ALTUS POWER MANAGEMENT REPORT ON FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and operating
results for Altus Power, Inc. (as used in this section, "Altus" or the
"Company") has been prepared by Altus Power's management. You should read the
following discussion and analysis together with our condensed consolidated
financial statements and related notes appearing elsewhere in this Quarterly
Report on Form 10-Q, our 2021 Annual Report on Form 10-K, and subsequent
Quarterly Reports on Form 10-Q. Any references in this section to "we," "our" or
"us" shall mean Altus. In addition to historical information, this Quarterly
Report on Form 10-Q for the period ended June 30, 2022 (this "Report"),
including this management's discussion and analysis ("MD&A"), contains
statements that are considered "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, as amended. These
statements do not convey historical information but relate to predicted or
potential future events and financial results, such as statements of our plans,
strategies and intentions, or our future performance or goals that are based
upon management's current expectations. Our forward-looking statements can often
be identified by the use of forward-looking terminology such as "believes,"
"expects," "intends," "aims," "may," "could," "will," "should," "plans,"
"projects," "forecasts," "seeks," "anticipates," "goal," "objective," "target,"
"estimate," "future," "outlook," "vision," or variations of such words or
similar terminology. Investors and prospective investors are cautioned that such
forward-looking statements are only projections based on current estimations.
These statements involve risks and uncertainties and are based upon various
assumptions. Such risks and uncertainties include, but are not limited to the
risks as described in the "Risk Factors" in our 2021 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 24, 2022 (the "2021
Annual Report on Form 10-K"). These risks and uncertainties, among others, could
cause our actual future results to differ materially from those described in our
forward-looking statements or from our prior results. Any forward-looking
statement made by us in this Report is based only on information currently
available to us and speaks to circumstances only as of the date on which it is
made. We are not obligated to update these forward-looking statements, even
though our situation may change in the future.

Such forward-looking statements are subject to known and unknown risks,
uncertainties, assumptions and other important factors, many of which are
outside Altus Power's control, that could cause actual results to differ
materially from the results discussed in the forward-looking statements. These
risks, uncertainties, assumptions and other important factors include, but are
not limited to: (1) the ability of Altus Power to maintain its listing on the
New York Stock Exchange; (2) the ability to recognize the anticipated benefits
of the recently completed business combination and related transactions, which
may be affected by, among other things, competition, (3) the ability of Altus
Power to grow and manage growth profitably, maintain relationships with
customers, business partners, suppliers and agents and retain its management and
key employees; (4) changes in applicable laws or regulations; (5) the
possibility that Altus Power may be adversely affected by other economic,
business, regulatory and/or competitive factors; and (6) the impact of COVID-19,
inflationary pressures, and supply chain issues on Altus Power's business.

Insight

Our mission is to create a clean electrification ecosystem, to drive the clean
energy transition of our customers across the United States while simultaneously
enabling the adoption of corporate environmental, social and governance ("ESG")
targets. In order to achieve our mission, we develop, own and operate solar
generation and energy storage facilities. We have the in house expertise to
develop, build and provide operations and maintenance and customer servicing for
our assets. The strength of our platform is enabled by premier sponsorship from
The Blackstone Group ("Blackstone"), which provides an efficient capital source
and access to a network of portfolio companies, and CBRE Group, Inc. ("CBRE"),
which provides direct access to their portfolio of owned and managed commercial
and industrial ("C&I") properties.

We are 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. We own systems
across the United States from Hawaii to Vermont. Our portfolio consists of over
350 megawatts ("MW") of solar PV. We have long-term power purchase agreements
("PPAs") with over 300 C&I entities and contracts with over 5,000 residential
customers which are serviced by approximately 40 megawatts of community solar
projects currently in operation. We have agreements to install another
approximately 55 megawatts of community solar projects. Our community solar
projects are currently servicing customers in 6 states with projects in a 7th
state currently under construction. We also participate in numerous renewable
energy certificate ("REC") programs throughout the country. We have experienced
significant growth in the last 12 months as a product of organic growth and
targeted acquisitions and currently operate in 18 states, providing clean
electricity to our customers equal to the consumption of approximately 30,000
homes, displacing 255,000 tons of CO2 emissions per annum.

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Comparability of financial information

Our historical operations and statements of assets and liabilities may not be
comparable to our operations and statements of assets and liabilities as a
result of the recently completed business combination with CBRE Acquisition
Holdings, Inc. as described in Note 1, "General," to our condensed consolidated
financial statements included elsewhere in this Quarterly Report on Form 10-Q
(the "Merger"), recent acquisitions as described in Note 4, "Acquisitions," to
our condensed consolidated financial statements included elsewhere in this
Quarterly Report on Form 10-Q and Note 7, "Acquisitions," to our audited
consolidated annual financial statements included in our 2021 Annual Report on
Form 10-K, and the cost becoming a public company.

As a result of becoming a public company, Altus is subject to additional rules
and regulations applicable to companies listed on a national securities exchange
and compliance and reporting obligations pursuant to the rules and regulations
of the SEC. Altus expects to hire additional employees to meet these rules and
obligations, and incur higher expenses for investor relations, accounting
advisory, directors' and officers' insurance, legal and other professional
services and will engage consultants and third party advisors to assist with the
heightened requirements of being a public company.

Key factors affecting our performance

Our results of operations and our ability to grow our business over time could
be impacted by a number of factors and trends that affect our industry
generally, as well as new offerings of services and products we may acquire or
seek to acquire in the future. Additionally, our business is concentrated in
certain markets, putting us at risk of region-specific disruptions such as
adverse economic, regulatory, political, weather and other conditions. See "Risk
Factors" in our 2021 Annual Report on Form 10-K for further discussion of risks
affecting our business.

Execution of growth strategies

We believe we are in the beginning stages of a market opportunity driven by the
broad shift away from traditional energy sources to renewable energy and an
increasing emphasis by the commercial and industrial sector on their public
commitment to decarbonization. We intend to leverage our competitive strengths
and market position to become customers' "one-stop-shop" for the clean energy
transition by 1) Using our existing customer and developer networks to build out
our electric vehicle ("EV") charging and energy storage offerings and establish
a position comparable to that of our C&I solar market position through our
existing cross-sell opportunities and 2) partnering with Blackstone and CBRE to
access their client relationships, portfolio companies, and their strong brand
recognition, to increase the number of customers we can support.

Competition

We compete in the C&I scale renewable energy space with utilities, developers, independent power producers, pension funds and private equity funds for new investment opportunities. We plan to increase our market share through the following competitive strengths:

•Development Capability: We have established an innovative approach to the
development process. From site identification and customer origination through
the construction phase, we've established a streamlined process enabling us to
further create the scalability of our platform and significantly reduce the
costs and time in the development process. Part of our attractiveness to our
customers is our ability to ensure a high level of execution certainty. We
anticipate that this ability to originate, source, develop and finance projects
will ensure we can continue to grow and meet the needs of our customers.

•Long-Term Revenue Contracts: Our C&I solar generation contracts have a typical
length of 20 years or longer, creating long-term relationships with customers
that allow us to cross-sell additional current and future products and services.
The average remaining life of our current contracts is approximately 17 years.
These long-term contracts are either structured at a fixed rate, often with an
escalator, or floating rate pegged at a discount to the prevailing local utility
rates. We refer to these latter contracts as variable rate, and as of June 30,
2022, these variable rate contracts make up approximately 60% of our current
installed portfolio. During the six months ended June 30, 2022, overall utility
rates have been increasing in states where we have projects under variable rate
contracts. The realization of solar power price increases varies depending on
region, utility and terms of revenue contract, but generally, we would benefit
from such increases in the future as inflationary pressures persist.

•Flexible Financing Solutions: We have a market-leading cost of capital in an
investment-grade rated scalable credit facility from Blackstone, which enables
us to be competitive bidders in asset acquisition and development. In addition
to our Blackstone term loan, we also have financing available through a
construction to term loan facility. This facility has $200 million of committed
capacity which carries a floating rate of LIBOR plus 2.25%.

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•Leadership: We have a strong executive leadership team who has extensive
experience in capital markets, solar development and solar construction, with
over 20 years of experience each. Moreover, through the transaction structure,
management and employees will continue to own a significant interest in the
Company.

•CBRE Partnership: Our partnership with CBRE, the world’s largest real estate services company, paves the way for us to create new relationships with our clients. CBRE is the largest data center operator and 90% of Fortune 100 companies are CBRE customers, providing us with a significant opportunity to expand our customer base.

