      per ordinary share, the USD equivalent of NIS       (based on the BOI Exchange Rate), would increase (decrease) the net proceeds to us from this offering by approximately $      million, assuming that the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each increase (decrease) of 1,000,000 shares in the number of ordinary shares offered by us would increase (decrease) the net proceeds to us from this offering by approximately $      million, assuming an initial public offering price of $      per ordinary share, the USD equivalent of NIS       (based on the BOI Exchange Rate), and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
We intend to use approximately $      million of the net proceeds from this offering to fund our equity requirements for our Advanced Development Projects and approximately $      million of the net proceeds from this offering for working capital purposes and general corporate purposes, and we may also use a portion of the proceeds to acquire or invest in businesses; however, we do not have agreements or commitments for any material acquisitions or investments at this time for which we intend to use any of the proceeds from this offering.
The expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our project development efforts and our future revenue and cash generated by operations and the other factors described in ‘‘Risk Factors.’’ As a result, our management retains broad discretion over the allocation of the net proceeds from this offering.
 
60

 
DIVIDEND POLICY
We have never declared nor paid any dividends on our ordinary shares. We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance operations and expand our business. Our board of directors has sole discretion in whether to pay dividends. If our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our board of directors may deem relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends. See “Description of Share Capital and Articles of Association—Dividend and Liquidation Rights” for additional information.
Payment of dividends may be subject to Israeli withholding taxes. See “Taxation and Government Programs—Israeli Tax Considerations” for additional information.
 
61

 
CAPITALIZATION
The following table sets forth our cash and cash equivalents and total capitalization as of September 30, 2022:

on an actual basis; and

on a pro forma as adjusted basis, giving effect to the Reverse Share Split and the issuance and sale of ordinary shares in this offering at an assumed initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
You should read this information in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes section and other financial information included elsewhere in this prospectus.
As of September 30, 2022
Actual
Pro forma(1)
(in thousands)
Cash:
Cash
$ 242,760 $      
Total cash and cash equivalents
242,760(2)
Corporate Debt:
Debentures
252,382
Convertible debentures
129,711
Total corporate debt
382,093
Non-Recourse Debt:
Loans from banking corporations and other financial institutions
1,429,941
Total non-recourse debt
1,429,941
Equity:
Equity attributable to owners of the Company
736,885
Non-controlling interests
214,980
Total equity
951,865
Total capitalization
$ 2,763,899 $       
(1) A $1.00 increase (decrease) in the assumed initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023, would increase (decrease) the pro forma amount of each of cash and cash equivalents, additional paid-in capital, total shareholders’ equity (deficit) and total capitalization by approximately $      million, assuming the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 1,000,000 shares in the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma amount of each of cash and cash equivalents, additional paid-in capital, total shareholders’ equity (deficit) and total capitalization by approximately $      million, assuming an initial public offering price of $      per ordinary share, the USD equivalent of NIS       (based on the BOI Exchange Rate), and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
(2) Cash and cash equivalents does not include $32 million of Financial Assets (as defined herein) measured at fair value, which largely includes fixed income securities managed passively through a third-party asset manager.
 
