Genie Energy Ltd

BUSINESS OVERVIEW

Genie Energy Ltd. is end-to-end provider of energy services. We manage our business and report results throughtwo reporting segments.

• Genie Retail Energy (“GRE”) supplies electricity and natural gas to residential and small business customers through retail energy providers ("REPs") operating in certain deregulated markets within the United States; and

• Genie Renewables includes the following three lines of businesses: Genie Solar is an integrated solar energy company that develops, constructs and operates solar energy projects for commercial and industrial ("C&I") customers as well as its own portfolio; CityCom Solar (“CityCom”) marketer of community solar energy solutions; and Diversegy LLC (“Diversegy”) provides energy brokerage and advisory services to C&I customers.

The Company through its wholly-owned subsidiary, Genie Energy International Corporation (“GEIC”), owns 100% of Genie Retail Energy, Inc. and 95.5% of Genie Energy Services, LLC (“GES”). GES holds our interest in the entities comprising the Genie Renewables segment. In March 2021, the Company renamed the GES segment to Genie Renewables. In the third quarter of 2022, the Company ceased to operate a former segment, GRE International (“GREI”). Certain GREI's assets and liabilities and operations were classified as discontinued operations and the segment's remaining assets and liabilities were combined with corporate.

GRE owns and operates REPs, including IDT Energy, Inc. (“IDT Energy”), Residents Energy, LLC (“Residents Energy”), Town Square Energy, LLC and Town Square Energy East, LLC (collectively,“TSE”), Southern Federal Power (“SFP”) and Mirabito Natural Gas, ("Mirabito"). GRE's REP businesses resell electricity and natural gas to residential and small business and small commercial customers. The majority of GRE's REPs' customers are located in the Eastern and Midwestern United States and Texas. Mirabito supplies natural gas to commercial customers in Florida.

Genie Renewables consists of our 95.5% interest in Genie Solar, an integrated solar energy company, our 92.8% interest in CityCom Solar, a marketer of community solar and other sales solutions and 91.5% interest in Diversegy, an energy broker.

Genie Solar holds our 80.0% interest in Sunlight Energy, a solar energy developer and operator and our 60.0% interest in Prism Solar Technologies (“Prism”) which designs and manufactures specialized solar panels.

DISCONTINUED OPERATIONS IN UNITED KINGDOM, FINLAND AND SWEDEN

Previously, the company had a third segment, GREI, which supplied electricity and natural gas to residential and small business customers in certain markets in Europe. The comp any operated Orbit Energy Limited ("Orbit”), which operated in the United Kingdom, Lumo Energia Oyj (“Lumo Finland”) which operated in Finland and Lumo Energi AB (“Lumo Sweden”) which operated in Sweden.

On November 29, 2021, Orbit was declared insolvent and its customers were transferred to the “supplier of last resort.” Effective December 1, 2021, the administration of Orbit was transferred to third-party Administrators. The accounts of Orbit were deconsolidated from those of the Company effective December 1, 2021.

On November 28, 2023, the administration of Orbit ceased and the control of Orbit reverted back to the Company from the Administrators. The accounts of Orbit were consolidated with those of the Company effective November 28, 2023.

In the third quarter of 2022, the Company decided to discontinue the operations of Lumo Energia Oyj (“Lumo Finland”) and Lumo Energi AB (“Lumo Sweden”). In July 2022, the Company entered into a series of transactions to sell most of the electricity swap instruments held by Lumo Sweden. The Company also entered into a series of transactions to transfer the customers of Lumo Finland and Lumo Sweden to other suppliers.

In November 2022, Lumo Finland declared bankruptcy and the administration of Lumo Finland was transferred to an administrator (the“Lumo Administrators”). All assets and liabilities of Lumo Finland remain with Lumo Finland, in which the Company retains its ownership interest, however, the management and control of Lumo Finland were transferred to the Lumo Administrators. Since the Company lost control of the management of Lumo Finland in favor of the Lumo Administrators, the accounts of Lumo Finland were deconsolidated effective November 9, 2022.

We account for the operations in the United Kingdom, Finland and Sweden as discontinued operations.

Following the discontinuance of operations of Lumo Finland and Lumo Sweden, GRE International ceased to be a separate segment and certain GREI's assets and liabilities and operations were classified as discontinued operations and the segment's remaining assets and liabilities and results of continuing operations of GRE International were combined with corporate.

REPORTABLE SEGMENTS

We havetwo reportable business segments: GRE and Genie Renewables. Our reportable segments are distinguished by types of service, customers and customer geography. Financial information by segment and geographic areas is presented in “Note 18 — Business Segment and Geographic Information” in the Notes to our Consolidated Financial Statements in this Annual Report.

GENERAL BUSINESS INFORMATION

Our main offices are located at 520 Broad Street, Newark, New Jersey 07102. Our telephone number is (973)438-3500 and our web site iswww.genie.com.

We make available free of charge through the investor relations page of our web site (http://genie.com/investors/sec-filings/) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports, and all beneficial ownership reports on Forms 3,4 and 5 filed by directors, officers and beneficial owners of more than 10% of our equity securities as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission. We have adopted a Code of Business Conduct and Ethics for all of our employees, including our principal executive officer and principal financial officer. Copies of our Code of Business Conduct and Ethics are available on our web site.

No portion of our web site (https://genie.com), including the various pages thereof (e.g. the investor relations pages and the materials available thereon) and the information contained therein or incorporated therein are incorporated into this Annual Report on Form 10-K or our other filings with the Securities and Exchange Commission.

KEY EVENTS IN OUR HISTORY

In November 2004, IDT Corporation, or IDT, our former corporate parent, launched a retail energy provider business in New York State under the brand name IDT Energy.

In October 2011, we were spun-off by IDT and became an independent public company with our Class B common stock listed on the New York Stock Exchange.