Availability of funding

Our future growth depends in significant part on our ability to raise capital
from third-party investors and lenders on competitive terms to help finance the
origination of our solar energy systems. We have historically used a variety of
structures including tax equity financing, construction loan financing, and term
loan financing to help fund our operations. From September 4, 2013, the
inception of Legacy Altus, to June 30, 2022, we have raised over $100 million of
tax equity financing, $80 million in construction loan financing and $690
million of term loan financing. Our ability to raise capital from third-party
investors and lenders is also affected by general economic conditions, the state
of the capital markets, inflation levels, interest rate levels, and lenders'
concerns about our industry or business.

Cost of solar power systems

Although the solar panel market has seen an increase in supply in the past few
years, most recently, there has been upward pressure on prices due to lingering
issues of the COVID-19 pandemic (further discussed below), recent inflationary
pressures, growth in the solar industry, regulatory policy changes, tariffs and
duties and an increase in demand. As a result of these developments, we have
been experiencing higher prices on imported solar modules. The prices of
imported solar modules have increased as a result of the COVID-19 pandemic and
may increase as a result of the Russia invasion of Ukraine. If there are
substantial increases, it may become less economical for us to serve certain
markets. Attachment rates for energy storage systems have trended higher while
the price to acquire has trended downward making the addition of energy storage
systems a potential area of growth for us.

Seasonality

The amount of electricity our solar energy systems produce is dependent in part
on the amount of sunlight, or irradiation, where the assets are located. Because
shorter daylight hours in winter months and poor weather conditions due to rain
or snow results in less irradiation, the output of solar energy systems will
vary depending on the season and the overall weather conditions in a year. While
we expect seasonal variability to occur, the geographic diversity in our assets
helps to mitigate our aggregate seasonal variability.

Another aspect of seasonality to consider is in our construction program, which
is more productive during warmer weather months and generally results in project
completion during fourth quarter. This is particularly relevant for our projects
under construction in colder climates like the Northeast.

Pipeline

Of the June 30, 2022, our pipeline of opportunities totals more than one gigawatt and is made up of approximately 50% potential operational acquisitions and 50% projects in development. Operational acquisitions are dynamic with new opportunities evaluated by our team every quarter.

Of the June 30, 2022compared to half of our pipeline consisting of development projects, approximately 23% of these projects are currently under construction or pre-construction, 36% of these projects are still in the contracting or due diligence phase, and the 41% the remaining represent projects from our customer engagements that are progressing towards an agreement in principle.

Of the June 30, 2022compared to half of our pipeline made up of potential operational acquisitions, approximately 19% of these projects are currently in the initial commitment phase, 61% of these projects are in negotiation and the last 20% of these projects are in the development phase. fencing.

Projects originated by our channel partners which we then develop, engineer and
construct benefit from a shorter time from agreed terms to revenues, typically 6
to 9 months based on our historical experience. Projects that we are originating
ourselves and self-developing, such as those with a lead from CBRE or
Blackstone, would historically take 12 to 15 months from agreed

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conditions for commercial exploitation. Given the supply chain challenges and licensing and interconnection timelines described above, effective June 30, 2022these historical timelines are currently pushed back approximately 3-6 months.

Government regulations, policies and incentives

Our growth strategy depends in significant part on government policies and
incentives that promote and support solar energy and enhance the economic
viability of distributed solar. These incentives come in various forms,
including net metering, eligibility for accelerated depreciation such as
modified accelerated cost recovery system, solar renewable energy credits
("SRECs"), tax abatements, rebate and renewable target incentive programs and
tax credits, particularly the Section 48(a) investment tax credits ("ITC"). We
are a party to a variety of agreements under which we may be obligated to
indemnify the counterparty with respect to certain matters. Typically, these
obligations arise in connection with contracts and tax equity partnership
arrangements, under which we customarily agree to hold the other party harmless
against losses arising from a breach of warranties, representations, and
covenants related to such matters as title to assets sold, negligent acts,
damage to property, validity of certain intellectual property rights,
non-infringement of third-party rights, and certain tax matters including
indemnification to customers and tax equity investors regarding Commercial ITCs.
The sale of SRECs has constituted a significant portion of our revenue
historically. A change in the value of SRECs or changes in other policies or a
loss or reduction in such incentives could decrease the attractiveness of
distributed solar to us and our customers in applicable markets, which could
reduce our growth opportunities. Such a loss or reduction could also reduce our
willingness to pursue certain customer acquisitions due to decreased revenue or
income under our solar service agreements. Additionally, such a loss or
reduction may also impact the terms of and availability of third-party
financing. If any of these government regulations, policies or incentives are
adversely amended, delayed, eliminated, reduced, retroactively changed or not
extended beyond their current expiration dates or there is a negative impact
from the recent federal law changes or proposals, our operating results and the
demand for, and the economics of, distributed solar energy may decline, which
could harm our business.

Impact of the COVID-19 pandemic and supply String issues

In March 2020the World Health Organization declared the outbreak of the novel coronavirus (“COVID-19”) a pandemic.

Our business operations have continued to function effectively during the
pandemic. We are continuously evaluating the pandemic and are taking necessary
steps to mitigate known risks. We will continue to adjust our actions and
operations as appropriate in order to continue to provide safe and reliable
service to our customers and communities while keeping our employees and
contractors safe. Although we have been able to mitigate to a certain extent the
impact to the operations of the Company to date, given that COVID-19 infections
remain persistent in many states where we do business and the situation is
evolving, we cannot predict the future impact of COVID-19 on our business. We
considered the impact of COVID-19 on the use of estimates and assumptions used
for financial reporting and noted there were material impacts on our results of
operations for the six months ended June 30, 2022, and 2021, as supply chain
issues and logistical delays have materially impacted the timing of our
construction schedules and likely will continue to have a material adverse
effect on our business, operations, financial condition, results of operations,
and cash flows.

The service and installation of solar energy systems has continued during the
COVID-19 pandemic. This continuation of service reflects solar services'
designation as an essential service in all of our service territories.
Throughout the COVID-19 pandemic, we have seen some impacts to our supply chain
affecting the timing of delivery of certain equipment, including, but not
limited to, solar modules, inverters, racking systems, and transformers.
Although we have been able to ultimately procure the equipment needed to service
and install solar energy systems, we have experienced delays in such
procurement. We have established a geographically diverse group of suppliers,
which is intended to ensure that our customers have access to affordable and
effective solar energy and storage options despite potential trade, geopolitical
or event-driven risks. We do anticipate continuing impacts to our ability to
source parts for our solar energy systems or energy storage systems, which we
are endeavoring to mitigate via advanced planning and ordering from our diverse
network of suppliers. However, if supply chains become even further disrupted
due to additional outbreaks of the COVID-19 virus or more stringent health and
safety guidelines are implemented, our ability to install and service solar
energy systems could become more adversely impacted.

Governmental restrictions of implemented to try to slow the spread of the
COVID-19 virus have caused, and may continue to cause, us to experience
operational delays and may cause milestones or deadlines relating to various
project documents to be missed. To date, we have not received notices from our
dealers regarding significant performance delays resulting from the COVID-19
pandemic. However, worsening economic conditions could result in such outcomes
over time, which would impact our future financial performance. Further, the
effects of the economic downturn associated with the COVID-19 pandemic may
reduce consumer credit ratings and credit availability, which may adversely
affect new customer origination and our existing customers' ability to make
payments on their solar service agreements. Periods of a lack of availability of
credit may lead to increased delinquency and default rates. We have not
experienced a significant increase in
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default or delinquency rates to date. However, if existing economic conditions
continue for a prolonged period of time or worsen, delinquencies on solar
service agreements could materialize, which would also negatively impact our
future financial performance. Moreover, the Russia invasion of Ukraine may
further exacerbate some of the supply chain issues.

We cannot predict the full impact the COVID-19 pandemic, the Russia invasion of
Ukraine, or the significant disruption and volatility currently being
experienced in the capital markets will have on our business, cash flows,
liquidity, financial condition and results of operations at this time due to
numerous uncertainties. The ultimate impact will depend on future developments,
including, among other things, the ultimate duration of the COVID-19 virus, the
duration of the Russia invasion of Ukraine and associated sanctions, the
distribution, acceptance and efficacy of the vaccine, the depth and duration of
the economic downturn and other economic effects of the COVID-19 pandemic, the
consequences of governmental and other measures designed to prevent the spread
of the COVID-19 virus, actions taken by governmental authorities, customers,
suppliers, dealers and other third parties, our ability and the ability of our
customers, potential customers and dealers to adapt to operating in a changed
environment and the timing and extent to which normal economic and operating
conditions resume. For additional discussion regarding risks associated with the
COVID-19 pandemic, see "Risk Factors" elsewhere in our 2021 Annual Report on
Form 10-K.

Key financial and operational indicators

We regularly review a number of metrics, including the following key operational
and financial metrics, to evaluate our business, measure our performance and
liquidity, identify trends affecting our business, formulate our financial
projections and make strategic decisions.