62

 
DILUTION
If you invest in our ordinary shares in this offering, your ownership interest will be immediately diluted to the extent of the difference between the initial public offering price per ordinary share and the net tangible book value per ordinary share after this offering. Our net tangible book value as of September 30, 2022, was $      per ordinary share. Historical net tangible book value per ordinary share as of any date represents the amount of our total tangible assets less our total liabilities, divided by the total number of ordinary shares outstanding as of such date.
Our pro forma net tangible book value as of September 30, 2022 was $      million, or $      per ordinary share. Pro forma net tangible book value represents the amount of our total tangible assets less our total liabilities, after giving effect to the Reverse Share Split. Pro forma net tangible book value per ordinary share as of any date represents pro forma net tangible book value divided by the total number of ordinary shares outstanding as of such date, after giving effect to the pro forma adjustments described above.
After giving effect to the sale of           ordinary shares in this offering at an assumed initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of September 30, 2022, would have been $      million, or $      per ordinary share. This amount represents an immediate increase in net tangible book value of $      per ordinary share to our existing shareholders and an immediate dilution of $      per ordinary share to new investors purchasing ordinary shares in this offering. We determine dilution by subtracting the pro forma as adjusted net tangible book value per ordinary share after this offering from the amount of cash that a new investor paid for an ordinary share.
The following table illustrates this dilution:
Assumed initial public offering price per ordinary share
$       
Pro forma net tangible book value per share as of September 30, 2022
$       
Increase in pro forma net tangible book value per ordinary share attributable to this offering
$       
Pro forma as adjusted net tangible book value per ordinary share after this offering
$       
Dilution per ordinary share to new investors in this offering
$       
A $1.00 increase (decrease) in the assumed initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023, would increase (decrease) the pro forma as adjusted net tangible book value per ordinary share by $      , and increase (decrease) dilution to new investors by $      per ordinary share, assuming that the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
If the underwriters exercise in full their option to purchase additional ordinary shares in this offering, the pro forma as adjusted net tangible book value after the offering would be $      per ordinary share, the increase in net tangible book value to existing shareholders would be $      per ordinary share and the dilution to new investors would be $      per ordinary share, assuming an initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
The following table summarizes, on the pro forma as adjusted basis described above as of September 30, 2022, the differences between the number of ordinary shares purchased from us, the total consideration paid to us in
 
63

 
cash and the average price per ordinary share paid, in each case by existing shareholders, on the one hand, and new investors in this offering, on the other hand. The calculation below is based on an assumed initial public offering price of $      per ordinary share, the USD equivalent of NIS      (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023, before deducting underwriting discounts and commissions and estimated offering expenses payable by us.
Ordinary Shares Purchased
Total Consideration
Average Price
Per Ordinary
Share
Number
Percent
Amount
Percent
Existing shareholders
% $         % $         
New investors
Total
100% 100%
To the extent any of our outstanding options are exercised, there will be further dilution to new investors. To the extent all of such outstanding options had been exercised as of September 30, 2022, the pro forma net tangible book value per share after this offering would be $      , and total dilution per ordinary share to new investors would be $      .
A $1.00 increase (decrease) in the assumed initial public offering price of           per ordinary share, the USD equivalent of NIS       (based on the BOI Exchange Rate), which was the closing price of our ordinary shares on the TASE on           , 2023, would increase (decrease) the total consideration paid by new investors and the average price per ordinary share paid by new investors by $      million and $      per ordinary share, respectively, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.
If the underwriters exercise their option to purchase additional ordinary shares in full:

the percentage of ordinary shares held by existing shareholders will decrease to approximately    % of the total number of our ordinary shares outstanding after this offering; and

the number of ordinary shares held by new investors will increase to           , or approximately    % of the total number of our ordinary shares outstanding after this offering.
To the extent any new options are granted and exercised or we issue additional ordinary shares or other equity securities or convertible debt securities in the future, there will be further dilution to investors participating in this offering.
 
