Pursuant to certain contracts, including fixed price and EPC contracts where we have assumed responsibility for procuring materials for a project, we are exposed to availability issues and price increases for materials that are utilized in connection with our operations, including, among other things, copper, steel, aluminum, specialized project components (e.g., transformers, solar panels) and raw materials utilized for certain of our product solutions. In addition, the timing of our customers’ ongoing projects, as well as their capital budgets and decision-making with respect to the timing of the future projects, can be negatively impacted by a lack of availability or an increase in prices of these materials. Prices and availability could be materially impacted by, among other things, supply chain and other logistical challenges (including inability of manufacturers to meet demand), global trade relationships (e.g., tariffs, duties, taxes, assessments, sourcing restrictions) and other general market and geopolitical conditions (e.g., inflation, market volatility, increased interest rates and geopolitical conflicts). The lack of availability of necessary materials could result in project delays, some of which could be attributable to us, and an increase in prices of materials could reduce our profitability on projects or negatively impact our customers, which could have an adverse effect on demand for our services or our business, financial condition, results of operations and cash flows. For example, recent sourcing restrictions have resulted in supply chain and logistical challenges with respect to solar cells and panels, including the U.S. Department of Commerce investigation into an antidumping and countervailing duties circumvention claim on these components from Southeast Asia, which negatively impacted our renewable energy services associated with solar projects during 2022 and into 2023, and certain other sourcing restrictions and challenges related to solar panels manufactured in China (e.g., the Uyghur Forced Labor Prevention Act), which may negatively impact project timing within the renewable energy market in the future. Additionally, the availability of power transformers utilized in electric power projects has been negatively impacted by the inability of manufacturers to meet current market demand, which has increased, and is expected to continue to increase, as a result of the transition to a reduced-carbon economy.
We also operate certain manufacturing facilities in the United States, and if such facilities experience a material interruption in operations it could cause delays in production and delivery of completed products to our customers or for use in connection with our services. Such delays may negatively impact our customers or the timing of their ongoing projects, which could have an adverse effect on demand for our services or our business, financial condition, results of operations and cash flows.
We are also exposed to increases in energy prices, particularly fuel prices for our large fleet of vehicles, which have fluctuated significantly since 2020 and could increase over the longer term due to market conditions or future regulatory, legislative and policy changes that result from, among other things, climate change initiatives. Furthermore, some of our fixed price contracts do not allow us to adjust our prices and certain of our other contracts, such as some long-term MSAs, allow for price adjustments within a certain range that may be insufficient for us to recover the full amount associated with increased fuel costs. As a result, increases in fuel costs could reduce our profitability with respect to such projects. Our ability to utilize certain existing vehicles within our fleet may also be limited by new emissions or other regulations, and, due to lack of production or availability, we may not be able to procure a sufficient number of vehicles meeting any such regulations. To the extent we are unable to utilize a significant portion of our existing fleet, we may be unable to perform services, which could have an adverse effect on our future financial condition, results of operations and cash flows. Additionally, to the extent we are required to transition our fleet to alternative sources of power, including EVs, and the availability of such vehicles is limited or fluctuates, we may be unable to efficiently plan for such transition, which could result in, among other things, the retirement of certain vehicles prior to the end of their useful life. The broader and longer-term implications of these challenges, which could accelerate based on the pace of the transition to a reduced-carbon economy or otherwise, remain highly uncertain and variable and could negatively impact our overall business, financial condition, results of operations and cash flows.