I'm Senior Manager of Corporate Development and Investor Relations here at Generac. I'd like to thank you all for taking the time to join us today, both here in person as well as virtually. For your reference, the slide deck for today's presentation has been posted to our investor relations website in the Investor Presentation page. For those of you in person, our Wi-Fi password for the guest network is LightTheNight2023. Capital L, T, capital N. Today's presentation will include strategic updates from several different leaders.
Sorry, Kris, do you mind repeating that? There was a bit of a problem.
Sure. Yeah, password is LightTheNight2023.
Got it.
Capital L, capital T, capital N. Today's presentation will include strategic updates from several leaders across our business, highlighting the range of opportunities that lie ahead for Generac. We have a jam-packed agenda, and we'll conclude with a 30-minute Q&A session at the end of the presentation. So please hold your questions until that time. Now, a quick introduction of today's speakers. We'll begin with President and CEO Aaron Jagdfeld, presenting an overview of Generac, our enterprise strategy, and evolution to an energy technology solutions company. Kyle Raabe will then provide an update on our unique position in the home standby generator market and how we expect to drive growth there over the next three years. Amanda Teter, Executive Vice President, Marketing, will follow with a fresh perspective on our full funnel marketing efforts.
Norm Taffe, President, Energy Technology, will then provide further insight into Generac's strategic vision in residential energy technology solutions. Following a 15-minute break, Erik Wilde, Executive Vice President, Industrial Americas, will discuss growth opportunities in domestic C&I markets, as well as our growing suite of C&I energy technology solutions. Paolo Campinoti, Executive Vice President, Rest of World, will then provide an overview of our international segment, highlighting Generac's ability to execute on a global stage. Finally, York Ragen, Chief Financial Officer, will update our 3-year financial framework. We'll begin our presentations today by commenting on forward-looking statements. Certain statements made during this presentation, as well as other information provided from time to time by Generac or its employees, may contain forward-looking statements and involve risks and uncertainties that could cause actual results to differ materially from those in these forward-looking statements.
Please see our SEC filings for a list of words or expressions that identify such statements and the associated risk factors. In addition, we will make reference to certain non-GAAP measures during today's presentation. Additional information regarding these measures, including reconciliation to comparable U.S. GAAP measures, is available in our SEC filings. With that, I'll turn it over to Aaron.
Thanks, Kris. Morning, everyone. Welcome to Waukesha, Wisconsin, to Generac. I don't know if some of you probably have been here before with some of our previous IR days. Some of you are new to the story or new to the facility here. This is our headquarters here in Waukesha, Wisconsin. Just a point of reference, this was our only building for many years when we first started the company. We did all of our manufacturing right here in this building. In fact, right in the room you're sitting in, we used to wind alternators and make transfer switches and other fun stuff. But obviously, as we've grown, we outgrew the manufacturing space here and have turned it into basically our corporate offices and our technical center. So you'll get a pretty good feel for that today.
Throughout the day, as we go through a manufacturing plant this afternoon in one of our facilities in Whitewater, Wisconsin. And then also, we come back and go through our Innovation Experience or Innovation Showcase, which will take us down to some of our lab space and show you some of the products that we're working on. So I think you guys know who Generac is, but we have to put this obligatory slide in just to give you a little bit of a... Just a, a bit of perspective. Net sales, these are LTM numbers, by the way, through the second quarter of 2023. LTM net sales of $4 billion, $594 million of EBITDA. About 80% of the revenues are domestic, the other 20% would be international.
We have about 8,800 employees worldwide. 1,000 of those employees are engineers, so it's pretty engineering-heavy staff level when, when you consider the percentages there. That's an important part of our heritage, and I'll get into that in, in a few minutes. Then, we have an, an omni-channel distribution strategy that I think many of you have, have heard us talk about in the past, and that we will talk about today in a number of the presenters', remarks. I think it's an important part of who we are as a company. It's an important part of how we protect some of the share we have, achieved in some of the markets we participate in. We'll talk about that at more length.
When you break down that revenue by kind of product class, about 54% of that is residential products, so that's primarily portable generators, home standby generators, residential energy storage systems, and the like. And then we've got 35% that would be commercial and industrial. So larger gen sets. Again, you're gonna see some of these products in the innovation experience or innovation showcase this afternoon. So that's kind of a breakdown and an overview. And then just a real quick history walk for those of you that, again, maybe don't have kind of the lay of the land in terms of what Generac was, where we came from. Pretty humble beginnings, right out here in Western Waukesha County, outside of Milwaukee.
Many of you probably flew into the airport, either down in Chicago, about 90 minutes to the south, or into the Milwaukee airport. We're about 35 minutes west of there, but northwest of there. But the business was founded by an engineer, and it was an engineer who worked for Waukesha Engine, which is another company that you may or may not know that's down the road here. And he left the employ of Waukesha Engine after about 6 years because he had an idea for a product, and that product was a smaller format, portable, if you will, power station. And so in 1959, he began this company right out here, actually in a dairy barn, which all good things in the 1950s in Wisconsin were happening in dairy barns.
There wasn't a lot of manufacturing yet in the state in 1959 was our founding. In the 1960s, we grew pretty rapidly through some private label agreements that were pretty important to the company back then. I think many of you remember a company we used to call Sears. I don't know, it's gone now. But that company at the time was the, you know, preeminent retailer of its era, right? So it was the Home Depot of the time, the Lowe's of the time, the Costco of the time. You could buy a house at Sears, right, and build it. That was the premise. We private labeled under the Craftsman label the first kind of portable generators that were commercialized, and that was throughout the 1960s.
In the 1970s, we expanded our product offering and added stationary generators, and we added some distribution agreements that helped us grow. In the 1980s, we basically got into the C&I markets in a much bigger way, serving primarily the telecom industry. We've been providing backup power to the telecom industry for really four decades at this point. The 1990s was kind of a pivotal point for the company. We introduced the home standby generator. We created the category. You can see a picture of it over there in the upper upper right-hand corner. And we also expanded our C&I products. We did a deal with a little company called Caterpillar. We were making ge sets, C&I gen sets for Caterpillar in the 1990s and 2000s.
In the 2000s, that's when things really took off for the company. The home standby business was commercialized, really started to scale, and we really expanded dramatically across the enterprise on the back of that success. In the 2010s, we really expanded our reach geographically, but also with a number of new products that were adjacent to the products that we were involved with at the time. So you can think of things that use engines and engine-driven power, engine-driven lighting, and engine-driven heating. All of those types of products came to us in the 2010s, primarily through acquisitions and other partnerships, and we expanded our footprint dramatically. Up until that point, about 99.5% of our revenues were here in the U.S. and Canada.
So, today, again, as you look back on the previous slides, 20% of our revenues come from outside the U.S. and Canada. That brings us to today, the 2020s, which has been a remarkable decade so far, only three years in, but for us, a decade of significant change as it relates to the product offering, our approach, our strategy, and those are the things that we're really gonna focus on today in our presentations. I do think it's important to kind of level set. We show this to investors. This is obviously something that you guys have seen before in our investor presentations, but, you know, I think the company has just a tremendous track record of growth. I've... This is my 30th year with Generac.
When I started here, the year I started, we had $100 million in revenues. So I think, you know, the amount of... It's hard to put into context when living through that kind of growth and what that means over just, you know, a 30-year period, which is really not a dramatically long time period. But I think what's really important here is how we've grown. It hasn't been in a straight line, as many of you who have tracked the company know, and as this graphic would evidence, you know, it's basically a stairstep function type of growth company.
We see periods of rapid inflection and demand, and that's followed by, you know, kind of a top, and coming off of that top, we're able to then hold a new and higher baseline level of demand. And there's a lot of reasons for that, and we'll talk about some of those reasons today. But a lot of those reasons of are, you know, the things that we've done to try and create awareness for the different products and categories and markets we serve, but also the expansion of our distribution with each of those, growth spurts that we go through. And as you can imagine, that, that is a, you know, that's a difficult way to grow. I'll be very honest.
When you grow in a very kind of vertical fashion, very quickly, and then kind of level out and then come back down, the ability to be flexible, the ability to be nimble, is something that is very critical to being able to handle that type of growth and accommodate the things that come from that. There's a lot of good things that come from growth like that, and there's a lot of really challenging things that can come from growth like that. We're experiencing some of the, you know, the backside of one of those latest growth spurts here, which was the largest growth spurt, obviously, on the chart, and we'll talk about that today as well.
I think the important thing on this, on this graphic, and some of you probably already realized we posted the Investor Day presentation here about a half hour ago, but, you know, kind of the big reveal here is by 2026, the period we're talking about today, is the next three years, 2024 to 2026, and we expect that to be, you know, about... If you looked at the midpoint of that guidance, that 12%-14% compounded annual growth rate would put you at about $5.85 billion in revenues by 2026. So again, I think it's, you know, visually, it's...
It kind of, I think, speaks for itself in terms of what the growth has looked like, and I think it's just, it's important to put it in context in terms of how that happens, why that happens, and how we continue to hold on to those new and higher level baselines as we grow. So I think just kind of getting into the meat of the presentation today, you know, like every company, we do strategy, right? And our strategy is, it's very formal in terms of its process nature today. It was a lot more informal, I would tell you, even 10 years ago. But as we formalize this, as we've become a larger company, and we've become more diverse, and we've had to formalize the process.
But a key part of the process for us is identifying what we refer to as megatrends. And so what we do is we go out there, and we look at, okay, what are the big thematic things going on in the world today, right? And, and that could be, not only impacting, you know, Generac and specifically the company or the industry and the markets that we serve, but even more broadly, some of the larger trends that are impacting businesses and industries, you know, kind of, on an overall basis. And so, you know, you, you probably have seen, these megatrends. We've presented them, and we continue to refine them. Every strategic cycle, allows us to kind of pressure test, are these the right megatrends? Are these the things that we should be looking at?... Are they still relevant?
Do they still impact us or our industries? Are they things that we either, they maybe perhaps present risk for the company or present opportunities? How do we think about these megatrends? So the five megatrends that are on this page are relatively similar to the megatrends you've seen before, but we've tweaked them again. We've refined them as we've moved along. So just very quickly, kind of going around the horn here, Grid 2.0, and you guys have heard us talk about this dramatically. And I have a couple of slides after these megatrend slides that I think get into the how, just how important that change in the grid is and what that's gonna have for an impact on Generac, on the industry, on the utility industry.
I mean, there's so many industries that the change in the grid is going to impact, and we're definitely one of them. And in fact, you can see by our actions, we're really leaning into the changes that are coming, and they are coming. There are some huge changes that are taking place, and maybe not as obvious to you, but everything from the decarbonization of the sources for our power grid today to the electrification of everything on the demand side. And those major forces have consequences, and some of those consequences are positive, of course, for the planet. Some of those consequences are more challenging to deal with. And we'll talk a little bit about how we think of those consequences in relation to the products and the solutions that Generac is developing and is deploying in the markets.
This is going to be a central theme for, for... Not only for us, but I think for a lot of companies that, that are involved in one way or another, with power, with electricity. This is something that, I think, you know, we've, we've talked about at length, and that we'll continue to talk about at length. Kind of intertwined with that is the impact of climate change, right? You can, one is a causation, the other one is, is, is, is, maybe part of, of how we solve for it. The impact of climate change has kind of brought us to the point that we're here today when it comes to some of the changes that are taking place in the grid.
As the planet warms, and I think we're all past kind of, you know, do we believe that it's real or not? Look, air temperatures are warming, sea temperatures are warming. You can debate what has caused that. That's probably a valid debate to have. But the reality of it is, is those temperatures are warming, and those impacts from those warming temperatures are manifesting themselves in ways that we've not seen before, at least in current modern civilization, in, in terms of what it's doing to our infrastructure, what it's doing to, you know, our populace, and what it's doing to the systems that we deploy and that we depend on. It's creating more volatile weather patterns. This is, this has been pretty clear.
I think it's been shown that, you know, the amount of severe weather that's occurring can be tied directly to these warmer air temperatures and these warmer water temperatures. So these are things that I think are not really at debate. It's a question then of how you deal with them. But they have impact, and they obviously have impact for Generac in terms of our products and our markets. Obviously, I think the other thing with climate change is the regulatory environment has changed significantly in the last several years. I think the, the policy environment has become very different from that of the environment, perhaps even, you know, as little as three to five years ago.