64

 
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the section titled “Summary Historical Financial Data” and our consolidated financial statements and related notes included elsewhere in this prospectus. This discussion and other parts of this prospectus contain forward-looking statements, such as those relating to our plans, objectives, expectations, intentions, and beliefs, which involve risks and uncertainties. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” included elsewhere in this prospectus.
Overview and business
We are a global renewable energy platform, founded in 2008 and publicly traded on the TASE since 2010. Since our founding, we have grown from an Israeli company to an international enterprise, with operations across 11 different countries on three continents and across multiple technologies. We develop, construct, own and operate utility-scale renewable energy projects. We primarily generate revenue from the sale of electricity produced by our renewable energy facilities, pursuant to long-term PPAs. Our control over the entire project life cycle, from greenfield development to ownership and operations, enables us to deliver strong returns and rapid growth. Furthermore, we distinguish ourselves through our diverse global presence and multi-technology capabilities, which allow us to strategically optimize our capital allocation between geographies and renewable technologies to deliver highly profitable projects at reduced risk. As of the Approval Date, our global portfolio of utility-scale, renewable energy projects included approximately 17.0 GW of multi-technology generation capacity and approximately 15.3 GWh of energy storage capacity, of which approximately 4.0 GW and approximately 2.1 GWh, respectively, are from Mature Projects.
Our project portfolio includes what we believe are some of the largest onshore wind and solar projects across Western Europe, CEE and Israel, many of which are either under construction or already operational. Many of these projects are flagship projects in each of their respective territories, highlighting our ability to identify and deliver unique projects of scale across our target markets. In the United States, we own a substantial development portfolio over a wide geographical area across 17 U.S. states with a particular focus on the Western United States (accounting for approximately 64% of our U.S. portfolio as of the Approval Date) where we are developing what we believe are some of the largest solar and storage projects in the region.
In August 2021, we acquired 90.1% of the shares of Clēnera, a leading greenfield developer of solar energy and energy storage projects in the United States, which has successfully developed, built and sold solar energy projects in the United States with an installed capacity of approximately 1.6 GW at an average profit of approximately $275 per kilowatt. Prior to the Clēnera Acquisition, Clēnera’s development portfolio was held under a dedicated holding company, Parasol Renewable Energy LLC (“Parasol”), which was indirectly held by Clēnera’s co-founders and an American insurance company. As part of the Clēnera Acquisition, Parasol’s development portfolio was transferred to Clēnera, excluding certain projects which for regulatory reasons remained with Parasol. The consideration paid as part of the Clēnera Acquisition included a $158 million upfront payment and up to $232 million of earn-out performance-based consideration (the “Earn-Out”). As of the date of this prospectus, we expect that the Earn-Out amount will be significantly lower than the maximum agreed amount of $232 million. In December 2022, we entered into an agreement with Parasol to acquire the vast majority of the remaining Parasol projects (the “Parasol Projects Acquisition”). The consideration to be paid as part of the Parasol Projects Acquisition includes $51 million upfront payment and up to approximitaly $52 million of earn-out performance based consideration (the “Parasol Earn-Out”). As part of the Clēnera Acquisition, the founders of Clēnera retain an option to sell their remaining 9.9% ownership stake to us for up to $43 million (depending on the achievement of certain milestones), exercisable on the fifth anniversary of the consummation of the Clēnera Acquisition.
 
65

 
Significant Factors and Trends Affecting Our Business
Growth in the Renewable Energy Market
The renewable energy market represents one of the largest growth opportunities in the global energy sector. Creating new opportunities across markets and technologies, increasing demand for sustainable energy continues to be driven by global action to combat the climate crisis, the ongoing replacement cycle for aging energy infrastructure, the expanding electrification of the broader economy and the increasing criticality of energy security. Growing public demand coupled with favorable regulatory trends and government policy are also incentivizing development of renewable energy projects. These governmental incentives include tax credits and abatements, accelerated depreciation deductions, grants, rebates, renewable portfolio standards and carbon taxes. These industry, economic and policy trends support our growth and we expect them to continue. See “Business—Market Overview—Our Industry and Market Opportunity.”
Rising Power Prices Across Europe and the United States
Power prices have risen considerably in the last 12 months across Europe and the United States, largely driven by the significant increase in the price of natural gas. According to BNEF, the average power price across Germany, Spain, the United Kingdom and the Netherlands reached a peak of EUR 501 per MWh in March 2022, an increase of 909% from January 2021. The power prices have come down materially since the recent highs but still maintain an average of $154 per MWh as of September 30, 2022. The rapid increase in power prices has made solar energy and wind energy projects more economically attractive for a wide range of offtakers. Acquiring electricity from renewable energy projects has become critical for utility and large corporations seeking to secure long term attractively priced electricity.
We believe that the significant increase in power prices will result in increases in PPA pricing both for projects where PPAs have yet to be signed and for projects with signed PPAs which have yet to commence operations. We have begun to see this trend unfold across our portfolio. For example, in the second quarter of 2022, we signed amendments to our PPAs at projects Björnberget (372 MW) and Atrisco (360 MW, 1,200 MWh), reflecting a 22% and 24% increase in PPA pricing, respectively. Similarly, as of the Approval Date, we have signed additional PPA amendments with a material price increase for Rustic Hills I and Rustic Hills II (256 MW in total), reflecting a 17% and 23% increase in PPA pricing, respectively, and are in advanced negotiations to amend PPAs for several other projects that are in pre-construction.
In addition, increases in the price of natural gas and other commodities in Europe directly impact the revenues that we generate from our projects that are operated under a Merchant Model in Sweden and Spain, where an increase in energy prices directly translates into an increase in the price in which we sell electricity. For example in the third quarter of 2022, our first operational quarter for project Gecama in Spain, we sold electricity at an average net price of EUR 103 per MWh. An increase in the price at which we sell the electricity produced by any of our projects is expected to increase the revenue that we generate from such project without a direct increase in the cost of its production.
Supply chain disruptions
The declining cost of solar panels, wind turbines and other raw materials necessary to manufacture them has historically been a key driver in the growth of the renewable energy industry, and we expect that continued technological advances, among other factors, will further drive long-term declines in price.
However, prices for these components and their raw materials have increased in the short term due to a variety of factors, including COVID-19 supply chain disruptions, tariffs and trade barriers and commodity price inflation. According to the Vestas Wind Systems A/S Investor Presentation, dated August 2022 (“Vestas”), solar module prices increased by 15% when comparing the second quarter of 2022 to the second quarter of 2021. Similarly, wind turbine prices have increased 7.5% between the first quarter of 2021 and fourth quarter of 2021 according to average selling prices reported by Vestas.
 