Installed megawatts

Megawatts installed represents the aggregate megawatt nameplate capacity of
solar energy systems for which panels, inverters, and mounting and racking
hardware have been installed on premises in the period. Cumulative megawatts
installed represents the aggregate megawatt nameplate capacity of solar energy
systems for which panels, inverters, and mounting and racking hardware have been
installed on premises.

                               As of June 30, 2022        As of June 30, 2021       Change
     Megawatts installed                369                        262              107


Cumulative megawatts installed increased from 262 MW as of June 30, 2021, to 369
MW as of June 30, 2022.

                              As of June 30, 2022       As of December 31, 2021       Change
    Megawatts installed                369                          362                 7

The cumulative number of megawatts installed increased from 362 MW to December 31, 2021to 369 MW at June 30, 2022.

The following table provides an overview of megawatts installed by state as of
June 30, 2022:

                        State            Megawatts installed       Share, %
                  Massachusetts                             95         26  %
                  New Jersey                                92         25  %
                  Minnesota                                 56         15  %
                  California                                34          9  %
                  Hawaii                                    23          6  %
                  New York                                  13          4  %
                  Maryland                                  10          3  %
                  Vermont                                    8          2  %
                  Connecticut                                7          2  %
                  All other                                 31          8  %
                  Total                                    369        100  %



Megawatt Hours Generated
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The megawatt-hours (“MWh”) generated represent the production of the solar energy systems from the solar energy systems in operation. The MWh generated compared to the nominal capacity can vary depending on several factors such as design, equipment, location, weather conditions and overall system performance.

                                                   Three Months Ended           Three Months Ended
                                                     June 30, 2022                June 30, 2021                 Change
Megawatt hours generated                                    137,000                      109,000                  28,000

Generated megawatt-hours increased by 109,000 MWh for the three months ended
June 30, 2021at 137,000 MWh for the three months ended June 30, 2022.

                                                 Six Months Ended June        Six Months Ended June
                                                        30, 2022                     30, 2021                   Change
Megawatt hours generated                                    223,000                      172,000                  51,000

Generated megawatt-hours increased by 172,000 MWh for the six months ended
June 30, 2021to 223,000 MWh for the half-year ended June 30, 2022.

Non-GAAP Financial Measures

Adjusted EBITDA

We define adjusted EBITDA as net income plus net interest expense, depreciation,
amortization and accretion expense, income tax expense, acquisition and entity
formation costs, non-cash compensation expense, and excluding the effect of
certain non-recurring items we do not consider to be indicative of our ongoing
operating performance such as, but not limited to, gain or loss on fair value
remeasurement of contingent consideration, change in fair value of redeemable
warrant liability, change in fair value of alignment shares liability, and other
miscellaneous items of other income and expenses.

We define adjusted EBITDA margin as adjusted EBITDA divided by operating revenue.

Adjusted EBITDA and adjusted EBITDA margin are non-GAAP financial measures that
we use to measure our performance. We believe that investors and analysts also
use adjusted EBITDA in evaluating our operating performance. This measurement is
not recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance. The GAAP measure most directly
comparable to adjusted EBITDA is net income and to adjusted EBITDA margin is net
income over operating revenues. The presentation of adjusted EBITDA and adjusted
EBITDA margin should not be construed to suggest that our future results will be
unaffected by non-cash or non-recurring items. In addition, our calculation of
adjusted EBITDA and adjusted EBITDA margin are not necessarily comparable to
adjusted EBITDA as calculated by other companies and investors and analysts
should read carefully the components of our calculations of these non-GAAP
financial measures.

We believe adjusted EBITDA is useful to management, investors and analysts in
providing a measure of core financial performance adjusted to allow for
comparisons of results of operations across reporting periods on a consistent
basis. These adjustments are intended to exclude items that are not indicative
of the ongoing operating performance of the business. Adjusted EBITDA is also
used by our management for internal planning purposes, including our
consolidated operating budget, and by our board of directors in setting
performance-based compensation targets. Adjusted EBITDA should not be considered
an alternative to but viewed in conjunction with GAAP results, as we believe it
provides a more complete understanding of ongoing business performance and
trends than GAAP measures alone. Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation or as a substitute
for analysis of our results as reported under GAAP.

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                                                 Three Months Ended                       Six Months Ended
                                                      June 30,                                June 30,
                                              2022                2021                2022                2021
                                                   (in thousands)                          (in thousands)
Reconciliation of Net income (loss) to
Adjusted EBITDA:
Net income (loss)                        $    21,574          $     (440)         $   81,709          $     (177)
Income tax expense                               707               2,092                 584               1,055
Interest expense, net                          5,173               4,826              10,111               8,739
Depreciation, amortization and accretion
expense                                        6,863               4,470              13,685               8,858
Stock-based compensation                       2,657                  37               3,962                  77
Acquisition and entity formation costs            52                  85                 346                 232
Gain on fair value of contingent
consideration, net                            (1,140)               (775)               (971)             (2,050)
Change in fair value of redeemable
warrant liability                             (4,659)                  -             (23,117)                  -
Change in fair value of alignment shares
liability                                    (16,705)                  -             (63,051)                  -
Other income, net                               (608)               (138)               (593)               (249)
Adjusted EBITDA                          $    13,914          $   10,157          $   22,665          $   16,485



                                                  Three Months Ended             Six Months Ended
                                                       June 30,                      June 30,
                                                 2022           2021           2022           2021
                                                                                  (in thousands)

Reconciliation of adjusted EBITDA margin:

 Adjusted EBITDA                              $ 13,914       $ 10,157       $ 22,665       $ 16,485
 Operating revenues, net                        24,762         17,613         43,961         30,084
 Adjusted EBITDA margin                             56  %          58  %          52  %          55  %

Components of operating results

The Company derives its operating revenues principally from power purchase
agreements, net metering credit agreements, solar renewable energy credits, and
performance-based incentives. Approximately 60% of our combined power purchase
agreements and net metering credit agreements are variable-rate contracts, 15%
are fixed-rate contracts with escalators, and 25% are fixed-rate contracts.

Revenue under power purchase agreements. A portion of the Company's power sales
revenues is earned through the sale of energy (based on kilowatt hours) pursuant
to the terms of PPAs. The Company's PPAs typically have fixed or floating rates
and are generally invoiced monthly. The Company applied the practical expedient
allowing the Company to recognize revenue in the amount that the Company has a
right to invoice which is equal to the volume of energy delivered multiplied by
the applicable contract rate. As of June 30, 2022, PPAs have a weighted-average
remaining life of 14 years.

Revenue from net metering credit agreements. A portion of the Company's power
sales revenues are obtained through the sale of net metering credits under net
metering credit agreements ("NMCAs"). Net metering credits are awarded to the
Company by the local utility based on kilowatt hour generation by solar energy
facilities, and the amount of each credit is determined by the utility's
applicable tariff. The Company currently receives net metering credits from
various utilities including Eversource Energy, National Grid Plc, and Xcel
Energy. There are no direct costs associated with net metering credits, and
therefore, they do not receive an allocation of costs upon generation. Once
awarded, these credits are then sold to third party offtakers pursuant to the
terms of the offtaker agreements. The Company views each net metering credit in
these arrangements as a distinct performance obligation satisfied at a point in
time. Generally, the customer obtains control of net metering credits at the
point in time when the utility assigns the generated credits to the Company
account, who directs the

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utility to be allocated to the client based on a schedule. The transfer of credits by the Company to the customer can take place up to one month after the production of the underlying electricity. Accordingly, NMCA-related revenue is recognized when the net metering credits are delivered by the Company to the customer. Of the June 30, 2022NMCAs have a weighted average remaining life of 18 years.

Solar renewable energy certificate revenue. The Company applies for and receives
SRECs in certain jurisdictions for power generated by solar energy systems it
owns. The quantity of SRECs is based on the amount of energy produced by the
Company's qualifying generation facilities. SRECs are sold pursuant to
agreements with third parties, who typically require SRECs to comply with
state-imposed renewable portfolio standards. Holders of SRECs may benefit from
registering the credits in their name to comply with these state-imposed
requirements, or from selling SRECs to a party that requires additional SRECs to
meet its compliance obligations. The Company receives SRECs from various state
regulators including New Jersey Board of Public Utilities, Massachusetts
Department of Energy Resources, and Maryland Public Service Commission. There
are no direct costs associated with SRECs and therefore, they do not receive an
allocation of costs upon generation. The majority of individual SREC sales
reflect a fixed quantity and fixed price structure over a specified term. The
Company typically sells SRECs to different customers from those purchasing the
energy under PPAs. The Company believes the sale of each SREC is a distinct
performance obligation satisfied at a point in time and that the performance
obligation related to each SREC is satisfied when each SREC is delivered to the
customer.