And so there is a political will, if you will, to go after solutions to combat climate change, to combat these warmer air temperatures and these warmer water temperatures. That regulatory framework that's developing and those policy changes have major impacts on many industries, but certainly on our industries in terms of our products and markets. Home is a sanctuary. This is another trend that I think emerged dramatically during the height of the pandemic, and we all witnessed that. I think a lot of companies had, you know, excess demand that was generated during times, you know, the time of the pandemic itself. I think for us, you know, the demand that we get comes from, generally from power outages or a concern around power outages. That became even more amplified, if you will, during the pandemic.
And so I think this concept, though, even though the pandemic itself has faded, the concept of people working from home, people, you know, kids that are learning from home, this has not changed. I don't think we... I think we would all agree, we're not going back to a 40-, 50-, 60-hour workweek in the office, 5 days a week. I mean, those days are relatively done. Even here in the Rust Belt of the U.S., we recognize the importance of a hybrid work structure and the flexibility that provides our workforce. It's critical. The opportunity to tap into new labor sources that perhaps aren't domiciled directly here within, you know, an hour's reach of our headquarters.
And so because of those trends and because they remain intact, that has profound implications on the importance of a continuous source of power at your home. And this is a really important concept that I think people are finally coming to grips with in terms of what happens when I'm trying to get my job done, or my children are trying to learn, or I'm trying to do anything I want to do in my home, and the power's out. I can't do it. And it's not just an inconvenience, it's impacting my way of life, perhaps my, my way of earning, my way of learning. All of those things become impacted in a way that people, I think, probably didn't think about when they weren't at home and the power was out. So these are... This is another important megatrend that impacts, the company.
I think the emergence of cleaner alternative fuels is another important trend in not only natural gas, which we've focused on for a long time because our products consume natural gas, but also other fuel types, like hydrogen. These are other ways to produce power with, you know, with cleaner impacts, if you will. And that's something that is gaining steam. And that is something that we're also focused on, and you'll see a little bit about that and hear a little bit about that throughout the day. But it has, again, profound implications as we work to decarbonize these currently more heavy fossil fuel burning assets around the world that are producing power. And then lastly, the growing investments in global infrastructure, which are creating new opportunities for the company.
We continue to upgrade the aging infrastructure of not only this country; this is a global challenge here. This—and it's absolutely a global theme, but these systems, and these systems run the gamut of everything from transportation systems to waterways, water systems themselves, water delivery systems, the electrical systems, the telecommunications systems. These are all critical infrastructure elements that we rely on every day. We—frankly, we take for granted every day, and they've continued to decay, and they've continued to be holistically underinvested in. That, again, talk about political will and the—I think, the realization of the importance of those systems and the amount of infrastructure investment that's going to be needed in the decades ahead, in the decades ahead, to bring those systems into a more modern state. Modernization of those systems is underway today. You're seeing evidence of it.
Perhaps on a new road you're driving or a new bridge you're driving across, those are kind of the easy things. But you're seeing it in some of the things that are happening with water systems, the telecommunication world, the continued march towards fifth generation wireless communications, those types of infrastructure investments. We play a role in that with the products that we develop, and the markets that we serve are a part of that infrastructure investment that's going to be necessary and the dollars that are flowing towards that. So these megatrends are absolutely critical. They're foundational for us. It's where we start when we talk about strategy.
And so we analyze these megatrends, we say, okay, we look at the trends, and we look at them in relation to our strategy and to the initiatives that we've got underway, and we say, is there good alignment? Again, are these megatrends relevant? How are they relevant to the company in a positive manner or a negative manner, and what are we doing about them, as we think about our future? And so I think one megatrend that I wanted... And it's not really a single megatrend. There's one thing that I do wanna mention. It basically brings all five of the megatrends together in a really interesting way, and this is-- it's underpinned with... I think some people maybe would put it under the bucket of Grid 2.0, because I think that's easy.
But I think actually all of those megatrends I just went through are involved in this particular issue, which is a growing issue. It's an issue of supply and demand imbalance, and this is something that, as a company, you know, you can, you can argue that maybe when we went public back in 2010, you know, I think for us, the, the weather events that we would see annually, right? That caused power outages, were critical to kind of our growth or lack thereof. I think what we're seeing as evidence over the last few years is a shift in the dynamic of what people, consumers, business owners, homeowners, are concerned about relative to power. It's not just the obvious concern when your lights go out. It's a, it's a broader concern that your lights may go out.
This is being evidenced by the fact that, as I said before, you've got a broad challenge, that grid operators and utility companies have a massive challenge ahead of them in how to balance supply and demand. Every grid operator will tell you their number one role is to balance supply and demand. That is full stop. That is what they do day in and day out, 24/7, 365 days a year. They are coming up against much greater challenges in trying to accomplish that. As we run to decarbonize the sources with more renewables, we're creating intermittency in those sources. Now, it's for the good of the planet, so it's a worthwhile exercise.
In fact, the cost of those renewables have come down to be on par, in many cases or better than some of the traditional thermal assets that we've used, but there's still a glaring difference, and that difference is in reliability. That's not a difference you can just ignore. You have to deal with that reliability issue, and that reliability issue is growing, and in particular, that reliability issue is being stressed by the more severe climate issues. Right? So it kind of builds on itself in terms of the impact of this issue. What we're seeing is as the sources, okay, on the supply side, become more intermittent in nature, and then you look over on the demand side, and we're pushing to electrify everything. We want to electrify heating, cooking, cleaning, transportation, right?
We're in very early innings here on some of these other trends. On the demand side, demand is gonna grow, and there are some pretty interesting projections out there, at least double, right? In the next 10 years, but probably even more than that, as we take all of those traditional kind of forms of energy and convert them to the electron in terms of how they are-- how they're consumed. As we do that, we become single-sourced on the electron. When you're single-sourced, you've now got more risk. You don't have-- If you think of it today, most of you have probably at least three mixes of energy in your own home. You have electricity, you have natural gas, and you probably use gasoline or diesel for your transportation.
That mix of energy allows you some—that you've got some resiliency based on just having three different types of fuel sources. If you start to bring those all down to a single source, you start to become more vulnerable to when that source is not available or if it's not available.... And this is, I think, got profound impacts for our customers and the markets we serve. And in fact, I just point to some—these are just headlines we took in the last 12 months, that I think, you know, the media, you know, Amanda's gonna talk to you about all the wonderful things we're doing in marketing here this morning, but, you know, the media is doing a great job helping us out with this because this is a real problem. And what you're seeing is, it's frankly frightening.
In ERCOT, in Texas, right? 10 consecutive days, they sent ratepayers, that's you and I, if you live in Texas, a text asking you to voluntarily curtail your power usage. Okay, so this is the strategy. We text everybody and ask them to turn the lights off. If you're the utility company, you know, this is... I mean, think of the heresy there. My only product, what I sell you, I'm asking you not to use. I mean, it's, it's a ridiculous business model, right? And it's voluntary today. How long will you continue to, you know, heed those voluntary requests without some additional incentive? Not for long. California, right? They sent a text out over the summer.
You know, they were literally, you know, an hour away from having to de-energize large parts of the grid because, you know, they had an imbalance of supply versus demand. Demand is peaking a lot more quickly because of the electrification of everything, and sources are coming offline a lot more quickly because of the reliance on renewable and intermittent sources. That is a tough combination to manage, and grid operators are struggling mightily with that. And we're seeing... I mean, you've seen there's been some pretty large, high-profile challenges there. The Texas freeze of 2021 is at the heart of this, right? The disconnections that happened in the Carolinas over the holidays last December, another visceral example. You wake up on Christmas morning, and the power's out. Why?
Because the utility, locally, didn't have enough power because the sun wasn't up yet. That's a tough thing to deliver. It was cold, not dramatically cold, for even for the Carolinas, it was cold. But these are the kinds of situations that grid operators are struggling with, and there is no easy solution, and that is a real problem. That's where I think, you know, products like what we manufacture, products that we design, the systems we design and deploy, can be so critical to helping fill some of these gaps and stabilize the grid, and help solve for some of those supply-demand imbalances. This is our strategy. You've seen it before. I'm not gonna belabor it. It hasn't changed from what we debuted two years ago in our IR day in 2021.
It's really, you know, it's three distinct pillars to improve energy resilience and independence. So think about resiliency being the first, the first pillar there, energy independence and resiliency. Optimizing energy efficiency and consumption, so the focus on efficiency, the focus on the demand side, is the second pillar. And lastly is protect and build critical infrastructure, which again, is another really important mega trend and pillar in our strategy. So this is our strategy as we again, we pressure test this every year. We have the right strategy. We think that Powering a S marterW orld is very relevant today, and maybe even more so than it was two years ago when we debuted it.
We think that the proof, in terms of what's been happening, the validation and what's been happening in some of these major trends, we think that it, you know, only validates that we've got the right strategy here and that we're thinking about this the correct way. I think also when we step back and we look at our strategy, obviously, ESG is an important element that companies are focused on today, our employees are focused on, our customers, our investors, are focused on, you know, in terms of how Generac itself, what do we think about ESG? What are we doing around these three important elements that make up ESG? When we think about our strategy and we step back, we think our strategy fits really, really well.
We think our values fit really, really well in terms of ESG. Now, you may have seen, you know, this is a journey for me, for us, for me, for every company, would probably tell you the same thing. The ESG process, the process of accumulating all the data you need to be smart about it, first and foremost, right? And then to action off of that data takes time. And as you've seen through the manifestation of our annual ESG report, if you haven't seen the latest version that we published earlier this year, I would recommend you go out and bring down a copy of it and just flip through it. But it can... You know, it's a continued evolution of our ESG, the messaging, the data that we share, and how we talk to ESG in general.
I think that it lines up incredibly well with powering a smarter world. So I'm not gonna dive into the details here because we're a little bit short on time, but I think it's really important to know, and we feel really good about the fact that our strategy itself fits very well into the things that we find very important and that you find important about our efforts around ESG. Now, I think the other thing that's really important about strategy is what does it mean in terms of your market opportunity? So for us, probably this is a really exciting chart that we've talked about here before, and we're advancing here now to include 2026. But it's the growth in our Served Addressable Market.
You can see that back in 2018, when arguably we were very focused on, I would say, one of those three pillars in our strategy, resiliency. That's what the company was all about before, was backup power. It could be an engine-driven gen set or getting into energy storage, but it was really about providing power to people when the lights would go out, when the utility was not there for them. That market was $14 billion. It's actually a pretty good-sized market. We felt pretty good about where we were at there. As we thought about the future, as we evaluated the mega trends, and as we looked at our strategy, we saw an opportunity to grow and to serve more markets because of our opportunities and where we were headed strategically.
We undertook a path here, both organically but also through acquisitions, to get into new markets, to bring new products into our portfolio, new thinking into the way we address solving some of these bigger challenges that are underpinned by these mega trends. So today, the served addressable market for Generac is five times greater than it was in 2018 as a $66 billion market opportunity. A lot of work has gone into bringing us here to this point of opportunity. Now it's back to us. What are we gonna do with it? How do we execute? How do we capitalize on this larger served addressable market? Obviously, that, you know, that's also not been a straight line, and we'll talk a little bit more about that today, but it's, it's hard. It's hard to go into new markets.
It's hard to go into new products, especially when you've got a 60-year history of being focused, maybe somewhat singularly, on a product set or a market opportunity. So we'll talk about that. But this is, I think, very exciting because it speaks to the work we've done to increase the opportunities we have to go out there and serve more of the market. We've got a great product offering to do this, and this is, you know, a lot of what we've acquired over the years. When you look at those three pillars, the first pillar being, again, resiliency. We've got our legacy products, right? Our traditional products with traditional gen sets. We've got our energy storage products, both in the residential side and the C&I side.
When you think about efficiency, this is where it gets really exciting, and this is where a lot of the new magic has been happening here, and you're gonna see a lot of this demonstrated in the innovation showcase later on this afternoon. But it's everything from smart thermostats to management—load management, right? To the connectivity elements that are so critical to tie these assets to the kind of control that we need to make them intelligent, to make them more valuable, both for the end user as well as maybe grid operators and utilities. And then lastly, that protecting and building out critical infrastructure, we have products that are targeted directly for that and that help out, those, companies, be they telecom companies or wastewater treatment plants, water districts, hospitals, grocery stores.
