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Fair Value Measurements

6 Months Ended

Jun. 30, 2013

11.	Fair Value Measurements

The Partnership follows the fair value guidance in ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) for items that are required to be measured at fair value. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect the Partnership’s market assumptions. ASC 820 classifies these inputs into the following hierarchy:

Level 1 Inputs– Quoted prices for identical instruments in active markets.

Level 2 Inputs– Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 Inputs– Instruments with primarily unobservable value drivers.

Fair value information with respect to the Partnership’s leased assets and liabilities are not separately provided for since ASC 820 does not require fair value disclosures of leasing arrangements.

The Partnership’s carrying value of cash and cash equivalents, other assets and accounts payable and accrued liabilities and, approximate fair value due to their short term until maturity.

The Partnership’s carrying values and approximate fair values of Level 3 inputs were as follows:

	June 30, 2013 (Unaudited)				December 31, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value
Assets:
Convertible promissory note, including accrued interest	$	1,550,000	$	1,550,000	$	—	$	—
Equipment notes receivable, including accrued interest	$	8,308,035	$	8,308,035	$	3,306,391	$	3,306,391

Liabilities:
Loan payable, including accrued interest	$	5,876,260	$	5,876,260	$	—	$	—

The carrying value of the Partnership’s convertible promissory note, including accrued interest approximates fair value at June 30, 2013, based on the following factors: (i) interest rates have been at or near historic low interest rates and the interest rate the Partnership was able to negotiate was higher (ii) interest rates have remained stable and the outlook for an increase in interest rates is minimal and (iii) the short period of time between the Partnership funding this convertible promissory note and the Partnership’s quarter end.

The carrying amount of the Partnership’s non-recourse equipment note receivable, including accrued interest approximates, fair value at June 30, 2013, based on the following factors: (i) interest rates have remained stable, (ii) the basic technology, the Archimedes Screw, is thousands of year old and has been successfully used in other hydro-electric generating plants in Europe and (iii) there is minimal credit risk associated with the lessee.

The carrying amount of the Partnership’s non-recourse loan payable, including accrued interest approximates fair value at June 30, 2013, based upon the following factors: (i) the Partnership was able to negotiate a favorable interest rate on the loan payable which is less than the interest rates on the non-recourse equipment that was financed, (ii) interest rates have remained stable and the outlook for an increase in interest rates is minimal and (iii) the short period of time between the Partnership borrowing the funds and the Partnership’s quarter end.

The following is a reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the quarter ended June 30, 2013:

	Convertible Promissory Note		Equipment Notes Receivable			Loan Payable
Beginning balance, January 1, 2013	$	—	$	3,306,391		$	—

Total gains (losses) included in earnings:
Interest income		50,000		278,008			—
Interest expense		—		—			16,175
Foreign currency transaction (loss) gain		—		(204,782	)		—

Issuance of additional notes		1,500,000		4,928,418			5,860,085

Ending balance, June 30, 2013	$	1,550,000	$	8,308,035		$	5,876,260

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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