66

 
For our projects that are already under construction, we have already secured supply contracts. As such, price increases in the last 12 months have not materially impacted our business. However, should prices of components and raw materials that are required for our projects continue to increase, the required equity to construct new projects would increase accordingly. This may adversely affect the profitability of our projects, especially those that have a signed PPA but have not yet procured all of the required equipment.
Our global presence and diversified network of suppliers enable us to leverage an international supply chain to access the components we need, preventing such disruptions from materially impacting our business, our results of operations and our capital resources. Albeit not materially, we are still affected by these disruptions, to the extent they cause supply delays or increases in the prices of components. For more information, see “Risk Factors—Risks related to development and construction of our renewable energy projects—Disruptions in our supply chain for materials and components and the resulting increase in equipment and logistics costs could adversely affect our financial performance.”
Access to and cost of capital
Our future growth depends significantly on our ability to raise capital to finance the development and construction of our projects through project finance providers, including lenders and tax equity investors on competitive terms, as well as through corporate finance. We have historically used a variety of structures including the issuance of non-recourse project debt, unsecured corporate and convertible debt, and both public and private equity financing to help fund our operations. As of the Approval Date, we had raised $1.2 billion of capital to support our growth through corporate and convertible debt and equity issuances. Our ability to raise capital from investors and lenders is affected by general economic conditions, the state of the capital markets, inflation levels, and concerns about our industry or business. See “—Liquidity and Capital Resources” for further details on capital raising and the effective management of our capital structure and capital allocation.
Our future growth also depends on our ability to raise capital at an attractive cost. Rising interest rates across our markets has a minimal impact on our outstanding debt, whereby 94% of our consolidated indebtedness net of deferred financing costs as of September 30, 2022 was locked in at a fixed-rate. Our exposure to rising interest rates relates primarily to either projects under construction whereby the base rate is set at each date the facility is drawn, as well as projects under development for which PPAs have been signed but financing has not yet been arranged. For such projects under development, we are working to amend the projects’ PPAs to reflect higher power prices, thereby offsetting the impact of increased interest rates.
Government Regulations and Incentives
Our strategy to grow our business through the development of renewable energy projects could be affected by certain government policies and regulations. Renewable energy projects currently benefit from various governmental incentives. These policies have had a significant positive effect on the development of renewable energy projects and the renewable energy industry in general, but such policies could change at any time. These incentives provide tax credits and accelerated depreciation for a significant portion of the development costs, or increase demand by mandating increasing levels of renewable energy generation. Any loss or reduction of such incentives and other programs could result in higher operating costs, while the utilization of such incentives and other programs can help reduce certain operating costs, primarily our cost of capital.
Seasonality
Seasonal trends affect both our solar energy and wind energy projects, with energy output varying seasonally depending on the location of a specific project. Our cash flow generated from any project is directly related to the amount of energy produced in such project. We produce a substantial amount of our solar energy projects’ energy during the summer months when solar resources tend to be most favorable. Our wind energy projects also have seasonal variation in output, though the projects differ in terms of which months are more favorable. Although seasonality may affect us on a project-by-project level, our geographic and technological diversity substantially mitigates any seasonal effect on our global business as a whole.
 