Those products and those companies that rely on the critical infrastructure, we wanna help them protect that infrastructure. We have products that can help them build the infrastructure and protect it. This is an, I think, an incredibly important slide in terms of how we win at this company. It's not only about having the right strategy, but I think culturally being aligned to execute on that strategy. This is where I think it gets pretty exciting for us, and we feel really good, even though we've had our setbacks and our challenges, of course, but I think we're stubborn enough and we're smart enough that we're gonna be successful in all of these areas when it's all said and done.
But I think what's really important here, and there's three kind of, I would say, areas, if you will, or buckets that we've put these in. The first being innovation. Again, our founder was an engineer, very deep in our DNA, the importance of innovating. And it's not just product innovation. I think this is something that, you know, is a distinction that it's not often made enough. A lot of people, you say the word innovation, you're saying, "Oh, product, new product, new features." Market innovation. We've created whole markets with home standby. It's innovation in the way we distribute products, innovation in the way we go to market, innovation in the way we tie our brands to the products. You can innovate in a lot of different ways. The processes that we deploy in the manufacturing floors, right? People can process innovate as well.
Innovation is deep within our veins here at the company, and it's a really important part of how we think we're gonna win in the future. Being operationally excellent, of course, that is another really important element of success for any company, but particularly when we think about the opportunities we have. We have been operationally very successful as a company over our history. Of course, as we've said, some of these newer markets, we've had our struggles, but we're finding our footing, and we are going to be successful in the future. But deploying these operating models that we've developed into some of these new areas is proving to be very fruitful. And I think that that's an important element of being successful, and I'll call out one other here, one other element here that's important, which is a relentless focus on cost.
Now we've changed that to also being a relentless focus on quality in some of these new markets where we know that's so critical going forward. But being ruthless about your cost structure and being sure that, you know, you can deliver products that deliver value to your customers, but also deliver value to your stakeholders, be they your shareholders, be they your employees, be they, you know, the others that have a stake in our success, is really important. You can't have one or the other. You have to have them both. There's got to be balance there. And lastly, on this page, which I think is also something that maybe is not as well known, maybe, is our go-to-market expertise.
Something that I talked about in terms of innovation, but things that we've developed that I think provide not only some moats around some of the businesses that we participate in, but that give us opportunities and the rights to be successful with some of these new products and some of the newer markets that we're getting into. Our go-to-market strategies, I think, have evolved dramatically over the last decade, and we've got a very rich pipeline of things that we're gonna do in the future that Amanda, in particular, is gonna talk about as it relates to go-to-market expertise. So, you know, I think that we have a great brand, we've got great distribution, we've got global scale. And we also are very vertically integrated.
You're gonna see an example of that when you walk through the Whitewater facility today. We make our own engines, we make our own alternators for those types of products. We make our own controls, designing our own controls. We put all of that together. We're gonna do the same. We are doing the same in our C&I products, and we're gonna do the same in a lot of these newer products. We think there are value streams to capture that are very important, and I think you can look at our margin profile, and you can kinda see for yourself the results of the importance of vertical integration. I think where this comes out in the end, for you know, I think our future, is the fact that we've kinda decided we can't just be a hardware company, right?
When we think about our future, we think about it as it relates to our past. Our past, we were building products, and we, we'd get them to the loading dock, we'd ship them out on a truck, and we'd wave goodbye to them. We didn't even really see a lot of service opportunities, right? 'Cause our products in the backup power space, by and large, are lightly used. So the opportunity for aftermarket parts, we always get that question, right? From investors and others. Where's the aftermarket parts opportunity? The reality of it is, it's always been pretty small for our, for our traditional power generation products. The reality is, going forward, we believe that you have to be excellent in hardware. There's no doubt that you have to deliver high quality, reliable, cost-effective hardware to the market.
But bringing all that hardware together to create more value stack for the end customer and for other third parties, be they grid operators, utilities, and most certainly Generac, there's an opportunity to do that in a way that's never existed before. This is the residential ecosystem that we're building, all right? This is visually what it's gonna look like. At the heart of that is the Ecobee thermostat. In the end, when the dust settles on everything we've done over the last 10 years, I think we will all look back and say one of our more important acquisitions was Ecobee. And I remember the questions early on that we got when we did that acquisition. "Oh, are you going into HVAC? Why are you buying thermostats?
Doesn't have anything to do with your markets." It has everything to do with the experience for the end user, the experience to take all of this hardware and make it interoperable, make it synchronous, and make it intelligent. That is the heart of it. That piece of hardware, you'll see in our innovation showcase this afternoon, you're gonna hear from Stuart Lombard, the founder of ecobee. He's here in the flesh, and he's gonna talk about what we're doing with that device. Don't even call it a thermostat. I almost cringe when somebody says it's a T-stat. It's an energy hub. It's an energy hub in the home going forward, and it's at the center of the energy ecosystem we're building, and it's absolutely critical as a differentiator for us to differentiate Generac from other people who are just doing a hardware solution.
And by the way, most people aren't doing all those hardware solutions. They're doing one of those, maybe two. We believe we have the opportunity here to own energy in the home going forward, and that's an obviously critical thing based on those mega trends that we talked about earlier. So you're gonna see more examples of that. And this is, this is at the heart of what we're building as we become an energy technology company, and we're doing the same thing on the C&I side. At the heart of the C&I ecosystem is the Blue Pillar acquisition that we did. Small acquisition, probably flew under your radar, but it provides the connectivity and the backbone in concert with our Grid Services group.
Both of these ecosystems, by the way, if you go back and look at the residential ecosystem, you see that Smart Grid Ready logo over in the far lower right. Though each one of these products can connect to the grid independently, but each one of these products can connect to the grid through the ecosystem and provide even greater value. The same thing exists on the C&I side. The Blue Pillar acquisition gives us the opportunity to not only control our traditional power assets, like generators and where we're going with battery energy storage, but also larger load applications within the C&I universe. Boilers, chillers, those types of assets that consume tremendous amounts of power and are absolutely critical and at the heart of how the C&I customers think about managing their energy.
So this ecosystem is gonna provide, we believe, tremendous value for end customers and tremendous value for the company as we go forward. This is at the heart... Again, you'll see great examples of both of these today. If we do this right, as we evolve in the future, you saw us present this graphic two years ago, but what we're defining as energy technology, and I'll just talk to this for a second. Today, based on our forecast for 2023 results, 12% of the $4 billion, the $4.06 is the midpoint of the range, the guidance, which today we are reaffirming, and I'll get to that in a second. At $4.06 billion, that 12% is about $500 million.
About 300 of that is residential, and 200 of that would be C&I today. We believe that, that's gonna grow to about 21% of that $5.85 billion in the future, okay? So that's about $1.2 billion. So $700 million of growth. And that $1.2 billion, when we think of it, it's about $700 million of residential and about $500 million of C&I by 2026. The CAGR on that energy tech piece is about 35% over the next, you know, over the next three-year period. Even our traditional markets are gonna grow 9%. So obviously, you know, maybe you... Depending on what you peg as GDP, 3x GDP, maybe greater, depending on where we're going here, maybe 4x GDP.
But if we do this right, we're gonna continue to broaden our opportunities with that, that new and larger served addressable market that we're creating for ourselves, and we're gonna create a bigger mix, a heavier mix of our sales coming from energy technology.... Now real quickly, I'm gonna conclude on this and then turn it over so we can keep moving. But from a near-term update, just want to bring everybody around. I just mentioned it, kind of the cat out of the bag, but, you know, we just provided guidance back on August 2, on our second quarter call. We're reaffirming that guidance this morning. No changes to that.
So it's still gonna be a consolidated revenue decrease for the full year, 10%-12%, primarily driven by residential products, which are down at a decrease in the mid-20% range, primarily from the field inventory challenges that we've talked about at length on the home standby side. Adjusted EBITDA margins, about a hundred basis points spread there between 15.5 and 16.5. That's also a lot lower than historically we've had, and York's gonna kind of level set you kind of on a history lesson of where we've been with our EBITDA margins and where we're going in the future. But it's also been depressed because of the. We're under shipping the market for home standby. Why is that?
Well, on the field inventory side of this graphic here, just to give you some perspective of where we're at, we've been working through that field inventory challenge for the better part of almost four quarters now, and we're getting close to what we've referred to as normal. We think by the time we get into 2024, we get into early 2024, we're gonna be into a much better position. We're actually already seeing, as we've said before, evidence where certain markets, certain regions, certain customers are already at or below normal levels. The good news is demand, end demand has remained strong, and Amanda's gonna touch on that, and Kyle will as well, Kyle Raabe here in a second.
But I think the point here we wanted to leave you with this morning is that there's no change to the guide at this point. We feel good about where we're going the second half of the year, and we feel like that field inventory problem is becoming further and further in our rearview mirror. Which is a good thing because it's been a drag on, obviously, you know, on sales, but it's also been a drag on earnings, given the outsized impact that mix has on our results. So I'll leave you with that this morning, and then I'm gonna turn this over to Kyle, and then we'll keep things moving along. Kyle?
Thanks, Aaron. So as we go through here today, I'm gonna start diving in a little bit deeper. You know, Aaron talked on how the megatrends affect our entire business, how they work across every single channel that we serve. We're gonna dive deep into what the resiliency portion of those megatrends really mean to Generac, what it means to Consumer Power, and how we plan to take advantage of the things that we do extremely well. Just a very brief introduction of myself. I've rejoined Generac back in December of 2019, after being at Fortune Brands and Master Lock, and prior to that, also spent some time here at Generac for approximately eight years.
So I'm happy to be with you this morning and happy to be talking about how we believe we're gonna win in the consumer space, specifically with home standby. The great news, and most of you know this already, we start from a position of leadership. In residential standby power, we're clearly out in front of every one of our competitors, and it's something that we enjoy, but we also, we don't take that for granted for one single day. When I think about taking it for granted, it really means, what do we do with that to then catapult ourselves through what Aaron talked about in an inventory reduction period, and take and drive for the next three years to higher levels of market penetration, to higher levels of consumer satisfaction?
We're gonna take, and we're gonna leverage everything that we've built in the last 20 to 25 years. You think about the scale in which we manufacture. You have the opportunity to see Whitewater later today, and the scale that that plant has brought about to be able to, to service the customer and service surges. We've taken and we've worked to duplicate that plant down in Trenton, South Carolina. What you see today in Whitewater, very, very similar to what's going on in Trenton, South Carolina. And those two plants, they bring the scale that we need, not only to drive the daily sales that go on, the daily need for backup power, but also to service the surges that come in day in and day out, to service the surges that we'll see.
Because when we leverage all of the tools that we have into not only the manufacturing side of the business, but also into the marketing side of the business, in our ability to create consumers who are interested in a category that, in some cases, they don't even know exists today, right? We live in, we live in a world where I live inside of Generac, and I would think, well, hey, no one could ever possibly not be aware of a home standby generator. But the reality is, we create that market every day, every single day. And I'm gonna talk a little bit later on how we really go about doing that and leverage our scale to bring that in, and Amanda's gonna give us even more detail in her section. But to go hit that objective, we really have about five key areas that we'll focus on.
I'll walk you through here, throughout my, my 30 minutes with you. Market creation, Amanda's gonna talk a lot deeper about that, but I'll hit it for a little bit. Distribution expansion, that's something I'll dive into for you, because as we create new consumers, as we create people who are interested in the category, you have to have distribution. You have to have the ability to service that at the same level that you're creating it. Data and intelligence, we believe, is an unbelievable competitive advantage, specifically for this space. When you lead a category by as much as what we do, what we acquire from that category, what we acquire from our customers and the data that we see every day, we're gonna leverage that.
We're gonna leverage it forward to be able to do things that not only will help the consumer, will help our distribution, but will also continue to distance us from anybody else that were to come into the market. As we deliver those homeowners, we're gonna go close the consumer. I'll walk you through a little bit of a history of what that close rate looks like. I know we've talked about it several times on several of the earnings calls, but there's a really rich history behind how we got to where we are today. Most importantly, I'll walk you through what we're gonna do and how we're gonna get to tomorrow, the end of the three-year period that we're talking about.
