Thank you, Nia. Good afternoon, everyone. We'll start with some disclaimers, and I think everybody has read these multiple times as well as the safe harbor, so we won't go through that in light of the time. I'd like to start out with an announcement that's a pretty powerful announcement that we'd like to make, and that is the battle between Edison and Tesla is shifting. If we think back over 100 years when Edison believed that DC power in distributed generation form should win out over transmission of large-scale megawatts, we never would have thought we'd be here today. That truly is what's happening as we look out. I'm going to spend a little time today talking about what is that and what does that mean for Capstone.
If we look back at where is Capstone today, and this is a company that's been around for over 40 years, that started in mobility and shifted to stationary power, it's got a proven technology, and we are now prepared, we believe, for the major transition and the major shift in the energy landscape. We have best-in-class emissions, which is becoming very critical. As a matter of fact, if you look at some of the attributes that our technology, the microturbine technology has, we're very clean, very low noise, and very efficient, and that's very similar to really only the likes of fuel cells and linear generator. The good news is, with that is we're significantly less expensive on a total cost of ownership and first cost basis. We'll spend a little time about what does this really mean for Capstone.
Over the, as probably many of you know, a little over two years ago, we went through a restructuring, Chapter 11, and came out of that rather quickly. So for the last two years, what we've been working on is really building that foundation and the bedrock for embracing this new energy landscape and what's upon us. So we've been delivering strong, solid financial results. More importantly, it's built around a very simple and executable strategy we call the Three Pillars of Strength, financial health, sustainable excellence, and revitalization of culture and talent. It's because of those three pillars that we've been able to put discipline back into our business, financial discipline, commercial discipline, operational discipline, and business discipline.
That's where we have been able to deliver such strong financial turnaround just in a period of two years. When it comes to that sustainable excellence, that's what's going to take us to the future. That really is predicated on three main factors or three main initiatives that we've used. These aren't anything that are new and different. It's the OKR process that Andy Grove started back in Intel many years ago, and John Doerr took it to Google, and it's the Objectives and Key Results, and we use that to create transparency and accountability. We've implemented a DFMA program, which is Design for Manufacturing and Assembly, and that's all predicated around how do we get cost out and really collaborate with our suppliers to get the most optimized cost in our product without sacrificing reliability, quality, and performance.
Lastly, simple thing, root cause analysis and corrective action. Believe it or not, a lot of companies don't practice this very well, and this is an initiative that we've been driving very hard. As you've probably seen in some of our earnings reports as well as our financials, it's really driving margin expansion because we're not allowing things to continue to eat our lunch. So those are the things that we've been working on in addition to bringing in really top-notch talent that's really based around our core values. When we think about who works at Capstone, it's just not the best and the brightest, but it's those people that truly understand where we're headed and what our true core values are.
When we believe in the courage to dare greatly, the little things matter because you can't do extraordinary things without getting the little things right. Integrate to success, this is what Capstone has done for so many years and why it's the only microturbine company really out there that's got such an install base like we do. Then, of course, mutual trust amongst all, not just amongst our employees, but amongst our suppliers, our customers, and our distributors. Then lastly, what do we demand? Well, we demand that you be your best and bring your best. At the end of the day, what we're looking to do is hire badasses. Those three pillars are what's causing our foundation to get stronger and better and really prepare us for what's to come.
As we think about the product, this is the other really exciting thing for me that I see, is that we can play and swim in many swim lanes. We can go to small, compact 65 kW engines that six of them can sit on a rooftop in the middle of New York City and deliver power for a hotel and hot water, or they can sit on a major gas pipeline and a compressor station. They can be as remote as you want them to be as long as there's a fuel supply. We have our commercial and industrial applications, and now what we're building for mission-critical. That's not just data centers, it's hospitals, it's pharma, it's all of those things that really rely on critical power.
I talked in the beginning about what is upon us, and it's really hard to really identify how big is the distributed energy market or what we now call behind the meter. This is just some of the numbers that we continually see. It is massive, and there's a lot of pie to be eaten here. What's causing that change in such a huge market? Well, we believe that it's really the intersection of a couple of things and a very basic economic analysis of supply and demand. It's not just everything we're hearing about data centers, but if you actually go back and look, and there's some EIA reports that came out last July, they talk about the fact that the generation base is shrinking.
Your supply is shrinking and your demand is growing, and that demand is not only coming from data centers, it's also coming from clean tech, and automation requires a lot of energy. Also the fact that you've got extreme weather outages that are really hurting a lot of places, and those durations are happening, and they're longer and longer. As the demand is shrinking, which by the way, some people say that that is being replaced with wind and solar, and we'll talk about that, but at the end of the day, this is where the chasm is being created. You've got a shrinking base of generation and a growing base of need, and that's why this distributed generation business is really becoming monstrous. Talking just a little bit about that.