67

 
Components of Statements of Operations
Revenue
We primarily generate revenue from the sale of electricity produced by our renewable energy facilities which we sell to local electricity authorities, utilities and corporations pursuant to long-term PPAs, with terms ranging from 8.5 to 25 years. The PPAs of our Operational Projects have a weighted-average remaining term of 12.5 years. We sell electricity produced by project Picasso in Sweden partially under the Merchant Model and manage our exposure to Merchant Risk through hedging agreements. As of September 30, 2022, we have hedged approximately 30% of the expected production of project Picasso until the end of 2023 at an average of EUR 75 per MWh. We sell electricity produced by project Gecama under the Merchant Model and manage our exposure to Merchant Risk through hedging agreements. We have hedged approximately 55% of the expected production of project Gecama beginning from October 2022 until the end of 2023 at an average of EUR 87 per MWh. We recognize revenues from the sale of electricity over the period of electricity generation.
We also generate revenue from the operation of renewable energy facilities in Israel. This revenue stream is generated from projects that are accounted for as financial assets under IFRS (“Financial Asset Projects”) (for more information on financial assets accounting, see “—Financial Asset Projects).” For these Financial Asset Projects, although we are the legal owner of the facility, because of the manner in which the government controls and regulates the electricity license terms, from an accounting perspective, the facility is viewed as if ownership had been transferred to the government. We are therefore considered to be a contractor, recognizing only a small portion of the proceeds generated from the sale of electricity under the PPA as revenue. The remaining proceeds generated from the sale of electricity for the Financial Asset Projects are recognized as finance income and through the repayment of the Financial Asset (as defined below). For more information, see “—Financial Asset Projects.”
Additionally, we generate revenue from asset management, development services and construction services that we provide to projects owned by us and third parties. For services provided to projects we own, revenues are eliminated upon consolidation. Revenues in respect to these activities are recognized upon provision of the services over the term of the arrangement.
Services provided to third parties largely comprise development services provided by Clēnera to Parasol with respect to the Parasol projects that we did not acquire in the Clēnera Acquisition. For more information on the Clēnera Acquisition, see Note 8 to our consolidated financial statements for the year ended December 31, 2021 included elsewhere in this prospectus.
We expect our revenues to increase as we (i) convert our projects under construction, our projects in pre-construction, our contracted projects, our Advanced Development Projects and our Development Projects into Operational Projects, (ii) benefit from inflation linked price provisions contained in certain of our off-take contracts for our Operational Projects and (iii) benefit from Operational Projects which sell electricity under the Merchant Model, for which energy prices have increased most recently.
Cost of sales
Our cost of sales for revenue generated from the sale of electricity or from the operation of renewable energy facilities includes expenses associated with the ongoing operations of our projects such as project site maintenance, municipal taxes, rent and insurance. Cost of sales that are incurred in connection with our construction and management services consist of employee compensation, including share-based compensation, and related human capital expenses.
We anticipate that, in the near term, our cost of sales will increase as we increase the number of Operational Projects but that our cost of sale to revenue ratio will not increase materially in the mid to long term.
Depreciation and amortization
Depreciation and amortization expense primarily reflects depreciation of our projects over their estimated useful lives. For more information on how we depreciate and amortize our assets, see Notes 2(H)(3) and 2(K) to our consolidated financial statements for the year ended December 31, 2021 included elsewhere in this prospectus.
 