Rental income. A portion of the Company’s energy revenues are derived from long-term power purchase agreements accounted for as operating leases under Accounting Standards Codification (“ASC”) 840, Leases. Rental income under these leases is recognized as revenue when the electricity is delivered to the customer.

Performance-Based Incentives. Many state governments, utilities, municipal
utilities and co-operative utilities offer a rebate or other cash incentive for
the installation and operation of a renewable energy facility. Up-front rebates
provide funds based on the cost, size or expected production of a renewable
energy facility. Performance-based incentives provide cash payments to a system
owner based on the energy generated by its renewable energy facility during a
pre-determined period, and they are paid over that time period. The Company
recognizes revenue from state and utility incentives at the point in time in
which they are earned.

Other income. Other income mainly consists of electricity sales on the wholesale electricity market which are recognized as income on delivery.

Cost of Operations (Exclusive of Depreciation and Amortization). Cost of
operations primarily consists of operations and maintenance expense, site lease
expense, insurance premiums, property taxes and other miscellaneous costs
associated with the operations of solar energy facilities. Altus expects its
cost of operations to continue to grow in conjunction with its business growth.
These costs as a percentage of revenue will decrease over time, offsetting
efficiencies and economies of scale with inflationary increases of certain
costs.

General and Administrative. General and administrative expenses consist
primarily of salaries, bonuses, benefits and all other employee-related costs,
including stock-based compensation, professional fees related to legal,
accounting, human resources, finance and training, information technology and
software services, marketing and communications, travel and rent and other
office-related expenses.

Altus expects increased general and administrative expenses as it continues to
grow its business but to decrease over time as a percentage of revenue. Altus
also expects to incur additional expenses as a result of operating as a public
company, including expenses necessary to comply with the rules and regulations
applicable to companies listed on a national securities exchange and related to
compliance and reporting obligations pursuant to the rules and regulations of
the SEC. Further, Altus expects to incur higher expenses for investor relations,
accounting advisory, directors' and officers' insurance, and other professional
services.

Depreciation, Amortization and Accretion Expense. Depreciation expense
represents depreciation on solar energy systems that have been placed in
service. Depreciation expense is computed using the straight-line composite
method over the estimated useful lives of assets. Leasehold improvements are
depreciated over the shorter of the estimated useful lives or the remaining term
of the lease. Amortization includes third party costs necessary to enter into
site lease agreements, third party costs necessary to acquire PPA and NMCA
customers and favorable and unfavorable rate revenues contracts. Third party
costs necessary to enter into site lease agreements are amortized using the
straight-line method ratably over 15-30 years based upon the term of the
individual site leases. Third party costs necessary to acquire PPAs and NMCA
customers are amortized using the straight-line method ratably over 15-25 years
based upon the term of the customer contract. Estimated fair value allocated to
the favorable and unfavorable rate PPAs and REC agreements are amortized using
the straight-line method over the remaining

                                       32
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non-cancelable terms of the respective agreements. Accretion expense includes
over time increase of asset retirement obligations associated with solar energy
facilities.

Acquisition and Entity Formation Costs. Acquisition and entity formation costs
represent costs incurred to acquire businesses and form new legal entities. Such
costs primarily consist of professional fees for banking, legal, accounting and
appraisal services.

Fair Value Remeasurement of Contingent Consideration. In connection with the
Solar Acquisition (as defined in Note 7, "Acquisitions," to our audited
consolidated annual financial statements included in our Annual Report on Form
10-K), contingent consideration of up to an aggregate of $10.5 million may be
payable upon achieving certain market power rates and actual power volumes
generated by the acquired solar energy facilities. The Company estimated the
fair value of the contingent consideration for future earnout payments using a
Monte Carlo simulation model. Significant assumptions used in the measurement
include the estimated volumes of power generation of acquired solar energy
facilities during the 18-36-month period since the acquisition date, market
power rates during the 36-month period, and the risk-adjusted discount rate
associated with the business.

Stock-Based Compensation. Stock-based compensation expense is recognized for
awards granted under the Legacy Incentive Plans and Omnibus Incentive Plan, as
defined in Note 13, "Stock-Based Compensation," to our condensed consolidated
financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Change in Fair Value of Redeemable Warrant Liability. In connection with the
Merger, the Company assumed a redeemable warrant liability composed of publicly
listed warrants (the "Redeemable Warrants") and warrants issued to CBRE
Acquisition Sponsor, LLC in the private placement (the "Private Placement
Warrants"). Redeemable Warrant Liability was remeasured as of June 30, 2022, and
the resulting gain was included in the condensed consolidated statements of
operations. As our Redeemable Warrants (other than the Private Placement
Warrants) continue to trade separately on the NYSE following the Merger, the
Company determines the fair value of the Redeemable Warrants based on the quoted
trading price of those warrants. The Private Placement Warrants have the same
redemption and make-whole provisions as the Redeemable Warrants. Therefore, the
fair value of the Private Placement Warrants is equal to the Redeemable
Warrants. The Company determines the fair value of the Redeemable Warrants,
including Private Placement Warrants, based on the quoted trading price of the
Redeemable Warrants.

Change in Fair Value of Alignment Shares Liability. Alignment shares represent
Class B common stock of the Company which were issued in connection with the
Merger. Class B common stock, par value $0.0001 per share ("Alignment Shares")
are accounted for as liability-classified derivatives, which were remeasured as
of June 30, 2022, and the resulting gain was included in the condensed
consolidated statements of operations. The Company estimates the fair value of
outstanding Alignment Shares using a Monte Carlo simulation valuation model
utilizing a distribution of potential outcomes based on a set of underlying
assumptions such as stock price, volatility, and risk-free interest rates.

Other (income) Expenses, Net. Other income and expenses mainly represent State subsidies and other miscellaneous items.

Interest expense, net. Interest expense, net, represents interest on our borrowings under our various credit facilities, amortization of debt discounts and deferred financing fees, and unrealized gains and losses on interest rate swaps of interest.

Income Tax Expense. We account for income taxes under ASC 740, Income Taxes. As
such, we determine deferred tax assets and liabilities based on temporary
differences resulting from the different treatment of items for tax and
financial reporting purposes. We measure deferred tax assets and liabilities
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to reverse. Additionally, we must
assess the likelihood that deferred tax assets will be recovered as deductions
from future taxable income. We have a partial valuation allowance on our
deferred state tax assets because we believe it is more likely than not that a
portion of our deferred state tax assets will not be realized. We evaluate the
recoverability of our deferred tax assets on a quarterly basis.

Net Income Attributable to Noncontrolling Interests and Redeemable
Noncontrolling Interests. Net income attributable to noncontrolling interests
and redeemable noncontrolling interests represents third-party interests in the
net income or loss of certain consolidated subsidiaries based on Hypothetical
Liquidation at Book Value.

                                       33
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Results of operations – Quarters ended June 30, 2022compared to the three months ended June 30, 2021 (Unaudited)

                                                            Three Months Ended
                                                                 June 30,                                      Change
                                                        2022                   2021                    $                    %
                                                              (in thousands)
Operating revenues, net                           $       24,762          $     17,613          $      7,149                 40.6  %
Operating expenses
Cost of operations (exclusive of depreciation and
amortization shown separately below)                       4,290                 3,236                 1,054                 32.6  %
General and administrative                                 6,558                 4,220                 2,338                 55.4  %
Depreciation, amortization and accretion expense           6,863                 4,470                 2,393                 53.5  %
Acquisition and entity formation costs                        52                    85                   (33)               (38.8) %
Gain on fair value remeasurement of contingent
consideration, net                                        (1,140)                 (775)                 (365)                47.1  %
Stock-based compensation                                   2,657                    37                 2,620              7,081.1  %
Total operating expenses                          $       19,280          $     11,273          $      8,007                 71.0  %
Operating income                                           5,482                 6,340                  (858)               (13.5) %
Other (income) expense
Change in fair value of redeemable warrant
liability                                                 (4,659)                    -                (4,659)               100.0  %
Change in fair value of alignment shares
liability                                                (16,705)                    -               (16,705)               100.0  %
Other income, net                                           (608)                 (138)                 (470)               340.6  %
Interest expense, net                                      5,173                 4,826                   347                  7.2  %
Total other (income) expense                      $      (16,799)         $      4,688          $    (21,487)              (458.3) %
Income before income tax expense                  $       22,281          $      1,652          $     20,629              1,248.7  %
Income tax expense                                          (707)               (2,092)                1,385                (66.2) %
Net income (loss)                                 $       21,574          $       (440)         $     22,014             (5,003.2) %
Net (loss) income attributable to noncontrolling
interests and redeemable noncontrolling interests         (2,541)                  749                (3,290)              (439.3) %
Net income (loss) attributable to Altus Power,
Inc.                                              $       24,115          $     (1,189)         $     25,304             (2,128.2) %
Net income (loss) per share attributable to
common stockholders
Basic                                             $         0.16          $      (0.01)         $       0.17             (1,264.7) %
Diluted                                           $         0.16          $      (0.01)         $       0.17             (1,259.8) %
Weighted average shares used to compute net
income (loss) per share attributable to common
stockholders
Basic                                                153,310,068            88,741,089            64,568,979                 72.8  %
Diluted                                              153,954,843            88,741,089            65,213,754                 73.5  %



                                       34
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Operating revenues, net
                                                    Three Months Ended
                                                         June 30,                     Change
                                                    2022           2021        Change          %
                                                      (in thousands)
  Revenue under power purchase agreements       $    6,730      $  4,653      $ 2,077        44.6  %
  Revenue from net metering credit agreements        7,822         7,155          667         9.3  %
  Solar renewable energy certificate revenue         7,975         4,900        3,075        62.8  %
  Rental income                                        785           539          246       100.0  %
  Performance-based incentives                         295           260           35        13.5  %
  Other revenue                                      1,155           106        1,049       989.6  %
  Total                                         $   24,762      $ 17,613      $ 7,149        40.6  %


Operating revenues, net increased by $7.1 million, or 40.6%, for the three
months ended June 30, 2022, compared to the three months ended June 30, 2021,
primarily due to the increased volume of generated electricity as a result of
solar energy facilities acquired and placed in service subsequent to June 30,
2021. We have three main sources of revenue including via power purchase
agreements, net metering credit agreements, and the sale of solar renewable
energy certificates. The revenue streams from PPAs and NMCAs vary slightly in
how the customers are billed and in which states the projects earn credits, but
both are products of our 20+ year contracts with our customers who purchase
power from our projects. Also the Company has no NMCAs in states where
high-profile Net Energy Metering proceedings are occurring, which are focused on
utility rate design.

Cost of operations

                                                     Three Months Ended
                                                          June 30,                                Change
                                                   2022                2021                $                  %
                                                       (in thousands)
Cost of operations (exclusive of
depreciation and amortization shown
separately below)                            $    4,290             $  3,236          $  1,054                32.6  %


Cost of operations increased by $1.1 million, or 32.6%, during the three months
ended June 30, 2022 as compared to the three months ended June 30, 2021,
primarily due to the increased number of solar energy facilities as a result of
acquisitions and facilities placed in service subsequent to June 30, 2021.

General and administrative

                                            Three Months Ended
                                                 June 30,                       Change
                                             2022            2021           $            %
                                              (in thousands)
         General and administrative    $    6,558          $ 4,220      $ 2,338        55.4  %


General and administrative expense increased by $2.3 million, or 55.4%, during
the three months ended June 30, 2022 as compared to the three months ended
June 30, 2021, primarily due to increase in general personnel costs resulting
from increased headcount in multiple job functions and costs associated with
operating as a public company.

Amortization and accretion expense

                                                       Three Months Ended
                                                            June 30,                                Change
                                                     2022                2021                $                  %
                                                         (in thousands)
Depreciation, amortization and accretion
expense                                        $    6,863             $  4,470          $  2,393                53.5  %


                                       35
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Depreciation, amortization and accretion expense increased by $2.4 million, or
53.5%, during the three months ended June 30, 2022 as compared to the three
months ended June 30, 2021, primarily due to the increased number of solar
energy facilities as a result of acquisitions and facilities placed in service
subsequent to June 30, 2021.

Entity acquisition and creation costs

                                                   Three Months Ended
                                                        June 30,                       Change
                                                     2022              2021        $           %
                                                     (in thousands)
  Acquisition and entity formation costs    $       52                $ 85      $ (33)      (38.8) %


Acquisition and entity formation costs decreased by 38.8% during the three
months ended June 30, 2022, as compared to the three months ended June 30, 2021,
primarily due to higher costs associated with the Merger and other acquisitions
in the prior period.

Gain on remeasurement to fair value of contingent consideration, net

                                                       Three Months Ended
                                                            June 30,                                 Change
                                                     2022                 2021                $                  %
                                                         (in thousands)
Gain on fair value remeasurement of contingent
consideration, net                             $    (1,140)            $   (775)         $   (365)               47.1  %


Gain on fair value remeasurement of contingent consideration, net is primarily
associated with the Solar Acquisition (as defined in Note 7, "Acquisitions," to
our audited consolidated annual financial statements included in our 2021 Annual
Report on Form 10-K) completed on December 22, 2020. Gain on fair value
remeasurement was recorded for the three months ended June 30, 2022 and 2021,
due to changes in the values of significant assumptions used in the measurement,
including the estimated volumes of power generation of acquired solar energy
facilities.

Stock-based compensation

                                         Three Months Ended
                                              June 30,                         Change
                                           2022              2021         $             %
                                           (in thousands)
        Stock-based compensation   $      2,657             $ 37      $ 2,620       7,081.1  %


Stock-based compensation increased by $2.6 million during the three months ended
June 30, 2022, as compared to the three months ended June 30, 2021, primarily
due to restricted stock units granted under the Omnibus Incentive Plan (as
defined in Note 13, "Stock-Based Compensation," to our condensed consolidated
financial statements included elsewhere in this Quarterly Report on Form 10-Q),
which was adopted on July 12, 2021.

Change in fair value of liability related to redeemable warrants

                                                      Three Months Ended
                                                           June 30,                                 Change
                                                   2022                  2021                $                  %
                                                        (in thousands)
Change in fair value of redeemable warrant
liability                                    $       (4,659)         $       -          $ (4,659)              100.0  %


In connection with the Merger, the Company assumed a redeemable warrant
liability which was remeasured as of June 30, 2022, and the resulting gain was
included in the consolidated statement of operations. The gain was primarily
driven by the decrease in the quoted price of the Company's Redeemable Warrants
as of June 30, 2022, compared to December 31, 2021.
                                       36
--------------------------------------------------------------------------------

Change in fair value of liability relating to alignment actions

                                                      Three Months Ended
                                                           June 30,                                     Change
                                                    2022                    2021                $                   %
                                                        (in thousands)
Change in fair value of alignment shares
liability                                  $      (16,705)              $       -          $ (16,705)              100.0  %


In connection with the Merger, the Company assumed a liability related to
alignment shares, which was remeasured as of June 30, 2022, and the resulting
gain was included in the consolidated statement of operations. The gain was
primarily driven by the decrease in the Company's stock price as of June 30,
2022, compared to December 31, 2021.

Other income, net

                                        Three Months Ended
                                             June 30,                      Change
                                         2022             2021         $            %
                                          (in thousands)
             Other income, net    $     (608)           $ (138)     $ (470)      340.6  %

Other expenses increased by $0.5 million in the three months ended June 30, 2022compared to the three months ended June 30, 2021mainly due to the increase in miscellaneous income.

Interest expense, net

                                           Three Months Ended
                                                June 30,                     Change
                                            2022            2021          $          %
                                             (in thousands)
              Interest expense, net   $    5,173          $ 4,826      $ 347       7.2  %


Interest expense increased by $0.3 million, or 7.2%, during the three months
ended June 30, 2022, as compared to the three months ended June 30, 2021,
primarily due to the increase of outstanding debt held by the Company during
these periods but offset by a lower blended interest rate on the Amended Rated
Term Loan Facility.

Income tax expense

                                       Three Months Ended
                                            June 30,                       Change
                                       2022             2021           $            %
                                         (in thousands)
             Income tax expense   $    (707)         $ (2,092)     $ 1,385       (66.2) %


For the three months ended June 30, 2022, the Company recorded an income tax
expense of $0.7 million in relation to pretax income of $22.3 million, which
resulted in an effective income tax rate of 3.2%. The effective income tax rate
was primarily impacted by $4.3 million of income tax benefit related to fair
value adjustments on redeemable warrants and alignment shares, $0.2 million of
income tax expense from net losses attributable to noncontrolling interests and
redeemable noncontrolling interests, and $0.1 million of state income tax
expense.

Related to the $4.3 million of income tax benefit, the Company has issued
redeemable warrants and alignment shares. These awards are liability classified
awards, and, as such, they are required to be remeasured to fair value each
reporting period with the change in value included in operating income. The
redeemable warrants and alignment shares are considered equity awards for U.S.
tax purposes. Therefore, the change in value does not result in taxable income
or deduction. The change in fair value results in a permanent tax difference
which impacts the Company's estimated annual effective tax rate.

For the three months ended June 30, 2021, the Company recorded an income tax
expense of $2.1 million in relation to a pretax income of $1.7 million, which
resulted in an effective income tax rate of 126.6%. The effective income tax
rate was primarily impacted by $1.0 million of income tax expense due to net
losses attributable to noncontrolling interests and

                                       37
--------------------------------------------------------------------------------

redeemable minority interests, $0.3 million the state income tax expense, and $0.5 million the income tax expense associated with the remeasurement of the contingent consideration.

Net (loss) income attributable to redeemable noncontrolling interests and
noncontrolling interests
                                                        Three Months Ended
                                                             June 30,                                   Change
                                                      2022                  2021                $                  %
                                                          (in thousands)
Net (loss) income attributable to
noncontrolling interests and redeemable
noncontrolling interests                       $     (2,541)             $    749          $ (3,290)              (439.3) %


Net loss attributable to redeemable noncontrolling interests and noncontrolling
interests was $2.5 million during the three months ended June 30, 2022, as
compared to net income attributable to redeemable noncontrolling interests and
noncontrolling interests of $0.7 million for the three months ended June 30,
2021, primarily due to additional funding provided by a tax equity investor and
reduced recapture periods for investment tax credits.





































                                       38
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Results of operations – Half-year ended June 30, 2022compared to the six months ended June 30, 2021 (Unaudited)

                                                             Six Months Ended
                                                                 June 30,                                     Change
                                                        2022                  2021                    $                     %
                                                              (in thousands)
Operating revenues, net                           $      43,961          $     30,084          $     13,877                  46.1  %
Operating expenses
Cost of operations (exclusive of depreciation and
amortization shown separately below)                      8,354                 6,156                 2,198                  35.7  %
General and administrative                               12,942                 7,443                 5,499                  73.9  %
Depreciation, amortization and accretion expense         13,685                 8,858                 4,827                  54.5  %
Acquisition and entity formation costs                      346                   232                   114                  49.1  %
Gain on fair value remeasurement of contingent
consideration, net                                         (971)               (2,050)                1,079                 (52.6) %
Stock-based compensation                                  3,962                    77                 3,885               5,045.5  %
Total operating expenses                          $      38,318          $     20,716          $     17,602                  85.0  %
Operating income                                          5,643                 9,368                (3,725)                (39.8) %
Other (income) expense
Change in fair value of redeemable warrant
liability                                               (23,117)                    -               (23,117)                100.0  %
Change in fair value of alignment shares
liability                                               (63,051)                    -               (63,051)                100.0  %
Other income, net                                          (593)                 (249)                 (344)                138.2  %
Interest expense, net                                    10,111                 8,739                 1,372                  15.7  %
Total other (income) expense                      $     (76,650)         $      8,490          $    (85,140)             (1,002.8) %
Income before income tax expense                  $      82,293          $        878          $     81,415               9,272.8  %
Income tax expense                                         (584)               (1,055)                  471                 (44.6) %
Net income (loss)                                 $      81,709          $       (177)         $     81,886             (46,263.3) %
Net (loss) income attributable to noncontrolling
interests and redeemable noncontrolling interests        (2,825)                   50                (2,875)              (5750.0) %
Net income (loss) attributable to Altus Power,
Inc.                                              $      84,534          $       (227)         $     84,761             (37,339.6) %
Net income (loss) per share attributable to
common stockholders
Basic                                             $        0.55          $          -          $       0.55             (21,530.5) %
Diluted                                           $        0.55          $          -          $       0.55             (21,421.2) %
Weighted average shares used to compute net
income (loss) per share attributable to common
stockholders
Basic                                               152,988,078            88,741,089            64,246,989                  72.4  %
Diluted                                             153,771,992            88,741,089            65,030,903                  73.3  %



                                       39
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Operating revenues, net
                                                     Six Months Ended
                                                         June 30,                    Change
                                                    2022          2021         Change          %
                                                      (in thousands)

Revenue from power purchase agreements $10,912 $7,784

$3,128 40.2%

Income from net billing credit agreements 11,722 10,465

1,257 12.0%

Revenue from renewable solar energy certificates 17,506 10,099

7,407 73.3%

   Rental income                                    1,429           760     

669 88.0%

   Performance-based incentives                       654           811          (157)      (19.4) %
   Other revenue                                    1,738           165         1,573       953.3  %
   Total                                         $ 43,961      $ 30,084      $ 13,877        46.1  %



Operating revenues, net increased by $13.9 million, or 46.1%, for the six months
ended June 30, 2022, compared to the six months ended June 30, 2021, primarily
due to the increased volume of generated electricity as a result of solar energy
facilities acquired and placed in service subsequent to June 30, 2021. We have
three main sources of revenue including power purchase agreements, net metering
credit agreements, and the sale of solar renewable energy certificates. The
revenue streams from PPAs and NMCAs vary slightly in how the customers are
billed and in which states the projects earn credits, but both are products of
our 20+ year contracts with our customers who purchase power from our projects.
Also the Company has no NMCAs in states where high-profile Net Energy Metering
proceedings are occurring, which are focused on utility rate design.

Cost of operations

                                                    Six Months Ended
                                                        June 30,                              Change
                                                 2022              2021                $                  %
                                                     (in thousands)
Cost of operations (exclusive of
depreciation and amortization shown
separately below)                            $   8,354          $  6,156          $  2,198                35.7  %


Cost of operations increased by $2.2 million, or 35.7%, during the six months
ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily
due to the increased number of solar energy facilities as a result of
acquisitions and facilities placed in service subsequent to June 30, 2021.

General and administrative

                                             Six Months Ended
                                                 June 30,                    Change
                                            2022          2021           $            %
                                              (in thousands)
           General and administrative    $  12,942      $ 7,443      $ 5,499        73.9  %


General and administrative expense increased by $5.5 million, or 73.9%, during
the six months ended June 30, 2022 as compared to the six months ended June 30,
2021, primarily due to increase in general personnel costs resulting from
increased headcount in multiple job functions and costs associated with
operating as a public company.

Amortization and accretion expense

                                                        Six Months Ended
                                                            June 30,                    Change
                                                       2022          2021           $            %
                                                         (in thousands)

Amortization and accretion expense $13,685 $8,858

$4,827 54.5%

                                       40
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Depreciation, amortization and accretion expense increased by $4.8 million, or
54.5%, during the six months ended June 30, 2022 as compared to the six months
ended June 30, 2021, primarily due to the increased number of solar energy
facilities as a result of acquisitions and facilities placed in service
subsequent to June 30, 2021.

Entity acquisition and creation costs

                                                    Six Months Ended
                                                        June 30,                     Change
                                                    2022            2021         $           %
                                                     (in thousands)
    Acquisition and entity formation costs    $     346            $ 232      $ 114        49.1  %

Entity acquisition and creation costs increased by $0.1 millioni.e. 49.1%, during the half-year ended June 30, 2022compared to the half-year ended
June 30, 2021primarily due to the costs associated with the Merger.

Gain on remeasurement to fair value of contingent consideration, net

                                                      Six Months Ended
                                                          June 30,                              Change
                                                   2022              2021                $                  %
                                                       (in thousands)
Gain on fair value remeasurement of contingent
consideration, net                             $    (971)         $ (2,050)         $  1,079               (52.6) %


Gain on fair value remeasurement of contingent consideration, net is primarily
associated with the Solar Acquisition (as defined in Note 7, "Acquisitions," to
our audited consolidated annual financial statements included in our 2021 Annual
Report on Form 10-K) completed on December 22, 2020. Gain on fair value
remeasurement was recorded for the six months ended June 30, 2022 and 2021, due
to changes in the values of significant assumptions used in the measurement,
including the estimated volumes of power generation of acquired solar energy
facilities.

Stock-based compensation

                                           Six Months Ended
                                               June 30,                       Change
                                            2022            2021         $             %
                                            (in thousands)
          Stock-based compensation   $     3,962           $ 77      $ 3,885       5,045.5  %


Stock-based compensation increased by $3.9 million during the six months ended
June 30, 2022, as compared to the six months ended June 30, 2021, primarily due
to restricted stock units granted under the Omnibus Incentive Plan (as defined
in Note 13, "Stock-Based Compensation," to our condensed consolidated financial
statements included elsewhere in this Quarterly Report on Form 10-Q), which was
adopted on July 12, 2021.

Change in fair value of liability related to redeemable warrants

                                                      Six Months Ended
                                                          June 30,                                  Change
                                                   2022                 2021                $                   %
                                                       (in thousands)
Change in fair value of redeemable warrant
liability                                    $     (23,117)         $       -          $ (23,117)              100.0  %


In connection with the Merger, the Company assumed a redeemable warrant
liability which was remeasured as of June 30, 2022, and the resulting gain was
included in the consolidated statement of operations. The gain was primarily
driven by the decrease in the quoted price of the Company's Redeemable Warrants
as of June 30, 2022, compared to December 31, 2021.
                                       41
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Change in fair value of liability relating to alignment actions

                                                    Six Months Ended
                                                        June 30,                                  Change
                                                 2022                 2021                $                   %
                                                     (in thousands)
Change in fair value of alignment shares
liability                                  $     (63,051)         $       -          $ (63,051)              100.0  %


In connection with the Merger, the Company assumed a liability related to
alignment shares, which was remeasured as of June 30, 2022, and the resulting
gain was included in the consolidated statement of operations. The gain was
primarily driven by the decrease in the Company's stock price as of June 30,
2022, compared to December 31, 2021.

Other income, net

                                         Six Months Ended
                                             June 30,                     Change
                                         2022            2021         $            %
                                          (in thousands)
               Other income, net    $    (593)         $ (249)     $ (344)      138.2  %


Other income, net increased by $0.3 million during the six months ended June 30,
2022, as compared to the six months ended June 30, 2021, due to increases in
miscellaneous income items.

Interest expense, net

                                          Six Months Ended
                                              June 30,                    Change
                                         2022          2021           $            %
                                           (in thousands)
              Interest expense, net   $  10,111      $ 8,739      $ 1,372        15.7  %


Interest expense increased by $1.4 million, or 15.7%, during the six months
ended June 30, 2022, as compared to the six months ended June 30, 2021,
primarily due to the increase of outstanding debt held by the Company during
these periods but offset by a lower blended interest rate on the Amended Rated
Term Loan Facility.

Income tax expense

                                          Six Months Ended
                                              June 30,                   Change
                                         2022          2021          $           %
                                           (in thousands)
                 Income tax expense   $   (584)     $ (1,055)     $ 471       (44.6) %


For the six months ended June 30, 2022, the Company recorded an income tax
expense of $0.6 million in relation to pretax income of $82.3 million, which
resulted in an effective income tax rate of 0.7%. The effective income tax rate
was primarily impacted by $19.0 million of income tax benefit related to fair
value adjustments on redeemable warrants and alignment shares, $1.6 million of
income tax expense associated with nondeductible compensation, $0.6 million of
income tax expense from net losses attributable to noncontrolling interests and
redeemable noncontrolling interests, and $0.1 million of state income tax
expense.

Related to the $19.0 million of income tax benefit, the Company has issued
redeemable warrants and alignment shares. These awards are liability classified
awards, and, as such, they are required to be remeasured to fair value each
reporting period with the change in value included in operating income. The
redeemable warrants and alignment shares are considered equity awards for U.S.
tax purposes. Therefore, the change in value does not result in taxable income
or deduction. The change in fair value results in a permanent tax difference
which impacts the Company's estimated annual effective tax rate.

For the six months ended June 30, 2021, the Company recorded an income tax
expense of $1.1 million in relation to a pretax income of $0.9 million, which
resulted in an effective income tax rate of 120.2%. The effective income tax
rate was primarily impacted by $0.5 million of income tax expense due to net
losses attributable to noncontrolling interests and

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redeemable minority interests, $0.2 million the state income tax expense, and $0.3 million the income tax expense associated with the remeasurement of the contingent consideration.

Net income (loss) attributable to refundable non-controlling interests and non-controlling interests

                                                       Six Months Ended
                                                           June 30,                                 Change
                                                    2022                2021                $                  %
                                                        (in thousands)
Net (loss) income attributable to
noncontrolling interests and redeemable
noncontrolling interests                       $     (2,825)         $     50          $ (2,875)             (5750.0) %


Net loss attributable to redeemable noncontrolling interests and noncontrolling
interests was $2.8 million during the six months ended June 30, 2022, as
compared to net income attributable to redeemable noncontrolling interests and
noncontrolling interests of $0.1 million for the six months ended June 30, 2021,
primarily due to additional funding provided by a tax equity investor and
reduced recapture periods for investment tax credits.

Cash and capital resources

Of the June 30, 2022the Company had total cash and restricted cash of $299.3 million. For a discussion of our restricted cash, see Note 2, “Significant accounting policies, cash, cash equivalents and restricted cash”, to our condensed consolidated financial statements.

We seek to maintain diversified and cost-effective funding sources to finance
and maintain our operations, fund capital expenditures, including customer
acquisitions, and satisfy obligations arising from our indebtedness.
Historically, our primary sources of liquidity included proceeds from the
issuance of redeemable preferred stock, borrowings under our debt facilities,
third party tax equity investors and cash from operations. Additionally, the
Company received cash proceeds of $293 million as a result of the Merger. Our
business model requires substantial outside financing arrangements to grow the
business and facilitate the deployment of additional solar energy facilities. We
will seek to raise additional required capital from borrowings under our
existing debt facilities, third party tax equity investors and cash from
operations.

The solar energy systems that are in service are expected to generate a positive
return rate over the useful life, typically 32 years. Typically, once solar
energy systems commence operations, they do not require significant additional
capital expenditures to maintain operating performance. However, in order to
grow, we are currently dependent on financing from outside parties. The Company
will have sufficient cash and cash flows from operations to meet working
capital, debt service obligations, contingencies and anticipated required
capital expenditures for at least the next 12 months. However, we are subject to
business and operational risks that could adversely affect our ability to raise
additional financing. If financing is not available to us on acceptable terms if
and when needed, we may be unable to finance installation of our new customers'
solar energy systems in a manner consistent with our past performance, our cost
of capital could increase, or we may be required to significantly reduce the
scope of our operations, any of which would have a material adverse effect on
our business, financial condition, results of operations and prospects. In
addition, our tax equity funds and debt instruments impose restrictions on our
ability to draw on financing commitments. If we are unable to satisfy such
conditions, we may incur penalties for non-performance under certain tax equity
funds, experience installation delays, or be unable to make installations in
accordance with our plans or at all. Any of these factors could also impact
customer satisfaction, our business, operating results, prospects and financial
condition.

Contractual obligations and commitments

We enter into service agreements in the normal course of business. These
contracts do not contain any minimum purchase commitments. Certain agreements
provide for termination rights subject to termination fees or wind down costs.
Under such agreements, we are contractually obligated to make certain payments
to vendors, mainly, to reimburse them for their unrecoverable outlays incurred
prior to cancellation. The exact amounts of such obligations are dependent on
the timing of termination, and the exact terms of the relevant agreement and
cannot be reasonably estimated. As of June 30, 2022, we do not expect to cancel
these agreements.

The Company has operating leases for land and buildings and is contractually committed to making payments in accordance with the site lease agreements.

                                       43
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Off-balance sheet arrangements

The Company enters into letters of credit and surety bond arrangements with
lenders, local municipalities, government agencies, and land lessors. These
arrangements relate to certain performance-related obligations and serve as
security under the applicable agreements. As of June 30, 2022, and December 31,
2021, the Company had outstanding letters of credit and surety bonds totaling
$10.7 million. Our outstanding letters of credit are primarily used to fund the
debt service reserve account associated with the Amended Rated Term Loan. We
believe the Company will fulfill the obligations under the related arrangements
and do not anticipate any material losses under these letters of credit or
surety bonds.

Debt

Modified Rated Term Loan Facility

As part of the Blackstone Capital Facility, APA Finance, LLC ("APAF"), a wholly
owned subsidiary of the Company, entered into a $251.0 million term loan
facility with Blackstone Insurance Solutions ("BIS") through a consortium of
lenders, which consists of investment grade-rated Class A and Class B notes (the
"Rated Term Loan").

On August 25, 2021, APAF entered into an Amended and Restated Credit Agreement
with BIS to refinance the Rated Term Loan (hereby referred to as the "Amended
Rated Term Loan"). The Amended Rated Term Loan added an additional $135.6
million to the facility, bringing the aggregate facility to $503.0 million. The
Amended Rated Term Loan has a weighted average 3.51% annual fixed rate, reduced
from the previous weighted average rate of 3.70%, and matures on February 29,
2056 ("Final Maturity Date").

The Amended Rated Term Loan amortizes at an initial rate of 2.5% of outstanding
principal per annum for a period of 8 years at which point the amortization
steps up to 4% per annum until September 30, 2031 ("Anticipated Repayment
Date"). After the Anticipated Repayment Date, the loan becomes fully-amortizing,
and all available cash is used to pay down principal until the Final Maturity
Date.

As of June 30, 2022, the outstanding principal balance of the Rated Term Loan
was $493.5 million less unamortized debt discount and loan issuance costs
totaling $8.0 million. As of December 31, 2021, the outstanding principal
balance of the Rated Term Loan was $500.0 million less unamortized debt discount
and loan issuance costs totaling $8.4 million.

As of June 30, 2022, the Company was in compliance with all covenants. As of
December 31, 2021, the Company was in compliance with all covenants, except the
delivery of the APAF audited consolidated financial statements, for which the
Company obtained a waiver to extend the financial statement reporting
deliverable due date. The Company delivered the audited financial statements on
May 25, 2022, before the extended reporting deliverable due date.

Construction Loan at Term Loan Facility

On January 10, 2020, APA Construction Finance, LLC ("APACF") a wholly-owned
subsidiary of the Company, entered into a credit agreement with Fifth Third
Bank, National Association and Deutsche Bank AG New York Branch to fund the
development and construction of future solar facilities ("Construction Loan to
Term Loan Facility"). The Construction Loan to Term Loan Facility includes a
construction loan commitment of $187.5 million and a letter of credit commitment
of $12.5 million, which can be drawn until January 10, 2023.

The construction loan commitment can convert to a term loan upon commercial
operation of a particular solar energy facility. In addition, the Construction
Loan to Term Loan Facility accrued a commitment fee at a rate equal to 0.50% per
year of the daily unused amount of the commitment. As of June 30, 2022, the
outstanding principal balances of the construction loan and term loan were zero
and $16.2 million, respectively. As of December 31, 2021, the outstanding
principal balances of the construction loan and term loan were $5.6 million and
$12.3 million, respectively. As of June 30, 2022, and December 31, 2021, the
Company had an unused borrowing capacity of $171.3 million. For the three months
ended June 30, 2022, and 2021, the Company incurred interest costs associated
with outstanding construction loans totaling zero and $0.1 million,
respectively. For the six months ended June 30, 2022, and 2021 the Company
incurred interest costs associated with outstanding construction loans totaling
zero and $0.3 million, respectively. These interest costs were capitalized as
part of property, plant and equipment. Also, on October 23, 2020, the Company
entered into an additional letters of credit facility with Fifth Third Bank for
the total capacity of $10.0 million. The Construction Loan to Term Loan Facility
includes various financial and other covenants for APACF and the Company, as
guarantor. As of June 30, 2022, and December 31, 2021, the Company was in
compliance with all covenants.
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Obligations relating to finance leases

From time to time, the Company sells equipment to third parties and enters into
master lease agreements to lease the equipment back for an agreed-upon term. Due
to certain forms of continuous involvement provided by the master lease
agreements, sale leaseback accounting is prohibited under ASC 840. Therefore,
the Company accounts for these transactions using the financing method by
recognizing the sale proceeds as a financing obligation and the assets subject
to the sale-leaseback remain on the balance sheet of the Company and are being
depreciated. The aggregate proceeds have been recorded as long-term debt within
the condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, the Company's recorded financing
obligations were $36.5 million, net of $1.1 million of deferred transaction
costs. Payments of $0.6 million and zero were made under financing lease
obligations for the three months ended June 30, 2022, and 2021, respectively.
Payments of $0.8 million and zero were made under financing obligations for the
six months ended June 30, 2022 and 2021, respectively. Interest expense,
inclusive of the amortization of deferred transaction costs, for the three
months ended June 30, 2022, and 2021, was $0.4 million and zero, respectively.
Interest expense, inclusive of the amortization of deferred transaction costs,
for the six months ended June 30, 2022 and 2021, was $0.7 million and zero,
respectively.

Cash flow

For the six months ended June 30, 2022and 2021

The following table presents the main sources and uses of cash and restricted cash for each of the periods presented below:

                                                                    Six Months Ended
                                                                        June 30,
                                                                   2022           2021
                                                                     (in thousands)

Net cash provided by (used for):

 Operating activities                                           $  11,869      $  9,485
 Investing activities                                             (34,910)      (13,371)
 Financing activities                                              (7,948)       (2,170)

Net decrease in cash, cash equivalents and restricted cash ($30,989)

   $ (6,056)


Operating Activities

During the six months ended June 30, 2022 cash provided by operating activities
of $11.9 million consisted primarily of net income of $81.7 million adjusted for
net non-cash income of $69.5 million and an increase in net assets of $0.4
million.

During the six months ended June 30, 2021, cash provided by operating activities
of $9.5 million consisted primarily of net loss of $0.2 million adjusted for net
non-cash expenses of $8.9 million and an increase in net liabilities of $0.8
million.

Investing Activities

During the six months ended June 30, 2022, net cash used in investing activities
was $34.9 million, consisting of $23.3 million of capital expenditures and $11.6
million of payments to acquire renewable energy facilities from third parties,
net of cash and restricted cash acquired.

During the six months ended June 30, 2021, net cash used in investing activities
was $13.4 million, consisting of $6.3 million of capital expenditures, $5.0
million to acquire renewable energy facilities from third parties, net of cash
and restricted cash acquired, and $2.1 million to acquire businesses, net of
cash and restricted cash acquired.

Fundraising activities

Net cash used for financing activities was $7.9 million for the six months ended
June 30, 2022, which primarily consisted of $8.1 million to repay long-term
debt, $0.7 million paid for equity issuance costs, and $1.1 million of
distributions to noncontrolling interests. Cash used for financing activities
was partially offset by $2.2 million of contributions from noncontrolling
interests.
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Net cash used for financing activities was $2.2 million for the six months ended
June 30, 2021, which consisted primarily of $16.7 million to repay long-term
debt, $8.4 million of paid dividends and commitment fees on Series A preferred
stock, $2.1 million of deferred transaction costs, $1.1 million of distributions
to noncontrolling interests, $0.6 million of debt issuance costs, and $0.1
million of paid contingent consideration. Cash used for financing activities was
partially off-set by $26.4 million of proceeds from issuance of long-term debt
and $0.4 million of contributions from noncontrolling interests.

Significant Accounting Policies and Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP
requires us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues, expenses and related disclosure of contingent
assets and liabilities. On an on-going basis, we evaluate our estimates,
including those related to inventories, long-lived assets, goodwill,
identifiable intangibles, contingent consideration liabilities and deferred
income tax valuation allowances. We base our estimates on historical experience
and on appropriate and customary assumptions that we believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Some of these accounting estimates and
assumptions are particularly sensitive because of their significance to our
consolidated financial statements and because of the possibility that future
events affecting them may differ markedly from what had been assumed when the
financial statements were prepared. As of June 30, 2022, there have been no
significant changes to the accounting estimates that we have deemed critical.
Our critical accounting estimates are more fully described in our 2021 Annual
Report on Form 10-K.

Other than the policies noted in Note 2, "Significant Accounting Policies," in
the Company's notes to the condensed consolidated financial statements in this
Quarterly Report on Form 10-Q, there have been no material changes to its
critical accounting policies and estimates as compared to those disclosed in its
audited consolidated financial statements in our 2021 Annual Report on Form
10-K.

Emerging Growth Company Status

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act,
was enacted. Section 107 of the JOBS Act provides that an "emerging growth
company," or an EGC, can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the
Securities Act, for complying with new or revised accounting standards. Thus, an
EGC can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. Altus has elected to use the
extended transition period for new or revised accounting standards during the
period in which we remain an EGC.

We expect to remain an EGC until the earliest to occur of: (1) the last day of
the fiscal year in which we, as applicable, have more than $1.07 billion in
annual revenue; (2) the date we qualify as a "large accelerated filer," with at
least $700 million of equity securities held by non-affiliates; (3) the date on
which we have issued more than $1.0 billion in non-convertible debt securities
during the prior three-year period; and (4) the last day of the fiscal year
ending after the fifth anniversary of our initial public offering.

Additionally, we are a "smaller reporting company" as defined in Item 10(f)(1)
of Regulation S-K. We will remain a smaller reporting company until the last day
of the fiscal year in which (i) the market value of our stock held by
non-affiliates is greater than or equal to $250 million as of the end of that
fiscal year's second fiscal quarter, or (ii) our annual revenues are greater
than or equal to $100 million during the most recently completed fiscal year and
the market value of our stock held by non-affiliates is greater than or equal to
$700 million as of the end of that fiscal year's second fiscal quarter. If we
are a smaller reporting company at the time we cease to be an emerging growth
company, we may continue to rely on exemptions from certain disclosure
requirements that are available to smaller reporting companies. Specifically, as
a smaller reporting company we may choose to present only the two most recent
fiscal years of audited financial statements in our Annual Report on Form 10-K
and, similar to emerging growth companies, smaller reporting companies have
reduced disclosure obligations regarding executive compensation.

Recent accounting pronouncements

A description of recently issued accounting pronouncements that may potentially
impact our financial position and results of operations is disclosed in Note 2
to our condensed consolidated financial statements appearing elsewhere in this
Quarterly Report on Form 10-Q.

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Alan A. Seibert