When we talk about those weather outages, in the past, they might have been down one hour, two hours. You can run your diesel generators or whatever. Nowadays, people don't wanna run diesel generators because of the emissions. Also, the maintenance costs are actually pretty high. Those longer outage durations really start to become hurtful for a business, especially if they lose product during their process because of that outage. As we look at the 104 GW of supply deficit, I mentioned earlier that everybody said, "Well, that's okay. We're going to replace that with wind and solar." For the most part, that is true, but there's a really key piece of the equation that's missing. Wind and solar doesn't operate 24/7. Wind and solar operates anywhere from 1,500- 4,000 hours a year.
If you really look at this number and you multiply that by 6,000 hours a year on average that a business needs generation for, then we have a big gap. It's not just the megawatts that are missing, it's the kilowatt hours that are missing, and that's a big need. Obviously, we know about the data centers and what the AI demand shock is there. When we think about this 104 GW, it's probably even less when you start looking at it in, on a kilowatt hour basis. Now this goes from 6,000 hours a year to 24/7, 365, nonstop. The kilowatt hour gap is much bigger than the actual output gap that we're seeing.
That's why we believe behind the meter distributed generation that can run on a multiple of fuels or a multitude of fuels and can run 24/7, 365 and have some of the highest uptimes is what's going to win today. Talk a little bit about our technology and why does it win? The first part is that our design is really one single moving part that's spinning at 60,000 RPMs on a cushion of air. No friction, no oil, no lubricants. It's quiet and it's clean. As a result of that, we don't have that many maintenance intervals, not as many as recip engines, about the same as big gas turbines, but the difference is those big gas turbines have many parts and pieces, and those outages are considerably longer. Our outages are significantly shorter.
We have an advantage there that we tend to win on the maintenance side and also on the maintenance interval side, which by the way, improves our overall uptime. We look at some of the things that we can provide because when you go behind the meter and you're not relying on the grid, you have to have redundancy. Whether we call it active redundancy or integrated redundancy, both have to be there, and that's why we can achieve five nines for a data center. If we can do that for a data center, then we can certainly do it for a hospital or a pharmaceutical manufacturing facility. Lastly, our power density. We run at about 45 MW per acre, is what we can put on the ground in power only.
The other really cool thing about what we do is we are a plug-and-play design. Everything comes in the package. When you buy a recip engine, you get it on a skid and a radiator, you got to buy all the parts and pieces and rely on your contractor to do the install. For us, it's just put it on a simple concrete pad, run a gas line, run a power line, and you're pretty much done. That becomes a big advantage when people need power fast. When we think about a lot of these mission-critical facilities, time to power is the new currency, and that's something that we certainly can plan.
Not going to go through the numbers here, but we wanted to share this, and for those of you who can get a copy of this, it will be on our investor page. It really shows you kind of the capital walk of even though we may be higher on a first cost, total installed cost basis, at the end of the day, those elements that I've just mentioned, the less maintenance intervals, the lower maintenance costs, and the uptime, so we can produce more kilowatt hours and more thermal energy, all creating savings. That's how we make up that ground on the higher first cost. When you roll all of that up, typically, Capstone on a Total Cost of Ownership basis will pay back within three to four years better than our competition. You have to do the math.
Let me spend a little time now talking about what's ahead of us because everybody can talk about data centers, and we see that as a big play, obviously. When we think about our core business, as we call it, our commercial and industrial business, and we see that high tide rising anywhere from 10+% per year. At Capstone, we won't wanna just put all of our chips on the data center table. As we all hear, sometimes data centers stall out. They'll grow, they'll plateau, they'll grow. There's a lot of buzz right now. People are waiting to see if there's going to be a burst. What we believe is we wanna have a diversified approach to the markets. These other four-- other three things are our major growth markets.
We believe in ports and terminals and the electrification. We believe that there's a great opportunity in helping those ports charge all of those batteries that they converted all their equipment to because the utilities cannot get power to those ports. Ports are typically at the end of the line, the power quality is terrible, and they don't have time to build that infrastructure to charge all of that equipment. We, because of the way we're designed, we can be mobile on the go, and that's what we call it, Power on the Go. Station Power, this is where we can help the big giga hyperscale data centers when they're using big gas turbines, and they need to have black start capability, and they need power for their auxiliary systems. We can do that.
We can do that also with combined cycle power plants that all these utility zones across the nation or even the world, technically, where we can provide not only that station power, but we recover the waste heat, turn it into chilled water, and do turbine inlet cooling to give those power plants even more power. It's a really interesting play when we look at station power. Lastly is microgrids. Microgrids today for us right now have been wind, solar, behind the meter, standalone, but there's a very interesting dilemma that's going on in the utility space. Part of it is at their substation with all these weather outages that we've talked about. When they have to take a power line down to protect it could be down for months. That substation is therefore down.
We can then put that temporary power in or permanent power to feed that substation, so their customers are not out for a long period of time. Even more importantly, there's a number of transformers out there, and with the greater use of electric vehicles, they are overloading those transformers. We've partnered with a company where we can then work with the utilities to help them protect those transformers by providing power and battery backup and optimizing how those electric vehicles are charged so that the overall customer base isn't sacrificed, and they overload the transformers. Big markets here, you can do the math. It's very compelling, and it's something that we have in flight. Every one of these major market growth opportunities are in flight with us today.
Let me spend a little bit of time on data centers 'cause I know that's what a lot of people like to talk about. You know, we got to the dance late. We only started approaching the data center market about 1.5 year ago. But what we did, we brought in some experts from that data center space, who truly understood how the data center electrical topology works. Then we created a reference design that we call Energy Surplus Program. The whole idea there is that we're using our microturbines to generate power on-site, but we're recovering that waste heat, and we make chilled water that data centers need to cool all the servers and the GPUs. We make that chilled water at 1/10 the energy cost of an electric chiller that's on today's data centers.
As we lower their electrical demand, we're actually generating power, therefore, we create this energy surplus. That's our approach with data centers, and we do this in 3 MW- 4 MW blocks that matches up with their IT load. We do this as an engineered equipment package to make it as simple and straightforward for those data center customers. We've got a number of opportunities in the pipeline, and it's keeping us quite busy. Did wanna touch a little bit on the major shift when NVIDIA last year announced the 800-volt DC, and everybody started to scramble, "What does this mean?" Well, for Capstone, we were already doing that natively. We were actually generating 760-volt DC.
With some software modifications and a couple of hardware modifications, we now have our prototype test unit with our Smart Power Switch that's been operating at our factory for months now, and we'll be ready for a real pilot by September. We're pretty excited with where 800-volt DC is going to go. It's not going to be tomorrow, but we're going to be ready for it when the rest of the world is ready in the new data center designs. Believe me, this will be powerful and huge because the amount of copper savings and the amount of energy savings that going direct current does for a data center will be a big deal. So that's why I say I think in this case, Edison was right and Tesla was wrong.
It just took a long over 100 years to prove that out. That's where the world is headed. I want to finish up a little bit about where is Capstone headed and how are we going to future-proof. We think about not only, you know, our microturbine technology, and you can see the different engines that we're currently working on and where we're headed for the future. Then I want to talk a little bit about some of the other things that we've been up to, in particular around emissions, because this is a big, big deal.
Especially with big data centers that are putting big blocks of power, they all of a sudden trigger what they call a major source under EPA. Because of our low emissions, we're able to stay under that a lot longer, or they can add more megawatts before it gets triggered. That's a big deal. Emissions are a very big deal for those that are siting behind-the-meter power. You saw that C200, the C250 engine. Some of the other things, this goes in line with why Capstone changed its name from Capstone Green Energy to Capstone Energy+, because we are more than just a microturbine business. We see the world in a circular economy, and I truly believe that the biggest source of renewable energy shouldn't be wind and solar.
It should be all of the waste streams that we're not recovering and converting into useful energy, whether that's gaseous, waste fuels, or whether that's recovering waste heat and turning that into hot water, chilled water, and so forth. We developed our own HRM, system, Heat Recovery Module, which recovers that waste heat, and it does it very efficiently. That's where we're headed with our future and the next technology. If we think about it, what does Capstone have to offer? We can hit the five nines. We're fluid free, no water, no oil, no coolants. We're scalable, modular, pay as you grow, and a lot of data centers like that too.
I talked about the circular economy, I've talked about the emissions, and then of course, we can be renewable fuels, we can be other gaseous fuels, we can blend hydrogen with natural gas. We have a wide operating range as well as a wide range of fuels that we can use. With that, I think we've got a few minutes now for questions. Yes, sir.
Are you behind the meter?
The question was, are we behind the meter? The answer is yes. We can also be grid connect. We can parallel the grid and be behind the meter. Are you agnostic as to your fuel feed or power feed? Are we agnostic to our fuel feed or power feed? We can be agnostic to the fuel feed, as I said.
Gaseous fuels is really the best place we work. Whether that's just pipeline natural gas, landfill gas, biogas, sour gas off of an oil and gas well. Gaseous fuels, as long as we can clean that gas up and it has the right BTU content, then we can certainly use almost any fuel. Thank you. Okay. Any other questions?