68

 
Operating expenses
General and administrative expenses
General and administrative expenses consist primarily of employee compensation, including share-based compensation and directly attributable or allocated corporate costs including, legal, accounting, treasury and information technology expenses, office expenses, professional fees, and other corporate services costs. We expect that in the near term our general and administration expenses will increase in absolute numbers as we grow our team but will decrease as a percentage of revenue as more projects become operational.
Selling, marketing and project promotion expenses
Our selling, marketing and project promotion expenses consist of expenses related to our business development activities including project sourcing and submission to tenders. These expenses consist primarily of employee compensation, including share-based compensation and directly attributable costs including legal, marketing and media expenses.
We expect our selling, marketing and project promotion expenses will increase in absolute numbers as we grow our business but will decrease as a percentage of revenue as more projects become operational.
Project development expenses
Project development expenses include costs incurred for the development of our project pipeline, such as allocated employee compensation, including share-based compensation, third-party development spend including interconnection and transmission studies, surveying and project diligence costs, and regulatory compliance studies. We expense development costs for a project as long as we estimate that the realization of such project is improbable. Once we believe it is probable that the relevant project will be materialized, development costs incurred for such project are capitalized. Should the realization of the project become improbable, the capitalized amounts are deducted through project development expenses. As we continue to expand our pipeline of early-stage Development Projects, we expect our project development expenses to increase in absolute numbers but decrease as a percentage of revenue as more projects become operational.
U.S. acquisition expense
U.S. acquisition expense is a one-off expense that we recognized in 2021. It includes the transaction expenses associated with the Clēnera Acquisition, including costs associated with legal, financial and tax advisory services, insurance premiums and regulatory filings.
Finance Income
Finance income primarily consists of proceeds from the sale of electricity generated from our Financial Asset Projects that are accounted as finance income. For more information, see “—Financial Asset Projects.” The income we recognize for these projects includes annual interest income and adjustments related to changes in the Consumer Price Index. Financial income also includes income from the revaluation of certain foreign currency hedge transactions.
Finance expenses
Finance expenses primarily consist of interest we pay for our bonds and for loans taken to finance our projects, loans provided by non-controlling interests, foreign currency hedge transactions, expenses related to lease liabilities and expenses related to the part of potential future earn-out payments that is not subject to the two co-founders’ continued tenure with Clēnera and which was recognized on the balance sheet on a discounted basis.
Early Repayment Fees
Early repayment fees consist primarily of a one-time payment made in the year 2020 with respect to the repayment of loans from other credit providers and with respect to the refinancing of senior debt in certain projects.
 
69

 
Taxes on Income (Tax Benefits)
Taxes on income (tax benefits) consist primarily of income taxes imposed by the jurisdictions in which we conduct business. Our effective tax rate is affected by tax rates in jurisdictions and the relative amounts of income we earn in those jurisdictions, changes in the valuation of our deferred tax assets and liabilities, applicability of any valuation allowances, and changes in tax laws in jurisdictions in which we operate. As of December 31, 2021, our net operating loss carry forwards for Israeli tax purposes amounted to approximately $103 million.
Other income
As discussed elsewhere in this prospectus, the size of our Earn-Out obligations in respect of the Clēnera Acquisition depends on how quickly certain projects that we acquired from Clēnera reach COD. Due to delays in the expected COD of various projects, our expected liability in respect of the Earn-Out payments was substantially reduced from what our financial statements had previously assumed. This reduction in liability resulted in $18.3 million being recorded as other income for the nine months ended September 30, 2022 (for more information regarding the reduction in our estimated Earn-Out payments, see Note 4 to our consolidated financial statements for the nine months ended September 30, 2022 included elsewhere in this prospectus).
Financial Asset Projects
Pursuant to IFRS, if the government controls and regulates the licensing arrangements for a renewable energy facility and the license term is similar to the facility’s useful life, the facility is viewed, from an accounting perspective, as if it has been transferred to the government’s ownership. Although when evaluating our performance, such a project is like any other renewable energy project we own, from an accounting perspective, it is treated as Financial Asset Project, whereby we are considered strictly as a contractor during both the construction period and operating period.
As a contractor from an accounting perspective, we are entitled to receive fees during the construction period for construction services. The fees for construction services include the construction costs of the Financial Asset Project plus a standard construction margin estimated by us. These fees, which are due at the end of the construction period, are recorded in our financial statements as a financial asset (“Financial Asset”). When construction is complete and before the project begins operations, we define a repayment schedule for the Financial Asset (the “Repayment Schedule”). The payments under the Repayment Schedule are funded through the sale of electricity under the PPA, which amortize the full amount of the Financial Asset over the PPA term, which is, on average, 20 years.
When the project becomes operational, we are entitled to receive the proceeds from the sale of electricity as under any PPA. However, because the project is treated as a Financial Asset Project from an accounting perspective, the proceeds from sale of electricity under the PPA are accounted for as follows:

certain amount of the proceeds, as determined in the Repayment Schedule, is recorded as principal payments made by the regulator to repay the Financial Asset (the “Repayments”), which do not appear in the profit and loss statement in our financial statements;

certain amount of the proceeds, reflecting the interest payments made by the regulator to repay the Financial Asset, is recorded as finance income (“Interest Income” and, together with the Repayments, “Financial Asset Payments”); and

the remaining amount of the proceeds, if any, are recorded as revenue from the operation of renewable energy facilities.
For the year ended December 31, 2021, we received proceeds from the sale of electricity from the Financial Asset Projects of $44.1 million, which comprised of:

