Table of Contents ENPHASE ENERGY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table provides information regarding changes in nonfinancial liabilities related to the Company’s warranty obligations measured at fair value on a recurring basis using significant unobservable inputs designated as Level 3 for the periods indicated: Years Ended December 31, 2023 2022 (In thousands) Balance at beginning of period $ 106,489 $ 51,007 Accruals for warranties issued during period 51,716 46,342 Changes in estimates (22,557) 23,910 Settlements (26,022) (20,824) Increase due to accretion expense 13,821 9,632 Change in discount rate 44,422 (9,609) Other (6,076) 6,031 Balance at end of period $ 161,793 $ 106,489 Quantitative and Qualitative Information about Level 3 Fair Value Measurements As of December 31, 2023 and December 31, 2022, the significant unobservable inputs used in the fair value measurement of the Company’s liabilities designated as Level 3 were as follows, of which the monetary impact for change in discount rate is captured in “Change in discount rate” in the table above: Percent Used (Weighted Average) Valuation Description of Significant December 31, December 31, Item Measured at Fair Value Technique Unobservable Input 2023 2022 Profit element and risk premium 17% 16% Warranty obligations for products Discounted cash sold since January 1, 2014 flows Credit-adjusted risk-free rate 7% 13% Sensitivity of Level 3 Inputs - Warranty Obligations Each of the significant unobservable inputs is independent of the other. The profit element and risk premium are estimated based on the requirements of a third-party participant willing to assume the Company’s warranty obligations. The discount rate is determined by reference to the Company’s own credit standing at the fair value measurement date, which improved in the year ended December 31, 2023 contributing to the change in warranty expense captured in “Change in discount rate” in the table above. Under the expected present value technique, increasing the profit element and risk premium input by 100 basis points would result in a $1.2 million increase to the liability. Decreasing the profit element and risk premium by 100 basis points would result in a $1.2 million reduction of the liability. Increasing the discount rate by 100 basis points would result in a $10.1 million reduction of the liability. Decreasing the discount rate by 100 basis points would result in a $10.9 million increase to the liability. Enphase Energy, Inc. | 2023 Form 10-K | 99