All of that is gonna be done on the back of a fantastic product portfolio that Aaron already talked to you. As I transition here a little bit, and I talked that we start from a position of strength, we start from a position of leadership. It's actually something slightly different. We actually start from a position of creation. When you think through the history of Generac, when you think through the history of the entire market, think about a company that created a product to solve a problem that homeowners 30 years ago had no idea even existed. The muscle, the might, and the firepower that it took to create this market, to drive it to where it is today, and then to take it and push it to tomorrow, continues to be an unbelievable strength of ours.
Over the last 4 years, we've taken that strength, and we've been able to play it forward into creating 4 times the number of IHCs or in-home consultations, as, as most of you are aware of. We create those in-home consultations by acquiring a customer that maybe has gone through the pain of a power outage for all those reasons that we talked about in the megatrends, and maybe they've gone through it once, maybe they've gone through it twice, and it's the third time that they come back to us and they say: "You know what?
I'm ready to jump into that process to find out how to solve that problem." Generating those IHCs is an art, a science, and it's a strength of ours that we'll continue to leverage well beyond what you see in 2023 or what you see in the slide here, and going out. And Amanda will talk about where we're going from a long-term perspective. But every time we do that, every time we get the opportunity, I call them at-bats, right? We get an at-bat for the consumer. We drive market penetration, and by the end of this year, we think we'll be north of 6% of market penetration. That is something that, to our organization, to everybody that works here at Generac, is an unbelievable opportunity. The growth that we've experienced, we're still only at 6%.
A wide open field that we have the opportunity to go attack, and every time we grab a point, it's another $3 billion. So the return on what we do in that open field and the way that we go to acquire a homeowner and provide a standby solution will, without a doubt, continue to return heavily to our organization. As we move through the last five years, the last six years, what you see on the slide here is some of it is new, some of it's not. I'm gonna talk you through the blue line here really quick. When we think megatrends, you think of grid, you think of demand, you think of the imbalance that Aaron talked about. We talk about the megatrend of weather, the severity of weather, that we see in the U.S. every single day.
It's amazing how it used to be just a hurricane season in the southeast, you know, for 2-3 months out of the year. It's expanded across the winter months. It's expanded up and down the seaboards. We saw a hurricane hit California this year. I can't remember the last time we saw weather in severity like that. That blue line that you see on the screen is taking away all of those major events. That's the baseline outage trends that we talk to you every quarter about, and we've seen those trends continue and increase, especially when you take a look at the jump from 2019 to 2020. That's the day in and day out outages that homeowners experience across the U.S.
That's the pain and the frequency of pain that continues to grow as the grid and as the megatrends take a grip and, and have effect on the homeowner. What's new and different is we look at how long those outages are lasting, and that's a big difference. When an outage lasts an hour, when an outage lasts 2 hours, the impact to the homeowner is significantly different than when you start to eclipse 10, 15, and what we track is even above 20 hours. Now you're talking a full day. That means you woke up in the morning, and your power was out, and you went through your entire day thinking, checking the web: What is my utility telling me? Is it gonna be back on? And you go to bed that night, and the power's still out. That's a completely different experience.
As we see that part of grid operating, of grid outages going down, that's where we see opportunity for consumers raising their hand, going to grab them and say, "Hey, somebody's got to fix it. Somebody's got to do something, and I don't trust my utility anymore to go do it, so I'm gonna take control. I'm gonna take control of the situation and put a backup power source on my home." There are options. There are options in this space, and they're growing. The opportunity for a homeowner to go do something else besides a home standby generator keeps coming at that homeowner from a lot of different angles. I want to walk you through what you see are two options that are particularly popular, two of them that are growing, and we've had conversations with you about both of these.
You think about solar and storage, and as I look at the top, right, solar and storage, what can that do for me from a backup perspective? When my power goes out, it can help me, and it can help me for a period of time, but it has its problems, it has its challenges. How full were the batteries when the power outage started? How long is the power outage gonna last? Is the sun gonna come up today? Am I going through a nighttime period? Where do I live? How much power am I using? How much power am I curtailing? What am I not using to try to get as many hours out of that solution as I possibly can, right? That's not a worry-free experience. It's a very green experience, and those products have their place and will continue to grow.
But to solve an extended power outage, to solve an outage environment that continues to grow, it doesn't compare. We've also talked a little bit about what does a bidirectional EV solution look like, right? I've got a bigger battery, I've got a car. In this case, we looked at a Ford F-150. That truck, that car, can power my home. In the future, we see bidirectional charging, being able to access that battery and be part of the solution. But what that does is it adds a different layer of worry, a different layer of concern. Does it, do I, am I taking away my mobility? What happens when I need to go somewhere, and I just run my electron gas tank dry?
Am I taking away when I do have to go get food or run out of the house, I take my power with me, and my home goes back dark again. So the family that was left behind now is unplugged. So risk, concern, and worry also accompanies that bigger battery because it's not designed specifically for long-duration outages. Our home standbys, which you see the example that we have here, is a 24 kW, will run as long as I have a fuel source. If I'm hooked up to natural gas, I can run almost in perpetuity. If I'm hooked up to propane, I have quite a few hours that I can bring in, and I can refill that tank and run hours upon hours, even days, on the fuel that I have. So no other solution gives me that type of longevity in this type of environment.
At the same time, that solution that provides longevity also has a better cost position to install and acquire for the homeowner. Now, again, very different from solar and storage, and what we have modeled up here does include tax incentives and rebates that a consumer gets, as well as does the F-150. But to create that apples-to-apples comparison, we look at how does this product get installed? What's the labor that goes into it? I have transfer switches. I have equipment that I have to bring along with me to actually get to that spot. And any way in which you slice it, the price to provide backup power that will last through the long outages that consumers are starting to see still favors a home standby generator, hands down.
So when we think about bringing people into the funnel, reaching out, creating IHCs, we use intelligence to make sure that we're able to serve that customer very crisply, very cleanly, and we know we have work to do. That's part of what you see on the screen here, is identifying the work that we have to go get done. But it doesn't happen haphazardly, right? It's not a shotgun approach. Being the organization, being a connected product, we have the ability to see homeowners. We have the ability to see power outages. We watch very closely what regions, and down to the county level that you see on the left-hand side here, we have the ability to see how counties behave when the power outages actually happen relative to how rural they are, how urban they are, what their electrical sources are.
Do they have power coming from peaker plants? Are they burning coal? Is it wind? All of that goes into how we score a county. What you see on the left-hand side, those blue counties, pretty cold, right? Not an area where we see the propensity of a homeowner to really jump into that funnel. What you see in the red is where certainly we've seen outages, you know, for many, many years. In many cases, we've talked about the inverted C, but now we start to see California light up, right? That the ability and the desire for a homeowner to come in and look for sustained backup power is increasing. We take that and data map it against every one of the distribution points that we have.
Aaron mentioned an omni-channel approach, and you look across the bottom of, of the screen here, 5,200 retail outlets where a consumer can go and ask for a home standby to be quoted and installed. 1,500 wholesale locations, where a contractor that is not a dealer can go and acquire our products because they may be trained, they may have experience, and they want to provide as an electrician, as an HVAC professional, they want to provide the power to their homeowner. And last, and certainly not least, are the growing number of dealers that we have throughout the entire country, 8,700 strong and building, every single quarter, every single month. We know the importance of making sure that when a homeowner comes to us, especially in the red and orange target areas, that we're able to serve them in a rapid fashion.
It's an emotional category, and if we lose the speed, if we don't have the speed to solve that problem for the consumer and the power comes back on, they move very, very quickly. So our distribution approach works to solve that problem every time the power goes out in every county across the country. Critical to that distribution strategy were those 8,700 dealers that I talked about. They make the whole thing go. We can send a lead to a, a dealer directly. Fantastic opportunity for that dealer to grow the business. Dealers are certainly out marketing and bringing business in on their own. The dealers are the backbone of our retail programs. I talked about 5,200 opportunities for a homeowner to walk into a Home Depot, to walk into a Lowe's, to walk into a Costco, a Menards, and get a home standby generator installed.
Our dealers sit down below, and they sit underneath that, and they make that happen, which is why we pour so much energy into that group every single day. What you see on the left-hand side are all of the things that we invest in to make that dealer network stronger. We know that if you walk into a Lowe's, that when a dealer shows up, the better the dealer is that shows up, and they might have their Lowe's shirt on, they might have their Home Depot shirt on, the better they approach you as a homeowner, the more likely you are to buy. When we send an IHC to a dealer, and they show up, and they understand the product, they understand how to sell, they understand the solution that you need, the better chance of their success is. But they also have businesses.
In many cases, these are small contractors, and they have to move through, and they have to grow as fast as what we are, as fast as the opportunity is presenting us. What you see on the right-hand side is where we're taking deeper tranches into their business to help them expand the way that we are, all the way down through hiring. We've launched programs, our Dealer Talent etwork, where we're working to actually place people into their businesses as they raise their hand and say, "I have to grow my technical staff. I have to grow my sales staff." Hiring's been a real drag over the last 3-4 years. Us jumping in to an environment where we know the demand on a technical employee is higher and higher is something that, that we're very willing to do.
Again, when I think about who else does these types of things in the organization in the industry, right? The answer is no one. No one thinks about our dealers. No one thinks about our installing contractors and technicians to drive engineering and products to help them install faster. This is what we do, and we're gonna continue to invest in these dealers day in and day out as they work to help the whole ecosystem go.
So as we make the investment, I wanna pause really quick, as we've talked about close rate, and give you a quick walk through how we got to where we are today, and then certainly, what are we gonna do to go forward to take what you see on the right-hand side there, which is a flattening of that close rate of the IHCs that we send out, and bend that curve upwards. When you look from left to right, what you have on the left-hand side, that escalating line is really the result of a couple of things. Number one is the growing awareness in the space. We have a lot more interested homeowners coming in, those interested homeowners pretty low on the bottom of the funnel.
We were able to grab them and pull them in through our PowerPlay process and really enhance the sales process that was going on prior to that upward curve. As COVID came in, you see the close rates peak right at the beginning of COVID through 2020. What happened at 2020 that drove the drop-off? Supply. All of a sudden, that IHC that came to that dealer was not 2 weeks out, it was 4 weeks out, it was 6 weeks out, it was 6 months out. All of a sudden, that home standby generator that had to go in wasn't going in inside of 60 days. It was going in inside of 270 days, in some cases. People back away. It's an emotional category. That dropped our close rate off.
As you can see in the curve, we've bottomed up, roughly 2020, and we're on our way up. We flattened off in 2023. So you say, "Well, hey, Kyle, that's great. You're coming off. Why hasn't that trajectory increased?" Well, the consumer, frankly, is in a very different spot today than they were even 12 months ago. You think about interest rates. The number of generators that are financed, that we pull through our funnel continues to grow. It's an expensive endeavor, and we work really, really hard on affordability, and we're gonna continue to do that because the consumer, through 2024, we see stress, right? We see that, but we're gonna deploy more resources to help bend that upwards.
We also have a larger funnel, so the more people that come into that funnel, right, you see people who are exploring for the very first time. Some people might call them tire kickers, or they're just looking for an estimate. As we grow and we bring more IHCs in, we've got to bring that customer sometimes through one, two, or even three IHCs to get them to purchase. So that trend will build, will go upwards, and we expect by the end of 2026 or this period, to recover half of that drop and be back up closing at a much higher pace against far more IHCs coming through the funnel. So how are we gonna go do that? Sounds great, right? That, that's a great outlook. I understand what you're trying to do. It all makes sense.
What do we actually have to do to go make that happen, as we grow those IHCs? The answer comes back to truly using our data and investing in the dealer. We're gonna start with the consumer. We're gonna start by learning more about that consumer as we create that IHC. We're gonna nurture them. We're gonna pin data that's publicly available to that IHC, to that homeowner, and we're gonna give our dealers a better fighting chance to go close that IHC. When I know something about the homeowner, when I know, hey, guess what? They've got propane. When I know, hey, they're in their sixties, when I know there's a family of 4 living at that home, when I know there's 20 units in that subdivision, and they're the last house standing, right? My dealer operates in a certain way.
Being able to deliver that information to a dealer that we're, by the way, also profiling and understanding, do you close well with propane customers? Do you close well in a suburban area? Do you close well in an urban area? Do you close well with a certain demographic of people? Marrying that together really enhances our ability to go and present a solution through PowerPlay, which I'll hit on the next slide as well, and the investments that we're gonna make there, and create those suggestive thoughts to our dealer as to how to sell the solution, not just in general, not just sell, hey, duration, not just sell, hey, we're gonna back up your house, but to sell it the way the homeowner wants to hear it, right?
To sell it with the right salesperson, to put someone in the kitchen, across the kitchen table that knows how to close that individual homeowner. That's a massive advantage. And with millions of at-bats behind us, millions of IHCs to learn from and to continue to go through, we will get better every single month, every single quarter, as we start deploying this. But if I keep rolling down, I talked about, hey, I've got to have the dealer who's really good at doing that, okay? How do we foster that? How do we make that come to fruition? And the answer goes back to investment. Investment in the tool that they use day in and day out. That's PowerPlay for us, right?
That's PowerPlay, a tool that we've created, a proprietary tool that we invest in and will continue to develop over many, many years, you know, far longer than the 3-year period that we're looking at here. Because that tool gives us the ability not just to provide a lead to the dealer, not to create, say, a suggestive selling environment, but also to take feedback, right? For them to let us know what's going on in the market, what quotes are winning, what quotes are losing, what solution isn't right for this consumer, so please change those suggestive tendencies, those data-driven tendencies. That's all driven by that PowerPlay tool.
An investment there will, without a doubt, make our dealers better, and the growing number of dealers that will continue to use it better every single day, whether I've been in the industry for a decade, sometimes two as a dealer, or whether it's month number three as a dealer that just came on board with us. As we build the tool, obviously, we've got to create the process. So we're digging really, really deep and thinking through what is that process at the table. And lastly, how do I bring that to that dealer? Those that have had experiences with the trades, you know, generally speaking, not the easiest group to train. They're not raising their hands and always willing to lean into a sales process, a technical training, no problem, right?
But as they grow and as they mature, not only does it become something that a technical individual becomes more comfortable in selling, but also expanding their dealership to have the professional sales force, to have people that day in and day out, sit across the kitchen table and sell as a job, right? Be in front of the homeowner and be a consultant that actually drives the right solution to them at the right time. Our investment, not only in the tool, in the process, but also in the daily behavior and tracking of how our dealers work, who's doing a great job and who needs what specific training to grow and improve, and build on the close rates, and build on the foundation that we have, will help propel us well beyond our close rates that we have today.
So as we bring that together, there's really three people that all of this helps. You know, if you go all the way back to product, right? And Aaron talked about product. You can see on the left-hand side there, I've got the portfolio of products that are really in, you know, in the center and in the heart of what consumer power is here at Generac, and certainly some extension off into the clean energy that you see on the upper left-hand corner. But as we bring these in and a sales process designed not just for home standby, certainly that's our focus, it's our heritage. You know, we as you can see, 6 million devices, you know, half of those are home standby generators, so we tend to focus there.
But the reality is that sales process, that, that way in which we engage the consumer is beyond that. And we're working to create a very specific and very easy connection between the homeowner, their power needs, and Generac. One-stop shop. As we go through the next three years, all of these devices come into that ecosystem that Aaron talked about, and all of a sudden, become a very easy solution for us to get into the house, as well as for our ability to be able to connect the consumer and solve an energy need. Our trade partners. You know, I talked a little bit about our omni-channel approach, and it, it's great that they give us leads, 5,200 retailers, 1,500 wholesalers, almost 9,000 dealers that we have right now. As we expand this portfolio, we're bringing more business to them.
We're bringing more dollars to the shelf at Costco. We're bringing more dollars to an electrical contractor, EV charging, something that they're doing today, why not already bring it into the ecosystem? If we can promote their business as a retailer, as a wholesale distributor, and certainly as a dealer to continue to grow, the moat we dig around that dealer network becomes something... And the loyalty that they have to us becomes something that any competitor that comes in, you've got to replace that. You've got to replace the training, you've got to replace the tools, you've got to replace every one of the solutions that we're bringing to those customers to take that share away from us. That's a big investment that I don't see happening, especially if we're putting our foot on the gas as hard as what we anticipate.
So as I wrap it down here, the things that we talked about, right, are all really designed to generate growth over this period. And we think about the opportunity, right? Longer power outages, more power outages, people being touched in different ways, energy solutions, energy problems coming in at a much faster pace, right? That's really our drive. Our drive is to grab those market trends, grab the tailwinds, and invest in the right spot to continue the growth trajectory that we've been on for the last 10-15, even 20 years. We will do it by improving our product availability, the dealer numbers that we talked to you about, the way in which we grow and engage with those dealers, how we bring product to the homeowner exactly where they want to find it. Sometimes I want to shop where I want to shop.
I want to shop online. I want somebody to come into my house. Our job, and where we'll be, is to put our products and our services, and our solutions in front of that homeowner at the exact right time. We're gonna do it wisely. We're gonna do it in the right spots. We're gonna invest in areas where we have to expand. We're gonna invest using data and intelligence to improve our dealers, improve their close rates, improve the way we educate a consumer along that path, so they're ready to take that solution that may be a foreign or out-of-body experience for them. Maybe it was something they didn't even know about. We're gonna use data to bring that to them in a very simple, easy, and consumable way.
By doing that, we'll close the consumer and that growing number of IHCs, that is a massive opportunity for us as the grid continues to fail, will be what drives us going forward. We learned a lot during COVID, right? Aaron talked about the massive influx, the dollars. We've invested a lot over that time to create the infrastructure. As we look forward for the next 3 years, it's time to leverage that infrastructure. It's time to leverage the supply chain, the marketing expertise, the network of distribution that we've built, even through that really, really tough time. Because what it's netted out is 3 million home standby generators. More than 3 billion home standby generators installed. Over 6 million Generac devices in homes. Just leveraging that, along with everything else that we've done, truly sets us up for success.
With that, I'd like to hand it over to Amanda, and she's gonna show us a little bit how.
Awesome. Thank you. Oh, my name is Amanda Teeter, and I joined Generac in 2022, and it's been a really exciting time. I spent about 20 years working at Procter & Gamble in the past, and worked across a lot of different brands at the company and really enjoyed that experience. Then most recently led the North America Consumer Tire business at Michelin before joining Generac. So, you know, as I've joined Generac, it's been really exciting to see this solution that the company's built in the standby generator that's really a perfect solution for what's happening in the market today, right?
The product provides feelings of safety and comfort, and the benefits that it provides really deliver that for consumers in a time when, you know, we've got these mega trends that the team has talked about, where you've got, climate change, right? Which is obviously producing a lot of new weather environments and creating more inclement and severe weather. And then you've got the situation with the consumers where they're changing, they're working from home more, they're more reliant on their home having power because of the way that their lifestyle has evolved in the last few years. And you've got people who are more likely to be aging in place. They wanna stay in their home longer. And so these trends are colliding a little bit, right?
Because you've got the worst sort of weather outcomes and more power outages, coupled with people's increased desire to be, you know, in their home and having power and spending more time actually there. And so that combination creates a little bit of a perfect storm, no pun intended, for our product and solution. And what's exciting is over time, the company has really built a moat and a, you know, some competitive advantages that give us the right to really win in that space. One, the 8,700 dealer network that Kyle already mentioned, that dealer network is super powerful, and our product is really at the heart of what they do, right? And so it's a great strong relationship with them that we continue to reinforce.
We also have impressive lead generation and lead management capability that the team has built over many years. And that enables us to generate leads for those dealers and to help kind of push consumers through that journey toward, you know, what's a considered purchase in a longer sales cycle. And then I think what's really great is we have a 90% customer satisfaction, which is sort of a, you know, enviable number for many companies, I think. And so it's great that we can continue to provide that level of service to our consumers. Because, you know, if the power goes out, you know, that's a and the generator doesn't come on, like, people are upset, right?
But we've got a 90% customer satisfaction rate, and so that shows that the product is really successful in delivering on consumers' expectations. And then the other piece, and this one's kind of exciting to me as a marketer, is our category prototype status. So some parts of the country, you know, if you have the sniffles, you say, "Can I have a tissue?" In other parts of the country, you say, "Can I have a Kleenex?" right? And we're kind of that Kleenex of generators, if you will. Consumers will say, you know, "I need a Generac," or, "I'm gonna buy a Generac." Right? Because... And to them, that means I'm gonna buy a generator, right? And those are synonymous.
And so that kind of, like, category prototype status is something that is really wonderful as a marketer and something that we wanna, like, sustain and continue to build on. And so as we think about the framework for continuing to drive growth on the business, there are a few parts of that. One is really the, what we call the who, so the consumer, right? And thinking about new ways to reach consumers and new consumer groups that we can target. The what, which is kind of our strategy, what do we communicate to them? And then the how. So this really looks at the different phases that the consumer is at in their journey, and then what are we trying to do at those different phases.
So driving awareness, really driving engagement with that consumer, helping them to consider and get to that consideration phase, and then purchase. That's kind of what they're doing, right? But then we've got a set of actions and activities that we're doing, at each of those moments to try to continue pulling them through that funnel. And that's, I think, what we'll talk a little bit more now is just, like, some of the ways that we're gonna continue to build on what we've done in the past, to continue to grow and to provide new opportunities. So, today, on the left-hand side, you can see, you know, our current consumer group, 65% of existing customers are age 60 and older, right? And so, that's obviously an older demographic, from a product perspective.
But because of the mega trends that we've talked about a couple times now, there is increasingly relevant new consumer groups that we can continue to tap into more that provide opportunity for future growth on this business. Those people who are frequently working from home, right? The younger families with children. You know, there's a lot of people who they just don't want the hassle of a power outage when they've got you know, multiple family, you know, members, kids that they're trying to deal with and manage. The increasing electrification of the home, right, and automation of the home makes having power more important just to kind of operate the home on a daily basis. And then families with special needs.
This group has always existed, but with more inclement weather and more power outages, they now have a greater need for our products. So as we think about, like, our potential for growth from a consumer base on that side of things, there's a lot of opportunity. And then thinking about, so think of this as like how we speak with consumers. And today, we have an approach where we use a lot of DRTV, and a lot of the communication there focuses on the storms and the environment that the consumer might be experiencing and reacting to. And that strategy isn't going away. We're continuing to build on that and refresh how we think about that.
But then in addition to that, we recognize that there is another way we can speak about this product as well, and that's to that consumer that's maybe a little bit more proactive, right? And kind of giving people credit for maybe taking a leap into the category. So we developed a new campaign idea about, say, Generac owners do it differently. They're the everyday heroes, protecting what matters most and building a sanctuary for those they love. They're proud, they're ready for anything, and they deserve a pat on the back for that. They know it's not just a generator, it's a power move. So we've taken this idea of it's a power move, and we feel like that idea can be a nice umbrella to talk with consumers about our product.
And we're starting to do some testing in that space, and we have an ad that we're testing with, which I'll play for you just so you can get a sense for how that might start to come to life. And I will play it now.
This house is a Generac house, and you're just the person to keep it running. Because a proud homeowner has a protective instinct, and frankly, the brains to know the grid is gonna let you down sometimes. That's why when the rest of the block is lighting candles and looking for flashlights, you're ready to rock and roll. It's not just a generator, it's a power move. Request a free quote today.
Oops! There we go. So that gives you a sense for how things could start to come to life a little bit differently, and how we can just open up the way we talk about the product to be relevant to a broader set of consumers. And that gets us into awareness, that first kind of part of the how. And what's really amazing is this graph that shows the sort of unaided awareness metric since 2013. And what you can see is that the team has made significant progress in growing awareness of the product. It's growing every year, and at the same time, we haven't achieved 50% unaided awareness yet. And so it's like one of those win-win type of stories where we've been super successful, and there's a lot of additional runway to drive increased awareness, right?
And that's exciting because it means that there are more people who haven't gotten the message about our product yet that we can continue to appeal to. And as we think about the awareness, we're kind of shifting from a mode on the... where you can see on the left-hand side, where we historically focused primarily just on DRTV, and we're shifting toward truly, like, full funnel marketing, where, you know, we'll start in that upper funnel and really kind of reach consumers broadly from that perspective. But then we'll also start to sort of follow consumers through the funnel on that journey to make sure that we can really pull them through. And we're beginning to test that and implement that now. And it's exciting.
Then the engagement piece, where the consumer starts to really engage with the brand, we've got a... That ecosystem is built, but there's really a lot of opportunity to improve the consumer experience and the sort of way that we sort of touch them. So on the left-hand side, you see sort of our current website, the form that the consumer fills out when they want an in-home consultation, like Kyle mentioned. Then the bottom section on the left there is, like, how we show up in the physical store, and that's kind of a best case scenario, if you will, from a retail perspective.
And so what we're shifting to is something more on the right-hand side, where we can really optimize that consumer experience in terms of how they can sort of engage with us, how they engage on the website, because we want more people to fill out the form. We want more people to complete the filling out of the form, right? And so there's a lot of work to be done to make that easier for them. And then in the 5,000 retail outlets that Kyle talked about, we've got a big opportunity to be more effective at communicating to people in those physical and digital environments. And then the consideration piece. So we're building a propensity model to nurture consumers in a more personalized way, based on how likely we think they are to purchase the product.
But then also, you know, what messages might be most appealing to them. And so we're focusing on implementing that approach and then adjusting our communications approach, ourselves and how we guide our dealers to communicate with these consumers, as they flow through that journey. And then, Kyle mentioned PowerPlay. So this is really kind of that last piece of the journey. PowerPlay is kind of the backbone of our sales process, but there's opportunity to connect, the data from the propensity model to the data that's flowing through PowerPlay so that dealers, too, can see, that, how they might treat these leads differently and how they might think about them in unique and different ways. And there are a lot of benefits that this sort of platform provides to dealers. They receive qualified leads.
You know, they can measure products, they can opt into programs like buyer financing, but it also provides us with benefits. We have data and visibility to the sales process. You know, we can really develop our dealers by understanding more of, like, how successful they are, areas where they're excelling, and areas where they have opportunities. So a lot of different ways that we continue to use that tool and can integrate it more across our ecosystem. And so... And this is, I think, you know, one of the things that's most exciting about Generac and the reason I joined is we really have the opportunity to strengthen how we engage with consumers. We've built an ecosystem to do that, but there's a lot of opportunity, as you can see, to continue growing and nurturing that.
We have some pretty significant competitive advantages... Right? Our dealer base, our customer satisfaction, our brand that have been built over many, many years, right? And those are going to lead to pretty meaningful increases in the standby generator penetration growth over the coming years. You can see by 2026, we're thinking to that 7.8% realm. And then what's even more exciting on top of that is that we can take these capabilities that we've built and really transfer them to other product categories and start to take a market share within other categories that are very relevant to our consumer. And that are large and frankly really have a lot of opportunity for continued growth. So thank you. Norm?
Thanks. Good morning. My name is Norm Taffe. I'm relatively new to the organization, but I'm managing the energy technology organization. Because I'm relatively new, I'll spend a little more time talking about my background. I joined Generac just about a year ago. Prior to that, I'd spent over 30 years in Silicon Valley. I started my professional career at, right out of college, at a company called Cypress Semiconductor, and then, to my great surprise, ended up spending the next 23 years there. Really started as an entry-level applications engineer, and then, by the end of the last 7 years, I ran what was one of the three product divisions in the company, working directly for kind of a famous guy in Silicon Valley called T.J. Rodgers.
You know, if I look back on my career, you know, one thing I've realized over time is just how great of an environment that was to learn and grow as both an engineer but also as a manager. I would say, if you know anything about T.J. Rodgers, he certainly... you develop a thick skin or you don't last. So I definitely developed that from working for T.J. But I also developed an incredible appreciation for what it takes to deliver complex technology products with high quality and engineering excellence. And he was maniacal about that, and I realized over, maybe even after I left, just how important it really was. From Cypress, I moved to SunPower Corporation, where I first kind of moved into the renewable energy industry.
At SunPower, I started leading engineering initially, but then the last four years, I had the great opportunity to run the residential business at SunPower, which became the largest and most profitable segment in the company. You know, what was great about SunPower and relevant to the job here at Generac is that I managed the development of a lot of the same products we're building out in that ecosystem. At SunPower, we built solar inverters, both string inverters and microinverters. We also did residential energy storage, and we had significant software and firmware teams designing systems to control all those. Very similar to some of the stuff that we're building out in the ecosystem here.
The other thing that was great about working at SunPower, we worked with a lot of great people, but a lot of great people with a passion for attacking the problem of climate change. And I found that resonated more with me while being there than I ever expected it to. One of the things that really excited me about coming to Generac was the ability to join not just a great company with a really strong financial footing, but one that had a great brand and an ambitious plan to lead that transition to sustainable energy. Now, Aaron covered this quite a bit as well. I'll give a little bit of a different take. You know, sustainable energy is both necessary and the right thing to do, and it's causing a lot of problems.
Frankly, I agree with Aaron, those problems are going to get worse before they get better. You know, 75% of the carbon emissions that are created in the world come from energy in some way, whether energy generation or energy consumption. So because it's such a huge contributor, the very best way to attack climate change is to start sourcing your energy from renewable resources and electrifying everything. The good news about that is those sources of energy, whether it be solar or wind, are absolutely the lowest cost sources of energy in the market today, unsubsidized. An example of that is, today in California, a utility can sign a 20-year PPA for $0.02/kWh. That's the marginal cost of operating a natural gas plant without paying for the equipment. And those prices are only getting cheaper.
Of course, the huge problem with renewable resources is that they're highly variable, and so it really makes the complexity of managing the grid much, much more difficult. The image on the top right kind of shows a duck imposed on the California Duck Curve. And this is, you know, this is just through 2020. You know, what it obviously represents the fact that during the day, the supply of energy is very, very high because sun reaches its peak. But as the sun goes down, the demand actually rises as people get home. And so you have this tremendous imbalance, which really adds to the complexity of solving the energy problem. A couple data points on the screen really kind of put this into perspective in both dimensions.
This year in California, I'm not sure how many years in a row, but it's consecutive years, we had negative energy prices. But this year, it happened on April 19. That's the earliest on record. It's getting record earlier every single year. At the other extreme, on August 16, not the year of the freeze, but this year, in Texas, under tremendous heat conditions, the price of electricity reached close to $5,000 a megawatt. On a typical day, just to put that in perspective, it's $25-$50 a megawatt. So that's an extraordinary change that is causing all kinds of really problems downstream, first at the utility, but then, also at the consumer. And what's gonna make this more difficult, as I said earlier, it's gonna worse before it gets better.
That move to electrification, which is critical for the planet, is also gonna make this phenomenon worse. And as the data point below, it's just by 2030, not even a decade away, we expect the demand for electricity to go up by 25%-30%, which is a massive change if you think about historical rates of growth for that in, for that technology. So the point about going and kind of reiterating some of that is that rapid change is also creating a homeowner challenge, homeowner... What I call homeowner energy challenge. You know, historically, utilities have really been able to shield customers, end customers, from any supply demand issues. They were very reliable at keeping the electricity on, and you never really even knew where it was coming from.
Gone are the days where you can just plug things in and not worry about whenever and wherever you want, and never spend any time thinking about where you get your energy. What's happened, I mean, actually, the example, Aaron, this really is a great example. People are getting texts that tell them to turn off their power in the middle of the day. You never had that kind of interaction. You would never even think of doing that. But now it's become necessity because the utilities can't afford. The price differences are so dramatic, and the problem of being able to just keep the grid, the lights on, are so much more complex than they used to be. It's coming back to homeowners now having to think about and make trade-offs between, "Am I gonna keep the power on versus how much comfort do I have?
Do I wanna participate in a grid services program, or do I wanna just optimize my energy portfolio for cost?" Lots of things that you honestly never thought about before are gonna become more and more of an issue for consumers. What we're trying to do at Generac is to deliver home energy solution for the future, which supports that trend toward electrification, but does it in such a way that the consumer's experience, they get back to not paying much attention to it, and they know they have an optimized solution in the home. Now, in delivering that solution, we've shown a version of this chart, I know in the past, you know, we have a very ambitious effort to attack and deliver leading solutions throughout the home for consumers.
Whether it be home standby generators, which we're obviously a leader, that allow you to get through outages, they're increasingly likely, or whether it be solar storage, EV charging solutions that will allow a customer not only to withstand some energy resiliency issues, but also to have more control over their power and lower their costs by operating directly off the sun. On the hardware side, and then, as Aaron kind of highlighted, importantly, we're investing also on the software side. Grid services technology, which allow you to really be aware of what's going on in the grid, because that's critical for both optimizing your costs, but also being aware of potential outages coming and preparing yourself to go through those outages with the right capabilities on the ground.
And then at the center, and I'll talk more about this later, we really are seeing a great opportunity to take what is a great smart thermostat today and add a ton of capability to that smart thermostat to really make it become the energy hub of the future. We're already starting to take steps in that direction. So, solving this problem is a significant challenge, but it's also a significant market opportunity. These markets are in the very early innings of their development. If you think about solar, solar is, it's been growing very, very fast, and yet it's still only penetrating about 3% of homes in the United States. And home storage is closer to 1% penetration.
While those are very volatile markets and tend to swing, the fact is the long-term trends are only up and to the right. Really driven by rising energy prices, growing consciousness about the environment, improving technology and costs that keep coming down and making the solution more attractive, as well as unprecedented policy tailwinds. The combination of those trends and new product introductions that we're gonna be making over the next couple of years, we see our servable market increasing by a factor of three, around $4 billion today, to about $14.5 billion within the energy technology portfolio. Now, as I said earlier, the market's in the early innings. Our efforts in this area are also in the early innings.
As Aaron alluded to earlier today, if you looked at that chart that showed 10 acquisitions at the bottom of the page, 7 of those 10 are essentially what was brought together to build the ET organization or technology organization. Now, as you'd expect with those many acquisitions, there's certainly a mix of capability, maturity, and, you know, success of those different companies coming together. A lot of what I've been doing with my team over the first year here is really working to integrate those teams more closely into a single organization and focusing them on developing a much better customer experience, both for the end customer and the installer. At the same time, we've spent a lot of time adding to and upgrading the organization itself.
In the last year, we've added more than 100 new employees with direct experience in solar, energy storage, or software related to it. In most, almost all of those, engineers. And we've also reset and established more rigorous quality and testing requirements because the products we're building here are living in a very, very challenging environment, and they have very long warranties. And we had a lot of opportunity, I think, to improve the way we go to market with those products, and that's been a huge focus for the team. In addition to changing the standards and driving a much more aggressive focus on quality, we've also been investing in that area. In fact, the picture at the bottom is our new facility that we just announced opening a couple of weeks back in Reno, Nevada.
It's a 40,000-square-foot facility, which is a battery design center, but also a center where we're gonna put in significant reliability testing, infrastructure, and manufacturing test infrastructure, as well as a place to attract talent and build out the organization. Now, at the heart of our essentially the home energy solution of the future is solar and storage solution. Generac was actually a fairly on the early side of entry into this space with the solution that's pictured at the left side here, where you have a storage device, an inverter, load management panel. Even today, that is remains at the high end of capacity at 18 kW in a single solution, modularity, power of the inverter, as well as integrated load management.
But while that's what we continue to sell today, there's a significant effort internally ongoing to develop a completely redesigned platform for the next generation. Now that generation or next-generation storage solution, it's too early to get into many details. The schedule for that product is we will expect to introduce it late next year. But we will certainly focus on continuing to deliver highest end in terms of power and capacity capabilities, but also work to dramatically improve the user and the customer experience of both installing the product, as well as using that product. At the same time, we're revamping that solar, that storage platform, we are also completely revamping our rooftop solar platform as well. That is scheduled to come out shortly after we introduce our new storage.
Nearer term, we're adding EV charging to the portfolio we service the home. In Q1 of next year, Generac will introduce our first EV charger. This is an important introduction because it's a key load in the home. As people add EVs, it's one of the key resources you want to be able to charge to efficiently, both optimize your electric bill and optimize your use of your battery and other systems throughout the home. It's also a product that the 8,000-strong dealer network that Amanda and Kyle talked about earlier have been asking for. Frankly, they've been installing other solutions, and they're looking for a Generac solution that they can provide their, their customers and, and, you know, as they grow their customer base. Also important for us is we see this as a product that's an, kind of an on-ramp product.
One of the things that we strategically want to take advantage of as we build out our home portfolio here is some of the generator dealers are looking to expand and get into solar and storage and other technologies. We see this as one of the entries for that and another opportunity for us to add value through more capability of that ecobee thermostat. And so it's one of the things we're going to be working with our dealers, train them on, on this as a, in some cases, as a lead-up to later, selling more of the portfolio on the clean energy side. One of the other acquisitions that was on the bottom of Aaron's chart is a company called Enbala. Enbala is a leader in grid services technology. And with Enbala technology, they built a product called Concerto.
Now, Concerto is actually very sophisticated software that is sold and used by some of the biggest utilities in the United States to manage exactly the problem I talked about at the beginning, which is the integration of renewable resources, and essentially, variable renewable resources into the grid effectively. Well, that same technology is actually very important for the home energy solution of the future, because having the context of what's going on in the grid, what the current price of electricity is at your specific location, or whether the grid's having trouble from stability or, or has in the near future, and we have predictive analytics, you know, likely to have a problem or go down.
All that helps your ecobee or at the center or independent devices themselves make the decisions on when to best charge your car or send energy back to the grid. All those things are critical to being able to deliver, frankly, the full ROI of those devices. One good example is for storage, being able to understand NEM 3.0 schedules and then either charge or discharge to the grid at the right times has a dramatic impact on what the ROI of that storage system is, based on NEM 3.0, the NEM 3.0 schedules that now exist. Similarly, things like demand response programs or market participation, having the grid services technology in the cloud allows us to, through our ecobee thermostat, easily have customers participate, enroll, or choose not to, depending on their desires.
This technology is one of the key things that adds value to all the hardware we sell within the home. So now, I'll finish by talking more detail about what Aaron called the energy hub of the home, and kind of where we're moving that thermostat capability to be a much stronger presence in your, in the home. Already today, it's really much more than a smart thermostat. It has both temperature but also door and window sensors. So the thermostat itself, that device, is really not a thermostat. It's actually a very powerful computer. It has AI and ML capabilities to understand context in the home, understand which rooms are occupied, which ones aren't, to optimize the use of your energy. It understands when you're home and when you're away, and therefore, can do additional things to optimize your energy.
We're adding additional capabilities in the very near future. We're adding the ability to see what's at your doorstep, even to do push-to-talk and talk to people on your doorstep. We're adding the capability for security to a pin pad that allows you at your thermostat to arm or disarm your door and window sensors when you're away. It's really a core engine that we're building the entire experience around. We're taking advantage of the fact that it's tremendous software. It is very high quality, and we use to build on for all the experiences, not just around the thermostat, but our other products as well. You know, ecobee has some essentially core values, and one of the core values I really like inside ecobee, they had as a company, is they call it welcome guest.
It's the way they think of their product, is they want to be a welcome guest in the customer's home. Now, being a welcome guest means that they focus on creating what they call magical experiences that exceed customer expectations. And the data supports that they're doing exactly that. They have NPS scores for their smart thermostats regularly in the mid-60s. That is, to give you a sense, that's in the top 1% of all consumer devices on the market. At the same time, they have 63% of their consumers actively using the mobile app on a weekly basis. That's a huge number and a huge level of engagement. 22% now, or up to 22%, are buying an additional service beyond the thermostat, whether that be security services or participating in a demand response program, which adds value to what our solution...
And their average Amazon star rating is 4.5, with 80% of reviews on Amazon are five-star reviews. So they have a great base of capability that we are going to leverage across our entire ecosystem. They're also in 3.6 million homes in North America and growing very, very fast. Related to those great results on the right, is we've gotten great partnerships for this product. From the beginning, the ecobee smart home thermostat has worked very well in the Apple ecosystem. It works perfectly within and seamlessly within Apple's HomeKit. It actually has Siri on the device embedded in the smart home thermostat, and Apple sells this smart home thermostat in their stores. The...
Recently, on the HVAC market, Carrier made an announcement where they've chosen to take the ecobee thermostat and co-brand it, that solution, as part of their next generation HVAC products. So they're already shipping with the technology that's called InteliSense, which they've embedded on their higher-end HVAC solutions and are now spreading to their entire portfolio. They ship with every one of those, an ecobee, co-branded ecobee Carrier thermostat to control and to provide that connection from both the dealer to their customer base. Big retail suppliers are key partners, certainly Home Depot, Best Buy, Lowe's, and we are now the exclusive supplier of smart home thermostats in Costco stores throughout the United States. Not surprisingly, based on those scores, this product is also very highly rated, really the highest-rated product in a category that ecobee created itself.
Just in the last year, Time, Tom's Guide, Newsweek, Wirecutter, all, gave awards to ecobee for its, its capability. Now, on the chart there, you saw the existing portfolio. You see there's a curtain on the, on the right. The whole purpose of that is we're not ready to show, but within a few weeks, we're gonna add a beautiful doorbell camera to this, this lineup. And that's another important device which gives additional context and capability. It makes the thermostat more, useful to the customer. It also makes the thermostat smarter and understanding now outside camera, and outside security, and, things with regards to security. And those are all important as you build that ecosystem in the hub, the home of the future. So I'm gonna... A couple slides to conclude my talk.
I first just want to emphasize, we're making major investments in the talent infrastructure necessary to win, really rebuilding our entire clean energy portfolio with a focus on quality first. We're in the midst of a complete revamp of the solar storage and charging solutions under way right now. We're leaning heavily into our investment on ecobee. We see that as a great solution that has incredible power, and we're looking to leverage that as the software platform across our portfolio and really develop the energy hub of the future... and then continue to create superior experiences for our customers. And as we build out this portfolio, we're taking into the fact of Generac and ecobee brands and channels to deliver that energy storage solution for the future. Now, I wanted to end to kind of say: What does that all mean financially?
What is our path to profitability in this business? As I said earlier, the focus in the last year has been building out the leadership team, adding a lot of industry experience to the organization, and really investing in the technical infrastructure necessary to deliver great products in this space. That's gonna continue on into next year, and there's a huge focus on executing the product roadmap that I alluded to earlier. We're also investing heavily on building out this common software platform, which doesn't just create much better user experiences, but also improves the quality of our solutions across the board.
In 2025, we expect to resume strong sales growth, expand our channels and leverage the brand strength with the new portfolio, as well as take advantage of a lot of the things that Amanda talked about today, which are focused today on home standby, where directly applicable to the clean energy portfolio. We expect to scale further in 2026 and reach breakeven, and continue to work on optimizing and improving that homeowner experience. Longer term, I expect this business to deliver EBITDA levels consistent with the rest of the company. Okay, with that, that's my... That concludes my remarks. I'm going to bring up Chris, and I think we're going to break. Is that right?
Yes.
Thank you.
So we'll take a quick break and reconvene at 10:40 A.M. promptly. We're a few minutes ahead of schedule, so we're gonna hold that restart vote at 10:40 A.M. Start up again. Thank you.
Okay, good morning. I see a few people coming in. I'll wait just 10 seconds. All right, so I'm here to talk about our commercial and industrial business. We spent a lot of time in the first half talking about it. It's a growth market for us, so I'll jump in really quickly. I've been at Generac since 2016, the same time as my counterpart, Paolo Campinoti, joined the team. So we kind of chased down the industrial side of the business. Prior to that, I was at Komatsu in the global mining business, as well as construction services. Really, to level set, I think everybody's familiar with maybe the products for our home side of the business because you use them yourselves, but also we get a lot of publicity around those products.
Our industrial product categories, we have a really extensive product line, and we go to market in multiple different ways. We also have an omni-channel on that side of the business. So in our product categories, starting up at the top corner, we have generators, so large industrial generators for large-scale facilities, critical infrastructure, hospitals, wastewater treatment facilities. In the middle, we have an example of a mobile product that's used in general construction, as well as plant turnovers and brought in for temporary power. And then the far right's our telecom product. We have a unique solution just focused on the telecom industry to have the highest power density per square inch. The newer products, as we move into the energy technology space, we're bringing on more energy technology product categories.
When you look up at the side, that large gray, light gray box, although it looks very similar to the one above, it's actually our new battery energy storage system. In the middle is the equivalent on the mobile side, so it's a temporary power mobile storage unit. And then the far right is what we call our Beyond Standby generator. That's actually an Enchanted Rock unit that they use to run more than just when the power is not present. So when we talk about, like, growth in the industrial segments, we're growing both domestically as well as internationally. It's a 60/40 split there. And as we look through our 2023 forecast, about $1.4 billion. So although it goes kind of unnoticed by many people following the stock, it is growing in a quite healthy business and expanding.
When we look at the market we're serving, so the center column is our global SAM for the product categories, very heavily centered this past year on traditional backup, but as well as on the residential side of the business, we're going through our energy technology evolution as well, and we're jumping out and growing that SAM consistently and significantly over the next three-year period. So the base traditional business is growing, but also the energy technology space, and I'll talk more to that and what it really is in the next few slides. So when we look at our global growth and the CAGR we're running at, we're looking to exit 2026 at roughly a $2 billion industrial business. So significant size, compared to where we started from before. So that was a global look.
Now I'll take a step back and look at what I'm responsible for here in the North American market. And really, I'll start on the right-hand side of the business. Our traditional market is a little over $4 billion market, and that traditional market is a lot of code-driven requirements. So where the standby generator is required, authorities having jurisdiction say you have to have power on site for safety egress, elevators, water pumps, fire pumps. So it's product that's basically driven by some regulation or some standard. After that, it comes into customers that want a product. Maybe it's a grocery store chain, and they're worried about spoilage, you know, power goes out, or that they actually want to be able to operate the store when the power is not there.
So we're seeing that more and more people, historically, they kept the cash registers running, but now that power outages are going longer, they're actually backing up whole stores. We're seeing a big growth there for whole facility resiliency. And overall, I think it's a consistent theme, as Aaron started earlier. Outages are rising, inconsistency of power, and the cleaner fuels and different alternatives are really changing the dynamic for the traditional space. Jumping down to the Energy Technology, which is our fastest-growing space, that's bucketed under multiple different categories. The big driver, and where we're really, I think, a dominant player in that, is the Beyond Standby generator business. And that's typically we're using a natural gas generator that's cleaner burning, more efficient, more fuel efficient, and we're actually putting those in applications where they're gonna run when the power is present.
And that's a big differentiation between the traditional backup power and the current Beyond Standby business is a lot of the regulations around EPA. Say, a standby power generator, it can only run when power is not present other than exercising and testing. So when you have these super low-emission products, like our natural gas generators, you can actually run, because in many cases, it's greener than the power on the grid, they can actually operate when power is present. And so what we see is facilities. They'll actually take their building off the grid. They'll actually pull back in actually island mode and operate to lower the energy prices or the energy consumption, or they'll actually push power back to the grid. So multiple ways they're doing that. Many customers are looking at Microgrid solutions.
We're delivering microgrid solutions with customers, and that's one of the great parts about the new battery energy storage system we launched. We really own that generator space, and now we're combining our clean-burning gas generators with the battery storage system to give a great resiliency optimization, as well as energy market participation. So really, as we talk going forward, you'll hear more and more talk about our energy technology transition. We're out there in the market, and it's actually. We're hitting the ground running with legacy generators, our natural gas product predominantly, as well as our battery energy storage. So to fuel this growth is we need more manufacturing capacity. In the last few weeks, you might have seen our announcement.
We've now started the process to build a new manufacturing facility, an additional facility in Wisconsin, to give us that additional capacity, 15%-20% additional capacity to help us deliver this long-term plan. So we're well underway on starting that project. Our other factories are very dedicated and custom-built, somewhat like you'll see in the Whitewater facility today, we're very vertically integrated. In all of our facilities, you know, we cut, bend, weld, we form all the materials, we gasify our own engines, so it's in all of our natural gas engines as a Generac engine, and we wind our alternators for most of our product. So very vertically integrated. That's why we need additional capacity to actually deliver that Generac value proposition to our customers. So really, how do we win and what do we do?