$32.9 million recorded as Financial Asset Payments, which appears in our cash flow statement under cash flow from operations; and
 
70

 

$11.3 million recorded as revenue from the operation of renewable energy facilities.
For the nine months ended September 30, 2022, we received proceeds from the sale of electricity from the Financial Asset Projects of $20.9 million, which comprised of:

$15.4 million recorded as Financial Asset Payments, which appears in our cash flow statement under cash flow from operations; and

$5.5 million recorded as revenue from the operation of renewable energy facilities.
The Halutziot project was considered to be a Financial Assets Project until April 2022 and $17.7 million of the proceeds generated by this project from sale of electricity were recorded for the year ended December 31, 2021 as Financial Asset Payments rather than revenue. However, following April 1, 2022 due to a significant change to the terms of the concession arrangement vis-a-vis the state, which included the execution of significant technological changes to the Halutziot facility and the expansion thereof in a manner which will increase the capacity and effectiveness of production, Halutziot is no longer considered a Financial Asset Project. All proceeds from the sale of electricity have been, and will be, recorded as revenue, resulting in an increase to our revenue in the nine months ended September 30, 2022 of $11.9 million. Our CODM evaluates our performance based on an evaluation of Financial Asset Projects as any other renewable energy project in our portfolio. For more information on our segment reporting, see Note 28 to our financial statements provided elsewhere herein.
We currently only have Financial Asset Projects in Israel. As of September 30, 2022, our Financial Asset Projects included: Mivtachim, Talmei Bilu, Cramim, Idan, Golan Fruits, Sde Nehemia and Barbur (collectively, the “Israel Solar Projects”). The aggregate installed capacity of our Financial Asset Projects was 30.6 MW as of the Approval Date. The last project to be accounted for as a Financial Asset began construction in 2015, and no other project has been recognized by us as a Financial Asset Project since.
Period
Proceeds from Sale of
Electricity by Financial
Assets Projects
Proceeds from Sale of
Electricity Recorded as
Financial Asset Payments
Proceeds from Sale of
Electricity Recorded as
Revenue
(in millions)
Nine months ended September 30, 2022
$ 20.9 $ 15.4 $ 5.5
Year ended December 31, 2021
44.1 32.9 11.3
Results of Operations
The following table sets forth the consolidated statements of operations in U.S. dollars and as a percentage of revenue for the period presented:
 
71

 
Nine months ended September 30,
Year ended December 31,
2022
2021
2021
2020
(in thousands)
Unaudited
Revenues
$131,303
$67,424
$102,461
$70,324
Cost of sales
(28,154)
(14,293)
(21,777)
(14,730)
Depreciation and amortization
(27,544)
(13,602)
(19,446)
(15,226)
Gross profit
75,605
39,529
61,238
40,368
General and administrative expenses
(21,774)
(9,085)
(15,569)
(9,018)
Selling, marketing and project promotion expenses
(2,458)
(2,314)
(3,617)
(2,257)
Development expenses
(1,804)
(1,099)
(719)
Transaction costs in respect of acquisition of activity in the United States
(6,990)
(7,331)
Other income
18,269
396
778
Operating profit
67,838
21,536
34,400
28,374
Finance income
19,181
22,897
30,333
17,214
Finance expenses
(50,465)
(28,316)
(37,175)
(31,408)
Total finance expenses, net before early prepayment fee
(31,284)
(5,419)
(6,842)
(14,194)
Pre-tax profit before early prepayment fee
36,554
16,117
27,558
14,180
Early prepayment fee
(67,594)
Profit (loss) before tax and equity gains (loss)
36,554
16,117
27,558
(53,414)
Share of (loss) profits of equity accounted investees
(72)
(139)
(189)
26
Profit (loss) before income taxes
36,482
15,978
27,369
(53,388)
Taxes on income
(9,324)
(2,419)
(5,694)
12,353
Profit (loss)
27,158
13,559
$21,675
$(41,035)
Profit (loss) for the year attributed to: