Greenbacker Renewable Energy Co LLC - FORM 10-Q

Attached files

file	filename
EX-32.2 - EXHIBIT 32.2 - Greenbacker Renewable Energy Co LLC	s106964_ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - Greenbacker Renewable Energy Co LLC	s106964_ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - Greenbacker Renewable Energy Co LLC	s106964_ex31-2.htm
EX-31.1 - EXHIBIT 31.1 - Greenbacker Renewable Energy Co LLC	s106964_ex31-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2017

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-55610

GREENBACKER RENEWABLE ENERGY COMPANY LLC

(Exact Name of Registrant as Specified in its Charter)

Delaware		80-0872648
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

11 East 44^th Street, 12^th Floor

New York, NY 10017

Tel (646) 237-7884

(Address, including zip code and telephone number, including area code, of registrants Principal Executive Office)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☐
Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 7, 2017, the registrant had 19,733,509 shares of common stock, $0.001 par value, outstanding.

TABLE OF CONTENTS

		PAGE

PART I.	FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements	3

	Consolidated Statements of Assets and Liabilities as of June 30, 2017 (unaudited) and December 31, 2016	3

	Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016 (unaudited)	4

	Consolidated Statements of Changes in Net Assets for the six months ended June 30, 2017 and 2016 (unaudited)	5

	Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016 (unaudited)	7

	Consolidated Schedules of Investments as of June 30, 2017 (unaudited) and December 31, 2016	8

	Notes to Consolidated Financial Statements (unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64

Item 4.	Controls and Procedures	65

PART II.	OTHER INFORMATION	65

Item 1.	Legal Proceedings	65

Item 1A.	Risk Factors	65

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65

Item 3.	Defaults Upon Senior Securities	65

Item 4.	Mine Safety Disclosures	65

Item 5.	Other Information	65

Item 6.	Exhibits	66

Signatures		67

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

	June 30, 2017			December 31, 2016
	(unaudited)
ASSETS
Investments, at fair value (cost of $155,201,262 and $115,124,750, respectively)	$	156,736,683		$	115,123,101
Swap contracts, at fair value		84,497			90,697
Cash and cash equivalents		10,090,128			13,055,090
Shareholder receivable		291,065			521,954
Deferred tax assets, net of allowance		6,037,889			6,179,394
Other assets		137,998			65,044
Total assets	$	173,378,260		$	135,035,280

LIABILITIES
Swap contracts, at fair value	$	53,804		$	—
Payable for investments purchased		4,743,908			—
Term note payable, net of financing costs		3,226,726			3,270,399
Management fee payable		254,482			232,856
Accounts payable and accrued expenses		448,342			423,639
Shareholder distributions payable		534,165			403,983
Due to advisor		51,905			99,782
Due to dealer manager		—			36,694
Payable for repurchases of common stock		941,466			945,770
Deferred sales commission payable		177,025			203,357
Total liabilities	$	10,431,823		$	5,616,480

Commitments and contingencies (See Note 2, Note 5 and Note 9)

MEMBERS’ EQUITY (NET ASSETS)
Preferred stock, par value, $.001 per share, 50,000,000 authorized; none issued and outstanding	$	—		$	—
Common stock, par value, $.001 per share, 350,000,000 authorized;
18,845,584 and 14,921,922 shares issued and outstanding, respectively		18,845			14,922
Paid-in capital in excess of par value		163,023,544			128,425,800
Accumulated deficit		(5,264,881	)		(3,629,220	)
Accumulated net realized gain on investments		4,578			4,578
Accumulated unrealized appreciation (depreciation) on:
Investments, net of deferred taxes		4,961,580			4,699,283
Foreign currency translation		(135,922	)		(187,846	)
Swap contracts		30,693			90,697
Total common stockholders’ equity		162,638,437			129,418,214
Special unitholder’s equity		308,000			586
Total members’ equity (net assets)		162,946,437			129,418,800
Total liabilities and members’ equity	$	173,378,260		$	135,035,280



Net assets, Class A (shares outstanding of 12,300,935 and 10,878,502 , respectively)	$	106,211,123		$	94,541,760
Net assets, Class C (shares outstanding of 1,174,790 and 1,041,836, respectively)		9,875,156			8,796,002
Net assets, Class I (shares outstanding of 3,436,421 and 2,754,491, respectively)		29,671,417			23,938,449
Net assets, Class P-A (shares outstanding of nil and 47,774, respectively)*		—			414,145
Net assets, Class P-I (shares outstanding of 1,933,438 and 199,319, respectively)		16,880,741			1,727,858
Total common stockholders’ equity	$	162,638,437		$	129,418,214

*All Class P-A shares were converted into Class P-I shares and are no longer offered for sale.

The accompanying notes are an integral part of these consolidated financial statements.

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	For the three months ended June 30, 2017			For the three months ended June 30, 2016			For the six months ended June 30, 2017			For the six months ended June 30, 2016
Investment income:
Dividend income	$	2,881,446		$	1,522,713		$	5,204,176		$	2,169,698
Interest income		55,024			122,578			99,193			132,159
Total investment income	$	2,936,470		$	1,645,291		$	5,303,369		$	2,301,857

Operating expenses:
Management fee expense		759,492			429,063			1,456,638			759,778
Audit and tax expense		85,675			112,563			280,995			206,047
Interest and financing expenses		185,748			—			319,718			—
General and administration expenses		68,003			94,998			243,855			188,103
Legal expenses		44,877			65,769			125,717			132,311
Directors fees and expenses		25,316			24,117			50,868			48,234
Insurance expense		20,456			20,310			22,885			40,619
Organizational expenses		—			—			—			35,188
Other expenses		20,283			16,475			82,556			30,792
Operating expenses before expense waiver and reimbursement		1,209,850			763,295			2,583,232			1,441,072
Expense reimbursement from advisor		—			327,150			—			506,040
Total expenses, net of expense waiver and reimbursement		1,209,850			1,090,445			2,583,232			1,947,112
Net investment income before taxes		1,726,620			554,846			2,720,137			354,745
Deferred tax benefit		283,856			977,234			773,928			1,257,899
Franchise tax expense		(23,577	)		(12,431	)		(65,827	)		(69,863	)
Net investment income		1,986,899			1,519,649			3,428,238			1,542,781

Net change in realized and unrealized gain
(loss) on investments, foreign currency translation and deferred tax assets:
Net realized gain on investments		—			4,578			—			4,578
Net change in unrealized appreciation (depreciation) on:
Investments		1,606,324			(244,944	)		1,485,146			(967,054	)
Foreign currency translation		38,991			8,940			51,924			97,003
Swap contracts		(69,043	)		—			(60,004	)		—
Change in benefit from deferred taxes on unrealized appreciation (depreciation) on investments		(653,366	)		1,838,292			(915,435	)		3,723,627
Net increase in net assets resulting from operations		2,909,805			3,126,515			3,989,869			4,400,935
Net increase (decrease) in net assets attributed to special unitholder		(308,000	)		46,258			(307,414	)		173,067
Net increase in net assets attributed to common stockholders	$	2,601,805		$	3,172,773		$	3,682,455		$	4,574,002


Common stock per share information —basic and diluted:
Net investment income	$	0.11		$	0.15		$	0.20		$	0.17
Net increase in net assets attributed to common stockholders	$	0.15		$	0.31		$	0.22		$	0.50
Weighted average common shares outstanding		17,835,922			10,339,058			16,849,686			9,102,063

The accompanying notes are an integral part of these consolidated financial statements.

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY
CONSOLIDATED STATEMENT OF NET ASSETS
For the six months ended June 30, 2017
(unaudited)


	Common Stockholders

	Shares			Par Value			Paid-in capital in excess of par value			Accumulated deficit			Accumulated net realized gain on investments		Accumulated unrealized appreciation (depreciation) on investments, net of deferred taxes			Accumulated unrealized appreciation (depreciation) on foreign currency translation			Accumulated unrealized appreciation (depreciation) on swap contracts			Common stockholders’ equity			Special unitholder		Total members’ equity (net assets)
Balances at December 31, 2016		14,921,922		$	14,922		$	128,425,800		$	(3,629,220	)	$	4,578	$	4,699,283			(187,846	)		90,697		$	129,418,214		$	586	$	129,418,800

Proceeds from issuance of common stock, net		3,902,422			3,902			34,923,949			—			—		—			—			—			34,927,851			—		34,927,851


Issuance of common stock under distribution reinvestment plan		241,929			242			2,190,655			—			—		—			—			—			2,190,897			—		2,190,897

Repurchases of common stock		(220,689	)		(221	)		(1,988,824	)		—			—		—			—			—			(1,989,045	)		—		(1,989,045	)

Offering costs		—			—			(528,036	)		—			—		—			—			—			(528,036	)		—		(528,036	)

Shareholder distributions		—			—			—			(5,063,899	)		—		—			—			—			(5,063,899	)		—		(5,063,899	)

Net investment income		—			—			—			3,428,238			—		—			—			—			3,428,238			—		3,428,238

Net change in unrealized appreciation on investments		—			—			—			—			—		1,177,732			—			—			1,177,732			307,414		1,485,146

Net change in unrealized appreciation on foreign currency translation		—			—			—			—			—		—			51,924			—			51,924			—		51,924

Net change in unrealized depreciation on swaps		—			—			—			—			—					—			(60,004	)		(60,004	)				(60,004	)

Change in benefit from deferred taxes on unrealized depreciation on investments		—			—			—			—			—		(915,435	)		—			—			(915,435	)		—		(915,435	)

Balances at June 30, 2017		18,845,584		$	18,845		$	163,023,544		$	(5,264,881	)	$	4,578		4,961,580			(135,922	)		30,693		$	162,638,437		$	308,000	$	162,946,437

The accompanying notes are an integral part of these consolidated financial statements.

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY
CONSOLIDATED STATEMENT OF NET ASSETS
For the six months ended June 30, 2016
(unaudited)

	Common Stockholders

	Shares			Par Value			Paid-in capital in excess of par value			Accumulated deficit			Accumulated net realized gain on investments		Accumulated unrealized appreciation (depreciation) on investments and foreign currency translation, net of deferred taxes			Common stockholders’ equity			Special unitholder			Total members’ equity (net assets)
Balances at December 31, 2015		6,721,967		$	6,722		$	57,713,925		$	(1,591,014	)	$	—	$	1,272,186		$	57,401,819		$	286,259		$	57,688,078

Proceeds from issuance of common stock, net		4,438,523			4,439			39,983,535			—			—		—			39,987,974			—			39,987,974


Issuance of common stock under distribution reinvestment plan		153,537			153			1,392,778			—			—		—			1,392,931			—			1,392,931

Repurchases of common stock		(89,979	)		(90	)		(817,298	)		—			—		—			(817,388	)		—			(817,388	)

Offering costs		—			—			(2,415,324	)		—			—		—			(2,415,324	)		—			(2,415,324	)

Shareholder distributions		—			—			—			(2,734,168	)		—		—			(2,734,168	)		—			(2,734,168	)

Net investment income		—			—			—			1,542,781			—		—			1,542,781			—			1,542,781

Net realized gain on investments		—			—			—			—			4,578		—			4,578			—			4,578

Net change in unrealized depreciation on investments		—			—			—			—			—		(793,987	)		(793,987	)		(173,067	)		(967,054	)

Net change in unrealized appreciation on foreign currency translation		—			—			—			—			—		97,003			97,003			—			97,003

Change in benefit from deferred taxes on unrealized appreciation on investments		—			—			—			—			—		3,723,627			3,723,627			—			3,723,627

Balances at June 30, 2016		11,224,048		$	11,224		$	95,857,616		$	(2,782,401	)		4,578	$	4,298,829		$	97,389,846		$	113,192		$	97,503,038

The accompanying notes are an integral part of these consolidated financial statements.

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

	For the six months ended June 30, 2017			For the six months ended June 30, 2016

Operating activities:
Net increase (decrease) in net assets from operations	$	3,989,869		$	4,400,935
Adjustments to reconcile net increase in net assets from
operations to net cash used in operating activities:
Amortization of deferred financing costs		99,660			—
Purchase of investments		(40,111,512	)		(32,247,755	)
Proceeds from principal payments and sales of investments		35,000			255,000
Net realized gain on investments		—			(4,578	)
Net change in unrealized (appreciation) depreciation on investments		(1,485,146	)		967,054
Net change in unrealized appreciation on foreign currency translation		(51,924	)		(97,003	)
Net change in unrealized depreciation on swap contracts		60,004			—
(Increase) decrease in other assets:
Interest receivable		—			(13,862	)
Due from advisor, net		—			26,636
Deferred tax assets, net of allowance		141,505			(4,981,526	)
Other assets		(72,954	)		39,818
Increase (decrease) in other liabilities:
Payable for investments purchased		4,743,908			—
Due to advisor, net		(47,877	)		—
Management fee payable		21,626			58,974
Accounts payable and accrued expenses		24,703			36,946
Directors fees payable		—			(23,750	)
Unearned revenue		—			1,312,935
Net cash used in operating activities		(32,653,138	)		(30,270,176	)

Financing activities:
Borrowings on Credit facility and term note		5,800,000			—
Paydowns on Credit facility and term note		(5,943,333	)		—
Proceeds from issuance of shares of common stock, net		35,132,413			40,196,747
Distributions paid		(2,742,825	)		(1,228,110	)
Offering costs		(528,036	)		(2,415,324	)
Repurchases of common stock		(1,993,349	)		(81,799	)
Due to dealer manager re: Offering costs		(36,694	)		346,618
Net cash provided by financing activities		29,688,176			36,818,132

Net increase (decrease) in cash and cash equivalents		(2,964,962	)		6,547,956
Cash and cash equivalents, beginning of period		13,055,090			5,889,030
Cash and cash equivalents, end of period	$	10,090,128		$	12,436,986

Supplemental disclosure of cash flow information:
Shareholder distributions payable	$	534,165		$	270,113
Shareholder distributions reinvested in common stock	$	2,190,897		$	1,392,931
Payable for repurchases of common stock	$	941,466		$	735,589

Non cash financing activities
Shareholder receivable from sale of common stock	$	291,065		$	171,938

The accompanying notes are an integral part of these consolidated financial statements.

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF INVESTMENTS

June 30, 2017

(unaudited)


Investments	Industry	Interest		Maturity		Shares or Principal Amount		Cost		Fair Value	Percentage of Net Assets ^(a)
United States:
Limited Liability Company Member Interests - Not readily marketable
Sunny Mountain Portfolio	Alternative Energy - Solar					100% Ownership	$	884,578	$	1,152,859	0.7	%

East to West Solar Portfolio	Alternative Energy - Solar					100% Ownership		27,889,875		26,996,045	16.6	%

Green Maple Portfolio	Alternative Energy - Solar					100% Ownership		13,075,000		11,653,289	7.2	%

Magnolia Sun Portfolio	Alternative Energy - Solar					100% Ownership		10,775,000		10,182,992	6.2	%

Six States Solar Portfolio	Alternative Energy - Solar					100% Ownership		2,350,000		2,826,901	1.7	%

Greenbacker Residential Solar Portfolio	Alternative Energy - Solar					100% Ownership or Managing Member, Majority Equity Owner		28,100,000		29,179,172	17.9	%

Greenbacker Residential Solar Portfolio II	Alternative Energy - Solar					Managing Member, Majority Equity Owner		6,400,000		6,270,988	3.8	%

Enfinity Colorado DHA Portfolio	Alternative Energy - Solar					100% Ownership		1,400,000		1,700,042	1.0	%

Floyd Road Solar Farm Portfolio	Alternative Energy - Solar					100% Ownership		10,596,559		11,336,522	7.0	%

Golden Horizons Solar Portfolio	Alternative Energy - Solar					100% Ownership		50,000		27,564	0.0	%^(c)

Greenbacker Wind Portfolio	Alternative Energy - Wind					100% Ownership or Managing Member, Equity Owner		50,852,428		52,177,842	32.0	%

GREC Energy Efficiency Portfolio	Energy Efficiency - Lighting Replacement					100% Ownership		488,315		505,115	0.3	%

Total Limited Liability Company Member Interests - Not readily marketable: 94.3%							$	152,861,755	$	154,009,331	94.4	%

Energy Efficiency Secured Loans - Not readily marketable
Renew AEC One, LLC	Energy Efficiency - Lighting Replacement	10.25	%(b)	2/24/2025	$	756,371	$	736,371	$	736,371	0.5	%

Total Energy Efficiency Secured Loans - Not readily marketable: 0.5%							$	736,371	$	736,371	0.5	%



Total United States Investments: 94.8%							$	153,598,126	$	154,745,702	94.9	%

Canada:
Capital Stock - Not readily marketable
Canadian Northern Lights Portfolio	Alternative Energy - Solar					100% Ownership	$	1,603,136	$	1,990,981	1.2	%
Total Canadian Investments: 1.2%							$	1,603,136	$	1,990,981	1.2	%

INVESTMENTS: 96.0%							$	155,201,262	$	156,736,683	96.1	%

OTHER ASSETS IN EXCESS OF LIABILITIES: 4.0%										6,209,754	3.9	%

TOTAL NET ASSETS: 100.0%									$	162,946,437	100.0	%

(a) Percentages are based on net assets of $162,946,437 as of June 30, 2017.

(b) Per the loan agreement, interest commenced on January 24, 2016.

Interest Rate Swaps


Counterparty	Pay / Receive Floating Rate	Floating Rate Index	Fixed Pay Rate			Payment Frequency	Maturity Date	Notional Amount		Fair Value			Upfront Premiums Paid (Received)

Fifth Third Financial Risk Solutions	Receive	1-MO-USD-LIBOR		1.110	%	Monthly	7/9/2021		4,037,222	$	84,497			—
Fifth Third Financial Risk Solutions	Receive	1-MO-USD-LIBOR		2.261	%	Monthly	2/29/2032		20,900,650		(53,804	)		—
										$	30,693		$	—

The accompanying notes are an integral part of these consolidated financial statements.

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

CONSOLIDATED SCHEDULE OF INVESTMENTS

December 31, 2016


Investments	Industry	Interest			Maturity		Maximum Commitment			Shares or Principal Amount	Cost		Fair Value		Percentage of Net Assets ^(a)
United States:
Limited Liability Company Member Interests - Not readily marketable

Sunny Mountain Portfolio	Alternative Energy - Solar									100% Ownership	$	884,578	$	1,175,952		0.9	%

East to West Solar Portfolio	Alternative Energy - Solar									100% Ownership		23,256,875		21,943,079		17.0	%

Green Maple Portfolio	Alternative Energy - Solar									100% Ownership		12,895,000		11,447,775		8.8	%

Magnolia Sun Portfolio	Alternative Energy - Solar									100% Ownership		10,775,000		10,445,788		8.2	%

Six States Solar Portfolio	Alternative Energy - Solar									100% Ownership		2,300,000		2,846,174		2.2	%

Greenbacker Residential Solar Portfolio	Alternative Energy - Solar									100% Ownership or Managing Member, Majority Equity Owner		19,850,000		20,487,901		15.8	%

Greenbacker Wind Portfolio	Alternative Energy - Wind									100% Ownership or Managing Member, Equity Owner		42,277,428		43,643,215		33.7	%

GREC Energy Efficiency Portfolio	Energy Efficiency - Lighting Replacement									100% Ownership		511,362		546,677		0.4	%

Total Limited Liability Company Member Interests - Not readily marketable: 87.0%											$	112,750,243	$	112,536,561		87.0	%

Energy Efficiency Secured Loans - Not readily marketable
Renew AEC One, LLC	Energy Efficiency - Lighting Replacement		10.25	%(b)		2/24/2025	$	1,100,000	$	771,371		771,371		771,371		0.6	%

Total Energy Efficiency Secured Loans - Not readily marketable: 0.6%											$	771,371	$	771,371		0.6	%



Total United States Investments: 87.6%											$	113,521,614	$	113,307,932		87.6	%

Canada:
Capital Stock - Not readily marketable

Canadian Northern Lights Portfolio	Alternative Energy - Solar									100% Ownership	$	1,603,136	$	1,815,169		1.4	%
Total Canadian Investments: 1.4%											$	1,603,136	$	1,815,169		1.4	%

INVESTMENTS: 89.0%											$	115,124,750	$	115,123,101		89.0	%

OTHER ASSETS IN EXCESS OF LIABILITIES: 11.0%														14,295,699		11.0	%

TOTAL NET ASSETS: 100.0%													$	129,418,800		100.0	%

(a) Percentages are based on net assets of $129,418,800 as of December 31, 2016.

(b) Per the loan agreement, interest commenced on January 24, 2016.

Interest Rate Swaps

Counterparty	Pay / Receive Floating Rate	Floating Rate Index	Fixed Pay Rate			Payment Frequency	Maturity Date	Notional Amount		Fair Value		Upfront Premiums Paid (Received)

Fifth Third Financial Risk Solutions	Receive	1-MO-USD-LIBOR		1.110	%	Monthly	7/9/2021		4,180,556	$	90,697	$	—
										$	90,697	$	—

The accompanying notes are an integral part of these consolidated financial statements.

GREENBACKER RENEWABLE ENERGY COMPANY LLC AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2017 (unaudited)

Note 1. Organization and Operations of the Company

Greenbacker Renewable Energy Company LLC (the “LLC”), a Delaware limited liability company, is an externally managed energy company that acquires and manages income-generating renewable energy and energy efficiency projects, and other energy-related businesses, as well as finances the construction and/or operation of these and sustainable development projects and businesses. The LLC conducts substantially all of its operations through its wholly-owned subsidiary, Greenbacker Renewable Energy Corporation (“GREC”). GREC is a Maryland corporation formed in November 2011 and the LLC currently holds all of the outstanding shares of capital stock of GREC. The LLC and GREC (collectively “we”, “us”, “our”, and the “company”) are externally managed and advised by Greenbacker Capital Management LLC (the “advisor” or “GCM”), a renewable energy, energy efficiency and sustainability related project acquisition, consulting and development company. The LLC’s fiscal year end is December 31.

Pursuant to an initial Registration Statement on Form S-1 (File No. 333-178786-01), the company offered up to $1,500,000,000 in shares of limited liability company interests, or the shares, including up to $250,000,000 pursuant to a distribution reinvestment plan (“DRP”), through SC Distributors, LLC, the dealer manager. The offering pursuant to that initial Registration Statement terminated on February 7, 2017. Pursuant to a Registration Statement on Form S-1 (File No. 333-211571), the company is offering on a continuous basis up to $1,000,000,000 in shares of limited liability company interests, or the shares, including up to $200,000,000 of shares pursuant to the DRP, on a “best efforts” basis through the dealer manager, meaning it is not required to sell any specific number or dollar amount of shares. The company is publicly offering three classes of shares: Class A, C and I shares in any combination with a dollar value up to the maximum offering amount. In addition, the company is privately offering Class P-I shares. The share classes have different selling commissions, dealer manager fees and there is an ongoing distribution fee with respect to Class C shares. The company has adopted a DRP pursuant to which a shareholder owning publicly offered share classes may elect to have the full amount of cash distributions reinvested in additional shares. The company reserves the right to reallocate the offered shares within each offering between each and any share class and between its public offering and the DRP.

Each quarter, our advisor, utilizing the services of an independent valuation firm when necessary, reviews and approves the net asset value for each class of shares, subject to the oversight of the company’s board of directors. The company expects such determination will ordinarily be made within 30 days after each such completed fiscal quarter. To the extent that the net asset value per share on the most recent valuation date increases above or decreases below the net proceeds per share, the company will adjust the offering prices of all classes of shares. The adjustments to the per share offering prices, which will become effective five business days after such determination is published, will ensure that after the effective date of the new offering prices, the offering prices per share, after deduction of selling commissions, dealer manager fees and organization and offering expenses, are not above or below net asset value per share as of the most recent valuation date. The purchase price per share to be paid by each investor will be equal to the price that is in effect on the date such investor submits his or her completed subscription agreement. The company’s shares are offered in the primary offering at a price based on the most recent valuation, plus related selling commissions, dealer manager fees and organization and offering expenses. Five days after the completion of each quarter end valuation, shares will be offered pursuant to the DRP at a price equal to the current offering price per each class of shares, less the sales selling commissions and dealer manager fees associated with that class of shares in the primary offering.

An inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross revenue and income, reduce our flexibility to implement the company’s business plans, and could adversely affect our ability to make distributions.

The company has initially focused on solar energy and wind energy projects as well as energy efficiency projects. The company believes solar energy projects generally offer more predictable power generation characteristics, due to the relative predictability of sunlight over the course of time compared to other renewable energy classes. Thus, the company expects they will provide more stable income streams. However, technological advances in wind turbines and other energy generation technologies, as well as government incentives make wind energy and other types of projects attractive as well. Solar energy projects provide maximum energy production during the middle of the day and in the summer months when days are longer and nights shorter. Solar energy projects tend to have minimal environmental impact enabling such projects to be developed close to areas of dense population where electricity demand is highest. Solar technology is scalable and well-established and it is a relatively simple process to integrate new acquisitions and projects into our portfolio. Unlike solar energy projects, maximum wind power energy generally occurs in the winter months as the occurrence of wind is usually greater than in the summer months. Over time, the company expects to broaden its strategy to include other types of renewable energy projects and energy efficiency projects and businesses, which may include hydropower assets, geothermal plants, biomass and biofuel assets, combined heat and power technology assets, fuel cell assets and other energy efficiency assets, among others, and to the extent the company deems an opportunity attractive, other energy and sustainability related assets and businesses.

As of June 30, 2017, the company has made solar, wind and energy efficiency investments in 13 portfolios, 12 domiciled in the United States and one in Canada, as well as one energy efficiency secured loan in the United States (See Note 3). As of December 31, 2016, the company had made solar, wind and energy efficiency investments in nine portfolios, eight domiciled in the United States and one in Canada, as well as one energy efficiency secured loan in the United States.

Note 2. Significant Accounting Policies

Basis of Presentation

The company’s consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which requires the use of estimates, assumptions and the exercise of subjective judgment as to future uncertainties. Actual results could differ from those estimates, assumptions, and judgments. Significant items subject to such estimates will include determining the fair value of investments, revenue recognition, income tax uncertainties, and other contingencies. The consolidated financial statements of the company include the accounts of the LLC and its consolidated subsidiary, GREC. All intercompany accounts and transactions have been eliminated.

The company’s consolidated financial statements are prepared using the specialized accounting principles of Accounting Standards Codification Topic 946, Financial Services—Investment Companies (“ASC Topic 946”). In accordance with this specialized accounting guidance, the company recognizes and carries all of its investments at fair value with changes in fair value recognized in earnings. Additionally, the company will not apply the consolidation or equity method of accounting to its investments. The company carries its liabilities at amounts payable, net of unamortized premiums or discounts. The company does not currently plan to elect to carry its non-investment liabilities at fair value. Net assets are calculated as the carrying amounts of assets, including the fair value of investments, less the carrying amounts of its liabilities.

The financial information associated with the June 30, 2017 consolidated financial statements has been prepared by management and, in the opinion of management, contains all adjustments and eliminations, consisting of only normal recurring adjustments, necessary for a fair presentation in accordance with GAAP. The June 30, 2017 financial information has not been audited by the independent registered public accounting firm and they do not express an opinion thereon.

Cash and Cash Equivalents

Cash consists of demand deposits at a financial institution. Such deposits may be in excess of the Federal Deposit Insurance Corporation insurance limits. The company has not experienced any losses in any such accounts.

The company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Short-term investments that are cash equivalents are stated at cost, which approximates fair value. There are no restrictions on the use of the company’s cash as of June 30, 2017 and December 31, 2016.

Foreign Currency Translation

The accounting records of the company are maintained in U.S. Dollars. The fair value of investments and other assets and liabilities denominated in non-U.S. currencies are translated into U.S. Dollars using the exchange rate at the end of each reporting period. Amounts related to the purchases and sales of investments, investment income and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions.

Net unrealized currency gains and losses arising from valuing foreign currency denominated assets and liabilities at the current exchange rate are reflected as part of net change in unrealized appreciation (depreciation) on translation of assets and liabilities denominated in foreign currencies in the consolidated statements of operations.

Foreign security and currency translations may involve certain considerations and risks not typically associated with investing in U.S. companies and U.S. government securities. These risks include, but are not limited to, currency fluctuations and revaluations and future adverse political, social and economic developments, which could cause investments in foreign markets to be less liquid and prices more volatile than those of comparable U.S. companies or U.S. government securities.

Valuation of Investments at Fair Value

Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”) defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosures about fair value. The company recognizes and accounts for its investments at fair value. The fair value of the investments does not reflect transaction costs that may be incurred upon disposition of the investments.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value is an exchange price notion under which fair value is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability.

The advisor has established procedures to estimate the fair value of its investments which the company’s board of directors has reviewed and approved. The company will use observable market data to estimate the fair value of investments to the extent that market data is available. In the absence of quoted market prices in active markets, or quoted market prices for similar assets or in markets that are not active, the company will use the valuation methodologies described below with unobservable data based on the best available information in the circumstances, which incorporates the company’s assumptions about the factors that a market participant would use to value the asset.

For investments for which quoted market prices are not available, which will comprise most of our investment portfolio, fair value will be estimated by using the income or market approach. The income approach is based on the assumption that value is created by the expectation of future benefits discounted to a current value and the fair value estimate is the amount an investor would be willing to pay to receive those future benefits. The market approach compares recent comparable transactions to the investment. Adjustments are made for any dissimilarity between the comparable transactions and the investments. These valuation methodologies involve a significant degree of judgment on the part of our advisor.

In determining the appropriate fair value of an investment using these approaches, the most significant information and assumptions may include, as applicable: available current market data, including relevant and applicable comparable market transactions, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the investment’s ability to make payments, its earnings and discounted cash flows, the markets in which the project does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, the principal market and enterprise values, environmental factors, among other factors.

The estimated fair values will not necessarily represent the amounts that may be ultimately realized due to the occurrence or nonoccurrence of future circumstances that cannot be reasonably determined. Because of the inherent uncertainty of the valuation of the investments, the estimate of fair values may differ significantly from the value that would have been used had a broader market for the investments existed.

The authoritative accounting guidance prioritizes the use of market-based inputs over entity-specific inputs and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation. The three levels of valuation hierarchy are defined as follows:

Level 1:

Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date. Valuation adjustments and block discounts are not applied to Level 1 measurements;

Level 2:

Valuations based on quoted prices in less active, dealer or broker markets. Fair values are primarily obtained from third-party pricing services or broker quotes for identical or comparable assets or liabilities;

Level 3:

Valuations derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and not based on market, exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market and significant professional judgment in determining the fair value assigned to such assets or liabilities.

In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls will be determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment.

Calculation of Net Asset Value

Net asset value by class is calculated by subtracting total liabilities for each class from the total carrying amount of all assets for that class, which includes the fair value of investments. Net asset value per share is calculated by dividing net asset value for each class by the total number of outstanding common shares for that class on the reporting date.

Earnings (Loss) per Share

In accordance with the provisions of ASC Topic 260 — Earnings per Share (“ASC Topic 260”), basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets attributed to common stockholders per share for the three and six months ended June 30, 2017 and June 30, 2016:

	For the three months ended June 30, 2017		For the three months ended June 30, 2016		For the six months ended June 30, 2017		For the six months ended June 30, 2016
Basic and diluted
Net increase in net assets attributed to common stockholders	$	2,601,805	$	3,172,773	$	3,682,455	$	4,574,002
Weighted average common shares outstanding		17,835,922		10,339,058		16,849,686		9,102,063
	$	0.15	$	0.31	$	0.22	$	0.50

Revenue Recognition

Interest income is recorded on an accrual basis to the extent the company expects to collect such amounts. Interest receivable on loans and debt securities is not accrued for accounting purposes if there is reason to doubt an ability to collect such interest. Original issue discounts, market discounts or market premiums are accreted or amortized using the effective interest method as interest income. Prepayment premiums on loans and debt securities are recorded as interest income when received. Any application, origination or other fees earned by the company in arranging or issuing debt are amortized over the expected term of the loan.

Loans are placed on non-accrual status when principal and interest are past due 90 days or more or when there is a reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are generally restored to accrual status when past due and principal and interest is paid and, in management’s judgment, is likely to remain current.

Dividend income is recorded (1) on the ex-dividend date for publicly issued securities and (2) when received from private investments. Dividends received from the company’s private investments, which generally reflect net cash flow from operations, are declared and paid on a quarterly basis at a minimum.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments

Realized gains or losses will be measured as the difference between the net proceeds from the sale, repayment, or disposal of an asset and the adjusted cost basis of the asset, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Payment-in-Kind Interest

For loans and debt securities with contractual payment-in-kind interest, any interest will be added to the principal balance of such investments and be recorded as income, if the valuation indicates that such interest is collectible.

Distribution Policy

Distributions to members, if any, will be authorized and declared by our board of directors quarterly in advance and paid on a monthly basis. From time to time, we may also pay interim special distributions in the form of cash or shares, with the approval of our board of directors. Distributions will be made on all classes of shares at the same time. The cash distributions with respect to the Class C shares will be lower than the cash distributions with respect to the company’s other publicly offered share classes because of the distribution fee associated with the Class C shares, which is allocated specifically to Class C net assets. Amounts distributed to each class are allocated amongst the holders of the shares in such class in proportion to their shares. Distributions declared by our board of directors are recognized as distribution liabilities on the ex-dividend date.

Organization and Offering Costs

Organization and offering costs (“O&O costs”), other than sales commissions and the dealer manager fee, are initially being paid by our advisor and/or dealer manager on behalf of the company. These O&O costs include all costs previously paid or to be paid by the company in connection with its formation and the offering of its shares pursuant to now terminated Registration Statement on Form S-1 (File No. 333-178786-01), the current Registration Statement on Form S-1 (File No. 333-211571) and a private placement memorandum, including legal, accounting, printing, mailing and filing fees, charges of the company’s escrow holder, transfer agent fees, due diligence expense reimbursements to participating broker-dealers included in detailed and itemized invoices and costs in connection with administrative oversight of the offering and marketing process, and preparing supplemental sales materials, holding educational conferences, and attending retail seminars conducted by broker-dealers. While the total O&O costs for the public offering shall be reasonable and shall in no event exceed an amount equal to 15% of the gross proceeds of this offering and the DRP, the company is targeting no more than 4.0% of the gross proceeds for O&O costs other than sales commissions and dealer manager fees in the current Registration Statement. The company is obligated to reimburse our advisor for O&O costs that it incurs on behalf of the company, in accordance with the advisory agreement, but only to the extent that the reimbursement would not cause the selling commissions, the dealer manager fee and the other organization and offering expenses borne by the company to exceed 15% of gross offering proceeds as of the date of reimbursement. Total O&O costs related to the terminated Registration Statement amounted to approximately $7,556,000 or 4.8% of gross offering proceeds raised pursuant to such Registration Statement.

The costs incurred by our advisor and/or dealer manager are recognized as a liability of the company to the extent that the company is obligated to reimburse our advisor and/or dealer manager, subject to the 15% of gross offering proceeds limitation described above. When recognized by the company, organizational costs are expensed and offering costs, excluding selling commissions and dealer manager fees, are recognized as a reduction of the proceeds from the offering.

The following table provides information in regard to the status of O&O costs (in 000’s) as of June 30, 2017 and December 31, 2016:

	June 30, 2017		December 31, 2016
Total O&O Costs Incurred by the Advisor and Dealer Manager	$	8,311	$	7,498
Amounts reimbursed to the Advisor/Dealer Manager by the company		7,957		7,362
Amounts payable to Advisor/Dealer Manager by the company		52		136
Amounts of the contingent liability subject to payment by the company only upon adequate gross offering proceeds being raised		302		—

Financing Costs

Financing costs related to debt liabilities incurred by the company, GREC or any wholly-owned holding company formed specifically to be a credit agreement counterparty are presented on the consolidated statements of assets and liabilities as a direct deduction from the carrying amount of that debt liability. Financing costs are deferred and amortized using the straight line method over the life of the debt liability.

Capital Gains Incentive Allocation and Distribution

Pursuant to the terms of the LLC’s amended and restated limited liability company agreement, a capital gains incentive distribution will be earned by an affiliate of our advisor on realized gains from the sale of investments from the company’s portfolio during operations prior to a liquidation of the company. While the terms of the advisory agreement neither include nor contemplate the inclusion of unrealized gains in the calculation of the capital gains incentive distribution, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, the company will include unrealized gains in the calculation of the capital gains incentive distribution expense and related capital gains incentive fee payable. This amount reflects the incentive distribution that would be payable if the company’s entire portfolio was liquidated at its fair value as of the consolidated statements of assets and liabilities date even though the advisor is not entitled to an incentive distribution with respect to unrealized gains unless and until such gains are actually realized. Thus on each date that net asset value is calculated, the company calculates for the capital gains incentive distribution by calculating such distribution as if it were due and payable as of the end of such period. As of June 30, 2017 and December 31, 2016, a capital gains incentive distribution allocation in the amounts of $308,000 and $586, respectively, was recorded based primarily upon appreciation on investments.

Deferred Sales Commissions

The company defers certain costs, principally sales commissions and related compensation, which are paid to the dealer manager and may be reallowed to financial advisors and broker/dealers in the future in connection with the sale of Class C shares sold with a reduced front-end load sales charge. The costs expected to be incurred at the time of the sale of Class C shares are recorded as a liability on the date of sale and are amortized on a straight-line basis over the period beginning at the time of sale and ending on the date which approximates an expected liquidity event for the company. As of June 30, 2017 and December 31, 2016, the company recorded a liability for deferred sales commissions in the amount of $177,025 and $203,357, respectively.

Reclassifications

Certain prior year amounts have been reclassified to conform with current year presentation.

Derivative Instruments

The company may utilize interest rate swaps to modify interest rate characteristics of certain liabilities to manage its exposure to interest rate fluctuations. Changes in the fair value of the interest rate swaps during the period are recognized in the accompanying consolidated statements of operations where the company, GREC or any wholly-owned holding company formed specifically to be a credit agreement counterparty is the counterparty and in the change in fair value of investments if a subsidiary of the company is the counterparty.

The fair value of interest rate swap contracts open as of June 30, 2017 is included on the schedule of investments by contract. For the six months ended June 30, 2017, the company’s average monthly notional exposure to interest rate swap contracts was $7,584,367.

Consolidated Statement of Assets and Liabilities - Values of Derivatives at June 30, 2017

	Asset Derivatives		Liability Derivatives

Risk Exposure	Consolidated Statement of Assets and Liabilities Location	Fair Value	Consolidated Statement of Assets and Liabilities Location	Fair Value
Swaps
Interest Rate Risk	Swap contracts, at fair value	$ 84,497	Swap contracts, at fair value	$ 53,804
		$ 84,497		$ 53,804

The effect of derivative instruments on the Consolidated Statement of Operations

Risk Exposure	Change in net unrealized depreciation on derivative transactions for the three months ended June 30, 2017			Change in net unrealized depreciation on derivative transactions for the six months ended June 30, 2017
Swaps
Interest Rate Risk	$	(69,043	)	$	(60,004	)
	$	(69,043	)	$	(60,004	)

By using derivative instruments, the company is exposed to the counterparty’s credit risk – the risk that derivative counterparties may not perform in accordance with the contractual provisions offset by the value of any collateral received. The company’s exposure to credit risk associated with counterparty non-performance is limited to collateral posted and the unrealized gains inherent in such transactions that are recognized in the consolidated statement of assets and liabilities. The company minimizes counterparty credit risk through credit monitoring procedures and managing margin and collateral requirements, as appropriate.

While we are currently of the opinion that the currency fluctuation between the Canadian and U.S. Dollar will not have a material impact on our operating results, we may in the future enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk if we believe not doing so would have a material impact our results of operations.

Income Taxes

The LLC intends to operate so that it will qualify to be treated as a partnership for U.S. federal income tax purposes under the Internal Revenue Code. As such, it will not be subject to any U.S. federal and state income taxes. In any particular year it is possible that the LLC will not meet the qualifying income exception and will not qualify to be treated as a partnership. If the LLC does not meet the qualifying income exception, the members would then be treated as stockholders in a corporation and the company would become taxable as a corporation for U.S. federal income tax purposes under the Internal Revenue Code. The LLC would be required to pay income tax at corporate rates on its net taxable income. Distributions to members from the LLC would constitute dividend income taxable to such members, to the extent of the company’s earnings and profits and the payment of the distributions would not be deductible by the LLC.

The LLC plans to conduct substantially all of its operations through its wholly-owned subsidiary, GREC, which is a corporation that is subject to U.S. federal, state and local income taxes. Accordingly, most of its operations will be subject to U.S. federal, state and local income taxes.

Income taxes are accounted for under the assets and liabilities method. Deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to differences between items that are recognized in the consolidated financial statements and tax returns in different years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. For income tax benefits to be recognized including uncertain tax benefits, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of the benefit that is more likely than not to be realized upon ultimate settlement. A valuation allowance is established against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the net deferred tax assets will not be realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Interest and penalties associated with income taxes, if any, will be recognized in general and administrative expense.

The company does not consolidate its investments for financial statements, rather it accounts for its investments at fair value under the specialized accounting of ASC Topic 946. The tax attributes of the individual investments will be considered and incorporated in the company’s fair value estimates for those investments. The amounts recognized in the consolidated financial statements for unrealized appreciation and depreciation will result in a difference between the consolidated financial statements and the cost basis of the assets for tax purposes. These differences will be recognized as deferred tax assets and liabilities. Generally, the entities that hold the company’s investments will be included in the consolidated tax return of GREC and the differences between the amounts recognized for financial statement purposes and the tax return will be recognized as additional deferred tax assets and liabilities.

The company follows the authoritative guidance on accounting for uncertainty in income taxes and concluded it has no material uncertain tax positions to be recognized at this time.

The company assessed its tax positions for all open tax years as of June 30, 2017 for all U.S. federal and state tax jurisdictions for the years 2013 through 2016. The results of this assessment are included in the company’s tax provision and deferred tax assets as of June 30, 2017.

Recently Issued Accounting Pronouncements

Under the Jumpstart Our Business Startups Act (the “JOBS Act”), emerging growth companies can delay the adoption of new or revised accounting standards until such time as those standards apply to private companies. The company is choosing not to take advantage of the extended transition period for complying with new or revised accounting standards.

In October 2016, the U.S. Securities and Exchange Commission (the “SEC”) adopted new rules and amended existing rules (together, the “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. The company has evaluated the impact that the adoption of the amendments to Regulation S-X on its consolidated financial statements and disclosures and determined that the adoption of the amendments to Regulation S-X has not had a material impact on its consolidated financial statements.

On August 26, 2016, the FASB issued ASU 2016-15, Statement of Cash Flows, or ASU 2016-15. ASU 2016-15 is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 addresses eight classification issues related to the statement of cash flows: 1) debt prepayment or debt extinguishment costs; 2) settlement of zero-coupon bonds; 3) contingent consideration payments made after a business combination; 4) proceeds from the settlement of insurance claims; 5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; 6) distributions received from equity method investees; 7) beneficial interests in securitization transactions; and 8) separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Entities should apply this ASU using a retrospective transition method to each period presented. The company is in the process of evaluating the impact, if any, that ASU 2016-15 will have on the company’s consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01 regarding “Recognition and Measurement of Financial Assets and Financial Liabilities”. The new guidance is intended to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information and addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The new standard affects all entities that hold financial assets or owe financial liabilities. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. At this time, management is evaluating the implications of ASU No. 2016-01, and its impact on the company’s consolidated financial statements and disclosures has not yet been determined.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows, which will amend FASB ASC 230. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update apply to all entities that have restricted cash or restricted cash equivalents and are required to present a statement of cash flows under Topic 230. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The company is evaluating the impact of ASU 2016-18 on its consolidated financial statements and disclosures.

In December 2016, the FASB issued ASU 2016-19, Technical Corrections and Improvements. As part of this guidance, ASU 2016-19 amends FASB ASC 820 to clarify the difference between a valuation approach and a valuation technique. The amendment also requires an entity to disclose when there has been a change in either or both a valuation approach and/or a valuation technique. ASU 2016-19 is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. The company has evaluated the impact of ASU 2016-19 on its consolidated financial statements and disclosures and determined that the adoption of ASU 2016-19 has not had a material impact on its consolidated financial statements.

Note 3. Investments

The composition of the company’s investments as of June 30, 2017 by geographic region, at amortized cost and fair value, were as follows:

	Investments at Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
United States:
East Region	$	35,447,369		34,766,148		22.2	%
Mid-West Region		1,035,005		1,118,694		0.7
Mountain Region		56,586,531		58,543,392		37.4
South Region		44,443,112		43,910,468		28.0
West Region		16,086,109		16,407,000		10.4
Total United States	$	153,598,126		154,745,702		98.7	%
Canada:		1,603,136		1,990,981		1.3
Total	$	155,201,262		156,736,683		100.0	%

The composition of the company’s investments as of December 31, 2016 by geographic region, at amortized cost and fair value, were as follows:

	Investments at Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
United States:
East Region	$	31,340,575		30,469,589		26.5	%
Mid-West Region		935,103		1,025,354		0.9
Mountain Region		46,145,555	$	47,846,814		41.5
South Region		29,929,892		28,553,024		24.8
West Region		5,170,489		5,413,151		4.7
Total United States	$	113,521,614	$	113,307,932		98.4	%
Canada:		1,603,136		1,815,169		1.6
Total	$	115,124,750	$	115,123,101		100.0	%

The composition of the company’s investments as of June 30, 2017 by industry, at amortized cost and fair value, were as follows:

	Investments at Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
Alternative Energy - Solar	$	103,124,148	$	103,317,355		65.9	%
Alternative Energy - Wind		50,852,428		52,177,842		33.3
Energy Efficiency - Lighting Replacement		1,224,686		1,241,486		0.8
Total	$	155,201,262	$	156,736,683		100.0	%

The composition of the company’s investments as of December 31, 2016 by industry, at amortized cost and fair value, were as follows:

	Investments at Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
Alternative Energy - Solar	$	71,564,589	$	70,161,838		60.9	%
Alternative Energy - Wind		42,277,428		43,643,215		37.9
Energy Efficiency - Lighting Replacement		1,282,733		1,318,048		1.2
Total	$	115,124,750	$	115,123,101		100.0	%

Investments held as of June 30, 2017 and December 31, 2016 are considered Control Investments, which are defined as investments in companies in which the company owns 25% or more of the voting securities of such company or have greater than 50% representation on such company’s board of directors or investments in limited liability companies for which the company serves managing member.

Note 4. Fair Value Measurements - Investment

The following table presents fair value measurements of investments, by major class, as of June 30, 2017, according to the fair value hierarchy:

	Valuation Inputs
		Level 1		Level 2			Level 3		Fair Value
Limited Liability Company Member Interests	$	—	$	—		$	154,009,331	$	154,009,331
Capital Stock		—		—			1,990,981		1,990,981
Energy Efficiency Secured Loans		—		—			736,371		736,371
Total	$	—	$	—		$	156,736,683	$	156,736,683
Other Financial Instruments*
Unrealized appreciation on open swap contracts	$	—	$	84,497		$	—	$	84,497
Unrealized depreciation on open swap contracts		—		(53,804	)				(53,804	)
Total	$	—	$	30,693		$	—	$	30,693

*Other financial instruments are derivatives, such as futures, forward currency contracts and swaps. These instruments are reflected at the unrealized appreciation (depreciation) on the instrument.

The following table presents fair value measurements of investments, by major class, as of December 31, 2016, according to the fair value hierarchy:

	Valuation Inputs
		Level 1		Level 2		Level 3		Fair Value
Limited Liability Company Member Interests	$	—	$	—	$	112,536,561	$	112,536,561
Capital Stock		—		—		1,815,169		1,815,169
Energy Efficiency Secured Loans		—		—		771,371		771,371
Total	$	—	$	—	$	115,123,101	$	115,123,101

Other Financial Instruments*
Unrealized appreciation on open swap contracts	$	—	$	90,697	$	—	$	90,697
Total	$	—	$	90,697	$	—	$	90,697

*Other financial instruments are derivatives, such as futures, forward currency contracts and swaps. These instruments are reflected at the unrealized appreciation (depreciation) on the instrument.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended June 30, 2017:

			Net change in		Translation of assets
	Balance as of		unrealized appreciation		and liabilities				Sales and			Balance as of
	December 31,		(depreciation) on		denominated in		Purchases and other		Repayments of			June 30,
	2016		investments		foreign currencies		adjustments to cost ⁽¹⁾		investments ⁽²⁾			2017
Limited Liability Company Member Interests	$	112,536,561	$	1,361,258	$	—	$	40,111,512	$	—		$	154,009,331
Capital Stock		1,815,169		123,888		51,924		—		—			1,990,981
Energy Efficiency - Secured Loans		771,371		—		—		—		(35,000	)		736,371
Total	$	115,123,101	$	1,485,146	$	51,924	$	40,111,512	$	(35,000	)	$	156,736,683

(1)	Includes purchases of new investments, capitalized deal costs, effects of purchase price adjustments, paid-in-kind interest, return of capital and additional investments in existing investments, if any.

(2)	Includes principal repayments on loans.

The total change in unrealized appreciation included in the consolidated statements of operations within net change in unrealized appreciation on investments for the three and six months ended June 30, 2017 attributable to Level 3 investments still held at June 30, 2017 was $1,606,324 and $1,485,146, respectively. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of the Level 3 as of the beginning of the period which the reclassifications occur. There were no reclassifications attributable to Level 3 investments during the six months ended June 30, 2017.

Net change in unrealized appreciation on investments at fair value for the three and six months ended June 30 2017 was $1,606,324 and $1,485,146, respectively, included within net change in unrealized appreciation (depreciation) on investments in the consolidated statements of operations. There were no net realized gains or losses on investments at fair value for the three and six months ended June 30, 2017. For the three and six months ended June 30, 2017, net unrealized currency gains arising from valuing foreign currency-denominated assets and liabilities at the current exchange rate were $38,991 and $51,924, respectively, and included within net change in unrealized appreciation on foreign currency translation in the consolidated statements of operations.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended June 30, 2016:

	Balance as of December 31, 2015		Net change in unrealized appreciation (depreciation) on investments			Realized gain		Translation of assets and liabilities denominated in foreign currencies		Purchases and other adjustments to cost ⁽¹⁾		Sales and Repayments of investments ⁽²⁾			Transfers in		Transfers out			Balance as of June 30, 2016
Limited Liability Company Member Interests	$	48,708,304	$	(1,160,665	)	$	4,578	$	—	$	6,360,000	$	(205,000	)	$	294,424	$	—		$	54,001,641
Capital Stock		1,562,967		193,611			—		97,003		—		—			—		—			1,853,581
Energy Efficiency - Secured Loans		1,183,295		—			—		—		—		(50,000	)		—		(294,424	)		838,871
Secured Loans - Other		—		—			—		—		25,887,755		—			—		—			25,887,755
Total	$	51,454,566	$	(967,054	)	$	4,578	$	97,003	$	32,247,755	$	(255,000	)	$	294,424	$	(294,424	)	$	82,581,848

(1)	Includes purchases of new investments, capitalized deal costs, effects of purchase price adjustments, paid-in-kind interest, return of capital and additional investments in existing investments, if any.
(2)	Includes principal repayments on loans.

The total change in unrealized depreciation included in the consolidated statements of operations within net change in unrealized depreciation on investments for the three and six months ended June 30, 2016 attributable to Level 3 investments still held at June 30, 2016 was $244,944 and $967,054, respectively. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of the Level 3 as of the beginning of the period which the reclassifications occur.

Net change in unrealized depreciation on investments at fair value for the three and six months ended June 30, 2016 was $244,944 and $967,054, respectively, included within net change in unrealized depreciation on investments in the consolidated statements of operations. Net realized gains on investments for the three and six months ended June 30, 2016 was $4,578. For the three and six months ended June 30, 2016, net unrealized currency gains arising from valuing foreign currency-denominated assets and liabilities at the current exchange rate were $8,940 and $97,003, respectively, and included within net change in unrealized appreciation on foreign currency translation in the consolidated statements of operations.

As of June 30, 2017, certain company investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the company’s investments as of June 30, 2017:

	Fair Value		Valuation Techniques	Unobservable Inputs	Rates/Assumptions
Alternative Energy - Solar	$	103,317,355	Income approach	Discount rate, future kWh Production, potential leverage and estimated remaining useful life	7.25% - 9.25%, 0.50% annual degradation in production, 13.7 – 34.5 years
Alternative Energy – Wind	$	52,177,842	Income approach	Discount rate, future kWh Production, potential leverage and estimated remaining useful life	8.50%, no annual degradation in production, 28.2 – 29.3 years
Energy Efficiency- Secured Loans and Leases– Lighting Replacement	$	1,241,486	Income and collateral based approach	Market yields and value of collateral	10.25% - 20.40%

As of December 31, 2016, all of the company’s portfolio investments utilized Level 3 inputs. The following table presents the quantitative information about Level 3 fair value measurements of the company’s investments as of December 31, 2016:

	Fair Value		Valuation Techniques	Unobservable Inputs	Rates/Assumptions
Alternative Energy - Solar	$	70,161,838	Income approach	Discount rate, future kWh Production, potential leverage and estimated remaining useful life	7.0% - 9.25%, 0.50% annual degradation in production, 31.7 years
Alternative Energy – Wind	$	43,643,215	Income approach	Discount rate, future kWh Production, potential leverage and estimated remaining useful life	7.75%, no annual degradation in production, 33.3 years
Energy Efficiency- Secured Loans and Leases – Lighting Replacement	$	1,318,048	Income and collateral based approach	Market yields and value of collateral	10.25% - 21.31%

The significant unobservable inputs used in the fair value measurement of the company’s limited liability company member interests are discount rates and estimates related to the future production of electricity. Significant increases in the discount rate used or actual kilowatt hour (“kWh”) production meaningfully less than projected production would result in a significantly lower fair value measurement.

Note 5. Related Party Agreements And Transactions Agreements

The company has executed advisory and administration agreements with the advisor and Greenbacker Administration, LLC, our administrator, respectively, as well as a dealer manager agreement with the dealer manager, which entitles the advisor, certain affiliates of the advisor, and the dealer manager to specified fees upon the provision of certain services with regard to the offering of the company’s shares and the ongoing management of the company as well as reimbursement of O&O costs incurred by the advisor and the dealer manager on behalf of the company (as discussed in Note 2) and certain other operating costs incurred by the advisor on behalf of the company. The term “Special Unitholder” refers to GREC Advisors, LLC, a Delaware limited liability company, which is a subsidiary of our advisor and “special unit”, refers to the special unit of limited liability company interest in GREC entitling the Special Unitholder to an incentive allocation and distribution. In addition, the company and the advisor entered into an expense reimbursement agreement whereby the advisor agreed to reimburse the company for certain expenses above certain limits and be repaid when the company’s expenses are reduced below that threshold. The expense reimbursement agreement expired and was not renewed as of December 31, 2016. The fees and reimbursement obligations are as follows:

Type of Compensation and Recipient		Determination of Amount
Selling Commissions — Dealer Manager		Up to 7% of gross offering proceeds from the sale of Class A and up to 3% of gross offering proceeds from the sale of Class C shares. No selling commission will be paid with respect to Class I and Class P-I shares or for sales pursuant to the dividend reinvestment plan. All of its selling commissions are expected to be re-allowed to participating broker- dealers.

Dealer Manager Fee — Dealer Manager		Up to 2.75% of gross offering proceeds from the sale of Class A and C shares, and up to 1.75% of gross offering proceeds from the sale of Class I shares. No dealer manager fee will be paid for sales pursuant to the dividend reinvestment plan. The dealer manager may re-allow a portion of its dealer manager fee to selected broker- dealers.

Distribution Fee — Dealer Manager		With respect to Class C shares only, the company will pay the dealer manager a distribution fee that accrues daily in an amount equal to 1/365th of 0.80% of the amount of the net asset value for the Class C shares for such day on a continuous basis from year to year. The company will stop paying distribution fees at the earlier of a listing of the Class C shares on a national securities exchange, following the completion of this offering, total underwriting compensation in this offering equals 10% of the gross proceeds from the primary offering or Class C shares are no longer outstanding. The dealer manager may re-allow all or a portion of the distribution fee to participating broker-dealers and servicing broker dealers Commencing as of June 30, 2016, the company estimates the amount of distribution fees expected to be paid and records that liability at the time of sale.

O&O costs — Advisor		The company reimburses the advisor for the O&O costs (other than selling commissions and dealer manager fees) it has incurred on the company’s behalf only to the extent that the reimbursement would not cause the selling commissions, dealer manager fee and the other O&O costs borne by the company to exceed 15.0% of the gross offering proceeds as the amount of proceeds increases. While the company has targeted an offering expense ratio of 4.0% for O&O costs over the term of the current offering, 4.8% was charged on the offering that terminated as of February 7, 2017.

Base Management Fees — Advisor		The base management fee payable to GCM will be calculated at a monthly rate of 0.167% (2.00% annually) of our gross assets (including amounts borrowed). For services rendered under the advisory agreement, the base management fee will be payable monthly in arrears. The base management fee will be calculated based on the average of the values of our gross assets for each day of the prior month. Base management fees for any partial period will be appropriately pro-rated. The base management fee may be deferred or waived, in whole or part, at the election of the advisor. All or any part of the deferred base management fee not taken as to any period shall be deferred without interest and may be taken in any period prior to the occurrence of a liquidity event as the advisor shall determine in its sole discretion.

Incentive Allocation and Distribution — Special Unitholder

The incentive distribution to which the Special Unitholder is be entitled to will be calculated and payable quarterly in arrears based on the pre-incentive distribution net investment income for the immediately preceding fiscal quarter. For this purpose, pre-incentive distribution net investment income means interest income, dividend and distribution income from equity investments (excluding that portion of distributions that are treated as return of capital) and any other income (including any other fees, such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive, but excluding any fees for providing managerial assistance) accrued during the fiscal quarter, minus the operating expenses for the fiscal quarter (including the base management fee, expenses payable under the administration agreement with the company’s Administrator, and any interest expense and distributions paid on any issued and outstanding indebtedness and preferred units of limited liability company interest, but excluding the incentive distribution). Pre-incentive distribution net investment income does not include any realized capital gains, realized capital losses, unrealized capital appreciation or depreciation or any accrued income taxes and other taxes including, but not limited to, franchise, property, and sales taxes.

Pre-incentive distribution net investment income, expressed as a rate of return on the value of the company’s average adjusted capital at the end of the immediately preceding fiscal quarter, will be compared to a “hurdle rate” of 1.75% per fiscal quarter (7.00% annualized). Adjusted capital shall mean: cumulative gross proceeds before sales and commission and dealer fees, generated from sales of the company’s shares and preferred units of limited liability company interests (including the DRP) reduced for distributions to members of proceeds from non-liquidation dispositions of asset and amount paid for share repurchases pursuant to the Share Repurchase Program. Average adjusted capital shall mean: the average value of the adjusted capital for the two most recently completed fiscal quarters. The Special Unitholder shall receive an incentive distribution with respect to the pre-incentive distribution net investment income in each fiscal quarter as follows:

● no incentive distribution in any fiscal quarter in which the pre-incentive distribution net investment income does not exceed the “hurdle rate” of 1.75%;

		● 100% of the pre-incentive distribution net investment income with respect to that portion of such pre-incentive distribution net investment income, if any, that exceeds the hurdle but is less than 2.1875% in any fiscal quarter (8.75% annualized with a 7% annualized hurdle rate). The company refers to this portion of the pre-incentive distribution net investment income (which exceeds the hurdle but is less than 2.1875%) as the “catch-up.” The “catch-up” is meant to provide the advisor with 20% of the pre-incentive distribution net investment income as if a hurdle did not apply if the net investment income exceeds 2.1875% in any fiscal quarter; and ● 20% of the amount of the pre-incentive distribution net investment income, if any, that exceeds 2.1875% in any fiscal quarter (8.75% annualized with a 7% annualized hurdle rate) is payable to the Special Unitholder (once the hurdle is reached and the catch-up is achieved, 20% of all pre-incentive distribution investment income thereafter is allocated to the Special Unitholder).

Capital Gains Incentive Distribution — Special Unitholder		The capital gains incentive distribution will be determined and payable to the Special Unitholder in arrears as of the end of each fiscal quarter (or upon termination of the advisory agreement, as of the termination date) to the Special Unitholder, and will equal 20.0% of the company’s realized capital gains, if any, on a cumulative basis from inception through the end of each fiscal quarter, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any capital gain incentive distributions.

Liquidation Incentive Distribution — Special Unitholder		The liquidation incentive distribution payable to the Special Unitholder will equal 20.0% of the net proceeds from a liquidation of the company (other than in connection with a listing, as described below) in excess of adjusted capital, as measured immediately prior to liquidation. Adjusted capital shall mean: cumulative gross proceeds generated from sales of shares (including the DRP) reduced for distributions to members of proceeds from non-liquidation dispositions of our assets and amounts paid for share repurchases pursuant to the Share Repurchase Program. In the event of any liquidity event that involves a listing of the company’s shares, or a transaction in which the company’s members receive shares of a company that is listed, on a national securities exchange, the liquidation incentive distribution will equal 20% of the amount, if any, by which the company’s listing value following such liquidity event exceeds the adjusted capital, as calculated immediately prior to such listing (the “listing premium”). Any such listing premium and related liquidation incentive distribution will be determined and payable in arrears 30 days after the commencement of trading following such liquidity event.

Operating Expense and Expense Assumption and Reimbursement Agreement

The company will reimburse the advisor’s cost of providing administrative services, legal, accounting and printing. The company will not reimburse the advisor for the salaries and benefits to be paid to the named executive officers. For the year ended December 31, 2015, the advisor assumed operating expenses for the company in an amount sufficient to keep total annual operating expenses (exclusive of interest, taxes dividend expense, borrowing costs, organizational and extraordinary expenses) of the company (“Expenses”) at percentages of average net assets of such class for any calculation period no higher than 5.0% (the “Maximum Rates”). During the year ended December 31, 2016, Expenses as a percentage of net assets were less than the Maximum Rates allowing the advisor to be fully reimbursed for past assumed operating expenses. The expense reimbursement agreement expired and was not renewed as of December 31, 2016 as Expenses are expected to continue in an amount less than the Maximum Rates.

For the three and six months ended June 30, 2017, the company incurred $1,209,850 and $2,583,232, respectively, in operating expenses, including the management fees earned by the advisor. For the three and six months ended June 30, 2016, the company incurred $763,295 and $1,441,072, respectively, in operating expenses, including the management fees earned by the advisor. Since January 1, 2015, the advisor has elected to limit the company’s operating expenses to no higher than 5% annually of the company’s average net assets. While the advisor has assumed responsibility for $830,884, of the company’s operating expenses under the expense reimbursement agreement since inception, as of December 31, 2016 the company had fully reimbursed the advisor for previously assumed operating expenses. For the six months ended June 30, 2016, the company had reimbursed the advisor $700,000 of previously assumed expenses, subject to the restrictions of the Maximum Rates. Since average annual expenses were less than 5% for the three and six months ended June 30, 2016, the company recorded a net payable to the advisor of $327,150 and $506,040, respectively, as reimbursement for assumption of past operating expenses.

For the three and six months ended June 30, 2017, the advisor earned $759,492 and $1,456,638 respectively, in management fees. For the three and six months ended June 30, 2016, the advisor earned $429,063 and $759,778, respectively, in management fees. While there was an incentive allocation of $916 earned to date by the advisor, the consolidated financial statements reflect a $308,000 increase in incentive allocation for the three months ended June 30, 2017 and a $307,414 increase incentive allocation for the six months ended June 30, 2017, based primarily upon unrealized appreciation on investments. The consolidated financial statements reflect a $46,258 decrease in incentive allocation for the three months ended June 30, 2016 and a $173,067 decrease in incentive allocation for the six months ended June 30, 2016, based primarily upon unrealized depreciation on investments.

As of June 30, 2017, due to advisor on the consolidated statements of assets and liabilities in the amount of $51,905 is comprised of a payable to the advisor for reimbursable Organization and Offering Costs. As of December 31, 2016, due to advisor and due to dealer manager on the consolidated statements of assets and liabilities in the amount of $99,782 and $36,694, respectively, are solely comprised of a payable to the advisor and the dealer manager for reimbursable Organization and Offering Costs. The company, dealer manager and advisor plan to cash settle any amounts due to/from advisor/dealer manager on a monthly basis.

For the three and six months ended June 30, 2017, the company paid $162,449 and $381,053, respectively, in dealer manager fees and $456,792 and $1,194,925, respectively, in selling commissions to the dealer manager. For the three and six months ended June 30, 2016, the company paid $340,832 and $744,875, respectively, in dealer manager fees and $1,211,063 and $2,659,497, respectively, in selling commission to the company’s dealer manager, SC Distributors. These fees and commissions were paid in connection with the sales of the company’s shares to investors and, as such, were recorded against the proceeds from the issuance of shares and are not reflected in the company’s consolidated statements of operations.

For the three and six months ended June 30, 2017, Greenbacker Administration LLC invoiced the company $0 and $115,983, respectively, for expenses, at cost, for services related to asset management and accounting services related to the company’s investments. Commencing as of April 1, 2017, these expenses were invoiced directly to the company’s investments. For the three and six months ended June 30, 2016, Greenbacker Administration, LLC invoiced the company $55,978 and $80,002, respectively, for expenses, at cost, for services related to asset management and accounting services related to the company’s investments.

As of June 30, 2017 and December 31, 2016, respectively, the advisor owned 23,601 and 23,469 Class A shares. An affiliate of the advisor owned 93,191 Class A shares as of December 31, 2016.

Transactions

The company entered into secured loans to finance the purchase and installation of energy efficient lighting with LED Funding LLC and Renew AEC One LLC (“AEC Companies”). All of the loans with LED Funding LLC, an AEC Company, converted to an operating lease on the day the energy efficiency upgrades became operational. AEC Companies are considered related parties as the members of these entities own an indirect, non-controlling ownership interest in the company’s advisor. The loans outstanding between the AEC Companies and the company, and the subsequent operating leases, were negotiated at an arm’s length and contain standard terms and conditions that would be included in third party lending agreements including required security and collateral, interest rates based upon risk of the specific loan, and term of the loan. As of June 30, 2017, all loans and operating leases are considered current per their terms.

Note 6. Borrowings

On July 11, 2016, the company, through an indirect, wholly owned subsidiary, GREC Entity HoldCo LLC (the “Borrower”), entered into a Credit Agreement by and among the Borrower, the lenders party thereto and Fifth Third Bank, as administrative agent, as well as swap counterparty. The new credit facility consists of an initial term loan of $4,300,000 (the “Facility 1 Term Loan”) as well as a revolving credit facility in the aggregate principal amount of up to $33,250,000 (the “Revolver”) that will convert to an additional term loan facility, based upon the amount outstanding on the conversion date, in July 2017 (the “Facility 2 Term Loan”) (collectively, the “Credit Facility”). The conversion date for the Revolver was modified on July 18, 2017 to extend the conversion date to September 9, 2017. Both the Facility 1 Term Loan and the Facility 2 Term Loan mature in July 2021. Financing costs of $1,005,494 related to the credit facility have been capitalized and are being amortized over the term of the Facility 1 Term Loan.

The company used the net proceeds of borrowings under the Facility 1 Term Loan to repay amounts outstanding under a previously existing project loan. The net proceeds of borrowings under the Revolver will be used for investment in additional alternative energy power generation assets and other general corporate purposes. Loans made under the Credit Facility bear interest at 3.5% in excess of one-month LIBOR. Commitment fees on the average daily unused portion of the Revolver are payable at a rate per annum of 0.25%.

Interest on the Credit Facility is payable on the last day of each month commencing August 31, 2016. Principal on the Facility 1 Term Loan is payable at a fixed amount of $23,889 on the last day of each month based upon a fifteen-year amortization. The Revolver is interest only for the first twelve months. Thereafter, the Revolver converts to the Facility 2 Term Loan whereby principal will be due monthly with amortization based upon the weighted average power purchase agreement life remaining on the date of conversion. Borrowings under the credit facility are secured by the assets, cash, agreements and equity interests in the Borrower and its subsidiaries. The company is a guarantor of the Borrower’s obligations under the Credit Facility.

In regard to the Credit Facility, we have entered into two interest rate swap agreements. The first swap, effective July 29, 2016, has a total notional amount of $4,300,000 to swap the floating rate interest payments on the Facility 1 Term Loan for a corresponding fixed payment. The fixed swap rate is 1.11% with an all-in rate of 4.61% on the Facility 1 Term Loan. The second swap, with a trade date of June 15, 2017 and an effective date of June 18, 2018 and an initial notional amount of $20,920,650, will be used to swap the floating rate interest payments on the Facility 2 Term Loan for a corresponding fixed payment. The fixed swap rate is 2.261%.

If an event of default shall occur and be continuing under the Credit Facility, the commitments under the Credit Facility may be terminated and the principal amount outstanding under the Credit Facility, together with all accrued unpaid interest and other amounts owing in respect thereof, may be declared immediately due and payable.

The company’s outstanding debt as of June 30, 2017 and December 31, 2016 was as follows:

	June 30, 2017										December 31, 2016
	Aggregate Principal Amount Available		Principal Amount Outstanding		Carrying Value		Deferred Financing Costs		Term Note Payable, Net of Financing Costs		Aggregate Principal Amount Available		Principal Amount Outstanding		Carrying Value		Deferred Financing Costs		Term Note Payable, Net of Financing Costs
Revolver	$	33,250,000	$	—	$	—	$	—	$	—	$	33,250,000	$	—	$	—	$	—	$	—
Facility 1 Term Loan		—		4,037,222		4,037,222		810,496		3,226,726		—		4,180,554		4,180,554		910,155		3,270,399
Total	$	33,250,000	$	4,037,222	$	4,037,222	$	810,496	$	3,226,726	$	33,250,000	$	4,180,554	$	4,180,554	$	910,155	$	3,270,399

The following table shows the components of interest expense, commitment fees related to the Revolving Facility, amortized deferred financing costs, weighted average stated interest rate and weighted average outstanding debt balance for the credit facility for the three and six months ended June 30, 2017:

	For the three months Ended June 30, 2017			For the six months Ended June 30, 2017
Revolver interest	$	105,801		$	157,326
Revolver commitment fee		17,751			38,762
Facility 1 Term Loan interest		12,091			23,970
Amortization of deferred financing costs		50,105			99,660
Total		185,748			319,718
Weighted average interest rate on credit facility		4.57	%		4.59	%
Weighted average outstanding balance of credit facility	$	9,247,363		$	6,716,072

	For the period July 11, 2016 through December 31, 2016
Revolver interest	$	164,179
Revolver commitment fee		29,927
Facility 1 Term Loan interest		96,248
Amortization of deferred financing costs		95,339
Unrealized gain on interest rate swap	$	(90,697	)
Total		294,996
Weighted average interest rate on credit facility		4.37	%
Weighted average outstanding balance of credit facility	$	10,991,000

The principal payments due on borrowings for each of the next five years ending December 31 and thereafter, are as follows:

Year ending December 31:	Principal Payments
2017		143,334
2018		286,668
2019		286,668
2020		286,668
2021		3,033,884
	$	4,037,222

Note 7. Members’ Equity

General

Pursuant to the terms of the LLC Agreement, the LLC may issue up to 400,000,000 shares, of which 350,000,000 shares are designated as Class A, C, I, P-A and P-I shares (collectively, common shares), and 50,000,000 are designated as preferred shares and one special unit. Each class of common shares will have the same voting rights.

The following are the current commissions and fees for each common share class in connection with the company’s continuous public offering pursuant to a Registration Statement on Form S-1 (File No. 333-211571) as well as the private offering of certain share classes.

Class A: Each Class A share is subject to a selling commission of up to 7.00% per share and a dealer manager fee of up to 2.75% per share. No selling commissions or dealer manager fees are paid for sales pursuant to the dividend reinvestment plan.

Class C: Each Class C share issued in the primary offering is subject to a selling commission of up to 3.00% per share and a dealer manager fee of up to 2.75% per share. In addition, with respect to Class C shares, the company pays the dealer manager on a monthly basis a distribution fee, or “distribution fee”, that accrues daily equal to 1/365th of 0.80% of the amount of the daily net asset value for the Class C shares on a continuous basis from year to year. No selling commissions or dealer manager fees are paid for sales pursuant to the DRP.

Class I and Class P-I: No selling commission or distribution fee will be paid for sales of any Class I and Class P-I shares. Each Class I share is subject to a dealer manager fee of up to 1.75% per share.

Class P-A shares were converted into Class P-I shares during the quarter ended June 30, 2017 and are no longer offered for sale.

The following table is a summary of the shares issued and repurchased during the period and outstanding as of June 30, 2017:

	Shares Outstanding as of December 31, 2016		Shares Issued During the Period		Shares Converted During the Period			Shares Repurchased During the Period			Shares Outstanding as of June 30, 2017
Class A shares		10,878,502		1,600,102		—			(177,669	)		12,300,935
Class C shares		1,041,836		132,954		—			—			1,174,790
Class I shares		2,754,491		724,950		—			(43,020	)		3,436,421
Class P-A shares		47,774		3,092		(50,866	)		—			—
Class P-I Shares		199,319		1,683,253		50,866			—			1,933,438
Total		14,921,922		4,144,351		—			(220,689	)		18,845,584

The following table is a summary of the shares issued during the period and outstanding as of December 31, 2016:

	Shares Outstanding as of December 31, 2015		Shares Issued During the Period		Shares Repurchased During the Period			Shares Outstanding as of December 31, 2016
Class A shares		5,420,728		5,719,394		(261,620	)		10,878,502
Class C shares		248,456		793,380		—			1,041,836
Class I shares		1,052,783		1,726,743		(25,035	)		2,754,491
Class P-A shares		—		47,774		—			47,774
Class P-I Shares		—		199,319		—			199,319
Total		6,721,967		8,486,610		(286,655	)		14,921,922

The proceeds from shares sold and the value of shares issued through the reinvestment of distributions for each class of shares for the six months ended June 30, 2017 and June 30, 2016 were as follows:

	Class A Shares		Class C Shares		Class I Shares		Class P-A Shares		Class P-I Shares		Total
For the six months ended June 30, 2017:
Proceeds from Shares Sold	$	13,145,303	$	1,037,822	$	6,014,894	$	27,075	$	14,702,757	$	34,927,851
Proceeds from Shares Issued through Reinvestment of Distributions	$	1,482,673	$	174,540	$	533,679	$	—	$	—	$	2,190,892
Capital transfers from the conversion of Shares	$	—	$	—	$	—	$	(441,005)	$	441,005	$	—
For the six months ended June 30, 2016:
Proceeds from Shares Sold	$	27,740,361	$	4,140,330	$	8,297,268		—		—	$	40,177,959
Proceeds from Shares Issued through Reinvestment of Distributions	$	1,035,075	$	90,046	$	267,810		—		—	$	1,392,931

As of June 30, 2017 and December 31, 2016, none of the LLC’s preferred shares were issued and outstanding.

The LLC Agreement authorizes the board of directors, without approval of any of the members, to increase the number of shares the company is authorized to issue and to classify and reclassify any authorized but unissued class or series of shares into any other class or series of shares having such designations, preferences, right, power and duties as may be specified by the board of directors. The LLC Agreement also authorizes the board of directors, without approval of any of the members, to issue additional shares of any class or series for the consideration and on the terms and conditions established by the board of directors. In addition, the company may also issue additional limited liability company interests that have designations, preferences, right, powers and duties that are different from, and may be senior to, those applicable to the common shares. The Special Unitholder will hold the special unit in the company. Refer to Note 5 for the terms of the special unit. The proceeds related to the shareholder receivable amount of $291,065 presented on the consolidated statements of assets and liabilities as of June 30, 2017 was subsequently collected on July 3, 2017.

Distribution Reinvestment Plan

The company adopted a distribution reinvestment plan (“DRP”) through which the company’s Class A, C and I shareholders may elect to purchase additional shares with distributions from the company rather than receiving the cash distributions. The board of directors may reallocate the shares between the public offering and the DRP. Shares issued pursuant to the DRP will have the same voting rights as shares offered pursuant to the public offering. As of June 30, 2017 and December 31, 2016, $50,000,000 in shares were allocated for use in the DRP. During this offering, the purchase price of shares purchased through the DRP will be at a price equal to the then current net offering price per share. No dealer manager fees, selling commissions or other sales charges will be paid with respect to shares purchased pursuant to the DRP except for distribution fees on Class C shares issued under the DRP. At its discretion, the board of directors may amend, suspend, or terminate the DRP. A participant may terminate participation in the DRP by written notice to the plan administrator, received by the plan administrator at least 10 days prior to the distribution payment date.

As of June 30, 2017 and December 31, 2016, 720,350 and 478,421 shares, respectively, were issued under the DRP.

Share Repurchase Program

During the quarter ended September 30, 2015, the company commenced a share repurchase program, or “share repurchase program”, pursuant to which quarterly share repurchases will be conducted, on up to approximately 5% of the weighted average number of outstanding shares in any 12-month period, to allow members who hold Class A, C or I shares to sell shares back to the company at a price equal to the then current offering price less the selling commissions and dealer manager fees associated with that class of shares. The company is not obligated to repurchase shares and the board of directors may terminate the share repurchase program at its sole discretion. The share repurchase program includes numerous restrictions that will limit a shareholders ability to sell shares. Unless the board of directors determines otherwise, the company limits the number of shares to be repurchased during any calendar year to the number of shares the company can repurchase with the proceeds received from the sale of shares under the DRP. At the sole discretion of the board of directors, the company may also use cash on hand, cash available from borrowings and cash from liquidation of investments to repurchase shares. In addition, the company plans to limit repurchases in each fiscal quarter to 1.25% of the weighted average number of shares outstanding in the prior four fiscal quarters. For the six months ended June 30, 2017, the company repurchased 177,670 Class A shares and 43,020 Class I shares at a total purchase of $1,601,265 and $387,780, respectively, pursuant to the company’s share repurchase program, including 93,192 shares from an affiliate of the advisor.

We have received an order for our repurchase program from the SEC under Rule 102(a) of Regulation M under the Exchange Act. In addition, our repurchase program is substantially similar to repurchase programs for which the SEC has stated it will not recommend enforcement action under Rule 13e-4 and Regulation 14E under the Exchange Act.

Note 8. Distributions

On the last business day of each month, with the authorization of the company’s board of directors, the company declares distributions on each outstanding Class A, C, I, P-A and P-I share. These distributions are calculated based on shareholders of record for each day in amounts equal to that exhibited in the table below based upon distribution period and class of share.

		Class of Share
Distribution Period		A		C		I		P-A		P-I
1-Jan-15	31-Oct-15	$	0.0016438	$	0.0016438	$	0.0016438		—		—
1-Nov-15	31-Jan-16	$	0.0016478	$	0.0016478	$	0.0016478		—		—
1-Feb-16	30-Apr-16	$	0.0016551	$	0.0016551	$	0.0016551		—		—
1-May-16	31-Jul-16	$	0.0016617	$	0.0016617	$	0.0016617	$	0.0015826	$	0.0015826
1-Aug-16	31-Oct-16	$	0.0016766	$	0.0016766	$	0.0016766	$	0.0015968	$	0.0015968
1-Nov-16	31-Jan-17	$	0.0016856	$	0.0016402	$	0.0016856	$	0.0016036	$	0.0016036
1-Feb-17	31-Apr-17	$	0.0016807	$	0.0016350	$	0.0016807	$	0.0015952	$	0.0015952
1-May-17	30-Jun-17	$	0.0016710	$	0.0016273	$	0.0016710	$	0.0015952	$	0.0015828

The following table reflects the distributions declared during the six months ended June 30, 2017:

Pay Date	Paid in Cash		Value of Shares Issued under DRP		Total
February 1, 2017	$	431,686	$	349,842	$	781,528
March 1, 2017		413,270		332,761		746,031
April 3, 2017		482,113		371,902		854,015
May 1, 2017		486,864		370,463		857,327
June 1, 2017		524,909		383,585		908,494
July 3, 2017		534,165		382,339		916,504
Total	$	2,873,007		2,190,892		5,063,899

The following table reflects the distributions declared during the six months ended June 30, 2016:

Pay Date	Paid in Cash		Value of Shares Issued under DRP		Total
February 1, 2016	$	171,410	$	185,680	$	357,090
March 1, 2016		182,825		195,193		378,018
April 1, 2016		221,088		221,729		442,817
May 2, 2016		234,799		241,934		476,733
June 1, 2016		261,003		271,362		532,365
July 1, 2016		270,112		277,033		547,145
Total	$	1,341,237	$	1,392,931	$	2,734,168

All distributions paid for the six months ended June 30, 2017 are expected to be reported as a return of capital to stockholders for tax reporting purposes and all distributions paid for the six months ended June 30, 2016 were reported as a return of capital to stockholders for tax purposes.

Cash distributions paid during the periods presented were funded from the following sources noted below:

	For the six months ended June 30, 2017		For the six months ended June 30, 2016
Cash from operations	$	2,654,310	$	549,485
Offering proceeds		88,515		678,625
Total Cash Distributions	$	2,742,825	$	1,228,110

The company expects to continue to fund distributions from a combination of cash from operations as well as offering proceeds until a minimum of $150,000,000 in net assets is reached, the portfolio is leveraged by at least 33% as well as being fully invested in operating assets.

Note 9. Commitments and Contingencies

Legal proceedings: The company may become involved in legal proceedings, administrative proceedings, claims and other litigation that arise in the ordinary course of business. Individuals and interest groups may sue to challenge the issuance of a permit for a renewable energy project or seek to enjoin construction of a wind energy project. In addition, we may be subject to legal proceedings or claims contesting the construction or operation of our renewable energy projects. In defending ourselves in these proceedings, we may incur significant expenses in legal fees and other related expenses, regardless of the outcome of such proceedings. Unfavorable outcomes or developments relating to these proceedings, such as judgments for monetary damages, injunctions or denial or revocation of permits, could have a material adverse effect on our business, financial condition and results of operations. In addition, settlement of claims could adversely affect our financial condition and results of operations. As of June 30, 2017, management is not aware of any legal proceedings that might have a significant adverse impact on the company.

Pledge of collateral and unsecured guarantee of loans to subsidiaries: Pursuant to various project loan agreements between the operating subsidiaries of East to West Solar LLC, Green Maple LLC, Greenbacker Residential Solar II and Greenbacker Wind LLC and various lenders (financial institutions, the Colorado Housing and Finance Authority and the Vermont Economic Development Authority), the operating entities have pledged all solar operating assets as well as the membership interests in various operating subsidiaries as collateral for the term loans with maturity dates ranging from March 2021 through March 2032. In addition to the company, East to West Solar LLC and Green Maple LLC (the “Guarantors”) have provided an unsecured guaranty on approximately $2,194,493 and $4,677,540, respectively, of term loans as of June 30, 2017. The guarantors would only have to perform under the guarantee if the cash flow or the liquidation of collateral at the operating subsidiaries was inadequate to fully liquidate the remaining loan balance.

Pursuant to a credit agreement between Holdco and a financial institution, Holdco has pledged all solar operating assets as well as all membership interests in operating subsidiaries owned by Holdco as collateral for the loan. GREC and the company have provided an unsecured guaranty on approximately $4,100,000 on the term and revolving loans as of June 30, 2017.

Unsecured guarantee of subsidiary renewable energy credit (“REC”) forward contracts: For the majority of the forward REC contracts currently effective as of June 30, 2017 where a subsidiary of the company is the principal, the company has provided an unsecured guarantee related to the delivery obligations. The amount of the unsecured guaranty related to these REC contracts is approximately $454,000 as of June 30, 2017.

See Note 1 – Organization and Operations of the Company and Note 5 – Related Party Agreements and Transactions Agreements for an additional discussion of the company’s commitments and contingencies.

Note 10. Financial Highlights

The following is a schedule of financial highlights of the company attributed to Class A, C, I, P-A and P-I shares for the six months ended June 30, 2017.

	For the six months ended June 30, 2017
	Class A Shares			Class C Shares			Class I Shares			Class P-I Shares
Per share data attributed to common shares (1):
Net Asset Value at beginning of period	$	8.69		$	8.44		$	8.69		$	8.67
Net investment income (3)		0.20			0.20			0.20			0.20
Net unrealized appreciation (depreciation) on investments, net of incentive allocation to special unitholder		0.08			0.08			0.08			0.08
Change in translation of assets and liabilities denominated in foreign currencies (4)		—			—			—			—
Change in benefit from deferred taxes on unrealized depreciation on investments		(0.05	)		(0.05	)		(0.05	)		(0.05	)
Net increase in net assets attributed to common stockholders		0.23			0.23			0.23			0.23
Shareholder distributions:
Distributions from net investment income		(0.16	)		(0.16	)		(0.16	)		(0.16	)
Distributions from offering proceeds		(0.15	)		(0.14	)		(0.15	)		(0.13	)
Offering costs and deferred sales commissions		(0.02	)		(0.02	)		(0.05	)		(0.03	)
Other (2)		0.04			0.06			0.07			0.15
Net increase (decrease) in members’ equity attributed to common shares		(0.06	)		(0.03	)		(0.06	)		0.06
Net asset value for common shares at end of period	$	8.63		$	8.41		$	8.63		$	8.73
Common shareholders’ equity at end of period	$	106,211,123		$	9,875,156		$	29,671,417		$	16,880,741
Common shares outstanding at end of period		12,300,935			1,174,790			3,436,421			1,933,438

Ratio/Supplemental data for common shares (annualized):
Total return attributed to common shares based on net asset value		2.68	%		3.03	%		2.68	%		4.07	%
Ratio of net investment income to average net assets		4.77	%		4.90	%		4.76	%		4.74	%
Ratio of operating expenses to average net assets		3.59	%		3.69	%		3.59	%		3.57	%
Portfolio turnover rate		0.03	%		0.03	%		0.03	%		0.03	%

(1) The per share data for Class A, C, I and P-I Shares were derived by using the weighted average shares outstanding during the six months ended June 30, 2017, which were 11,738,881, 1,110,587, 3,030,077 and 928,271, respectively.

(2) Represents the impact of different share amounts used in calculating certain per share data based on weighted average shares outstanding during the period and the impact of shares at a price other than the net asset value.

(3) Does not reflect any incentive fees that may be payable to the Special Unitholder.

(4) Amount is less than $0.01 per share.

The following is a schedule of financial highlights of the company attributed to Class A shares, Class C shares and Class I shares for the six months ended June 30, 2016.

	Class A Shares			Class C Shares			Class I Shares
	For the six months ended June 30, 2016			For the six months ended June 30, 2016			For the six months ended June 30, 2016
Per share data attributed to common shares (1):
Net Asset Value at beginning of period	$	8.54		$	8.54			8.54
Net investment income (4)		0.17			0.17			0.17
Net unrealized depreciation on investments		(0.11	)		(0.11	)		(0.11	)
Change in translation of assets and liabilities denominated in foreign currencies		0.01			0.01			0.01
Change in benefit from deferred taxes on unrealized appreciation on investments		0.41			0.41			0.41
Net increase in net assets resulting from operations		0.48			0.48			0.48
Shareholder distributions		(0.30	)		(0.30	)		(0.30	)
Offering costs and deferred sales commissions		—			(0.26	)		—
Other (2)		(0.03	)		(0.03	)		(0.03	)
Net increase in members’ equity attributed to common shares		0.15			(0.11	)		0.15
Net asset value for common shares at end of period	$	8.69		$	8.43			8.69
Total return attributed to common shares based on net asset value (3)		5.21	%		2.05	%		5.21	%
Common shareholders’ equity at end of period	$	74,013,171		$	6,087,628		$	17,289,047
Common shares outstanding at end of period		8,512,969			722,499			1,988,580
Ratio/Supplemental data for common shares (annualized) (3):
Ratio of net investment income to average net assets (5)(6)		4.03	%		3.98	%		4.02	%
Ratio of operating expenses to average net assets (5)(6)		4.99	%		4.92	%		4.97	%
Portfolio turnover rate		0.54	%		0.54	%		0.54	%


	(1)	The per share data for Class A Shares, Class C Shares and Class I Shares were derived by using the weighted average shares outstanding during the six months ended June 30, 2016, which was 7,063,450, 500,288 and 1,538,324, respectively.
	(2)	Represents the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on weighted average shares outstanding during the period and organizational costs which are not included in operating expenses nor subject to the expense reimbursement agreement and the impact of shares at a price other than the net asset value.
	(3)	Total return, ratio of net investment income and ratio of operating expenses to average net assets for the six months ended June 30, 2016, prior to the effect of the expense reimbursement agreement for Class A Shares were 5.77%, 5.34% and 3.68%, respectively. Total return, ratio of net investment income and ratio of operating expenses to average net assets for the six months ended June 30, 2016, prior to the effect of the expense reimbursement agreement for Class C Shares were 2.52%, 5.27% and 3.63%, respectively. Total return, ratio of net investment income and ratio of operating expenses to average net assets for the six months ended June 30, 2016, prior to the effect of the expense reimbursement agreement for Class I Shares were 5.74%, 5.32% and 3.66%, respectively. Allocation of net assets to special unitholder has not been included in determining net investment income or operating expenses used in the ratio calculations.
	(4)	Does not reflect any incentive fees that may be payable to the Special Unitholder.
	(5)	The company’s ratio of net investment income to average net assets and ratio of operating expenses to average net assets have been annualized for the six months ended June 30, 2016 assuming consistent results over a full fiscal year.
	(6)	Organizational expenses included within the ratio are not annualized.

Note 11. Subsequent Events

The company’s management has evaluated subsequent events through the date of issuance of the consolidated financial statements. There have been no subsequent events that occurred during such period that would require disclosure in the consolidated financial statements or would be required to be recognized in the consolidated financial statements as of and for the six months ended June 30, 2017 (unaudited) except as noted below.

On July 14, 2017, the company sold Floyd Road Solar Farm LLC for approximately $11,400,000, realizing a gain of approximately $700,000, and subsequently leased the facility back for a period of 24 years. De Lage Landen Financial Services was the sale/leaseback entity.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the company’s consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly report on Form 10-Q.

Except as otherwise specified, references to “we,” “us,” “our,” or the “company,” refer to Greenbacker Renewable Energy Company LLC.

Forward Looking Statements

Various statements in this annual report, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects, revenues, income and capital spending. We generally identify forward-looking statements with the words “believe,” “intend,” “expect,” “seek,” “may,” “will,” “should,” “would,” “anticipate,” “could,” “estimate,” “plan,” “predict,” “project” or their negatives, and other similar expressions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. The forward-looking statements contained in this report are largely based on our expectations, which reflect many estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors and it is impossible for us to anticipate all factors that could affect our actual results. In addition, our advisor’s assumptions about future events may prove to be inaccurate. We caution all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that such statements will prove correct or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to the numerous risks and uncertainties as described under “Risk Factors” and elsewhere in this report. All forward-looking statements are based upon information available to us on the date of this report. We undertake no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These cautionary statements qualify all forward-looking statements attributable to us, or persons acting on our behalf. The risks, contingencies and uncertainties associated with our forward-looking statements relate to, among other matters, the following:

	●	changes in the economy;

	●	the ability to complete the renewable energy projects in which we invest;

	●	our relationships with project developers, lawyers, investment and commercial banks, individual and institutional investors, consultants, diligence specialists, EPC companies, contractors, renewable energy technology manufacturers (such as panel manufacturers), solar insurance specialists, component manufacturers, software providers and other industry participants in the renewable energy, capital markets and project finance sectors;

	●	fluctuations in supply, demand, prices and other conditions for electricity, other commodities and renewable energy certificates (“RECs”);

	●	public response to and changes in the local, state and federal regulatory framework affecting renewable energy projects, including the potential expiration or extension of the production tax credit (“PTC”), investment tax credit (“ITC”) and the related U.S. Treasury grants and potential reductions in renewable portfolio standards (“RPS”) requirements;

	●	competition from other energy developers;

	●	the worldwide demand for electricity and the market for renewable energy;

	●	the ability or inability of conventional fossil fuel-based generation technologies to meet the worldwide demand for electricity;

	●	our competitive position and our expectation regarding key competitive factors;

	●	risks associated with our hedging strategies;

	●	potential environmental liabilities and the cost of compliance with applicable environmental laws and regulations, which may be material;

	●	our electrical production projections (including assumptions of curtailment and facility availability) for our renewable energy projects;

	●	our ability to operate our business efficiently, manage costs (including general and administrative expenses) effectively and generate cash flow;

●

availability of suitable renewable energy resources and other weather conditions that affect our electricity production;

	●	the effects of litigation, including administrative and other proceedings or investigations relating to our renewable energy projects;

	●	non-payment by customers and enforcement of certain contractual provisions;

	●	risks associated with possible disruption in our operations or the economy generally due to terrorism or natural disasters; and

●

future changes in laws or regulations and conditions in our operating areas.

Overview

Greenbacker Renewable Energy Company LLC, (the “LLC”) a Delaware limited liability company, is an externally managed energy company that acquires and manages income-generating renewable energy and energy efficiency projects and other energy-related businesses as well as finances the construction and/or operation of these and sustainable development projects and businesses. The LLC conducts substantially all of its operations through its wholly-owned subsidiary, Greenbacker Renewable Energy Corporation (“GREC”). GREC is a Maryland corporation formed in November 2011 and the LLC currently holds all of the outstanding shares of capital stock of GREC. The LLC and GREC (collectively “we”, “us”, “our”, and the “company”) are managed and advised by Greenbacker Capital Management LLC (the “advisor” or “GCM”), a renewable energy, energy efficiency, sustainability and other energy related project acquisition, consulting and development company that is registered as an investment adviser under the Investment Advisers Act of 1940, as amended (“Advisers Act”). The LLC’s fiscal year end is December 31.

Our business objective is to generate attractive risk-adjusted returns for our members, consisting of both current income and long-term capital appreciation, by acquiring, and financing the construction and/or operation of income-generating renewable energy, energy efficiency and sustainable development projects, primarily within but also outside of North America. We expect the size of our investments to generally range between approximately $1 million and $100 million. We will seek to maximize our risk-adjusted returns by: (1) capitalizing on market opportunities; (2) focusing on hard assets that produce dependable cash flows; (3) efficiently utilizing government incentives where available; (4) employing creative deal structuring to optimize capital and ownership structures; (5) partnering with experienced financial, legal, engineering and other professional firms; (6) employing sound due diligence and risk mitigation processes; and (7) monitoring and managing our portfolio of assets on an ongoing basis.

