We're going to start now.
Okay.
All righty. Good morning, track room one. Next up, we have Vince Canino with Capstone Energy+.
Wow. Okay, sit down in front. Good morning, everyone. Just a few weeks ago, I walked onto this elevator wearing this exact shirt, my Capstone Energy+ shirt, and there was an elderly lady on the elevator, and I said, "Good morning," and she said, "Good morning." She looked at me, saw my shirt, and said, "Capstone Energy+. What do you do?" Yeah, maybe I'll check that. I said, "Well," I thought about it. I said, "Well, ma'am, we sell newspapers." She looked at me, and she paused, a little confused, and she said, "Oh, is that what the plus is for Energy+?" I kind of chuckled and I said, "Well, kind of." I said, "The reality is our technology has such little routine maintenance that our technicians actually have time to read the newspapers." She found that kind of interesting.
As I think about that this technology has been able to do something very different than other power generation technology. At the end of the day, of course, we don't sell newspapers. In reality, what Capstone does is we exist to provide energy certainty. We do that through thinking beyond and challenging ourselves. Challenging ourselves to think beyond how is it designed for scalability and modularity, thinking beyond how it's engineered through elegant IP that stands the test of time, thinking beyond the simplicity of how this maintenance can be performed. Very low maintenance intervals, very low maintenance intensity, all of those things with a Formula 1 pit stop mentality in that maintenance event, all of that is what creates that uptime. That plus no friction, no oil, no lubricants, no coolants, no water, that all delivers energy certainty.
Who would've thought, though, this single moving part, riding on a cushion of air, would actually have a role to play on the world stage of today's energy renaissance? When this technology was envisioned almost 40 years ago, we weren't thinking that way. Back then, energy was abundant, and the world was solving a very different problem. It was about growth that followed infrastructure. Most of those years, you could argue that Tesla was right and Edison was wrong. Centralized generation won. Distributed generation existed around the edges, really chasing efficiency, economics, resiliency, or backup power. But we're living in a very exciting time today because that world has changed, and it's changed in a very fundamental way. While Capstone has been transforming itself over the past few years, the world around us has transformed as well. For decades, businesses operated under a very simple assumption.
If you needed more power, the grid would provide it. Build a factory, expand a facility, construct a data center, connect to the grid and grow. For many years, the biggest competitor was the grid. But the grid wasn't doing anything wrong. The grid was doing exactly what it was designed for, which was to provide energy certainty. But that assumption is being challenged today, and the world needs more power. It needs it faster. It needs it cleaner. It needs it reliably. It needs it more resiliently. Increasingly, businesses are discovering access to power itself can determine whether they grow or whether they stand still. That is a profound change, and I believe it creates one of the greatest opportunities in the history of this company, and Capstone was built for this moment. We don't have to wait for the world to discover distributed generation.
The world has actually recognized its legitimacy, and it's rapidly turning to distributed energy solutions for energy certainty. Customers simply aren't asking us, "How much is your turbine?" or "How efficient is it?" They're asking, "How can you give me power? How fast? Can you give me power reliably, cleanly?" In one situation, we just recently had an announcement on a resort in Utah. They asked, "Can you give me the power the grid can't?" That, my friends, is a very different conversation and very interesting. As we think about the grid and how it's under pressure, it's not about Capstone replacing the grid. We think quite differently. It's about distributed generation collaborating with utilities, not competing. Recognizing the energy challenges of today and tomorrow will require work together in ways that we haven't worked like before. We have to help utilities grow demand.
We have to help our customers operate and also expand with confidence. That's what it means to think beyond the grid when the grid is under pressure. Not to think without the grid, but to think about how we can go beyond the limitations of what the energy challenges are today. Because our customers, they don't wake up wanting distributed generation, they wake up wanting energy certainty, and that's what we're here to deliver, especially when energy matters. Capstone isn't defined by the industries we serve. We're defined by the energy challenges that we solve. We don't need to walk through each application. The image on this slide tells that story. But the real takeaway is here is how some of the same technology can serve very different customers, each with a very different challenge and reason for needing energy certainty.
Now, I'd like you to look at these two installations. Both of them are six-unit installations. The one on the left is a natural gas reciprocating application, and the one on the right is Capstone. Both are designed to accomplish the same thing, deliver dependable power. But they get there and they couldn't be more different. Look at everything on the left. Between your oil tanks, your coolant storage, your waste storage, your motor control centers, all of the different equipment that goes into building that. I'd like to share a little story. We had a pharmaceutical company come visit us, and at that time, they were looking at recip engines.
As we were talking, we were going through a TCO model, which I'm going to show you that TCO model in a second, but the lead person asked, "Well, Vince, why do contractors and engineers tell us to use recips and not think about Capstone gas turbines?" I said, "Well, number one, they're used to recips, but number two, look at all the money they make." Because the installation cost of that kind of a system is much more than the installation cost of a Capstone system. That's when they had their aha moment, and that's when they realized that it really is about simplicity and clean and being reliable. So that is a big difference of how we should operate. This is really the financials behind all of that.
There are situations here where we're more expensive than the competitor, and there's other elements to this where we're significantly better. At the end of the day, when you look at the whole problem that you're trying to solve, both in a technical situation and a financial situation, you can see that this type of a solution, clean and elegant, can win out on a total cost of ownership. So let's talk about the opportunity in front of us. This $265 million TAM, quite frankly, is a lot larger than that. We're being a bit conservative here. But the message is clear. We don't need to capture a large percentage of these markets to fundamentally change and transform Capstone. What's exciting to us is this is not just built around data centers. Of course, data centers are one of the more important ones.
At the end of the day, we're all seeing what's happening right now today with data centers. I can't tell you the number of conversations I've had with investors and customers who have said, "I'm glad you're not just focused on data centers." We believe that the electrification of ports is a problem that needs to be solved, and we have some really cool, unique situations for mobile power, temporary power, and permanent power to help the ports solve their problems there. The other major growth market on this list is what we call the utility microgrid. To me, that's the big sleeper. That's where this all comes full circle again. Because at the end of the day, we're not competing with the utilities. They need our help. Utilities could build big power plants. They could build 100 MW peaking power plant.
They can build 500 MW combined cycle power plants. They can do that in their sleep. Now, granted, it is going to take them years to do that. What they need right now is they need to figure out a way to strengthen their grid in those areas that they are the weakest. Sometimes those are 5 MW, 10 MW, 20 MW deployments. We can provide that under this distributed capacity program. There are substations. We saw this in Texas when they had the big freeze. They have now learned to put backup generation at the substation to protect that substation. We also believe field deployed transformers. A lot of times we hear about transformers that have long lead times. If we come in and we protect those transformers, they do not fail. They do not overload and fail.
What we see here is not just a market of what is happening in the C&I space and the growth associated with that. We see the data centers are great. They are hard. It takes a lot of time to get through those projects. They will be very fastidious because they are very risk adverse. There are other markets out there that nobody is looking at, and we believe we can go capture some of those markets and create a more diversified transformation of Capstone. That is what excites us here. We have talked about the size of the opportunity, but capturing that opportunity requires more than having the right technology today. These are some of the things that we are working on. The first step is power architecture. We got pushed into power architecture through NVIDIA and their move to 800-volt DC.
We believe in that because it saves a lot of copper, it saves a lot of space, it saves a lot of things. At the end of the day, we also realize that 800-volt DC product, or even more, is going to help us down the road with other customers. We see it in the oil and gas space and gas compression lines, where if we can provide DC power and they can have DC motors, they run more efficiently, we run cleaner. A really interesting play here that helps us get to market faster with new products. The second is really about emissions. We today provide 9 PPM of NOx, which is the lowest of any combustion technology that is out there. Not fuel cells and linear generators that are below 1 PPM or 2 PPM, but we today produce a 9 PPM liner.
We challenged ourselves to think beyond that, because sometimes people say, "Well, that is pretty good. That is where we should stop." We did not. We kept pushing, and we have now developed a 5 PPM liner, which fingers crossed, we are finishing up some of our cold weather testing. We might be able to get down even lower than 5 PPM. That becomes a real game changer, and that puts us in the same space as fuel cells and linear generators. We are pretty excited about where we are headed with the emissions. The next one is really about scale and scalability, and the first step to that journey is our 250 kW engine, which helps us with power density for data centers. It also helps us with power density for ports as well because they are very limited in space.
Having that scale and being able to deliver that within the next year is going to be a game changer for us. Lastly, system efficiency. This is really coming down to the fact that we believe in the circular economy, and the best way you can do that is recapture that waste heat and turn it into useful thermal energy. By doing that, we do that today, but can we do it better? Can we do it more efficiently? We are employing some of the things that we have learned and developing new heat recovery technology. These are things that we have been working on that are going to help us build our future. They are not for disconnected energy projects, if you really look at it.
Where is the future going with power architecture, especially for the utilities, and how do you connect to the grid? How do you help the grid be more stable and reliable? We can do that. Cleaner, reliable, better emissions, scalable, improved power density, and then lastly, the overall system efficiency. When you can get to 90% efficiency for every BTU of natural gas that I consume, 90% of that is turned into useful energy. There are not too many people that can do that, and that is pretty cool. We have not stopped there, and not everything we have shown so far is really about what is in front of us today. We have to think about tomorrow. I like to challenge my R&D team, and we call this slide our Buzz Lightyear to infinity and beyond.
The thinking is that so many people thought, "Well, we did a 200 kW engine with air bearings. That is probably our limits." It is not. With today's materials, today's engineering tools, and manufacturing processes, we believe we can go bigger. When I really think about it is not just about bigger engines and bigger turbines, but what else is out there? What else should we be thinking about? Should we be thinking about things other than turbines? That is part of the Energy+ that we are challenging ourselves on. I want to leave you with this final thought. Customers did not wake up in the morning wanting distributed generation. They woke up in the morning wanting energy certainty. I like to think about something as simple as a glass of milk.
Back in the day for generations, we woke up in the morning, opened up the refrigerator, grabbed the carton, and poured ourselves a glass. Maybe it was a full glass, maybe it was a half a glass, maybe it was two glasses. Right? We knew it was always going to be there. That is the way utilities have been. That is the way we think that we have to help those utilities make sure that that glass of milk is always going to be in the refrigerator for them. The world has changed. Customers are not asking for distributed generation, right? They need certainty so that they can open up their doors tomorrow. They need to know that they can operate their businesses without interruption. They need to know that they can expand when opportunity knocks. In today's environment, we live in a fast-paced environment.
I don't know about you, but when we're dealing with data centers, this is the part that really just is very profound to me. Coming from that space years ago and breaking into the data center world, you could see how fast they were moving. With today's AI, it moves even faster. What scares me is that we don't have the infrastructure. When I say infrastructure, we can deliver the power. But when I say infrastructure, I'm talking about the agencies, the permitting agencies, and those types of folks that don't like to move at light speed. That's what data centers are trying to do. Because at the end of the day, it is a race, and he who develops the compute power first generally wins. I think we have a golden opportunity in this country to really support something like that.
It does start with power, and then it goes to permitting. If you've noticed what's happening lately, most of the issues now are not necessarily just around power, but it's around permitting. I can tell you the number of projects where customers are ready to go, and then we have to go through a six-month permitting process, and that slows us down. Now, we're helping through lower emissions and making the permitting agencies' lives easier. But at the end of the day, we have to move much faster than that, and we're certainly ready for it. So, for us, it's about building an energy infrastructure that's going to be an infrastructure of strength and not weakness. One that gives the customers confidence in tomorrow. That's what we want.
That's what we mean when we say, "Think beyond the grid." Not thinking without the grid, but thinking beyond what the grid can't do alone. That's our opportunity, it's our responsibility, and it's our future. That's Capstone Energy+, folks. Because when energy matters, certainty matters, and that's why Capstone Energy+ exists. On-site, on-demand, always on. With that, I'll open it up to Q&A. Yes, sir.
Maybe you can just kind of frame for us a little bit how you see the whole data. Not that I want to focus on the whole. I've focused all on data centers, but just obviously, you talked about permitting, you talked about energy is a huge thing. We talked about financing. Not that I want to harp on what's negative, but from your view, are the data centers going to get built? Are some of them not going to get built? Are we going to run into a situation where there's not enough data centers and they just can't get built because they can't get financing, they can't get permitting, they can't get energy? Maybe just frame it for us a little bit.
Yeah. That's a really good question. Did everybody hear the question? Doing data centers is very complicated, and one of the things that we were trying to explain to some of our board members one time was when we sell C&I, we're typically selling to one or two people, and it goes through the organization and gets its approvals. When you're selling in a data center space, you've got to get the engineer on board, you've got to get the EPC on board, you've got to get the developer on board, you've got to get the end user on board, right, and the tenant on board. Sometimes the tenant is re-leasing those GPUs to somebody else, and they have a say in who's providing the power and how the data center's going to get built.
They talk about the chillers, they talk about the building, they talk about the power distribution. So it is very complicated. Then you layer on the financing side. This is something that we've had to learn, and we ask harder questions now. Because so many folks say, "I've got land, I've got gas, I'm building a data center." "Well, where's your financing? Do you have it lined up?" The financers will say, "Well, who are your end users? Is it an LOI or is it a signed agreement? If it's a signed agreement, what's the timing on it, and what's the ready for service date? Then what are the LDs?" So there's so much that goes into this. That's why part of the reason is they have to move with speed, because you have to line all of these things up.
I'll give you a quick example. We're working with one in Georgia, and they sign their contract, they've got the end user, they've got the tenant, they've got a date, then all of a sudden the permitting agency says, "Well, I can't give you an exemption on temporary power." "Well, what do you mean?" "Nope. You've got to file your full permit." "But I got these diesel generators, and then I've got to put this on-site generation because the utility can only give me 3 MW." You've got to coordinate all of that. Then you have to do it to make sure you're doing it and delivering it by date certain, otherwise you're paying LDs. Unless you've got a good tenant that understands that some things can't be controlled and you can extend out. It's tough.
Now you take a 10 MW, 15 MW data center like that and 10x that, 100x that. It's big. It's complicated. So yes, they will happen. I truly believe they will happen. They're going to take some time, especially the bigger ones. They have to just march through all those pieces. At the end of the day, what we're seeing is more of the data centers are now shifting to edge compute and sovereign compute, and those are the 5 MW, 10 MW, 20 MW. They're going to start there, and then they'll do 50 MW, and then they'll do 100 MW. We're also seeing a number of other data centers where they're saying, "Well, I've got this. Why don't I just expand my campus?
It's easier for me to expand this campus than it is to go find another site and go through that whole process. I truly believe I couldn't give a number, maybe 90%, 80% will get built, but it'll take time for some of them. Yeah. Question?
Thanks for the presentation. Just two questions. One is, can you compare your product with fuel cells? Because we've seen the other fuel cell companies sort of have really strong traction, and from what I understand, I think microturbines are fairly comparable. Just trying to understand why Capstone hasn't had that sort of traction.
Yeah.
Second question is just can you talk about your profitability outlook over the next couple years?
Okay. I'll try to go really quick because I guess I've only got a minute. When it comes to fuel cells, and I'm a big fan of fuel cells, I have a fuel cell car. But there is big differences in fuel cells, and they have a place to play in the data centers when you're 100% load and you can't change. They're your base load, if you will. Very low emissions, but the power density is pretty tough. That's why Bloom is stacking units at this point. Where our advantage is we have that flexibility, we have the redundancy. We can ramp up and ramp down. We can go from a megawatt down to zero in 90 seconds. That's part of the advantage.
That is what we are seeing with data centers. You have your big block base power, then you have your other intermediary powers, and then you have your trimming power. Everybody has a role to play in that. That is kind of the differences. When you look at the TCO, yes, CapEx install costs were less, O&M costs were less, but the overall efficiency, even though a fuel cell degrades over time, you have to replace it, where we are just pretty steady. That is the beauty of us. We turn it on, you let it run. You could let it run for three years before you have to do a maintenance event. That is the cool thing. In terms of profitability, in four seconds, not to worry. We do data centers, our margins are going to get much better, and we are pretty excited about that future.
Thank you very much. I guess I am getting booted.