In November 2016, GRE purchased Retail Energy Holdings, LLC, which operated REPs under the brand name Town Square Energy.

In August 2017, GRE acquired Mirabito Natural Gas, a commercial supplier located in Florida. The acquisition expanded GRE’s serviceable markets into Florida.

In October 2018, we acquired a 60.0% interest in Prism, a solar solutions company that is engaged in U.S.-based manufacturing of solar panels, solar installation design and project management.

In July 2019, we launched our Southern Federal Power REP and entered the energy supply market in Texas.

In 2022, Genie Solar began to focus on developing utility scale solar projects that it will own and separate.

In July 2022, we established Sunlight Energy, an investment vehicle to finance ownership of Genie Renewable-originated solar generation projects and projects developed by third parties.

In December 2022, Genie Solar obtained the notice to proceed for its first company-owned project, a 4-megawatt, or MW community solar firm in upstate New York.

In November 2023, we acquired a portfolio of ten operating solar system facilities in Ohio and Michigan and agreed to purchase an additional solar system facility in Indiana from the same owners, subject to the satisfaction of certain closing conditions, which were met in February 2024.

RECENT DEVELOPMENTS

In April 2023, Genie Solar broke ground on its first company-owned solar generation project in Upstate New York.

In June 2023, we announced the redemption of all remaining outstanding shares of our Series A 2012 Preferred Stock.

In July 2023, Genie Solar announced that it had achieved notice to proceed (NTP) on its second company owned project, a 6.25 MW array also in Upstate New York.

DIVIDENDS

We pay a quarterly dividend on our Class A and Class Bcommon stock and, prior to redemption of all outstanding shares of our Series 2012-A Preferred Stock (the“Preferred Stock”), on our Preferred Stock.

The aggregate dividends paid in the year ended December 31, 2023 on our Class A and Class B common stock (the“Common Stock”) was $8.0 million, as follows:

On February 28, 2024, we paid a quarterly dividend of $0.075 per share on our Common Stock for the fourth quarter of 2023 to stockholders of record as of the close of business on February 20, 2024.

On February 7, 2022, the Board of Directors of the Company authorized a program to redeem, beginning, in the second quarter of 2022, up to $1.0 million per quarter of our Preferred Stock at the liquidation preference of $8.50 per share. In 2023 and 2022, we redeemed 983,385 and 1,339,341 shares of Preferred Stock, respectively, at the liquidation preference of $8.50 for an aggregate amount of $8.4 million and $11.4 million, respectively.

Prior to redemption of all outstanding shares of Preferred Stock, we paid a quarterly dividend on our Preferred Stock. The aggregate dividend paid in the year ended December 31, 2023 on our Preferred Stock was $0.9 million, as follows:

On December 31, 2022, we accrued Additional Dividends of $0.5301 per share on our Preferred Stock, equal to an aggregate of $0.5 million. The accrual was made in light of the performance of GRE through December 31, 2022. and was paid on May 15, 2023.

BUSINESS

Genie Retail Energy

GRE is comprised of REPs and related businesses. GRE’s REP businesses acquire residential and business electricity and natural gas customers in deregulated markets in the United States. GRE purchases electricity and natural gas on the wholesale markets and resells these commodities to GRE's REPs' customers. The positive difference between the net sales price of electricity and natural gas sold to its customers and the cost of their electricity and natural gas supplies and related costs are the REP businesses’ gross profits.

GRE’s REP businesses operate in certain utility territories within the deregulated retail energy markets ofeighteen states in the United States: Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Texas, as well as in Washington, D.C. As part of our ongoing business development efforts, we routinely evaluate opportunities in other deregulated jurisdictions to accelerate the growth of our customer base and to reduce operational and regulatory risks associated with geographical concentration.

GRE’s REP businesses operate under several brand names including IDT Energy, Residents Energy, Town Square Energy, Southern Federal Power and Mirabito. GRE's diverse offerings, in both the electricity and natural gas markets included variable rate or fixed rate offerings or both. Throughout many of their markets, GRE's REPs offer green electricity and green natural gas. Green electricity supply is matched with renewable energy certificates, or RECs that reflect the generation of electricity from renewable sources. Green natural gas supply is matched with carbon offsets certificates generated mostly from greenhouse emission reduction projects.

Historically, GRE has expanded its REP businesses through organic growth of its REPs– adding new customers through customer acquisition programs at a rate faster than customers lost through attrition or churn– as well as through acquisitions of other REPs and books of business. New customers are generally acquired through a combination of marketing and sales channels including door-to-door solicitation, telemarketing, online and digital marketing, direct mail, and municipal aggregation through a competitive bidding for exclusive contracts awarded by certain municipalities, where authorized by state laws. These municipal aggregation contracts award participating residents’ electricity supply to a single supplier at a fixed price that is typically established through a competitive bidding process.

GRE evaluates its customer base both in terms of the numbers of commodity meters served and the number of Residential Customer Equivalents ("RCEs") represented by these meters. An RCE is a unit of measure denoting the typical annual commodity consumption of a single-family residential customer. One RCE represents 1,000 therms of natural gas or 10,000 kWh of electricity.

Customer churn is a significant factor in the REP business. GRE's REPs' monthly churn rates average between four and seven percent per month. Customer churn tends to decrease when commodity prices fall, when weather-driven consumption decreases, when the price to REP customers decreases relative to competitors including the incumbent utility provider, or when the REPs incentivize customer tenure. Customer churn tends to increase when commodity prices rise, when weather driven consumption increases or spikes, or when the price to REP customers increases relative to the prices charged by competitors including incumbent utility providers. Newly acquired customers typically have higher rates of churn than longer-tenured customers. Expiration of municipal aggregation deals also impacts churn as the customers are moved to the new supplier.

GRE’s revenue represented approximately 95.6% and 96.3% of our total consolidated revenue in 2023 and 2022, respectively. In 2023, GRE generated revenue of $409.9 million comprised of $350.8 million from sales of electricity and $56.0 million from sales of natural gas, as compared with revenue of $304.0 million in 2022, comprised of $241.8 million from the sales of electricity and $62.1 million from the sales of natural gas. GRE's electricity sales as a percentage of total sales have increased in recent years as our sales channels have acquired more electric customers than gas customers. The change in the electric and natural gas proportions is due to the Company's expansion and growth in states where only electricity has been deregulated such as Massachusetts and Texas.

GRE’s REP revenue is seasonal. Approximately 48.1% and 39.7% of our natural gas revenues in 2023 and 2022, respectively, were generated during the first quarter, when the demand for heating in our service areas tends to be highest. Although the demand for electricity is not as seasonal as natural gas, approximately 32.5% and 30.5% of total revenues from electricity sales in 2023 and 2022, respectively, were generated in the third quarter when the demand for cooling in our service areas tends to be highest.

Severe and unusual weather patterns can significantly impact GRE’s financial results. Examples, a polar vortex that impacted the northeast in the first quarter of 2014 and WinterStorm Uri that impacted Texas in the first quarter of 2021.

Potential global climate change may produce, among other possible conditions, unusual variations in temperature and weather patterns, resulting in unusual weather conditions, more intense, frequent and extreme weather events and other natural disasters. Some climatologists believe that these extreme weather events will become more common and more extreme, which will have a greater impact on our operations.

As of December 31, 2023, GRE serviced 361,000 meters (279,000 electric and 82,000 natural gas), compared to 275,000 meters (196,000 electric and 79,000 natural gas) as of December 31, 2022. As of December 31, 2023, GRE has 350,000 RCEs (272,000 electric and 78,000 natural gas), compared to 262,000 RCEs (181,000 electric and 81,000 natural gas) as of December 31, 2022.

REP Industry Overview

REPs operate in deregulated retail energy markets in the US. REPs purchase electricity and natural gas on the wholesale markets and resell these commodities to their customers including homeowners, renters and small to mid-sized commercial and governmental operations and institutions. Generally, incumbent local utilities continue to handle electricity and natural gas distribution, billing, and collections. The utilities remit the proceeds collected for the commodity supply portion of their bills less certain fees to the REPs.

REPs generally have no significant fixed assets and low levels of capital expenditure. Their cost of revenue is incurred to purchase electricity and natural gas in their respective wholesale markets and other factors. Selling, general and administrative expenses are primarily related to customer acquisition, customer retention, billing and purchase of receivables, or POR, fees paid to the utilities, and program management.

As of December 31, 2023, there were thirty U.S. states in which there is some level of energy deregulation. We currently market in all the states where residential deregulation covers both electricity and natural gas, and in some states, where residential deregulation covers onlyone commodity. We are in the process of applying for licenses or setting up operations in certain such states and are constantly evaluating market opportunities in others.

Some competitors in certain REP markets have engaged in unfair business practices in order to recruit new customers. These practices can create an unfavorable impression about our industry with consumers, regulators or political bodies. Further, such practices can lead to regulatory action that negatively impact us and the industry.

Marketing

The services of GRE’s REPs - IDT Energy, Residents Energy, TSE, SFP and Mirabito - are made available to customers under several offerings with distinct terms and conditions. The offerings include variable rate programs whose prices change month-to-month, fixed contracts whose unit price remains the same for the agreed upon term and renewable contracts. A significant portion of our customer base is enrolled in variable rate products, which enable us to adjust the rates we charge to our customers. The frequency and degree of these rate adjustments are determined by GRE. Variable rate products are available to all customers in all states served by GRE’s REPs except for Connecticut.

As of December 31, 2023, customers on variable rate products constituted approximately 43.5% of our consolidated revenue. The balance comprised customers on fixed rate agreements.

GRE’s REPs offer renewable or green energy supply options in all their markets. Renewable electricity supply is 100% matched with renewable energy certificates, or RECs, that reflect the generation of electricity from sources such as hydro-electric wind, solar and biomass.

The electricity and natural gas we sell through all of our offerings are metered and delivered to customers by the local utilities. The utilities also provide billing and collection services for the majority of our customers.

In many states, GRE’s REPs’ receivables are purchased by the utilities in their territories for a percentage of their face value. In exchange, the utility accepts a first priority lien against the customer receivable without recourse to the REP. Programs operating within this framework are preferred to as purchase of receivables, or POR, programs, and they mitigate our credit risk. Over the course of 2023, the associated cost was approximately 0.9% of GRE's revenue. At December 31, 2023,84.4% of GRE’s net accounts receivable were under a POR program.

Certain utilities in Connecticut, Ohio, New York, Pennsylvania, Illinois, Washington, D.C., Massachusetts and Maryland offer POR programs, without recourse. These programs permit customers with past-due balances to remain in the POR and consolidated bill programs. However, utilities in New Jersey generally do not permit customers with past-due balances beyond 120 days to enroll or remain in their POR programs. After a certain amount of time (determined based on the specific commodity), the REP becomes responsible for the billing and collection of the commodity portion of the future invoices for its delinquent customers. Certain utilities in Delaware, Illinois, New Hampshire, Ohio and Rhode Island do not offer POR, but they do offer consolidated billing. In Florida and Texas, there are no POR programs.

GRE targets markets in which we can procure energy in an efficient and transparent manner. We seek to purchase wholesale energy where there is a real-time market that reflects a fair commodity price for all participants. This allows GRE to reflect a true market cost base and adjust its rates to its variable rate customers taking into account prevailing market rates.

We regularly monitor deregulated or deregulating markets in states where we do not yet operate to determine whether and under what conditions we could operate profitability. We may initiate the licensing process in a selected region to facilitate entry into that region contingent upon favorable deregulatory developments.

Procurement and Management of Gas and Electric Supply

Certain of GRE's REPs are party to an Amended and Restated Preferred Supplier Agreement with BP Energy Company, or BP, through November 30, 2026. Under the agreement, the REPs purchase electricity and natural gas at the market rate plus a fee. The obligations to BP are secured by a first security interest in deposits or receivables from utilities in connection with their purchase of the REP’s customer’s receivables, and in any cash deposits or letters of credit posted in connection with any collateral accounts with BP. The ability to purchase electricity and natural gas under this agreement is subject to satisfaction of certain conditions including the maintenance of certain covenants. At December 31, 2023, the Company was in compliance with such covenants.

GRE is required to meet certain minimum green energy supply criteria in many of the markets in which it operates. We meet those thresholds by acquiring renewable energy certificates, or RECs. In addition, GRE offers green or other renewable energy products to its customers in all of the territories in which we operate. GRE acquires green renewable energy conversion rights or attributes and RECs to satisfy the load requirements for these customers.

GRE does not own electrical power generation, transmission, or distribution facilities, or natural gas production, pipeline or distribution facilities. For their natural gas supply, GRE’s REPs currently contract with Dominion Transmission, Inc., National Fuel Supply, Williams Gas Pipeline and Texas Eastern Transmission and others for natural gas pipeline, storage and transportation services. For electricity supply, they utilize the New York Independent System Operator, Inc., or NYISO, and PJM Interconnection, LLC, or PJM, for electric transmission and distribution. NYISO operates the high-voltage electric transmission network in New York State, and administers and monitors New York’s wholesale electricity markets. PJM is a regional transmission organization that coordinates the movement of wholesale electricity in all or parts of thirteen states (including New Jersey, Pennsylvania, Maryland and Illinois) and the District of Columbia. In Texas, SFP acquires power through the Electric Reliability Council of Texas (ERCOT).

For risk management purposes, GRE’s REPs utilize forward physical delivery contracts for a portion of their purchases of electricity and natural gas, which are defined as commodity derivative contracts. In addition, GRE’s REPs enter into put and call options as hedges against unfavorable fluctuations in market prices of electricity and natural gas.

The ISOs perform real-time load balancing for each of the electrical power grids in which GRE REPs operate. Similarly, load balancing is performed by the utilities or local distribution company, or LDC, for each of the natural gas markets in which GRE operates. Load balancing ensures that the amount of electricity and natural gas that GRE’s REPs purchase is equal to the amount necessary to service its customers’ demands at any specific point in time. GRE’s REPs are charged or credited for balancing the electricity and natural gas purchased and sold for their account by their suppliers and the LDCs. GRE’s REPs manage the differences between the actual electricity and natural gas demands of their customers and their bulk or block purchases by buying and selling in the spot market, and through monthly cash settlements and/or adjustments to future deliveries in accordance with the load balancing performed by utilities, LDCs, and/or ISOs.

Competition

As an operator of REPs, GRE often competes with the local utility companies in each of the markets in which it provides services and with many other licensed REPs. In some markets, competitor REPs are affiliated with local utilities. GRE also competes with several large vertically integrated energy companies as well as smaller independent operators. Competition with the utilities and REPs impacts GRE’s gross margins, customer acquisition rates and customer churn rates.

REPs and utilities offering fixed rate products or guaranteed pricing often are unable to change their sell rates offered to customers in response to underlying commodity price volatility. In a downward moving commodity cost environment, variable rate REPs typically become more competitive as they benefit from the lag that utilities experience in reducing their sell rate to reflect the lower commodity costs, and they may benefit from decreases in margin pressure, improvements in the customer acquisition environment, and lower rates of churn. In a rising commodity cost environment, REPs that offer variable rate products, and reflect real-time commodity costs, will typically become less competitive with fixed rate providers, experience increased margin pressure, a more challenging customer acquisition environment and higher rates of customer churn.

Increasing our market share depends in part on our ability to persuade more customers to switch from other providers toone of our REPs at a higher rate than our customers churn to other providers. Moreover, local utilities and some REPs may have certain advantages such as name recognition, financial strength and long-standing relationships with customers. Persuading potential customers to switch to GRE requires significant marketing and sales operations.

Regulation

REPs such as ours must be licensed in each state and utility service territory in which they operate. Each is subject to the rules and regulations governing the operations of REPs in each jurisdiction.

Although the rates charged by GRE’s REPs are not regulated in the same way as the rates of utility companies, the manner in which the REPs market to potential customers, and the relationships between the REPs and their customers, are heavily regulated. GRE’s REPs must also comply with various quarterly and/or annual reporting requirements in order to maintain their eligibility to provide service. In certain jurisdictions the REPs are required to publish product offers with the applicable regulatory commissions, or in the public domain, generally on a website established for such purpose. In addition to the regulations that govern the relationships between GRE’s REPs and their customers, GRE’s REPs also maintain specific Terms & Conditions or Terms of Service for each product in each jurisdiction that the parties agree to be bound by.

From time to time, the Company is party to legal proceedings that arise in the ordinary course of business including those with utility commissions or other government regulatory or law enforcement agencies.

As of December 31, 2023, GRE’s REPs operate in Washington D.C., New York, Pennsylvania, New Jersey, Maryland, Illinois, Indiana, Ohio, Michigan, New Hampshire, Rhode Island, Connecticut, Florida, Massachusetts, Delaware, Maine, Texas and Georgia. The federal government and related public service/utility commissions, among others, establish the rules and regulations for our REP operations.

Like all operators of REPs, GRE is affected by the actions of governmental agencies, mostly on the state level, by the respective state Public Service/Utility Commissions, and other organizations (such as NYISO, ERCOT and PJM) and indirectly by the Federal Energy Regulatory Commission, or FERC. Regulations applicable to electricity and natural gas have undergone substantial changes over the past several years as a result of restructuring initiatives at both the state and federal levels. We may be subject to new laws, orders or regulations or the revision or interpretation of existing laws, orders or regulations.

Environment

In March 2021, the Biden Administration announced a framework for the "Build Back Better" agenda. The proposed framework included policies to address climate change across the federal government through the tax code, an energy efficiency and clean energy standard, research and development, among other areas of focus.

In April 2021, President Biden announced that the United States' Nationally Defined Contribution to the international Paris Climate Agreement will be an economy-wide reduction in greenhouse gas emissions ("GHG") emissions of 50-52% by 2030, relative to 2005 levels. In advance of the November 2021 Conference of the Parties 26 meeting in Glasgow, Scotland, the Biden Administration released details on its strategy to achieve those targets as part of the "Build Back Better" agenda.

On August 16, 2022, President Biden signed the Inflation Reduction Act ("IRA"), which aims to reduce U.S. carbon emissions and promote economic development through investments in clean and renewable energy projects. The consumer-facing clean energy tax credits created or expanded by the IRA are intended to drive rapid adoption of energy efficiency, electric transportation, and solar energy which would require the utility industry to expand and modernize infrastructure, systems and services to integrate and optimize these resources.

In addition to climate-related initiatives at the federal level, some states have adopted provisions designed to regulate GHG emissions and renewable and other portfolio standards, which impact the power sector. See discussion below for additional information on renewable and other portfolio standards.

Certain northeast and mid-Atlantic states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia) currently participate in the Regional Greenhouse Gas Initiative ("RGGI"). The program requires most fossil fuel-fired power plant owners and operators in the region to hold allowances, purchased at auction, for each ton of carbon dioxide emissions. Non-emitting resources do not have to purchase or hold these allowances. Pennsylvania joined RGGI in April 2022.

Broader state programs impact other sectors as well, such as the District of Columbia's Clean Energy DC Omnibus Act and cross-sector GHG reduction plans. Maryland expects to meet and exceed the mandate set in the Greenhouse Gas Emissions Reduction Act to reduce statewide GHG emissions 40% (from 2006 levels) by 2030, and the state’s Climate Solutions Now Act of 2022 further updates requirements with a proposal to reduce emissions 60% (from 2006 levels) by 2031. New Jersey accelerated its goals through Executive Order 274, which establishes an interim goal of 50% reductions below 2006 levels by 2030 and affirms its goal of achieving 80% reductions by 2050 and includes programs to drive greater amounts of electrified transportation. Delaware's Climate Change Solutions Act established in August 2023 sets a statewide GHG emissions reduction goal of 50% by January 1, 2030 and a net-zero GHG emissions goal by January 1, 2050, on a net basis as compared to a 2005 baseline. Illinois’ climate bill, Clean Energy Jobs Act, establishes decarbonization requirements for the state to transition to 100% clean energy by 2050 and supports programs to improve energy efficiency, manage energy demand, attract clean energy investment and accelerate job creation.

The Company cannot predict the nature of future regulations or how such regulations might impact its future operations.

The adoption and implementation of any foreign laws or regulations imposing obligations on, or limiting GHG emissions from, our equipment and operations could adversely affect pricing or demand for our offerings. We may not be able to pass on increases in costs to customers. In addition, changes in regulatory policies that result in a reduction in the demand for hydrocarbon products and carbon-emitting fuel sources that are deemed to contribute to climate change, or restrict the use of such products or fuel sources, may reduce demand for our offerings or impact the energy supply markets.

Employees

As of March 1, 2024, GRE employed 159 employees,64 of whom are located in the Jamestown, New York office,60 of whom are located in our New Jersey office,20 of whom are located in our Arizona office and 15 of whom are located in Texas with SFP.

Genie Renewables

Genie Renewables is comprised of businesses that market and provide renewable and other energy solutions. Genie Renewables currently consists of (i) our 95.5% interest in Genie Solar, (ii) our 92.8% interest in CityCom, and (iii) our 91.5% interest in Diversegy.

Genie Solar is a developer, owner and operator of large-scale roof, ground and carport-based photovoltaic ("PV") and energy storage systems, serving commercial and industrial, public sector and community solar customers. Our goal is to offer a clean electrification ecosystem for our customers and stakeholders leveraging best-in-class technology and operations. We utilize in-house expertise to source, develop, build and provide operations and maintenance services for our assets. Genie Solar holds our 80.0% interest in Sunlight Energy, a solar energy developer and operator and our 60.0% interest in Prism which designs and manufactures specialized solar panels.

CityCom Solar operates as a customer acquisition solution for the rapidly expanding community solar industry, as well as other products and services.

Diversegy is a commercial energy broker and advisor to industrial, commercial and municipal customers across deregulated energy markets in the U.S. It also offers ancillary energy services in both deregulated and regulated state markets.

Market

Genie Solar and CityCom Solar are primarily engaged in different business areas within the solar industry.

Solar energy isone of the fastest growing forms of renewable energy with numerous economic and environmental benefits that make it an attractive complement to and/or substitute for traditional forms of energy generation. Demand for renewable energy has accelerated recently with the renewable targets and decarbonization goals across all industry segments, including the public sector, the private sector and residential customers.

In recent years, the price of solar power systems, and accordingly the cost of producing electricity from such systems, has dropped to levels that are competitive with or even below the wholesale price of electricity in many markets. Worldwide solar markets continue to develop, aided by the above factors as well as demand elasticity resulting from declining industry average selling prices, both at the module and system level, which make solar power more affordable.

Multiple markets within the United States, exemplify favorable characteristics for a solar market, including (i) sizeable electricity demand, particularly around growing population centers and industrial areas; (ii) strong demand for renewable energy generation; and (iii) abundant solar resources. In those areas and applications in which these factors are more pronounced, our solar energy solutions compete favorably on an economic basis with traditional forms of energy generation.

Diversegy competesfor industrial, commercial and municipal customers in markets across the United States.

Business Operations

Genie Solar is a developer, owner and operator of large-scale roof, ground and carport-based PV and energy storage systems, serving commercial and industrial, public sector and community solar customers. Genie Solar holds our 80.0% interest in Sunlight Energy, a solar energy developer and operator and our 60.0% interest in Prism which designs and manufactures specialized solar panels.

Genie Solar targets projects with attractive return characteristics that are usually in the 1-15 MW range. Projects are either Distributed Generation (DG) where the power is used by customers in a defined proximity to the project or “behind the meter” where the power is consumed by a customer on the same premise as the project.

Our current portfolio consists of an 9.4 MW operating portfolio of projects in Ohio and Michigan, ~10 MW of community Solar projects in NY that are at the construction phase 6 MW of projects in permitting and an additional 72MW of projects under site control.

In 2023, Genie Solar accounted for 1.0% and 23.8% of our consolidated revenue and Genie Renewables segment's revenue, respectively.

CityCom Solar operates as a customer acquisition solution for the rapidly expanding community solar industry, as well as other products and services.

In 2023, CityCom Solar accounted for 1.6% and 36.9% of our consolidated revenue and Genie Renewables segment's revenue, respectively.

Diversegy is a commercial energy broker and advisor to industrial, commercial and municipal customers across deregulated energy markets in the U.S. It also offers ancillary energy services in both deregulated and regulated state markets.

Diversegy works with clients to maximize the benefits afforded by energy deregulation through the solicitation and analysis of competing offers from its supplier-partners. This service is typically provided at no cost to our clients.

In 2023, Diversegy accounted for 1.7% and 39.3% of our consolidated revenue and Genie Renewables segment's revenue, respectively.

Regulations

On May 23, 2023, the EPA published in the Federal Register proposed new source performance standards under Clean Air Act (CAA) section 111(b) that would establish standards of performance for emissions of greenhouse gases (expressed as carbon dioxide (CO2)) for newly constructed, modified, and reconstructed fossil fuel-fired electric utility steam generating units and fossil fuel-fired stationary combustion turbines. On that same day, in a separate rulemaking under CAA section 111(d), the EPA published proposed emission guidelines for states to use in developing plans to limit CO2 emissions from existing fossil fuel-fired electric generating units and certain large existing stationary combustion turbines.

Additionally, a number of federal regulations have increased the cost of fossil generation across the country over the last several decades. The Clean Air Act of 1970 originally provided the EPA with authority to regulate emissions, but it was not until the 2000s that EPA restrictions on sulfur dioxide and nitrogen oxides emissions required installation of scrubbers or other emissions control equipment. More recently, EPA’s continued air quality level regulations have driven controls on all types of units along with stringent operational limitations. EPA has also set broader standards for greenhouse gas emissions particularly from new, modified, and reconstructed fossil-fired power plants forcing efficiency improvements and increasing maintenance costs. At the state level, a number of carbon pricing schemes have been implemented, including a cap-and-trade program in California and a carbon tax in the Northeast via the RGGI.

In addition, the Biden Administration continues to propose legislation and both regulatory and executive actions to help accelerate the clean energy transition, including new tax incentives, additional restrictions on methane and other GHG emissions, and other policies intended to combat climate change. For example, in December 2021, President Biden signed an executive order calling for the federal government to achieve net zero emissions by 2050, with a 65% reduction by 2030. The order specifically directs the federal government to use its scale and procurement power to achieve 100% carbon pollution-free electricity by 2030, with at least half coming from locally supplied clean energy, as well as 100% zero-emission vehicle acquisitions by 2035 and a net-zero emissions building portfolio by 2045, all of which may contribute to increased demand for alternative energy technologies, including renewable energy and energy storage. The Administration has also set a goal of economy-wide net zero emissions in the United States by 2050.

Government Incentives

The U.S. federal government provides an uncapped investment tax credit, or “Federal ITC,” that originally allowed a taxpayer to claim a credit of 30% of qualified expenditures for a residential or commercial solar generation facility. The Tax Act did not make any changes to the existing laws surrounding tax credits for renewable energy. The Federal ITC is currently at 26% for a solar generation facility. A permanent 10% Federal ITC is available for non-residential solar generation facility construction that begins on or after January 1, 2022.

On August 16, 2023, the Inflation Reduction Act (IRA) was enacted. The IRA extended the ITC through December 31, 2025, for solar, wind, geothermal, biogas, combined heat and power ("CHP") facilities, and microgrid projects that begin construction before December 31, 2025. The IRA established a Federal ITC level of 30.0 % for all projects that meet Prevailing Wage and Apprenticeship standards as well as additional 10.0% - 20.0% credits for projects that meet certain domestic materials requirements, placement within an energy community or placement within an environmental justice area. The IRA also allows for interconnection costs within qualified ITC costs and extends the Federal ITC for eligible costs associated with standalone energy storage.

Many states offer a personal and/or corporate investment or production tax credit for renewable energy facilities, which is additive to the Federal ITC. Further, more than half of the states, and many local jurisdictions, have established property tax incentives for renewable energy facilities that include exemptions, exclusions, abatements and credits. Many renewable energy facilities in the U.S. have been financed with a tax equity financing structure, whereby the tax equity investor is a member holding equity in the limited liability company that directly or indirectly owns the solar generation facility or wind power plant and receives the benefits of various tax credits. Additionally, Solar Development often benefits from state incentives that may provide valuable Renewable Energy Certificates, cash refunds and/or guaranteed revenue per unit of electricity produced by utility scale solar projects like community solar.

Many states also have adopted procurement requirements for renewable energy production. Thirty states, Washington, D.C., andtwo territories have active renewable or clean energy requirements, while an additional 3 states and 1 territory have set voluntary renewable energy goals. Renewable portfolio standard ("RPS") legislation has seentwo opposing trends in recent years. Onone hand, many states with RPS targets are expanding or renewing those goals. Since 2018,15 states,2 territories, and Washington, D.C., have passed legislation to increase or expand their renewable or clean energy targets. Eleven states andone territory have allowed their RPS targets to expire.

There are 41 states that have a regulatory policy known as net metering. Net metering typically allows our customers to interconnect their on-site solar generation facilities to the utility grid and offset their utility electricity purchases by receiving a bill credit at the utility’s retail rate for energy generated by their solar generation facility in excess of electric load that is exported to the grid. Some states require utilities to provide net metering to their customers until the total generating capacity of net metered systems exceeds a set percentage of the utilities’ aggregate customer peak demand.

Marketing

Genie Solar markets its solar energy offerings through a scalable sales organization and intermediaries that connect clients and developers directly to the company. We also generate sales volume through client and partner referrals. We believe that is necessary to maintain a customer-centric approach that optimizes the customer and other stakeholder experience to maintain relationships with developers that can lead to repeat projects.

CityCom markets its services directly to community solar operators as well as other service providers. The company leverages in-house business development professionals as well as marketing and referral services.

Diversegy markets its services throughits in-house sales team comprised of experienced sales representatives and recruiting independent sales agents and brokers with existing books of business. To attract new clients directly, Diversegy utilizes customer marketing campaigns focused on propriety pricing software. It recruits affinity groups, associations and organizations in specific market verticals for cross-sell opportunities. Diversegy is well-positioned to increase market share by leveraging its custom energy software, energy market expertise and strong agent support.

Competition

In the solar energy space, the market for customer and attractive projects is highly competitive and continually evolving. In the last year, we faced increased competition, resulting in price reductions in the market and reduced margins, which may continue and could lead to loss of market share.

We also face competition from resellers that have developed related offerings that compete with our product and service offerings, or have entered into strategic relationships with other existing solar power system providers. We compete for limited government funding for research and development contracts, customer tax rebates and other programs that promote the use of solar, and other renewable forms of energy with other renewable energy providers and customers.

At Diversegy, the energy brokerage market is highly competitive with a number of different competition types.

Employees

As of March 1, 2024, Genie Renewables employed 26 employees,25 of whom are located in our New Jersey office and 1 of whom is in our Arizona office.

Climate Change

As indicated by the Intergovernmental Panel on Climate Change, emissions of GHG, including carbon dioxide, are very likely changing the world’s climate. Climate change could affect customer demand for the Company's product offerings. It might also cause physical damage to theenergy production ecosystem that the Company's REPs rely on to procure electricity and natural gas for their customers. Additionally, climate change could affect the availability of risk management products and services that the Company REPs rely on to manage its risk position.

In September 2016, the U.S. joined in adopting the agreement reached on December 12, 2015, at the United Nations Framework Convention on Climate Change meetings in Paris to reduce GHGs. The Paris Agreement’s non-binding obligations to limit global warming to belowtwo degrees Celsius became effective on November 4, 2016. Genie cannot currently estimate the financial impact of climate change policies, although potential legislative or regulatory programs restricting CO 2 emissions, or litigation alleging damages from GHG emissions, could require material capital and other expenditures or result in changes to its operations.

In December 2009, the EPA released its final “Endangerment and Cause or Contribute Findings for GHGs under the Clean Air Act (CAA),” concluding that concentrations of several key GHGs constitute an "endangerment" and may be regulated as "air pollutants" under the CAA and mandated measurement and reporting of GHG emissions from certain sources, including electric generating units (EGU). Subsequently, the EPA released its final Clean Power Plan (CPP) regulations in August 2015 to reduce CO 2 emissions from existing fossil fuel-fired EGUs and finalized state regulations imposing CO 2 emission limits for new, modified, and reconstructed fossil fuel-fired EGUs. Numerous states and private parties filed appeals and motions to stay the CPP with the D.C. Circuit in October 2015. On February 9, 2016, the U.S. Supreme Court stayed the rule during the pendency of the challenges to the Washington D.C. Circuit and U.S. Supreme Court. On March 28, 2017, an executive order, entitled “Promoting Energy Independence and Economic Growth,” instructed the EPA to review the CPP and related rules addressing GHG emissions and suspend, revise or rescind the rules if appropriate. On June 19, 2019, the EPA repealed the CPP and replaced it with the affordable clean energy (ACE) rule that established guidelines for states to develop standards of performance to address GHG emissions from existing coal-fired generation. On January 19, 2021, the Washington D.C. Circuit vacated and remanded the ACE rule declaring that the EPA was “arbitrary and capricious” in its rule making and, as such, the ACE rule is no longer in effect and all actions thus far taken by states to implement the federally mandated rule are now null and void. The D.C. Circuit decision is subject to legal challenge. Depending on the outcomes of further appeals and how any final rules are ultimately implemented, the future cost of compliance may be material. On May 23, 2023, the EPA proposed significantly revising the manner in which new and existing Electric Generating Units’ GHG emissions should be regulated including using hydrogen as a fuel, capturing and storing/sequestering CO2 and requiring new units to be more efficient. The EPA has stated that it intends to finalize these revisions in 2024. The Company expects that the final rule will be challenged in the courts and accordingly uncertain over the next several years.

In December 2021, President Biden signed an executive order calling for the federal government to achieve netzero emissions by 2050, with a 65% reduction by 2030. The order specifically directs the federal government to use its scale and procurement power to achieve 100% carbon pollution-free electricity by 2030, with at least half coming from locally supplied clean energy, as well as 100%zero-emission vehicle acquisitions by 2035 and a net-zero emissions building portfolio by 2045, all of which may contribute to increased demand for alternative energy technologies, including renewable energy and energy storage.

Additionally, a number of other federal and state regulations have increased the cost of fossil generation across the country over the last several decades. The Clean Air Act of 1970 originally provided the EPA with authority to regulate emissions, but it was not until the 2000 s that EPA restrictions on sulfur dioxide and nitrogen oxides emissions required installation of scrubbers or other emissions control equipment. More recently, EPA’s continued air quality level regulations have driven controls on all types of units along with stringent operational limitations. EPA has also set broader standards for greenhouse gas emissions particularly from new, modified, and reconstructed fossil-fired power plants forcing efficiency improvements and increasing maintenance costs. At the state level, a number of carbon pricing schemes have been implemented, including a cap-and-trade program in California and a carbon tax in the Northeast via the RGGI.

The cost to the Company to comply with any legislation, regulations or initiatives limiting GHG or emissions or otherwise seeking to limit the impact of climate change could be substantial. Moreover, regulations imposing obligations on, or limiting GHG emissions from, our equipment and operations could adversely affect pricing or demand for our offerings. We may not be able to pass on increases in costs to customers. In addition, changes in regulatory policies that result in a reduction in the demand for hydrocarbon products and carbon-emitting fuel sources that are deemed to contribute to climate change, or restrict the use of such products or fuel sources, may reduce demand for our offerings or impact the energy supply markets.

Additionally, on March 21, 2022, the U.S. Securities and Exchange Commission issued a proposed rule regarding the enhancement and standardization of mandatory climate-related disclosures for investors. The proposed rule would require registrants to include certain climate-related disclosures in their registration statements and periodic reports, including, but not limited to, information about the registrant’s governance of climate-related risks and relevant risk management processes; climate-related risks that are reasonably likely to have a material impact on the registrant’s business, results of operations or financial condition and their actual and likely climate-related impacts on the registrant’s business strategy, model and outlook; climate-related targets, goals and transition plan (if any); certain climate-related financial statement metrics in a note to their audited financial statements; Scope 1 and Scope 2 GHG emissions; and Scope 3 GHG emissions and intensity, if material, or if the registrant has set a GHG emissions reduction target, goal or plan that includes Scope 3 GHG emissions. Although the proposed rule’s ultimate date of effectiveness and the final form and substance of these requirements is not yet known and the ultimate scope and impact on our business is uncertain, compliance with the proposed rule, if finalized, may result in increased legal, accounting and financial compliance costs, make some activities more difficult, time-consuming and costly, and place strain on our personnel, systems and resources.

Further, legislative and regulatory initiatives are underway to that purpose. The Inflation Reduction Act of 2022 (“IRA”), signed into law in August 2022, appropriates significant federal funding for renewable energy initiatives and, for the first time ever, imposes a fee on GHG emissions from certain oil and gas sources and facilities. The emissions fee and funding provisions of the law could increase operating costs within the oil and gas industry and accelerate a transition away from fossil fuels, which could in turn adversely affect our business and results of operations. The U.S. Congress has also considered legislation that would control GHG emissions through a “cap and trade” program and several states have already implemented programs to reduce GHG emissions. Additionally, following the U.S. Supreme Court finding that GHG emissions fall within the CAA definition of an “air pollutant,” the EPA has adopted regulations that, among other things, establish construction and operating permit review for GHG emissions from certain large stationary sources, require the monitoring and annual reporting of GHG emissions from certain petroleum and natural gas system sources, and together with the United States Department of Transportation, implement GHG emissions limits on vehicles manufactured for operation in the United States. The EPA has also proposed rules in November 2021 and 2022 intended to reduce methane emissions from new and existing oil and gas sources. Furthermore, many state and local leaders have intensified or stated their intent to intensify efforts to support international climate commitments and treaties, in addition to developing programs that are aimed at reducing GHG emissions by means of cap and trade programs, carbon taxes or encouraging the use of renewable energy or alternative low-carbon fuels.

Many states in which we operate have state and regional programs to reduce GHG emissions and renewable and other portfolio standards, which impact the power sector and other sectors as well. A total of 25 states and the District of Columbia have 100% clean energy targets, deep GHG reductions, or both, encompassing 53% of U.S residential electricity customers.

Employees and Human Capital Resources

Attracting and retaining qualified personnel familiar with our businesses who head our different businesses units is critical to our success. As of March 1, 2024, we had a total of 198 employees, of which 192 were full-time employees.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees, advisors and consultants. To accomplish that, our compensation practices are designed to attract and retain qualified and motivated personnel and align their interests with the goals of the Company and with the best interests of our stockholders. Our compensation philosophy is to provide compensation to attract the individuals necessary for our current needs and growth initiatives, and provide them with the proper incentives to motivate those individuals to achieve our long-term plans, which includes among other things, equity and cash incentive plans that attract, retain and reward personnel through the granting of stock-based and cash-based compensation awards.

We believe that talent attraction and retention are critical to our ability to achieve our strategy and that a trained, diverse and inspired workforce is integral to delivering on our objectives. Our recruiting process reaches a wide array of potential employees, and we employ a rigorous screening process to ensure that we identify and hire quality professionals.

We are committed to diversity and inclusion in the workforce including a policy of non-discriminatory treatment and respect of human rights for all current and prospective employees. Discrimination on the basis of an individual’s race, religion, creed, color, sex, sexual orientation, age, marital status, disability, national origin or veteran’s status is not permitted by us and is illegal in many jurisdictions. We respect the human rights of all employees and strive to treat them with dignity consistent with standards and practices recognized by the international community.

Intellectual Property

We rely on a combination of patents, copyrights, trademarks, domain name registrations and trade secret laws in the United States and other jurisdictions and contractual restrictions to protect our intellectual property rights and our brand names. All of our employees sign confidentiality agreements. These agreements provide that the employee may not use or disclose our confidential information except as expressly permitted in connection with the performance of his or her duties for us, or in other limited circumstances. These agreements also state that, to the extent rights in any invention conceived of by the employee while employed by us do not vest in us automatically by operation of law, the employee is required to assign his or her rights to us.