Our goal is to assemble a diversified portfolio of renewable energy, energy efficiency and other sustainability related projects and businesses. Renewable energy projects generally earn revenue through the sale of generated electricity as well as frequently through the sale of other commodities such as RECs and energy efficiency certificates (“EECs”), which are generated by the projects and the sale of by-products such as organic compost materials. We initially have focused on solar energy and wind energy projects as well as energy efficiency projects. We believe solar energy projects generally offer more predictable power generation characteristics, due to the relative predictability of sunlight over the course of time compared to other renewable energy classes and therefore we expect they will provide more stable income streams. However, technological advances in wind turbines and other energy generation technologies, as well as government incentives make wind energy and other types of projects attractive as well. Solar energy projects provide maximum energy production during the middle of the day and in the summer months when days are longer and nights shorter. Solar energy projects tend to have minimal environmental impact enabling such projects to be developed close to areas of dense population where electricity demand is highest. Solar technology is scalable and well-established and it will be a relatively simple process to integrate new acquisitions and projects into our portfolio. Over time, we expect to broaden our strategy to include other types of renewable energy projects and energy efficiency projects and businesses, which may include wind farms, hydropower assets, geothermal plants, biomass and biofuel assets, combined heat and power technology assets, fuel cell assets and other energy efficiency assets, among others, and to the extent we deem the opportunity attractive, other energy and sustainability related assets and businesses.

Our preferred investment strategy is to acquire controlling equity stakes in our target assets or to be named the managing member of a limited liability company in order to oversee and supervise their operations. We define controlling equity stakes as companies in which we own 25% or more of the voting securities of such company or have greater than 50% representation on such company’s board of directors. However, we will also provide financing to projects owned by others, including through the provision of secured loans which may or may not include some form of equity participation. We may also provide projects with senior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, and preferred equity, and make minority equity investments. We may also participate in projects by acquiring contractual payment rights or rights to receive a proportional interest in the operating cash flow or net income of a project. We may also make equity investments in or loans to parties financing the supply of renewable energy and energy efficiency to residential and commercial customers or the adoption of strategies to reduce the consumption of energy by those customers. Our strategy will be tailored to balance long-term cash flow certainty, which we can achieve through long-term agreements for our products, with shorter term arrangements that allow us to potentially generate higher risk- adjusted returns.

Our renewable energy projects generate revenue primarily by selling (1) generated electric power to local utilities and other high quality, utility, municipal, corporate and individual residential counterparties, and (2) in some cases, RECs, EECs, and other commodities associated with the generation or savings of power. We seek to acquire or finance projects that contain transmission infrastructures and access to power grids or networks that will enable the generated power to be sold. We generally expect our projects will have power purchase agreements with one or more counterparties, including local utilities or other high credit quality counterparties, who agree to purchase the electricity generated from the project. We refer to these power purchase agreements as “must-take contracts,” and we refer to these other counterparties as “off-takers.” These must-take contracts guarantee that all electricity generated by each project will be purchased. Although we intend to work primarily with high credit quality counterparties, in the event that an off-taker cannot fulfill its contractual obligation to purchase the power, we generally can sell the power to the local utility or other suitable counterparty, which would potentially ensure revenue is generated for all solar electricity generation. We may also generate revenue from the receipt of interest, fees, capital gains and distributions from investments in our target assets.

We employ a rigorous credit underwriting process for each of our contractual counterparties that involves (i) identification of high credit quality counterparties with appropriate bonding and insurance capacity; (ii) where available, the review of counterparty financial statements and/or publicly available credit rating reports (iii) worst-case analysis testing of assets; (iv) ongoing monitoring of acquired assets and counterparty creditworthiness, including monitoring the public credit ratings reports issued by Moody’s and Standard and Poor’s, and (v) in regard to residential solar where the homeowner is the counterparty, individual FICO scores.

The following table illustrates the allocation by percentage of the company’s contracted revenue by counterparty type and creditworthiness for the six months ended June 30, 2017 and the year ended December 31, 2016.

	For the six months ended June 30, 2017			For the year ended December 31, 2016
Investment grade:
Utility		70.6	%		72.2	%
Municipality		5.0			6.2
Corporation		0.3			1.2
Subtotal investment grade		75.9	%		79.6	%

Non-investment grade or no rating:
Utility		0.6	%		1.1	%
Municipality		5.3			5.9
Individual		16.2			10.0
Corporation		2.0			3.4
Subtotal non-investment grade or no rating		24.1	%		20.4	%

Total		100.0	%		100.0	%

Our power purchase agreements, when structured with utilities and other large commercial users of electricity, are generally long-term in nature with all electricity generated by the project purchased at a rate established pursuant to a formula set by the contract. The formula is often dependent upon the type of subsidies, if any, offered by the local and state governments for project development. Although we focus on projects with long-term contracts that ensure price certainty, we also look for projects with shorter term arrangements that will allow us, through these projects, to participate in market rate changes which may lead to higher current income.

Certain of the power purchase agreements for our projects are structured as “behind the meter” agreements with residential, commercial or government entities, which provide that all electricity generated by a project will be purchased by the off taker at an agreed upon rate that may be set at a slight discount to the retail electric rate for the off-taker. These agreements also typically provide for annual rate increases over the term of the agreement although that is not a necessary requirement. The behind the meter agreement is generally long-term in nature and further typically provides that, should the off-taker fail to fulfill its contractual obligation, any electricity that is not purchased by the off-taker may be sold to the local utility, usually at the wholesale spot electric rate.

We have structured some of our investments in residential solar with a similar commercial arrangement to that of the power purchase agreements with utilities and other large commercial users of electricity for our energy projects, as described above. Recently, we acquired residential solar assets which have a private purchase agreement with the residential homeowner as counterparty. In the future, we may also acquire assets where we lease the solar assets to a residential owner on a long term basis where the residential owner directly receives the benefit of the electricity generated.

We currently also finance energy efficiency projects, which seek to enable residential customers, businesses and governmental organizations to consume less energy while at the same time providing the same or greater level of amenity. Financing for energy efficiency projects is generally used to pay for energy efficiency retrofits of buildings, homes, businesses, and replacement of other inefficient energy consuming assets with more modern technologies. These projects are structured to provide predictable long-term cash flows by receiving a portion of the energy savings and the potential sale of associated RECs and EECs generated by such installations. In each of our renewable energy and energy efficiency investments, we intend, where appropriate, to maximize the benefits of renewable portfolio standards or RPS as well as other U.S. federal, state and local government support and incentives for the renewable energy industry.

The table below sets forth the company’s investments in alternative energy generation portfolios as of June 30, 2017.

Acquisition Date

Industry

Location(s)

Form of
Investment

Cost **/
Principal
Amount*

Assets

Generation
Capacity in
(MW)*

East to West Solar Portfolio

First quarter 2015, Second quarter 2015, Fourth quarter 2015

Alternative Energy – Solar

Colorado, Connecticut, Florida, Hawaii, Indiana and North Carolina

100% equity ownership

27,889,875

Commercial ground and roof mounted solar photovoltaic systems

19.46

Magnolia Sun Portfolio

Third quarter 2015, First quarter 2016

Alternative Energy – Solar

California, Massachusetts and Tennessee

100% equity ownership

10,775,000

Commercial ground and roof mounted solar photovoltaic systems

5.302

Green Maple Portfolio

Fourth quarter 2014, Fourth quarter 2015

Alternative Energy – Solar

Vermont

100% equity ownership

13,075,000

Commercial ground mounted solar photovoltaic systems

7.393

Canadian Northern Lights Portfolio

Fourth quarter 2014 Fourth quarter 2015

Alternative Energy – Solar

Ontario, Canada

100% equity ownership

1,603,136

Residential rooftop mounted solar photovoltaic systems

0.560

Six States Solar Portfolio

Fourth quarter 2015

Alternative Energy – Solar

Arizona, California, Colorado, Connecticut and Indiana

100% equity ownership

2,350,000

Ground and roof mounted solar systems

6.223

Greenbacker Wind Portfolio

Fourth quarter 2015, Fourth quarter 2016

Alternative Energy – Wind

Montana

100% ownership or managing member, equity owner

50,852,428

Operating wind power facilities

45.5

Renew AEC One, LLC

Fourth quarter 2015

Energy Efficiency – Lighting Replacement

Pennsylvania

Secured Loan

736,371

Energy efficiency LED lighting

—

Greenbacker Residential Solar Portfolio

Third quarter 2016, First quarter 2017

Alternative Energy – Solar

Arizona, California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey and New York

100% ownership or managing member, majority equity owner

28,100,000

Residential rooftop mounted solar photovoltaic systems

18.313

Greenbacker Residential Solar Portfolio II

Second quarter 2017

Alternative Energy – Solar

Arizona, California, Connecticut, Maryland, Massachusetts, Nevada, New Jersey and New York

Managing member, majority equity owner

6,400,000

Residential rooftop mounted solar photovoltaic systems

8.899

Enfinity Colorado DHA Portfolio

First quarter 2017

Alternative Energy – Solar

Colorado

100% equity ownership

1,400,000

Residential rooftop mounted solar photovoltaic systems

2.508

Floyd Road Solar Farm Portfolio

Second quarter 2017

Alternative Energy – Solar

North Carolina

100% equity ownership

10,596,559

Ground mounted solar systems

6.750

Golden Horizons Solar Portfolio

Second quarter 2017

Alternative Energy – Solar

—

100% equity ownership

50,000

—

GREC Energy Efficiency Portfolio

Third quarter 2015

Energy Efficiency – Lighting Replacement

Puerto Rico

Capital lease

488,315

Energy efficiency LED lighting

—

Sunny Mountain Portfolio

Third quarter 2014

Alternative Energy – Solar

Colorado

100% equity ownership

$884,578

Commercial and residential ground and roof mounted solar photovoltaic systems

0.801

* Approximate.

** Does not include assumed project level debt.

The investments described above have allowed us to execute on our early-stage strategy of constructing a portfolio of projects offering predictable power generation characteristics and generally stable income streams. With the addition of a wind power generation project and energy efficiency lighting investments, we have added diversified revenue streams to our seasonal solar generation income, further enhancing the predictability of returns.

The LLC conducts a significant portion of its operations through GREC, of which the LLC is the sole shareholder, holding both shares of common stock and the special preferred stock. We intend to continue to operate our business in a manner permitting us to maintain our exemption from registration under the Investment Company Act of 1940, as amended (the “Investment Company Act”). We are not a blank check company within the meaning of Rule 419 of the Securities Act of 1933, as amended (the “Securities Act”) and have no specific intent to engage in a merger or acquisition in the next 12 months.

Pursuant to a Registration Statement on Form S-1 (File No. 333-211571), we are offering on a continuous basis up to $1,000,000,000 in shares of our limited liability company interests, consisting of up to $800,000,000 of shares in the Primary Offering and up to $200,000,000 of shares pursuant to the Distribution Reinvestment Plan. SC Distributors, LLC is the dealer manager for the Offering. The company’s initial offering pursuant to a Registration Statement on Form S-1 (File No. 333-178786-01) terminated on February 7, 2017.

After the finalization of the June 30, 2017 net asset value, the current offering price of the Class A shares is $9.724 per share, the current offering price of the Class C shares is $9.078 per share, the current offering price of the Class I shares is $8.932 per share, and the current offering price of the Class P-I shares is $8.730 per share.

As of June 30, 2017, through initial purchases of shares and participation in the distribution reinvestment program, our advisor owned 23,601 shares. As of December 31, 2016, our advisor and its affiliate owned 23,469 and 93,191 shares, respectively.

As of June 30, 2017, we had received subscriptions for and issued 19,717,911 of our shares (including shares issued under the DRP) for gross proceeds of $191,494,780 (before dealer-manager fees of $2,840,667 and selling commissions of $10,087,676 for net proceeds of $178,566,437). As of December 31, 2016, we had received subscriptions for and issued 15,223,577 of our shares (including shares issued under the DRP) for gross proceeds of $149,746,470 (before dealer-manager fees of $2,416,177 and selling commissions of $8,713,815 for net proceeds of $138,616,478).

Current Competition in the Alternative Energy - Solar Marketplace

The solar financing market as a whole started as a cottage industry where developers would bring together high net worth investors to fund single solar and wind transactions. While successful in jump starting the industry, true capital formation is a relatively new phenomenon and is not as well developed as in other asset classes. Currently in the alternative energy – solar marketplace, there are several sources of capital:

	●	Developer/Owner Operators. The major competition we face in the market for the assets we target comes from privately backed developer/owner operators. The capital from these organizations has generally been sourced from a combination of family offices/private equity funds and hedge funds. These organizations are generally set up as developers, with investment return expectations in the 20-30% range. However, to facilitate the most favorable exit for the sponsors, the developer/owner operators seek to accumulate a significant portfolio of operating assets to provide a base level of stable and predictable earnings for the enterprise. Through a combination of developer profits and leverage they are able to generate satisfactory ongoing returns with the bulk of the upside being generated for the sponsors through the exit. We are of the opinion this group of buyers will ultimately be capital constrained particularly in circumstances where equity markets experience a downturn.

	●	Single Purpose Limited Partnerships. These entities are typically funded by high net worth individuals or family offices and are generally focused on a small number of deals as they have a limited amount of capital to invest.

	●	Utilities. Institutional investors (including large life insurance companies), pension funds and infrastructure funds. This sector dominates investment in the larger projects (i.e. $100,000,000 or greater). Because scale is always an important consideration for larger institutions we tend not to encounter this group in the markets we target.

	●	Yieldcos. Following the filing of company’s Registration Statement with the SEC, several U.S. companies registered and listed public vehicles designed to generate steady tax deferred distributions to investors through the ownership and operation of traditional and renewable energy generation assets. There are currently six large vehicles, known as “yieldcos” listed on various stock exchanges around the United States as well as several other very small public companies. The yieldco strategy provides an opportunity for large Independent Power Producers to source cost effective capital to fund the ownership of contracted generation assets thus freeing up their own capital for other higher returning activities elsewhere in their businesses. Initially the yieldco strategy proved very effective and delivered the independent power producers sponsoring such vehicles a cost of capital very much in line with our own.

In management’s view, the company has been competitive in bidding for solar assets against all of these sources of capital and maintains a significant pipeline of deals which can be consummated as offering proceeds are raised.

Opportunities in Solar Power Today

We believe that the greatest opportunity exists within the Small Utility Scale segment of the market where the company can buy assets with similar attributes to the Large Utility Scale projects (Investment Grade off-taker, same equipment and warrantees, same operations and maintenance service provider, etc.) but where returns are higher. In our view, there is a significant opportunity to aggregate portfolios of high quality Small Utility Scale projects working with experienced developers looking for a reliable and sustainable source of capital to increase the certainty of them closing transactions. As a result, we have been focusing on building relationships with respected developers with a view to acquiring pipelines of projects rather than one-off deals. By working closely with developers to efficiently close their transactions, we are seeking to create a sustainable competitive advantage which will lead to recurring and consistent deal flow. Recently, we have been working with developers of residential rooftop solar assets as we believe a significant opportunity exists to securitize residential solar assets once significant scale is achieved resulting in increased value and return. Importantly our strategy is differentiated from the developer/owner operators mentioned above because we do not ever seek to compete with the developers but rather to work in lock-step with them so that they can achieve sustainable development profits and we have access to pipelines of transactions, which align with our current investment strategy and focus.

Factors Impacting Our Operating Results

The results of our operations are affected by a number of factors and will primarily depend on, among other things, the supply of renewable energy assets in the marketplace, the revenues we receive from renewable energy and energy efficiency projects and businesses, the market price of electricity, the availability of government incentives, local, regional and national economies and general market conditions. Additionally, our operations are impacted by interest rates and the cost of financing provided by other financial market participants. Many of the factors that affect our operating results are beyond our control.

Size of portfolio. The size of our portfolio of investments will be a key revenue driver. Generally, as the size of our portfolio grows, the amount of income we receive will increase. In addition, our portfolio of investments may grow at an uneven pace as opportunities to make investments in our target assets may be irregularly timed, and the timing and extent of GCM’s success in identifying such assets, and our success in acquiring such assets, cannot be predicted. Lastly, other than management fees, the majority of our expenses are of a fixed nature so expenses as a percentage of net assets are reduced as the net assets of the company increase.

Credit risk. We encounter credit risk relating to (1) counterparties to the electricity and environmental credit sales agreements (including power purchase agreements) for our projects, (2) counterparties responsible for project construction and hedging arrangements, (3) companies in which we may invest and (4) any potential debt financing we or our projects may obtain. When we are able to do so, we seek to mitigate credit risk by entering into contracts with high quality counterparties. However, it is still possible that these counterparties may be unable to fulfill their contractual obligations to us. If counterparties to the electricity sales agreements for our projects or the companies in which we invest are unable to make payments to us when due, or at all, our financial condition and results of operations could be materially adversely effected. While we seek to mitigate construction-related credit risk by entering into contracts with high quality EPC companies with appropriate bonding and insurance capacity, if EPCs to the construction agreements for our projects are unable to fulfill their contractual obligations to us, our financial condition and results of operation could be materially adversely effected. We seek to mitigate credit risk by deploying a comprehensive review and asset selection process, including worst case analysis, and careful ongoing monitoring of acquired assets as well as mitigation of negative credit effects through back up planning. Nevertheless, unanticipated credit losses may occur which could adversely impact our operating results.

Electricity prices. All of our projects benefit from take-or-pay contracts to sell 100% of the power we generate on the contracted terms. On average the contracts on our existing portfolio have approximately 18.6 yearsleft prior to being exposed to market prices. The credit standing of the contract counterparty is a particular focus in situations where the contracts have a price escalator as such contracts create an incentive for the counterparty to not continue to perform if the contract pricing deviates materially from the market price. If the contract is with a public or investment grade entity, we have generally been confident that the contract terms will be honored. The only exception might apply in situations where rising electricity prices could create pressure around a political change in a particular state or locale.

Due to the take-or-pay nature of the contracts, management believes that the company is largely insulated from the day to day price volatility of the electricity markets. With that said, it would be imprudent of us not to keep an eye to what is happening across the electricity markets and to stay abreast of developments in the industry as they occur. Over recent years, we have seen a lot of volatility in gas prices and yet that volatility has been slow to translate into movements in the electricity prices. Electricity pricing is a function of a range of factors and the price of gas is just one component. Electricity prices also include a recovery of the cost of the generation plant, the labor to operate it, the cost to transport the fuel to the plant, the cost to wheel the power to the customer, the cost to administer the utility, etc., so gas price volatility is less impactful on the delivered price of electricity than one might expect.

The U.S. Energy Information Agency of the Department of Energy anticipates that electricity prices will rise annually by between 2.5% and 3.0% nationally for the next 20 years (on a nominal basis). Assuming the price at which we sell the power under our contracts is set at a discount to the current electricity price and the escalator (to the extent there is one) is less than 2.5% per annum, we expect the contracted price will remain close to, if not below, the market price of the electricity throughout the entire term of the contract.

Changes in market interest rates. With respect to our current business operations, to the extent that we use debt financing with unhedged floating interest rates or in the case of any refinancing, general increases in interest rates over time may cause the interest expense associated with our borrowings to increase, and the value of our debt investments to decline. Conversely, general decreases in interest rates over time may cause the interest expense associated with our borrowings to decrease, and the value of our debt investments to increase.

Market conditions. We believe that demand for alternative forms of energy from traditional fossil-fuel energy will continue to grow as countries seek to reduce their dependence on outside sources of energy and as the political and social climate continues to demand social responsibility on environmental matters. Notwithstanding this growing demand, we believe that a significant shortage of capital currently exists in the market to satisfy the demands of the renewable energy sector in the United States and around the world, particularly with respect to small and mid-sized projects and businesses that are newly developed. Many of the traditional sources of equity capital for the renewable energy marketplace were attracted to renewable energy projects based on their ability to utilize ITCs and tax deductions. We believe that due to changes in their taxable income profiles that have made these tax incentives less valuable, these traditional sources of equity capital have withdrawn from the market. In addition, much of the capital that is available is focused on larger projects that have long-term off-take contracts in place, and does not allow project owners to take any “merchant” or investment risk with respect to RECs. We believe many project developers are not finding or are encountering delays in accessing capital for their projects. As a result, we believe a significant opportunity exists for us to provide new forms of capital to meet this demand.

Regulatory matters. Regulatory and tax policy at the federal and state levels tends to be forward looking rather than retrospective. As a result, we do not see many regulatory or tax issues impacting any assets we already own or buy during the operation of a particular regulatory or tax regime.

With that said, there may be changes in the future which could impact the returns on future transactions, all of which will be factored into our buying decisions at that time. In the past, we have seen government policy drive a lot of development activity. For example, when the government announces the phasing out of a tax incentive, developers race to get projects to a stage that ensures the project qualifies for the incentive. That kind of activity is generally short lived but can skew the investment supply and demand dynamic.

From the federal perspective, changes in tax and regulatory policy could negatively affect prospective returns. Federal tax incentives are comprised of MACRS depreciation and the ITC. MACRS results in accelerated depreciation of renewable assets over a 5.5-year period but given the wide application of MACRS to other asset classes we believe it is less susceptible to change than the ITC. The ITC is a tax incentive that allows an investor to take up to 30% of the installed cost of a solar system as a federal tax credit. This rule was extended at the end of 2015 with the credit amounts incrementally lowered over the next few years from 30% in 2016 to 10% in 2022 and beyond. With the extension of the ITC indefinitely, the original flurry of activity which was expected by the end of 2016 has abated.

Other kinds of regulatory changes that could negatively impact returns include the introduction of some kind of value added tax either at the federal or state level, changes to property tax regimes, any kind of targeted tax on the income of renewable energy generation assets, etc. None of these possible changes appear likely any time soon but it is impossible to predict the future with any real certainty.

Generally speaking, the policy changes that have occurred over the past decade at the U.S. Environmental Protection Agency and U.S. Department of Energy have been very positive for renewables with stronger emission regulations and other mandates improving the case for renewable energy assets. In addition, the U.S. Energy Information Association forecasts that approximately 65,000 megawatts (“MW”) of older generating capacity will be retired and go offline by 2020 all of which will need to be replaced by new energy sources. Their current prediction is that at least 50% of that replacement will come from new renewable generating capacity (approximately 25% by wind and 25% by solar). While the current U.S. administration has indicated greater support for traditional sources of energy and the potential reduction in support for alternative energy production, management is of the opinion that any changes enacted by the current U.S. administration will not have a material impact on our operations.

The regulatory market for electric power is highly fragmented with each state having significant influence over the functioning of their respective electricity markets. The states are the primary regulator for the utilities and therefore you see widely divergent policies at the state level. Some states, for example, allow utilities to be vertically integrated producers of power as well as operators of the grid while others have separated those functions entirely. We believe that this diversity is a benefit for our program as the states have been highly adept at advancing programs designed to benefit renewable energy with or without federal government support. There are currently 29 states that have developed a renewable portfolio standard. As a result, we see state regulatory issues as a shifting mosaic of opportunities where some markets will present opportunities while others become less attractive on a prospective basis.

Critical Accounting Policies and Use of Estimates

The following discussion addresses the accounting policies utilized based on our current operations. Our most critical accounting policies involve decisions and assessments that affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all of the decisions and assessments upon which our consolidated financial statements are based are reasonable at the time made and based upon information available to us at that time. Our critical accounting policies and accounting estimates may be expanded over time as we continue to implement our business and operating strategy. The material accounting policies and estimates that are most critical to an investor’s understanding of our financial results and condition, as well as those that require complex judgment decisions by our management, are discussed below.

Basis of Presentation

Our consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) which requires the use of estimates, assumptions and the exercise of subjective judgment as to future uncertainties.

Although we are organized and intend to conduct our business in a manner so that we are not required to register as an investment company under the Investment Company Act, our consolidated financial statements are prepared using the specialized accounting principles of Accounting Standards Codification Topic 946, Financial Services—Investment Companies (“ASC Topic 946”). Overall, we believe that the use of investment company accounting makes our consolidated financial statements more useful to investors and other financial statement users since it allows a more appropriate basis of comparison to other entities with similar investment objectives.

Investment Classification

We classify our investments by level of control. “Control Investments” are investments in companies in which we own 25% or more of the voting securities of such company, have greater than 50% representation on such company’s board of directors or that are limited liability companies for which we are the managing member. “Affiliate Investments” are investments in companies in which we own 5% or more and less than 25% of the voting securities of such company. “Non-Control/Non- Affiliate Investments” are investments that are neither Control Investments nor Affiliate Investments. Because our consolidated financial statements are prepared in accordance with ASC Topic 946, we do not consolidate companies in which we have Control Investments nor do we apply the equity method of accounting to our Control Investments or Affiliate Investments.

Valuation of Investments

Our advisor, in conjunction with an independent valuation firm when necessary, subject to the review and approval of the board of directors, is ultimately responsible for the determination, in good faith, of the fair value of investments. In that regard, the advisor has established policies and procedures which have been reviewed and approved by our board of directors, to estimate the fair value of our investments which are detailed below. Any changes to these policies and procedures are required to be approved by our board of directors, including a majority of our independent directors.

Investments for which market quotations are readily available are valued at such market quotations.

For most of our investments, market quotations will not be available. With respect to investments for which market quotations are not readily available, our board of directors has approved a multi-step valuation process each fiscal quarter, as described below:

	1.	each investment will be valued by GCM. As part of the valuation process, GCM will prepare the valuations and associated supporting materials for review and approval by the board of directors;

	2.	our board of directors has approved the selection of an independent valuation firm to assist with the review of the valuations prepared by GCM. At the direction of our board of directors, the independent valuation firm will review valuations prepared by GCM for the appropriate application of its valuation policies and the appropriateness of significant inputs used in the valuation models by performing certain limited procedures, which will include a review of GCM’s estimates of fair value for each investment and providing an opinion that GCM’s estimate of fair value for each investment is reasonable. The independent valuation firm may also provide direct assistance to GCM in preparing fair value estimates if the board of directors approves such assistance. In the event that the independent valuation firm is directly involved in preparing the fair value estimate, our board of directors has the authority to hire a separate valuation firm to review that opinion of value;

	3.	the audit committee of our board of directors reviews and discusses the preliminary valuation prepared by GCM and the report of the independent valuation firm, if any; and

our board of directors reviews the valuations and approves the fair value of each investment in our portfolio in good faith by GCM.

Loan investments are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts (for example, interest and amortization payments) to a single present value amount (discounted) calculated based on an appropriate discount rate. The measurement is based on the net present value using current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in determining the fair value of our loans include as applicable: debt covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the project’s ability to make payments, its earnings and discounted cash flows, the markets in which the project does business, comparisons of financial ratios of peer business entities that are public, mergers and acquisitions comparables, the principal market and enterprise values, among other factors.

Equity investments are also valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts (for example net cash flows or earnings) to a single present value amount (discounted) calculated based on an appropriate discount rate. The measurement is based on the net present value using current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in determining the fair value of our equity investments include, as applicable: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, the project’s earnings and discounted cash flows, the markets in which the project does business, comparisons of financial ratios of peer business entities that are public, mergers and acquisitions comparables, the principal market and enterprise values, among other factors.

OTC derivatives including swap contracts are valued on a daily basis using observable inputs, such as quotations provided by an independent pricing service, the counterparty, broker-dealers, whenever available and considered reliable.

We have adopted Accounting Standards Codification Topic 820, Fair Value Measurements and Disclosures (formerly Statement of Financial Accounting Standards No. 157, Fair Value Measurements), or ASC Topic 820, which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.

ASC Topic 820 clarifies that the fair value price is the price in an orderly transaction between market participants to sell an asset or transfer a liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. ASC Topic 820 provides a consistent definition of fair value which focuses on exit price and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. In addition, ASC Topic 820 provides a framework for measuring fair value and establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels of valuation hierarchy established by ASC Topic 820 are defined as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by our company at the measurement date.

Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.

Level 3: Unobservable inputs for the asset or liability.

Our board of directors has approved the selection of an independent valuation firm to review our advisor’s valuation methodology and to work with our advisor and officers to provide additional inputs for consideration by our audit committee and to work directly with our full board of directors, at the board of directors’ request, with respect to the fair value of investments. For example, our board of directors may determine to engage more than one independent valuation firm in circumstances in which specific expertise of a particular asset or asset class is needed in connection with the valuation of an investment. In addition, GCM will recommend to our board of directors that one quarter of our investments be valued by an independent valuation firm each quarter, on a rotating quarterly basis. Accordingly, each such investment would be reviewed by an independent valuation firm at least once per year.

Our board of directors will have the ability to review our advisor’s valuation methodologies each quarter in connection with GCM’s presentation of its valuation recommendations to the audit committee. If during the period between quarterly board meetings, GCM determines that significant changes have occurred since the prior meeting of the board of directors at which it presented its recommendations on the valuation methodology, then GCM will also prepare and present recommendations to the audit committee of the board of directors of its proposed changes to the current valuation methodology. Any such changes to our valuation methodologies will require the approval of our board of directors, including a majority of our independent directors. We will disclose any change in our valuation methodologies, or any change in our investment criteria or strategies, that would constitute a fundamental change in a registration statement amendment prior to its implementation.

Foreign Currency Translation

The accounting records of the company are maintained in U.S. Dollars. The fair value of investments and other assets and liabilities denominated in non-U.S. currencies are translated into U.S. Dollars using the exchange rate at 4:00 p.m., Eastern Time, at each quarter end. Amounts related to the purchases and sales of investments, investment income and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions.

Net unrealized currency gains and losses arising from valuing foreign currency-denominated assets and liabilities at the current exchange rate are reflected separately as unrealized appreciation/depreciation on translation of assets and liabilities denominated in foreign currencies.

Calculation of Net Asset Value

We calculate our net asset value per share by subtracting all liabilities from the total carrying amount of our assets, which includes the fair value of our investments, and dividing the result by the total number of outstanding shares on the date of valuation. For purposes of calculating our net asset value, we expect to carry all liabilities at cost.

The determination of the fair value of our investments requires judgment, especially with respect to investments for which market quotations are not available. For most of our investments, market quotations will not be available. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. Because the calculation of our net asset value is based, in part, on the fair value of our investments as determined by our advisor, which is an affiliated entity of the company, our calculation of net asset value is to a degree subjective and could be adversely affected if the determinations regarding the fair value of our investments were materially higher than the values that we ultimately realize upon the disposal of such investments. Furthermore, the fair value of our investments, as reviewed and approved by our board of directors, may be materially different from the valuation as determined by an independent valuation firm.

Revenue Recognition

We record interest income on an accrual basis to the extent that we expect to collect such amounts. We do not accrue as a receivable interest on loans and debt securities for accounting purposes if we have reason to doubt our ability to collect such interest. Original issue discounts, market discounts or premiums are accreted or amortized using the effective interest method as interest income. We record prepayment premiums on loans and debt securities as interest income. Any application, origination or other fees earned by the company in arranging or issuing debt are amortized over the expected term of the loan.

We place loans on non-accrual status when principal and interest are past due 90 days or more or when there is a reasonable doubt that we will collect principal or interest. Accrued interest is generally reversed when a loan is placed on non- accrual. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are generally restored to accrual status when past due and principal and interest is paid and, in our management’s judgment, is likely to remain current.

Dividend income is recorded (1) on the ex-dividend date for publicly issued securities and (2) when received from private investments.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments

We measure realized gains or losses by the difference between the net proceeds from the sale, repayment, or disposal of an asset and the adjusted cost basis of the asset, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized.

Organization Costs

Organization costs are expensed on the company’s consolidated statements of operations as incurred.

Offering Costs

Offering costs include all costs to be paid by the company in connection with the offering of its shares, including legal, accounting, printing, mailing and filing fees, charges of the company’s escrow holder, transfer agent fees, due diligence expense reimbursements to participating broker-dealers included in detailed and itemized invoices and costs in connection with administrative oversight of the offering and marketing process, and preparing supplemental sales materials, holding educational conferences, and attending retail seminars conducted by broker-dealers. When recognized by the company, offering costs will be recognized as a reduction of the proceeds from the offering.

Deferred Sales Commissions

The company defers certain costs, principally sales commissions and related compensation, which are paid to the dealer manager and may be reallowed to financial advisors and broker/dealers in the future in connection with the sale of Class C shares sold with a reduced front-end load sales charge. The costs expected to be incurred at the time of the sale of Class C shares are recorded as a liability on date of sale and are amortized on a straight-line basis over the period beginning on the time of sale and ending on the date which approximates an expected liquidity event for the company. As of June 30, 2017 and December 31, 2016, the company recorded a liability for deferred sales commissions in the amount of $177,025 and $203,357, respectively.

Financing Costs

Financing costs related to debt liabilities of the company, GREC or GREC Entity Holdco LLC are presented on the consolidated statements of assets and liabilities as a direct deduction from the carrying amount of that debt liability.

Recently Issued Accounting Pronouncements

In October 2016, the U.S. Securities and Exchange Commission adopted new rules and amended existing rules (together, the “final rules”) intended to modernize the reporting and disclosure of information by registered investment companies. In part, the final rules amend Regulation S-X and require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date for the amendments to Regulation S-X is August 1, 2017. The company has evaluated the impact that the adoption of the amendments to Regulation S-X on its consolidated financial statements and disclosures and determined that the adoption of the amendments to Regulation S-X has not had a material impact on its consolidated financial statements.

In January 2016, the FASB issued ASU No. 2016-01 regarding “Recognition and Measurement of Financial Assets and Financial Liabilities”. The new guidance is intended to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information and addresses certain aspects of the recognition, measurement, presentation, and disclosure of financial instruments. The new standard affects all entities that hold financial assets or owe financial liabilities. The new guidance is effective for public companies for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. At this time, management is evaluating the implications of ASU No. 2016-01 and its impact on the financial statements and disclosures has not yet been determined.

JOBS Act

We qualify as an “emerging growth company” pursuant to the provisions of the JOBS Act, enacted on April 5, 2012. For as long as we are an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation.

Under the JOBS Act, we will remain an “emerging growth company” until the earliest of:

	●	the last day of the fiscal year during which we have total annual gross revenues of $1 billion or more;

	●	the last day of the fiscal year following the fifth anniversary of the completion of this offering;

	●	the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; and

●

the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We will qualify as a large accelerated filer as of the first day of the first fiscal year after we have (i) more than $700,000,000 in outstanding common equity held by our non-affiliates as of the last day of our most recently completed second fiscal quarter, (ii) been a public company for at least 12 months and (iii) filed at least one annual report with the SEC. The value of our outstanding common equity will be measured each year on the last day of our second fiscal quarter.

The JOBS Act also provides that an “emerging growth company” can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. However, we are choosing to opt out of that extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Portfolio and Investment Activity

As of June 30, 2017, the company invested in numerous solar, wind and energy efficiency projects included in 13 investment portfolios, as well as one energy efficiency secured loan, as follows:

East to West Solar Portfolio

The company owns 9.789 Megawatts of operating solar power facilities located on 13 sites in the states of Colorado, Connecticut, Florida, Hawaii, Indiana and North Carolina (the “East to West Solar Portfolio”). The East to West Solar Portfolio consists of ground and roof mounted solar systems (each, a “System”) located on municipal and commercial properties as follows:

	1.	Denver International Airport - The Denver International Airport System has a generation capacity of 1,587.6 kilowatts (“kW”). The System sells power directly to the City and County of Denver Department of Aviation, which is the owner and operator of the airport. The System has a 25-year variable rate power purchase agreement (“PPA”) with a floor price of $0.036/kWh. The System also sells Solar Renewable Energy Credits (“SORECs”) to the local utility (Xcel Energy) under a 20-year contract.

	2.	Progress Energy I – The Progress Energy I System has a generation capacity of 2,479.0 kW. The System is located in Laurinburg, North Carolina and sells power to the utility, Duke Energy (Progress Energy) under a 20-year fixed rate PPA at $0.120/kWh.

	3.	Progress Energy II – The Progress Energy II System has a generation capacity of 2,499.2 kW. The System is located in Laurinburg, North Carolina and sells power directly to the utility, Duke Energy (Progress Energy) under a 15-year fixed rate PPA at $0.083/kWh. The System also sells RECs to Duke Energy (Progress Energy) under a 15-year contract.

SunSense I - The SunSense I System has a generation capacity of 500.0 kW. The System is located in Raleigh, North Carolina and sells power directly to the utility, Duke Energy (Progress Energy Carolinas, Inc.) under a 20-year fixed rate PPA at $0.150/kWh.

	5.	SunSense II – The SunSense II System has a generation capacity of 497.0 kW. The System is located in Clayton, North Carolina and sells power directly to the utility, Duke Energy (Progress Energy Carolinas, Inc.) under a 20-year fixed rate PPA at $0.150/kWh.

	6.	SunSense III – The SunSense III System has a generation capacity of 497.0 kW. The System is located in Fletcher, North Carolina and sells power directly to the utility, Duke Energy (Progress Energy Carolinas, Inc.) under a 20-year fixed rate PPA at $0.150/kWh.

	7.	NIPSCO III – The NIPSCO “Turtle Top” System has a generation capacity of 375.2 kW. The System is located in New Paris, Indiana and sells power directly to the Northern Indiana Public Service Company under a 15-year fixed rate PPA which started at $0.260/kWh and grows annually at 2.0%.

	8.	OUC I – The OUC I System has a generation capacity of 417.0 kW. The System is located in Orlando, Florida and sells power directly to the Orlando Utilities Commission. The System has a 25-year fixed rate PPA at $0.195/kWh.

	9.	KIUC – The KIUC System has a generation capacity of 383.0 kW. The System is located in Koloa, Hawaii and sells power directly to the Kauai Island Utility Cooperative under a 20-year fixed rate PPA at $0.200/kWh.

	10.	TJ Maxx – The TJ Maxx System has a generation capacity of 249.9 kW. The System is located in Bloomfield, Connecticut and sells power directly to the H.G. Conn. Realty Corp under a 15-year fixed rate PPA which started at $0.112/kWh and grows annual at 3%.

	11.	Denver Public Schools (Green Valley) – The Green Valley System has a generation capacity of 101.2kW. The System is located in Denver, Colorado and sells power directly to the Denver Public Schools under a 20-year fixed rate PPA which started at $0.027/kWh and grows annually at 3%. The System also sells SORECs to Xcel Energy under a 20-year fixed price contract at a rate of $0.115/kWh.

	12.	Denver Public Schools (Rachel B. Noel) – The Rachel B. Noel System has a generation capacity of 101.2 kW. The System is located in Denver, Colorado, and sells power directly to the Denver Public Schools under a 20-year fixed rate PPA which started at $0.027/kWh and grows annually at 3%. The System also sells SORECs to Xcel Energy under a 20-year fixed price contract at a rate of $0.115/kWh.

13.

Denver Public Schools (Greenwood) – The Greenwood System has a generation capacity of 101.2 kW. The System is located in Denver, Colorado, and sells power directly to Denver Public Schools under a 20-year fixed rate PPA which started at $0.027/kWh and grows annually at 3%. The System also sells SORECs to Xcel Energy under a 20-year fixed price contract at a rate of $0.115/kWh.

Separately, the company owns two additional operating solar PV systems, each with approximately 1.0 MW in power generation and together comprising a total of 2.05 MW, located in Gainesville, Florida (the “Gainesville Solar” facilities). Details of Gainesville Solar, which are included in the East to West Solar Portfolio, are as follows:

MLH2 - The MLH2 System has a generation capacity of 1,000 kW. The System is located in Gainesville, Florida, on land now owned by the company, and sells power to the Gainesville Regional Utility (GRU), which is rated Aa2 by Moody’s, under a 20 year fixed rate PPA at a price of $0.19/kWh. The System was placed in service on September 27, 2012.

MLH3 – The MLH3 System has a generation capacity of 1,050 kW. The System is located in Gainesville, Florida and sells power to the GRU under a 20 year fixed rate PPA at a price of $0.15/kWh. The System was placed in service on November 22, 2013.

Lastly, the company acquired two operating solar PV systems comprising a total of 7.621 MW (the “NC Tar Heel” facilities) located in North Carolina through an equity investment of approximately $8,400,000 plus working capital.

Details of the NC Tar Heel facilities, which is included in the East to West Solar Portfolio, are as follows:

1. Person County Solar Park 2 (PCIP) – The PCIP System has a generation capacity of 1,250 kW. The System is located in Timberlake, North Carolina and sells power to the utility, Duke Energy (Progress Energy) under a 20-year PPA at a current price of $0.130/kWh which escalates at a rate of 2% per year. The System was placed in service in November 2011.

2. South Robeson – The South Robeson System has a generation capacity of 6,371kW. The System is located in Rowland, North Carolina and sells power to the utility, Duke Energy (Progress Energy), under a 15-year fixed rate PPA at a price of $.083/kWh. The System also sells RECs to Duke Energy (Progress Energy) under a 15-year contract at a price of $0.005/kWh. The System was placed in service in June 2012.

Green Maple Portfolio

The company committed owns nine solar power facilities in various locations in the state of Vermont (the “Green Maple Portfolio”). In conjunction with constructing these facilities, the company entered into separate loan agreements for seven facilities with the Vermont Economic Development Authority (“VEDA”) for a total loan commitment of approximately $5,183,000, of which approximately $4,678,000 is outstanding as of June 30, 2017.

A brief summary of each project is as follows:

	1.	Charter Hill Solar – Constructed in Rutland, Vermont, this 1.044MW DC system has a PPA with Green Mountain Power, an investment grade utility, to sell 100% of the power generated over a 25-year period.

	2.	Williamstown Solar – Constructed in Williamstown, Vermont, this 732 kW DC system has an SSA in place with a commercial entity to purchase 100% of the energy generated by the system for 20 years.

	3.	GLC Chester Solar – Constructed in Chester Township, Vermont, this 732 kW DC system has SSAs in place with various municipal entities to purchase 100% of the energy generated by the system for 20 years.

	4.	Pittsford Solar – Constructed in Pittsford Township, Vermont, this 686 kW DC system has SSAs in place with various commercial entities to purchase 100% of the energy generated by the system for 20 years.

	5.	Novus Royalton Solar – Constructed in Royalton, Vermont, this 686 kW DC system has SSAs in place with various municipal entities to purchase 100% of the energy generated by the system for 20 years

Proctor GLC Solar LLC – Constructed in Proctor, Vermont, this 708.75 kW DC system has SSAs in place with a municipal entity to purchase 100% of the energy generated by the system for 20 years.

	7.	Hartford Solarfield LLC – Constructed in Hartford, Vermont on the town landfill, this 748.44 kW DC system has an SSA in place with a municipal entity to purchase 100% of the energy generated by the system for 20 years.

	8.	46 Precision Drive LLC – Constructed in North Springfield, Vermont, this 748.44 kW DC system has an SSA in place with a municipal entity to purchase 100% of the energy generated by the system for 20 years.

City Garden Solar LLC – Constructed in Rutland, Vermont, this 1.0 MW DC system has a PPA with Green Mountain Power, an investment grade utility, to sell 100% of the power generated over a 25-year period.

Magnolia Sun Portfolio

The company owns four solar facilities in Tennessee, with a total generation capacity of 3.0 MW. The four assets which are owned within the Magnolia Sun Portfolio (named “Powerhouse One”), consist of commercial grade, ground mounted solar systems located on leased property within a five-mile radius in Fayetteville, Tennessee. Electricity produced by the portfolio is sold under long term PPAs with two investment grade counterparties; the Tennessee Valley Authority and Fayetteville Public Utilities. The PPAs have an average remaining contract life of approximately 14.3 years.

On January 19, 2016, the company acquired an additional 721,828 kW of operating solar power facilities located on three sites in the states of California and Massachusetts, for a total purchase price of approximately $250,000 (named “CaMa Solar”). The largest off-taker is Santa Cruz City Schools, rated Aa2, followed by Petaluma City Schools of Sonoma County, rated A2, which are both based in California. The third off-taker is the WGBH Educational Foundation, a non-profit, which has a rating of Aaa on its revenue bonds and is located in Boston, MA.

On March 24, 2016, the company acquired eleven solar facilities in Tennessee, with a total generation capacity of 1.75 MW, for a total purchase price of approximately $3,100,000 (named “SolaVerde”). Included in the Magnolia Sun Portfolio, SolaVerde consists of ground and roof mounted solar systems located on leased property near Fayetteville, Sneedville and Tazewell, Tennessee. Electricity produced by the portfolio is sold under long term PPAs with the Tennessee Valley Authority, an investment grade utility and two North Carolina municipal entities. The PPAs have an average remaining contract life of approximately 15 years.

Canadian Northern Lights Portfolio

The company acquired a portfolio in November 2014, of forty-five (45) rooftop solar photovoltaic systems (the “Canadian Northern Lights Portfolio”). The assets are located within a 60-mile radius of Toronto, Ontario, Canada and comprise approximately 275 kilowatts of generation capacity. In November 2015, the company acquired an additional thirty-five (35) residential, rooftop photovoltaic systems in the province of Ontario, Canada comprising an additional 306.4 kilowatts of generation capacity. As part of both acquisitions, the individual local distribution company and Ontario Power Authority (“OPA”) contracts were transferred from the seller to Canadian Northern Lights Corp, a wholly owned, indirect subsidiary of the company. The Company sold one of the locations in June 2017 for approximately CAD $30,000.

There is a standardized lease that is signed with each of the home /building owners that allows the system to be generally operated and maintained during the term of each OPA contract. The lease has been designed to survive the sale of the home/building and there is a non-disturbance provision which will allow the owner of the system, the company, to operate the system for the entirety of the term. The home/building owner receives a modest rental payment for use of the rooftop which is paid annually.

The Canadian Northern Lights Portfolio produces revenue from the sale of electricity measured in kilowatt hours (kWh) to the OPA, the sole off-taker for all the solar systems. The price of electricity sold, based upon the rate contained in the OPA contract, is between CAD $0.549 and CAD $0.802 per kWh. On average, the OPA contracts have a remaining life of approximately 14.4 years unless terminated earlier by either party pursuant to the terms of each contract.

Six States Solar Portfolio

The company currently leases 6.223 MW of operating solar power facilities located on 23 sites in the states of Arizona, California, Colorado, Connecticut and Indiana under a master lease agreement. During the remaining term of the lease, which is approximately 17 years, there is the potential for the company to purchase these assets directly upon agreement and consent of the parties. With over 82% of the contracted revenues from investment grade counterparties, the average remaining life of the PPA is approximately 13.4 years.

The Six States Solar Portfolio (the “SSS Portfolio”) consists of ground and roof mounted solar units located on municipal and commercial properties as follows:

	1.	Newington Public Schools - Newington Public Schools (“Newington”) is the off-taker for the Town of Newington project, which comprises approximately 2.5% of revenue in the SSS Portfolio. Located in Newington, Connecticut, Newington encompasses seven schools, which are accredited by the New England Association of Schools & Colleges. The off-taker serves approximately 4,200 students from kindergarten through 12th grade.

	2.	Northwestern Regional School District #7 - Northwestern Regional School District (“Northwestern”) is the off-taker for the Regional School District #7 project, which comprises approximately 7.4% of revenue in the SSS Portfolio. Located in Winsted, Connecticut, Northwestern is a comprehensive public Middle School-High School. The off-taker serves the total Regional Community with emphasis on middle school and high school students.

	3.	City of Winters - The City of Winters (“Winters”) is the off-taker for the City of Winters project, which comprises approximately 8.4% of revenue in the SSS Portfolio. Located in Winters, California, the city is part of the Sacramento-Arden-Arcade-Yuba City, California-Nevada region.

	4.	Denver Public Schools - Denver Public Schools (“DPS”) is the off-taker for the 13 Denver Public Schools projects, which comprises approximately 15.5% of revenue in the SSS Portfolio, with 4.0% coming from PPA revenue and 11.6% from RECs with Xcel Energy. Located in Denver, Colorado, DPS encompasses 185 schools serving 90,150 students. Both DPS and Xcel Energy maintain investment grade credit ratings.

	5.	Adams State College - Adams State College (“Adams”) is the off-taker for the Adams State College project, which comprises approximately 5.3% of revenue in the SSS Portfolio, with 1.5% coming from PPA revenue and 3.9% from RECs with Xcel Energy. Located in Alamosa, Colorado, Adams is a state-supported liberal arts university established in 1921. Both Adams and Xcel Energy maintain investment grade credit ratings.

	6.	Sacramento County Water Agency - Sacramento County Water Agency (“SCWA”) is the off-taker for the Sacramento County Waste Authority project, which comprises approximately10.6% of revenue in the SSS Portfolio, with 9.5% coming from PPA revenue and 1.1% coming from performance-based incentives with Sacramento Municipality Utility District (“SMUD”). Located in Sacramento, California, SCWA commits to providing safe and reliable drinking water to over 55,000 homes and businesses. SCWA was established in 1952 with the passage of the Sacramento County Water Agency Act. Both SCWA and SMUD maintain investment grade credit ratings.

	7.	Tanque Verde School District - Tanque Verde School District (“TVSD”) is the off-taker for the four Tanque Verde School District projects, which comprise approximately 21.9% of revenue in the SSS Portfolio, with 8.4% coming from PPA revenue and 13.5% coming from RECs with Tuscan Electric Power. Located in Tucson, Arizona, TVSD encompasses four schools. Both TVSD and Tuscan Electric Power maintain investment grade credit ratings.

Northern Indiana Public Service Company - Northern Indiana Public Service Company (“NIPSCO”) is the off-taker for the three NIPSCO projects, which comprise approximately 17.0% of revenue in the SSS Portfolio. The projects are located in Goshen, Milford, and Topeka, Indiana. NIPSCO is Indiana’s largest natural gas distributor and second-largest distributor of electricity serving more than one million customers. The off-taker maintains an investment grade credit rating.

South Adams County Water and Sanitation District - The South Adams County Water and Sanitation District (“South Adams”) is the off-taker for the South Adams project, which comprises approximately 4.1% of revenue in the SSS Portfolio with 1.5% coming from the PPA and 3.9% coming from RECs sold to Xcel Energy. Located in Commerce City, Colorado, South Adams was formed in 1953 under the State of Colorado Special District provisions to serve Commerce City. South Adams is the largest combined Water and Sanitation District in the state of Colorado serving nearly 50,000 customers. The off-taker maintains an investment grade credit rating.

Sunny Mountain Portfolio

On August 28, 2014, the company acquired a portfolio of 22 commercial and residential rooftop and ground mounted solar systems comprising approximately 801 kW of generation capacity for a purchase price of $880,000 plus closing costs. The company sold one of the locations in June 2016 for $40,000.

Greenbacker Residential Solar Portfolio

On August 8, 2016 the company purchased a controlling interest in a 12.1 MW portfolio of 1,611 residential rooftop solar systems from a subsidiary of OneRoof Energy Inc. (“ORE”) for approximately $19,800,000. The systems are located across seven states including California, Connecticut, Hawaii, Maryland, Massachusetts, New Jersey and New York. All of the energy generated by the systems has been sold under 20 year power purchase agreements to the various residential customers who on average have a FICO Score Rating of Very Good.

On March 3, 2017, the company signed a purchase and sale agreement to purchase an additional 747 residential photovoltaic solar systems, with aggregate generating capacity of 6.219 MW DC, from ORE and certain direct and indirect subsidiaries. The portfolio of systems, located in Hawaii, Massachusetts, New Jersey, Arizona, California, New York, Connecticut, and Maryland, is a mix of systems with power purchase agreements and operating lease systems that had original agreement terms of 20 years. The weighted average remaining life of these systems at the expected time of purchase was approximately 18.0 years. The closing of the transaction occurred in two tranches, with the first tranche including an additional 193 systems, in the amount of approximately $2,250,000 closing on March 15, 2017, and the second tranche including an additional 554 systems, in the amount of approximately $5,800,000 closing on May 15, 2017.

Greenbacker Residential Solar II Portfolio

One June 13, 2017, the company signed a purchase and sale agreement to purchase 1,252 operating residential photovoltaic solar systems, with aggregate generating capacity of 8.897 MW DC, from a subsidiary of TerraForm Power for approximately $6,000,000. The portfolio of systems, located in Arizona, California, Connecticut, Massachusetts, Maryland, Nevada, New Jersey and New York, all are subject to power purchase agreements that had original agreement terms of 20 years. The weighted average remaining life of these systems at time of purchase was approximately 18.6 years. The transaction closed on June 30, 2017.

Floyd Road Solar Farm Portfolio

On April 10, 2017, the company acquired 6.75 MW of operating solar power facilities located on one site in Gaston, North Carolina (“Floyd Road”), for a total purchase price of approximately $10,800,000. All of the energy generated by the systems, which reached commercial operation date in the second quarter of 2017, has been sold under a 15 year power purchase agreement to Dominion Energy. As of June 30, 2017, approximately $4,800,000 of the purchase price is payable subject to reaching certain operational milestones. Subsequent to quarter-end on July 14, 2017, the company sold Floyd Road for approximately $11,400,000 and leased the facility back for a period of 24 years. De Lage Landen Financial Services was the sale/leaseback entity.

Enfinity Colorado DHA Portfolio

On March 31, 2017 the company acquired a 2.5 MW portfolio of 666 residential rooftop solar systems from a subsidiary of Terraform Power Inc. for approximately $1,100,000 (“DHA Portfolio”). The systems are located in and around Denver, Colorado. All of the energy generated by the systems has been sold under a 20 year power purchase agreement to the Denver Housing Authority with SRECs sold to Xcel Energy.

The DHA Portfolio is leveraged at the project level through a subsidized debt program with the Colorado Housing and Finance Authority pursuant to a trust indenture with a Midwestern retail bank. The debt has a subsidized interest rate of 1.75% per annum and amortizes fully over the term of the PPA with no required refinancing.

With the inclusion of owned and leased assets, the company operates approximately 55.971 MW of operating solar power facilities throughout the United States as of June 30, 2017.

Greenbacker Wind Portfolio

The company owns two wind farms, comprising a total of 35.0 MW of operating wind power facilities, in Teton County, Montana (the “Fairfield Wind Portfolio” and the “Greenfield Wind Portfolio”)). Both projects sell power directly to the local public utility, NorthWestern Energy, an investment grade rated utility.

The Fairfield Wind Portfolio, which uses four 1.7 MW and two 1.6 MW General Electric wind turbines to generate 10.0 MW, has a 20-year fixed-rate PPA, with pricing based on a $0.05444/kWh off peak rate and a $0.09087/kWh on peak rate for the contract period. The system has historically performed in line with production estimates. With the original in-service date being May 1, 2014, there is approximately 16.8 years remaining on the current PPA. The Fairfield Wind Portfolio also has a contract to sell renewable energy credits to NorthWestern Energy priced at $0.0069/kWh and escalating at 2.5% with a $0.0099/kWh cap.

The Greenfield Wind Portfolio totals 25,000 kW using thirteen GE 2.3 -107 MW 1.7 MW wind turbines. The Project has a 25-year fixed-rate PPA with NorthWestern Energy, which includes the sale of 100% of the environmental credits, with no escalation for the contract period.

On June 30, 2017, the company purchased Fossil Gulch Wind Park (“Fossil Gulch”) for approximately $6,500,000. Fossil Gulch is a 10.5 MW Wind Farm located in Hagerman, Idaho that sells power directly to the local public utility, Idaho Power Company. The Fossil Gulch project has a 20-year escalating power purchase agreement with approximately eight years remaining as of the acquisition date. The pricing on the PPA is based on a $0.061/kWh rate with 2.4% annual escalations over the contract period and includes a contract to sell renewable energy tax credits to a third party through December 31, 2018 at $0.00255/kWh. The facility originally commenced operations in the third quarter of 2005 and it has been operated continuously since that date.

GREC Energy Efficiency Portfolio

The company maintains three capital leases with AEC-LEDF, LLC related to the ownership of energy efficient lighting fixtures in three commercial locations in Puerto Rico, United States. The combined value of capital leases as of June 30, 2017 is approximately $503,000. The lease period under each of the master lease agreements correspond with underlying equipment service agreements between LED Funding LLC, the seller of the equipment to GREC Energy Efficiency Portfolio, and the owners of the commercial locations. The equipment service agreement terms range from seven to ten years. At the end of each of the lease terms, ownership of the fixtures is retained by the owners of the commercial locations.

Renew AEC One, LLC

In September 2015, the company entered into a secured loan agreement with Renew AEC One, LLC to fund the installation and purchase of energy efficiency lighting in a warehouse in Pennsylvania. The loan, which is valued at $736,371 as of June 30, 2017, bears an interest rate of 10.25% per annum. The principal is amortized over ten years ending in February 2025.

LED Funding LLC and Renew AEC One LLC (the “AEC Companies”) are considered related parties as the members of these entities own an indirect, non-controlling ownership interest in the company’s advisor. The loans and capital leases outstanding between the AEC Companies and the company were negotiated at an arm’s length and contain standard terms and conditions that would be included in third party lending agreements including required security and collateral, interest rates based upon risk of the specific loan, and term of the loan. As of June 30, 2017, all loans and capital leases were considered current per their terms.

Investment Summary

The following table presents the purchases of new investments or the funding of additional capital for existing investments for the six months ended June 30, 2017 and June 30, 2016:

	For the six months ended June 30, 2017		For the six months ended June 30, 2016
Alternative Energy - Solar
East to West Solar Portfolio	$	4,633,000	$	200,000

Green Maple Portfolio		180,000		3,100,000
Magnolia Sun Portfolio		—		3,225,000

Greenbacker Residential Solar Portfolio		8,250,000		50,000

Greenbacker Residential Solar II		6,400,000		—

Six States Solar Portfolio		50,000		—
Enfinity Colorado DHA Portfolio		1,400,000		—
Floyd Road Solar Farm Portfolio		10,596,559		—
Golden Horizons Solar Portfolio		50,000		—
Alternative Energy – Wind
Greenbacker Wind LLC Portfolio		8,575,000		—
Secured Loans - Other

Greenfield Secured Turbine Loan		—		25,887,755

Total	$	40,134,559	$	32,462,755

The composition of the company’s investments as of June 30, 2017, at amortized cost and fair value, were as follows:

	Investments at Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
Alternative Energy - Solar:
Sunny Mountain Portfolio	$	884,578	$	1,152,859		0.7	%
East to West Solar Portfolio		27,889,875		26,996,045		17.3
Green Maple Portfolio		13,075,000		11,653,289		7.4
Magnolia Sun Portfolio		10,775,000		10,182,992		6.5
Canadian Northern Lights Portfolio		1,603,136		1,990,981		1.3
Six States Solar Portfolio		2,350,000		2,826,901		1.8
Greenbacker Residential Solar Portfolio		28,100,000		29,179,172		18.6
Greenbacker Residential Solar Portfolio II		6,400,000		6,270,988		4.0
Enfinity Colorado DHA Portfolio		1,400,000		1,700,042		1.1
Floyd Road Solar Farm Portfolio		10,596,559		11,336,522		7.2
Golden Horizons Solar Portfolio		50,000		27,564		0.00
Subtotal	$	103,124,148	$	103,317,355		65.9	%
Alternative Energy - Wind:
Greenbacker Wind Portfolio	$	50,852,428	$	52,177,842		33.3	%
Subtotal	$	50,852,428	$	52,177,842		33.3	%
Energy Efficiency Secured Loans:
GREC Energy Efficiency Portfolio	$	488,315	$	505,115		0.3	%
Renew AEC One, LLC		736,371		736,371		0.5
Subtotal	$	1,224,686	$	1,241,486		0.8	%
Total	$	155,201,262	$	156,736,683		100.0	%

The composition of the company’s investments as of December 31, 2016, at amortized cost and fair value, were as follows:

	Investments at Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
Alternative Energy - Solar
Sunny Mountain Portfolio	$	884,578	$	1,175,952		1.0	%
East to West Solar Portfolio		23,256,875		21,943,079		19.0
Green Maple Portfolio		12,895,000		11,447,775		9.9
Magnolia Sun Portfolio		10,775,000		10,445,788		9.1
Canadian Northern Lights Portfolio		1,603,136		1,815,169		1.6
Six States Solar Portfolio		2,300,000		2,846,174		2.5
Greenbacker Residential Solar Portfolio		19,850,000		20,487,901		17.8
Alternative Energy - Wind
Greenbacker Wind Portfolio		42,277,428		43,643,215		37.9
Energy Efficiency
GREC Energy Efficiency Portfolio		511,362		546,677		0.5
Renew AEC One, LLC		771,371		771,371		0.7
Total	$	115,124,750	$	115,123,101		100.0	%

The composition of the company’s investments as of June 30, 2017 by industry, at amortized cost and fair value, were as follows:

	Investments at Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio
Alternative Energy - Solar	$	103,124,148	$	103,317,355		65.9	%
Alternative Energy - Wind		50,852,428		52,177,842		33.3
Energy Efficiency - Lighting Replacement		1,224,686		1,241,486		0.8
Total	$	155,201,262	$	156,736,683		100.0	%

The composition of the company’s investments as of December 31, 2016 by industry, at amortized cost and fair value, were as follows:

	Investments at Cost		Investments at Fair Value		Fair Value Percentage of Total Portfolio

Alternative Energy - Solar	$	71,564,589	$	70,161,838		60.9	%
Alternative Energy - Wind		42,277,428		43,643,215		37.9
Energy Efficiency - Lighting Replacement		1,282,733		1,318,048		1.2
Total	$	115,124,750	$	115,123,101		100.0	%

Results of Operations

A discussion of the results of operations for the three and six months ended June 30, 2017 and the three and six months ended June 30, 2016 are as follows:

Revenues. As the majority of our assets consist of equity investments in renewable energy projects, the majority of our revenue is generated in the form of dividend income. Dividend income from our privately held, equity investments are recognized when received. The other major component of our revenue is interest income earned on our debt investments, including loans to developers and loans made directly or indirectly to renewable energy projects. Dividend income for the three and six months ended June 30, 2017 totaled $2,881,446 and $5,204,176 respectively, while interest income earned on our cash, cash equivalents and secured loans (including the amortization of origination and other fees) amounted to $55,024 and $99,193, respectively. Dividend income for the three and six months ended June 30, 2016 totaled $1,522,713 and $2,169,698, respectively, while interest income earned on our cash, cash equivalents and secured loans (including the amortization of origination and other fees) amounted to $122,578 and $132,159, respectively.

The increase in dividend income from the prior three and six month periods ended June 30, 2016 was primarily attributed to the acquisition of renewable energy projects throughout the past year as the value of our investments increased from $82 million as of June 30, 2016 to $156 million as of June 30, 2017, or a 90% increase. As new projects were purchased by the company, the volume of overall electricity generated by our project investments increased which increased net income available for distribution to the company. The decrease in interest income for the three and six month periods ended June 30, 2017 versus 2016 was primarily attributed to the repayment of the turbine supply loan in the fourth quarter of 2016.

Expenses. For the three and six months ended June 30, 2017, the company incurred $1,209,850 and $2,583,232 in operating expenses, respectively, including the management fees earned by the advisor. For the three and six months ended June 30, 2016, the company incurred $763,295 and $1,441,072 in operating expenses, respectively, including the management fees earned by the advisor. The company and the advisor entered into an expense reimbursement agreement on January 30, 2014, ending on December 31, 2016, whereby the advisor agreed to reimburse the company for certain operating expenses above rate limits to maintain the company’s operating expenses at a specified level (as defined within the agreement). Once the company’s expenses were below that limit, the company was obligated to repay the advisor for all previous expenses reimbursed by the advisor until the advisor was fully reimbursed. For the three and six months ended June 30, 2016, the company recorded a net $327,150 and $506,040, respectively, payable to the advisor as reimbursement for assumption of past operating expenses. Thus, total expenses, net of expense waiver and reimbursement, for the three and six months ended June 30, 2016 was $1,090,445 and $1,947,112, respectively.

For the three and six months ended June 30, 2017, the advisor earned $759,492 and $1,456,638, respectively, in management fees. While there was an incentive allocation of $916 earned to date by the advisor, the consolidated financial statements reflect a $308,000 increase in incentive allocation for the three months ended June 30, 2017 and a $307,414 increase in incentive allocation for the six months ended June 30, 2017, based primarily upon net unrealized appreciation.

For the three and six months ended June 30, 2016, the advisor earned $429,063 and $759,778, respectively, in management fees. While there was an incentive allocation of $916 earned to date by the advisor, the consolidated financial statements reflect a $46,258 decrease in incentive allocation for the three months ended June 30, 2016 and a $173,067 decrease in incentive allocation for the six months ended June 30, 2016, based primarily upon net unrealized depreciation.

For the three and six months June 30, 2017, Greenbacker Administration LLC invoiced the company $0 and $115,983, respectively, for expenses, at cost, for services related to asset management and accounting services related to the company’s investments. Commencing as of April 1, 2017, these expenses were invoiced directly to the company’s investments. For the three and six months ended June 30, 2016, Greenbacker Administration, LLC invoiced the company $55,978 and $80,002, respectively, for expenses, at cost, for services related to asset management and accounting services related to the company’s investments.

Lastly, for the three and six months ended June 30, 2017, the company incurred an increase in deferred tax benefits from operations in the amounts of $283,856 and $773,928, respectively, which was offset by franchise tax expense on various solar facilities of $23,577 and $65,827, respectively. For the three and six months ended June 30, 2016, the company incurred an increase in deferred tax benefits from operations in the amount of $977,234 and $1,257,899, respectively, which was offset by franchise tax expense on various solar facilities of $12,431 and $69,863, respectively. The deferred tax benefit is mainly derived from net operating losses incurred and investment tax credit carryforwards related to the company’s investments which, unlike financial statement purposes under GAAP, are consolidated for tax purposes offset by unrealized tax basis gain on the company’s investments. Thus, for the three and six months ended June 30, 2017, the net investment income was $1,986,899 and $3,428,238, respectively, or $0.11 and $0.20, respectively, per share. For the three and six months ended June 30, 2016, the net investment income was $1,519,649 and $1,542,781, respectively, or $0.15 and $0.17, respectively, per share.

Going forward, we expect our primary expense to be the payment of asset management fees under our advisory agreement with the advisor. We will bear other expenses, which are expected to include, among other things:

●

the cost of calculating our net asset value, including the related fees and cost of retaining third-party valuation services;

●

the cost of effecting sales and repurchases of units;

●

fees payable to third parties relating to, or associated with our financial and legal affairs, making investments, and valuing investments, including fees and expenses associated with performing due diligence reviews of prospective investments and sub-advisors;

●

fees payable to our advisor;

●

interest payable on debt incurred to finance our investments;

●

transfer agent and custodial fees;

●

fees and expenses associated with marketing efforts;

●

federal and state registration fees;

●

costs of board meetings, unitholders’ reports and notices and any proxy statements;

●

directors and officers errors and omissions liability insurance and other types of insurance;

●

direct costs, including those relating to printing of unitholder reports and advertising or sales materials, mailing, telephone and staff;

●

fees and expenses associated with independent audits and outside legal costs, including compliance with the Sarbanes-Oxley Act of 2002 and applicable federal and state securities laws; and

●

all other expenses incurred by us or the advisor or sub-advisors in connection with administering our investment portfolio, including expenses incurred by our advisor in performing certain of its obligations under the advisory agreement.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation on Investments and Translation of Assets and Liabilities Denominated in Foreign Currencies. Net realized and unrealized gains and losses from our investments and net realized and unrealized foreign currency gains and losses on translation of assets and liabilities denominated in foreign currencies are reported separately on the consolidated statements of operations. We measure realized gains or losses as the difference between the net proceeds from the sale, repayment, or disposal of an asset and the adjusted cost basis of the asset, without regard to unrealized appreciation or depreciation previously recognized. Net change in unrealized appreciation or depreciation will reflect the change in investment values during the reporting period, including any reversal of previously recorded unrealized appreciation or depreciation, when gains or losses are realized. While we recognized no realized gains or losses for the three and six months ended June 30, 2017, a net change in unrealized appreciation of $1,645,315 and $1,537,070, respectively, was recorded of which $1,606,324 and $1,485,146 of unrealized appreciation, respectively, related to the change in value of investments and $38,991 and $51,924 of unrealized appreciation, respectively, related to the change in value based upon changes in foreign currency exchange rates. We recognized a $4,578 realized gain on the sale of a small solar asset for the three and six months ended June 30, 2016, a net change of $236,004 and $870,051 of unrealized depreciation, respectively, was recorded of which $244,944 and $967,054 of unrealized depreciation, related to change in value of investments and $8,940 and $97,003 of unrealized appreciation, respectively, related to change in value based upon changes in foreign currency exchange rates. The net change in unrealized depreciation on investments is primarily attributable to the acquisition of investments where the fair value of the investment purchased was in excess of the cost to acquire the investment.

Changes in Net Assets from Operations. For the three and six months ended June 30, 2017, we recorded a net increase in net assets resulting from operations of $2,909,805 and $3,989,869, respectively. For the three and six months ended June 30, 2016, we recorded a net increase in net assets resulting from operations of $3,126,515 and $4,400,935, respectively.

Changes in Net Assets, Net Asset Value and Offering Prices. For the six months ended June 30, 2017 and June 30, 2016, we recorded a net increase in net assets of $3,989,869 and $4,400,935, respectively. The increase in net assets primarily relates to our net investment income earned during the period and the positive effect of our deferred tax benefit due to a significant loss for tax purposes at GREC, mainly generated by accelerated depreciation on our solar and wind investments.

Based on the net asset value for each quarter ended since the Commencement of Operations, the offering price of our shares was adjusted to ensure that the net proceeds per share are no more or less than the then current net asset value per share. The offering prices since inception, and the dates they were effective, are as follows:

Period				Class
From		To		A		C		I		P-A		P-I
	25-Apr-14		4-Nov-15	$	10.000	$	9.576	$	9.186		NA		NA
	5-Nov-15		4-Feb-16	$	10.024	$	9.599	$	9.208		NA		NA
	5-Feb-16		5-May-16	$	10.048	$	9.621	$	9.230		NA		NA
	6-May-16		3-Aug-16	$	10.068	$	9.640	$	9.248	$	9.589	$	8.808
	4-Aug-16		6-Nov-16	$	10.227	$	9.791	$	9.394	$	9.739	$	8.946
	7-Nov-16		7-Feb-17	$	10.282	$	9.581	$	9.445	$	9.782	$	8.828
	8-Feb-17		4-May-17	$	10.224	$	9.526	$	9.391	$	9.704	$	8.758
	5-May-17		17-May-17	$	10.165	$	9.479	$	9.337	$	9.704	$	8.690
	18-May-17		04-Aug-17	$	9.735	$	9.067	$	8.942	$	9.704	$	8.690
	From 05-Aug-17			$	9.724	$	9.078	$	8.932		N/A	$	8.730

Liquidity and Capital Resources

As of June 30, 2017 and December 31, 2016, the company had $10,090,128 and $13,055,090 in cash and cash equivalents, respectively. We use our cash to fund the acquisition, construction and operation of renewable energy and energy efficiency and sustainable development projects, make investments in renewable energy businesses, repay principal and interest on our borrowings, make distributions to our members and fund our operations. Our primary sources of cash generally consist of:

●

the net proceeds of this offering;

●

dividends, fees, and interest earned from our portfolio of investments, as a result of, among other things, cash flows from a project’s power sales;

●

proceeds from sales of assets and capital repayments from investments;

●

financing fees, retainers and structuring fees;

●

incentives and payments from federal, state and/or municipal governments; and

●

potential borrowing capacity under future financing sources.

Operating entities of the company, which are accounted for as investments using fair value in the company’s consolidated financial statements under ASC 820, had approximately $12,397,000 and $11,494,000 in outstanding notes payable collateralized by certain solar assets and membership interests in limited liability companies included in the East to West Solar, Enfinity Colorado DHA and Green Maple Portfolios, respectively, as of June 30, 2017 and December 31, 2016, respectively. The company and GREC provided an unsecured guarantee on the repayment of the East to West Solar LLC and Green Maple LLC loans.

As of June 30, 2017, Williamstown Old Town Road LLC, Novus Royalton LLC, GLC Chester Community Solar LLC Charter Hill Solar LLC., Pittsford GLC Solar LLC, Hartford Solarfield, LLC and Proctor GLC Solar LLC, all indirect, wholly owned subsidiaries included in the Green Maple Portfolio, had individually entered into loan agreements with the VEDA. As of June 30, 2017, the outstanding balance of the VEDA loans amounted to approximately $4,678,000. The terms of all these loans include 1) a term of one hundred and forty-seven (147) months with principal repayments commencing in the fourth month; and 2) interest thereon at a variable rate, tied to VEDAs prime rate, which was 3.0% as of June 30, 2017. While the individual subsidiaries of Green Maple LLC have pledged all their assets as collateral, Green Maple LLC, GREC and the company have individually provided an unsecured guaranty on these loans.

As part of the acquisition of the Enfinity Colorado DHA Portfolio (“DHA Portfolio”), a mortgage note dated April 20, 2012 (the “Note”), funded with bond proceeds from the Colorado Housing Finance Authority of Denver, Colorado in the amount of $6,775,000 (Taxable Qualified Energy Conservation Bonds) pursuant to a trust indenture, was assumed. The Note bears gross interest at an effective annual rate of 5%, and requires semiannual interest payments, payable on April 1 and October 1 of each year. The note has a final maturity date of April 1, 2032. Pursuant to the Series 2012 bonds, the DHA Portfolio receives interest subsidy payments from the United States Treasury semiannually on April 1 and October 1 of each year. The semiannual interest subsidy receivable is 3.255% of the outstanding bond principal. The Note is secured by the personal property, land improvements, and income of the DHA Portfolio, Lastly, pursuant to the Note agreement, the DHA portfolio has agreed that it will not take any action which jeopardizes the tax-exempt status of the mortgage.

As part of the acquisition of Fairfield Wind Manager LLC (“FWM LLC”) by Greenbacker Wind LLC, an indirect, wholly owned subsidiary of the company, the company is indirectly responsible for $11,534,417 in outstanding notes payable collateralized by wind assets held by Fairfield Wind Owner, LLC (“FWO LLC”), an entity which FWM LLC owns 50.01%. The loan earns interest at a variable base rate plus the applicable margin (3.0% as of June 30, 2017), as such terms are defined in the financing agreement.

Since the company maintains operating control over this entity, we have included the total amount of the debt outstanding in the below table summarizing notes payable associated with the company’s operating subsidiaries.

On July 11, 2016, the company, through a newly formed, indirect, wholly owned subsidiary, GREC Entity HoldCo LLC (the “Borrower”), entered into a Credit Agreement by and among the Borrower, the lenders party thereto and Fifth Third Bank, as administrative agent, as well as swap counterparty. The new credit facility consists of an initial term loan of $4,300,000 (the “Facility 1 Term Loan”) as well as a revolving credit facility in the aggregate principal amount of up to $33,250,000 (the “Revolver”) that will convert to an additional term loan facility, based upon the amount outstanding on the conversion date, in July 2017 (the “Facility 2 Term Loan”) (collectively, the “Credit Facility”). The conversion date for the Revolver was modified on July 18, 2017 to extend the conversion date to September 9, 2017. There was a maximum draw down of $5,800,000 on the Revolver during the six months ended June 30, 2017. Both the Facility 1 Term Loan and the Facility 2 Term Loan mature in July 2021.

Interest on the Credit Facility is payable on the last day of each month starting as of August 31, 2016. Principal on the Facility 1 Term Loan is payable at a fixed amount of $23,889 on the last day of each month based upon a fifteen-year amortization. The Revolver is interest only for the first twelve months. Thereafter, the Revolver converts to the Facility 2 Term Loan whereby principal will be due monthly with amortization based upon the weighted average power purchase agreement life remaining on the date of conversion. Borrowings under the credit facility are secured by the assets, cash, agreements and equity interests in the Borrower and its subsidiaries. The company and its wholly owned subsidiary, Greenbacker Renewable Energy Corporation, are guarantors of the Borrower’s obligations under the Credit Facility.

The weighted average interest rate on all notes payable outstanding at the company’s operating entities was 4.30% as of June 30, 2017.

The following table summarizes the notes payable balances of the company’s operating entities as of June 30, 2017, in addition to committed but undrawn funds on notes payable:

	Interest Rates
	Range		Weighted Average		Maturity Dates		June 30, 2017
Fixed rate notes payable	1.775%–6.25	%	3.05	%	03/31/2021-04/01/2032	$	7,719,000
Floating rate notes payable	2.25–5.86	%	4.78	%	07/11/2021- 07/21/2032		20,249,000
						$	27,968,000

The principal payments due on the notes payable for each of the next four years ending December 31 and thereafter, including amounts expected to be drawn down on existing commitments, are as follows:

Year ending December 31:		Principal Payments
	2017		567,000
	2018		1,715,000
	2019		1,778,000
	2020		1,836,000
	2021		6,029,000
	Thereafter		16,043,000
		$	27,968,000

In the future, we expect that our ongoing sources of financing will be through corporate-level credit facilities or other secured and unsecured borrowings. In addition, we expect to use other financing methods at the project level as necessary, including joint venture structures, construction loans, property mortgages, letters of credit, sale and leaseback transactions, other lease transactions and other arrangements, any of which may be unsecured or may be secured by mortgages or other interests in our assets. In addition, other sources of capital may include tax equity financings, whereby an investor receives an allocation of tax benefits as well as cash distribution and governmental grants. Tax equity investors are passive investors, usually large tax-paying financial entities such as banks, insurance companies and utility affiliates that use these investments to reduce future tax liabilities. Depending on the arrangement, until the tax equity investors achieve their agreed upon rate of return, they may be entitled to substantially all of the applicable project’s operating cash flow, as well as substantially all of the project’s ITCs, accelerated depreciation and taxable income or loss. Typically, tax equity financing transactions are structured so that the tax equity investors reach their target return between 5 and 10 years after the applicable project achieves commercial operation. As a result, a tax equity financing may substantially reduce the cash distributions from the applicable project available for debt service and the period during which the tax equity investors receive most of the cash distributions may last longer than expected if the portfolio company’s energy projects perform below our expectations. While the terms of a tax equity financing may cause cash to be diverted away from the company to the tax equity investor for certain periods specified in the financing arrangement (often five to ten years, measured from commencement of the tax equity financing), then we expect to couple investments where cash is so restrained with other cash flowing investments so as to provide cash for distributions to investors. Our investment strategy will involve a combination of different types of investments, so as to maintain a mix of cash flowing and non-cash flowing investments.

Hedging Activities

We may seek to stabilize our financing costs as well as any potential decline in our investments by entering into derivatives (including swaps) or other financial products in an attempt to hedge our interest rate risk. In connection with the FWO LLC note payable, FWO LLC entered into two interest rate swap agreements in notional amounts of $9,175,561 and $11,677,316, respectively, to swap the floating rate interest payments under the note payable agreement for corresponding fixed payments. The swap agreements have an effective interest rate of 5.07%, and 2.86%, respectively, and an outstanding total notional balance that matches the principal of the loan agreement. The value of the swap agreements as of June 30, 2017 was a total liability in the amount $1,772,740. FWO LLC did not designate the derivative as a hedge for accounting purposes and, accordingly, accounts for the interest rate swap at fair value, with adjustments to fair value recorded as interest expense.

In regard to our investment in the Canadian Northern Lights Portfolio, with 79 solar assets located in and around Toronto, Ontario, Canada, we have foreign currency risk related to our revenue and operating expenses which are denominated in the Canadian Dollars as opposed to the U.S. Dollars. While we are currently of the opinion that the currency fluctuation between the Canadian and U.S. Dollar will not have a material impact on our operating results, we may in the future enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk if we believe not doing so would have a material impact our results of operations.

Contractual Obligations

While the company does not include a contractual obligations table herein as all obligations of the company are short-term, we have included the following information related to commitments of the company to further assist investors in understanding our outstanding commitments.

Advisory Agreement - GCM, a private firm that is registered as an investment adviser under the Advisers Act serves as our advisor. Under the direction of our board of directors, GCM manages our day-to-day operations and provides advisory and management services to us. The advisory agreement was previously approved by our board of directors and became effective on April 25, 2014. Unless earlier terminated, the advisory agreement will remain in effect for successive one-year periods if approved annually by a majority of our independent directors. The advisory agreement was most recently re-approved in February 2017, for the one-year period commencing April 25, 2017.

Pursuant to the advisory agreement, GCM is authorized to retain one or more sub-advisors with expertise in our target assets to assist GCM in fulfilling its responsibilities under the advisory agreement. However, GCM will be required to monitor any sub-advisor to ensure that material information discussed by management of any sub-advisor is communicated to our board of directors, as appropriate. If GCM retains any sub-advisor, our advisor will pay such sub-advisor a portion of the fees that it receives from us. We will not pay any additional fees to a sub-advisor. While our advisor will oversee the performance of any sub-advisor, our advisor will remain primarily liable to us to perform all of its duties under the advisory agreement, including those delegated to any sub-advisor. As of June 30, 2017, no sub-advisors have been retained by GCM.

We pay GCM a base management fee for advisory and management services. The base management fee is calculated at a monthly rate of 0.167% (2.00% annually) of our gross assets (including amounts borrowed). The Special Unitholder, an entity affiliated with our advisor, will hold the special unit in our company entitling it to an incentive allocation and distribution. Pursuant to our LLC Agreement, the incentive allocation and distribution, or incentive distribution, will have three parts as follows: the Income Incentive Distribution, Capital Gains Incentive Distribution and the Liquidation Incentive Distribution.

Administration Agreement - Greenbacker Administration LLC, a Delaware limited liability company and an affiliate of our advisor, serves as our Administrator. As of March 31, 2017, Greenbacker Administration LLC delegated certain of its administrative functions to U.S. Bancorp Fund Services, LLC. Greenbacker Administration LLC may enter into similar arrangements with other third party administrators, including with respect to fund accounting and administrative services. Greenbacker Administration LLC performs certain asset management, compliance and oversight services, as well as asset accounting and administrative services, for many of the company’s investments. The fee for these services, which is billed at cost, is invoiced monthly in arrears.

Pledge of Collateral and Unsecured Guarantee of Loans to Subsidiaries: Pursuant to various loan agreements between operating subsidiaries of the East to West Solar portfolio and various financial institutions, East to West Solar LLC, a wholly owned subsidiary of GREC, has pledged all of its solar operating assets as well as the membership interests in various operating subsidiaries as collateral for the term loans which expire on dates through 2021. In addition, East to West Solar LLC, GREC and the company have provided an unsecured guaranty on approximately $2,194,000 of term loans as of June 30, 2017.

Pursuant to various loan agreements between operating subsidiaries of the Green Maple portfolio and VEDA, Green Maple LLC, a wholly owned subsidiary of GREC, has pledged all solar operating assets as well as the membership interests in various operating subsidiaries as collateral for the term loans which expire on dates through 2028. In addition, Green Maple LLC, GREC and the company have provided an unsecured guaranty on the outstanding principal of term loans, which is approximately $4,678,000 as of June 30, 2017.

Borrowings under the Credit Facility are secured by the assets, cash, agreements and equity interests in the GREC Entity Holdco LLC and its subsidiaries. The company and GREC are guarantors of GREC Entity Holdco LLC’s obligations under the Credit Facility. The amount of the unsecured guaranty on the outstanding principal of the Credit Facility is approximately $4,037,000 as of June 30, 2017.

Renewable Energy Credits: For certain solar power systems in the Green Maple Portfolio, Greenbacker Residential Solar Portfolio and the Greenbacker Residential Solar II Portfolio (the “Portfolios”), the company has received incentives in the form of RECs. In certain cases, the Portfolios have entered into multiple year binding contractual arrangements whereby specific entities have agreed to sell a fixed amount of RECs at a fixed price over the term of the agreement. If production does not occur on the systems for which we have sale contracts for our RECs, we may have to purchase RECs on the spot market or pay specified contractual damages. Based upon current projections of electricity production, we do not expect a requirement to purchase RECs to fulfill our current REC sales contracts. If RECs earned by the Portfolios are not sold forward, they are then sold on the “spot” market and revenue is recorded in the accounts of the underlying investment when received.

Recording of a sale of RECs under GAAP is accounted for under Accounting Standards Codification Topic 605, Revenue Recognition. There are no differences in the process and related revenue recognition between REC sales to utilities and non-utility customers. Revenue is recorded in our wholly owned, single member LLCs when all revenue recognition criteria are met, including that: there is persuasive evidence that an arrangement exists (typically through a contract), services rendered through the production of electricity, pricing is fixed and determinable under the contract and collectability is reasonably assured. The accounting policy adopted by our wholly owned, single member LLC related to RECs is that the revenue recognition criteria are met when the energy is produced and a REC is generated and transferred to a third party.

If any of our contractual obligations discussed above are terminated, our costs may increase under any new agreements that we enter into as replacements. We would also likely incur expenses in locating alternative parties to provide the services we expect to receive under our advisory agreement. For the majority of the forward REC contracts currently effective as of June 30, 2017, GREC and/or the company has provided an unsecured guarantee related to the delivery obligations under these contracts. The amount of the unsecured guaranty on REC contracts is approximately $454,000 as of June 30, 2017.

We currently have no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices.

Distributions

Subject to the board of directors’ review and approval and applicable legal restrictions, we intend to authorize and declare distributions on a quarterly basis and pay distributions on a monthly basis. We will calculate each member’s specific distribution amount for the period using record and declaration dates, and each member’s distributions will begin to accrue on the date we accept each member’s subscription for shares. From time to time, we may also pay interim special distributions in the form of cash or shares, with the approval of our board of directors.

Distributions will be made on all classes of our shares at the same time. The cash distributions with respect to the Class C shares are lower than the cash distributions with respect to Class A, I, P-A and P-I shares because of the distribution fee relating to Class C shares, which will be allocated as a Class C-specific charge. Amounts distributed to each class will be allocated among the holders of our shares in such class in proportion to their shares.

The company is building its asset base by purchasing individual operating assets or portfolios of operating assets as gross offering proceeds are raised and cash becomes available. Cash distributions paid during the periods presented were funded from the following sources noted below:

	For the six months ended June 30, 2017		For the six months ended June 30, 2016
Cash from operations	$	2,654,310	$	549,485
Offering proceeds		88,515		678,625
Total Cash Distributions	$	2,742,825	$	1,228,110

The company expects to continue to fund distributions from a combination of cash from operations as well as offering proceeds until a minimum of $150 million in net assets is reached as well as being fully invested in operating assets. We expect distributions to continue at the current level once we achieve this minimum and we do not anticipate significant changes in the level of distributions in future periods.

Inflation

We do not anticipate that inflation will have a significant effect on our results of operations. However, in the event of a significant increase in inflation, interest rates could rise and our projects and investments may be materially adversely affected.

Seasonality

Certain types of renewable power generation may exhibit seasonal behavior. For example, wind power generation is generally stronger in winter than in summer as wind speed tends to be higher when the weather is colder. In contrast, solar power generation is typically stronger in the summer than in the winter. This is primarily due to the brighter sunshine, longer days and shorter nights of the summer months, which generally result in the highest power output of the year for solar power. Because these seasonal variations are relatively predictable for these types of assets, we factor in the effects of seasonality when analyzing a potential investment in these target assets. Therefore, the impact that seasonality may have on our business, including the cash flows from our investments in our target assets, will depend on the diversity of our investments in renewable energy, energy efficiency and other sustainability related projects in our overall portfolio at such time as we have fully invested the proceeds from this offering. However, in the early stages of our operations, or to the extent our initial investments are concentrated in either solar or wind power, we expect our business to be seasonal based on the type of investment, as discussed above.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following qualitative disclosures regarding our market risk exposures — except for (i) those disclosures that are statements of historical fact and (ii) the descriptions of how we, along with our advisor, manage our primary market risk exposures, constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Our primary market risk exposures as well as the strategies used and to be used by the advisor managing such exposures are subject to numerous uncertainties, contingencies and risks, any one of which could cause the actual results of our risk controls to differ materially from the objectives of such strategies. Government interventions, defaults and expropriations, illiquid markets, the emergence of dominant fundamental factors, political upheavals, changes in historical price relationships, an influx of new market participants, increased regulation and many other factors could result in material losses as well as in material changes to our risk exposures and risk management strategies. There can be no assurance that our current market exposure and/or risk management strategies will not change materially or that any such strategies will be effective in either the short or long term. Investors must be prepared to lose all or substantially all of their investment in the shares.

We anticipate that our primary market risks will be related to commodity prices, the credit quality of our counterparties and project companies and market interest rates. We will seek to manage these risks while, at the same time, seeking to provide an opportunity for members to realize attractive returns through ownership of our shares.

Commodity price risk. Investments in renewable energy and energy efficiency projects and businesses expose us to volatility in the market prices of electricity. In an effort to stabilize our revenue, we generally expect our projects will have power purchase agreements with local utilities and off-takers that ensure that all or most of electricity generated by each project will be purchased at the contracted price. In the event any electricity is not purchased by the off-taker or the energy produced exceeds the off-taker’s capacity, we generally will sell that excess energy to the local utility or other suitable counterparty, which would potentially ensure revenue is generated for all electricity produced. We may be exposed to the risk that the off-taker will fail to perform under the power purchase agreement, with the result that we will have to sell our electricity at the market price, which could be disadvantageous.

In regard to the market price of oil, our investments are little effected by the volatility in this market as most oil consumed in the U.S. today is used for transportation infrastructure and not for the generation of electricity.

Credit risk. Through our investments in our target assets, we expect to be indirectly exposed to credit risk relating to counterparties to the electricity sales agreements (including power purchase agreements) for our projects as well as the businesses in which we invest. If counterparties to the electricity sales agreements for our projects or the businesses in which we invest are unable to make payments to us when due, or at all, our financial condition and results of operations could be materially adversely effected. GCM will seek to mitigate this risk by deploying a comprehensive review and asset selection process and careful ongoing monitoring of acquired assets. In addition, we expect our projects will seek to have contracts with high credit quality counterparties. Nevertheless, unanticipated credit losses could occur which could adversely impact our operating results.

Changes in market interest rates. With respect to our proposed business operations, general increases in interest rates over time may cause the interest expense associated with our borrowings to increase, and the value of our debt investments to decline. Conversely, general decreases in interest rates over time may cause the interest expense associated with our borrowings to decrease, and the value of our debt investments to increase.

Changes in government incentives. Retrospective changes in the levels of government incentives may have a negative impact on current investments. Prospective changes in the levels of government incentives may impact the relative attractiveness of future investments in various renewable energy projects, which could make it difficult for GCM to find suitable investments in the sector.

Item 4. Controls and Procedures

Disclosure Controls

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that the disclosure controls and procedures are effective. Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act are recorded, processed and summarized and reported within the time period specified in the applicable rules and forms.

Change in Internal Control Over Financial Reporting

No change occurred in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the period ended June 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Any control system, no matter how well designed and operated, can only provide reasonable (but not absolute) assurance that its objectives will be met. Furthermore, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None of us, GCM, or the Administrator, is currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us, or against GCM or the Administrator.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed under the heading “Risk Factors” in the LLC’s annual report on Form 10-K for the year ended December 31, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other information

Not applicable.

Item 6. Exhibits

Exhibit Number		Description of Document

3.1*		Certificate of Formation of Greenbacker Renewable Energy Company LLC (Incorporated by reference from Exhibit 3.1 of Pre-Effective Amendment No. 1 to the Registrant’s Registration Statement on Form S-1 (File No. 333- 178786-01) filed on December 11, 2012)

3.2*		Third Amended and Restated Limited Liability Company Operating Agreement of Greenbacker Renewable Energy Company LLC dated June 27, 2014 (Incorporated by reference from Exhibit 3.2 of the Registrant’s Annual Report on Form 10-K (File No. 333-178786-01) filed on March 20, 2015)

10.1*		Form of Participating Broker-Dealer Agreement between SC Distributors, LLC and the participating dealers (Incorporated by reference from Exhibit 10.1 of the Registrant’s Pre-Effective Amendment No. 5 to the Registration Statement on Form S-1 (File No. 333-178786-01) filed on July 11, 2013)

10.2*		Amended and Restated Advisory Agreement between Registrant, Greenbacker Renewable Energy Corporation and Greenbacker Capital Management LLC dated October 9, 2013 (Incorporated by reference from Exhibit 10.2 of the Registrant’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-178786-01) filed on October 9, 2013)

10.3*		Form of Dealer Management Agreement by and among Registrant, Greenbacker Capital Management LLC and SC Distributors, LLC (Incorporated by reference from Exhibit 10.3 of the Registrant’s Pre-Effective Amendment No. 5 to the Registration Statement on Form S-1 (File No. 333-178786-01) filed on July 11, 2013)

10.4*		Form of Administration Agreement by and among Registrant, Greenbacker Renewable Energy Corporation and Greenbacker Administration, LLC (Incorporated by reference from Exhibit 10.5 of the Registrant’s Pre-Effective Amendment No. 5 to the Registration Statement on Form S-1 (File No. 333-178786-01) filed on July 11, 2013)

10.5*		Form of Expense Assumption and Reimbursement Agreement by and among Registrant, Greenbacker Renewable Energy Corporation and Greenbacker Capital Management, LLC (Incorporated by reference from Exhibit 10.6 of the Registrant’s Form 10-Q (File No. 333-178786-01) filed on August 11, 2014)

10.6*		Credit Agreement among GREC Entity Holdco LLC, as Borrower, Greenbacker Renewable Energy Corporation, as Intermediate Holdco, Greenbacker Renewable Energy Company LLP, as Parent, the lenders named therein, and Fifth Third Bank, as Administrative Agent, dated July 11, 2016 (Incorporated by reference from Exhibit 10.1 of the Registrant’s Form 8-K (File No. 333-178786-01) filed on July 14, 2016)

24.1*		Power of attorney

31.1**		Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended

31.2**		Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as amended

32.1**		Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes- Oxley Act of 2002

32.2**		Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes- Oxley Act of 2002

101		The following materials from Greenbacker Renewable Energy Company LLC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed on August 11, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Assets and Liabilities, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Changes in Net Assets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Schedules of Investments and (vi) Notes to the Consolidated Financial Statements

*	Filed previously.

**	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 11, 2017	By
		Charles Wheeler
		Chief Executive Officer and Director
		(Principal Executive Officer)
		Greenbacker Renewable Energy Company LLC

Date: August 11, 2017	By
		Richard C. Butt
		Chief Financial Officer and Principal Accounting Officer
		(Principal Financial and Accounting Officer)
		Greenbacker Renewable Energy Company LLC

Greenbacker Renewable Energy Co LLC - FORM 10-Q - August 11, 2017

Attached files

Greenbacker Renewable Energy Co LLC Reports