This is something that, I mean, it's very simple. Yeah, we're selling generators or energy storage products to customers, but really, it starts with a conversation. It's changed, it's evolved in the last three or four years, that it's more of an energy evolution discussion. So we talk to customers about, "Hey, do you need resiliency? What are your plans for there? Do you have carbon goals?" That can help guide them in which direction to go. A lot of times, now customers are saying, "Hey, we want energy independence." So we work through a really extensive network of partners. These partner firms help us deliver value for the customers. Whether they have the application expertise or it's us designing a custom solution, we leverage that partner network, and predominantly, we support it in North America through our industrial distributor channel.
So we have 26 distributors that wake up every day only focused on supporting industrial businesses. So they're really focused on the business users. So like I said, our wastewater treatment facilities, hospitals, data centers, they're putting their resources to support that, and they're solely focused on it. So it's not intermingled with residential products and different things. It's, it's a really focused group, and they have engineering support and excellent capabilities. We also do have a few company-owned stores, so that, in key markets, like in California, where we want to provide an unrivaled level of support to our customers, we've actually invested to build up the capabilities to, like, really better serve that market, provide that 24/7, 365 support the customers need, and really deliver the solutions they require.
So the next bar up, if we look, it's energy services, and that's really an aspect that nobody in our space really talks about with customers. And we walk in day one and start talking about: What do you need? What type of solutions do you require to have? And that's really our whole value proposition that when we come into customers and we talk through. So I mentioned briefly about the Beyond Standby, you know, market and the generators. And on the right-hand side, it's really the... an overview of why a customer would wanna do it. So the first basic assumption in the market is that a customer needs a diesel standby generator, and basically, the value they get is avoidance of downtime beyond just the regulation compliance.
And the value is basically equal to that of the cost to actually deploy the asset. Otherwise, people wouldn't do it, unless they're mandated to. What happens is, when a customer goes into a natural gas behind-the-meter generator, there's actually an ability to, it's a little more expensive, but they can extract more value out of the product. They can actually lower their energy bills, they can actually generate revenue or income by actually participating in market programs. And there's a lot of programs nationwide. And when I mentioned energy services on the previous page, our Generac Grid Services team, we put together a solution for customers, and we can outline what programs they qualify for, where can they participate? And most times, we're actually setting them up with a third-party partner to meet their needs. Maybe they're a retail energy provider, and they're going and talking.
We give them the ammunition or the value, so they can talk to the retail energy provider and say, "I'd like to participate in this 4 CP program." And so we set that up for them, and they participate with that behind the gas, you know, behind the meter gas generator. Now, lately, we're seeing a big switch to really grid sync, and this is really as, you know, green assets, solar, wind are coming online. There's more need for grid stability, and so more customers are actually putting in the additional gear, switch gear, driving the cost up on the project, but they're able to actually push power back onto the grid to provide that market support. And so when we talk about our energy technology evolution, a lot of it is moving people beyond just that standby and leveraging their assets that they have. In many cases, it can be quite profitable for them, plus, they still have that base resiliency that they need. So really, I'll jump to the middle here, that natural gas generator advantages. Couple of really big things. So cleaner burning, so it doesn't require all the additional emissions control solutions that you would need to be able to participate in most market programs. So the product comes out of the factory, clean burning, and ready to go. Another benefit is the fuel source. So a diesel generator, you're limited by the fuel tank capacity. Natural gas generators, they can continuously have the gas supplied to it, so they have a longer runtime, longer capability, and a lot lower maintenance cost. So the maintenance cost is significantly less expensive 'cause you're not having to polish the fuel and treat the solution.
So how we've entered this market, so we sell through our distributor channel, we sell through multiple different partner communities, like we talk about in Enchanted Rock. They're a leader in microgrids using that natural gas grid sync product, and we have many other partners that we work with, and we support our customers by delivering a solution. So rather than just a simple product, we actually talk about what their needs are and help bundle a solution, working with third-party financing or other monetizers that will actually help bring value to their assets. And when we start this journey, really, as we talk to customers, and this is really the evolution that we're seeing, and as you go out into the marketplace, you'll find this is becoming very, very true. Customers had traditional backup power needs and very minimalistic.
Maybe they wanted some remote monitoring for reporting. Maybe they needed to have something for compliance standards or possibly even dispatching technicians to site. And that's kind of what we say is, like, our very basic you know minimalistic solutions fall into that box. And it's traditional backup power. Our distributors do that every day. They provide support and solutions. So as we've added the Enbala team and developed our Generac grid services, it allowed us to move and shift the whole equation going into... Now we can start discussing and delivering these simple demands, demand response programs, all the way up to total power solutions, and actually helping our customers structure their rate payments, structure their bills, and really finance their fund their whole energy cost.
As customers are evolving, and when I say, like, low level to high level, traditionally, the generator was managed just by the maintenance team or a facilities person that was responsible for making sure that the building met code and compliance and operated. Now, we're having more and more discussions in further upstream and talking to the real key decision-makers around energy, ecosystem, and lifecycle. So last part of our energy transition is adding this Beyond Standby BESS, the battery energy storage system, and really, it's a new product. You'll be able to see it later today. It's an LFP-based product. We've tried to productize and come out with significant models to meet the market, and sales are off and running. You'll see more and more from us going forward about how we're gonna evolve the product line.
I think one of the key things on the battery energy storage that I wanted to highlight is that as we look at storage, really when it's bundled with a generator, it delivers the best economic value. That's where we feel Generac has a sweet spot in the storage space, and we're focused really on the behind-the-meter applications and driving, you know, battery energy storage plus generator to give optimum value. This top right chart really shows the challenge for a customer. If you have solar, like a PV array and battery energy storage, and there's an outage, you actually drop off after so many hours, however, the battery size for it, or you have to invest a significantly higher amount of money to even be able to make it through a full day. Typically, the storage size is gonna be 2-4 hours for the facility.
So if you have a longer outage, you're pretty much out of luck in an overnight period. So by adding a generator, you can cut the cost by more than 40% and have really infinite runtime and infinite stability for your operations. So I'm going to flag this really quickly. I'm running out of time here. We've talked in the past about our telecom market segments, and the telecom and data center markets are both robust markets. Up on the top, on the telecom sites, sites are expected to continue to grow. We're a dominant player, really, in that space, and we deliver a lot of solutions to telecom accounts by focusing on customized products and the best turnkey network. So we have over 4,000 technicians to deliver that uptime and support.
As we look forward, we're seeing more and more investment, while the requirements for uptime and reliability of cell sites is becoming even greater. We know this is a strong market for years to come. On the data center side, I think a lot of people hear about the data centers and talk about it, and the ChatGPT scenario. Really, AI is driving huge power consumption increases, and we're seeing the data center market to be a continued area for investment. When we look at the addressable market by 2026, just that, that data center generator market's a $7 billion market opportunity. It's one that we're gonna continue to be involved in and continue to grow with. I think I'll end on this C&I ecosystem.
Aaron talked a lot about really starting with that Blue Pillar platform, that hub to actually connect all the assets and devices. So as we look at really how we participate in the market and how we're going to market, we have products. So we have up on the top level, you know, batteries, generators, but really where we're finding our sweet spot is those two middle areas, where we have the platform and controls from our Deep Sea acquisition. We have great technology there, and then it's integrated with our Blue Pillar solutions, so we can control assets, manage them, monitor them, and it's not just a Generac traditional asset. You know, as Aaron mentioned, boilers, chillers, any type of HVAC system, we can actually command, control, and help bring value to the market.
And that bundle, with our grid services, we can really deliver customer solutions that provide their whole ecosystem. It's not just for a generator. So with that, I'll turn it over to Paolo Campinoti.
Good morning, everybody. I am Paolo Campinoti. I'm... Most of you don't know me. I am running the international business of Generac since 2016. I'm based in Florence, and where the Pramac legal entity was is still there and has been acquired by Generac on 2016. And from 1995, I was CEO of Pramac. That was a family-owned business active in the power generators, and we have been a mid-Italian company, but with a very strong international footprint. That has been this footprint, the base of the actual develop that we are having with together with Generac.
Briefly, I present you where we are, because, I mean, it's important to understand that Generac is not anymore only a North American company, but it have- it's becoming more and more a worldwide company with a global footprint. As you can see here, we have made the little bit of snapshot of where we are. There is a most of the branches is only sales branches, but we have also several factories spread out around in the world. We have from China, India. In Europe, we are in Italy and in Spain, with a legal entity that historically was from Pramac and Generac.
And now we have added the blue dot is the new acquisition that is consumer control and automation, the Deep Sea, that is in U.K. and in Germany, the legal entity of Motortech. And that we are present in all South America, with a few big factories, one in Brazil and one in Mexico, and in Colombia, we have a sales office. So as you can see, we cover all the continent, the all the Europe. We have many places in Europe, we are in Australia, we are in Middle East, with the where the market now is very, very active and booming. And we have 2,400 employees, with 275 engineers.
So we are really quite a sizable company, and in and that is the good things, that all these activities growing in the last in the last year, and we have a very also interesting growth for the future. This is briefly where we are and the major factory that we are. So that is important also to see that it's not only one dot in the map, but it's a real factory, and we have a few factory in Italy. One is in in Siena, the other one is in Pavia. That is a former light tower, Tower Light, that where we produce a light tower. We have in Spain below on on the left, that is a factory that is we produce medium-sized generators.
We have China, that one historical plant. We have Brazil, that is recently opened last year. That is a quite sizable company. We have Mexico, that is probably the best factory that is in row. But I think also, I would say in the group, because it's one of the newest factory that we are having. This factory, in most of the case, each one is created to serve the local market, because in some market there is a barrier to enter, like tariff, like localization. The other factory is done also for cost purpose, that we are creating a strong base for the group also, for component, for product.
Especially now, also, we have in India that we didn't put the picture, but is one of the most prominent, promising market that we have, as from production and from sales, because it's a it's very, very important opportunity. Here, as you can see, we have a 2 million sq ft, so we are quite sizable. We have 800 direct workforce and 1,600 indirect, including the people that is in the sales, the sales side. Product. Here, the product that we are distributing in ROW is more or less the same product that we have in U.S., with the differentiation that is mainly the I mean, the product is has to be compliant with the local market.
That is different from U.S., but the product is more or less the same. We have from diesel generator, we have the gas generators and, we have, the new product that, we are selling now, that is battery storage, mobile and, commercial industrial. We have the light tower and the residential. So all in all, we are selling, more or less, the same product that in U.S. Our product, sales, the most is, for C&I. The majority residential outside U.S., it's less, important, and as has been said before, the home standby for us is a totally new product, so we have, can say 100% of market share, but the problem that the market is not big enough, so we are creating the market in many geography.
Now, we are very growing market like in, for example, in Argentina, in Brazil, we are growing, in Southeast Asia. We have had a good very important market in Russia, that unfortunately, now we cannot develop anymore, but was. So in many, many geography, the home standby is a product that can, I'm not saying that can reach the American level, but, I mean, there is a huge opportunity. There is Australia, that we are growing, that is a very important market. Now, we are starting with India, that we have done all the certification in the last couple of years.
That has been quite painful to reach, but we are the only product certified from the emission and from the noise, and that is something that it's, it's a very good opportunity, because India, if we will be able to penetrate India, I'm not saying is another U.S., but can be a very, very sizable market. And so that is the reason why the residential product for us is not at the level that is in U.S. So mainly our activity is C&I, and now with the new battery storage, I think we can have also, we have had a big step also in that direction. Here, briefly, we represent where we have been, and what we, and where we are now.
We start in 2016, that we had $271 million revenue, and what with 6.3% EBITDA. After that, through an organic growth, that is the majority of the growth, and some acquisition, that you can see here, we had from Motortech, from Selmec in Mexico, we had Captiva in India, and recently we have done Off Grid, that is the mobile storage company that we bought in UK. Deep Sea, that is probably one of the most successful company that we have in the group as revenue and as marginalities, particularly, and for the controller, that is a fantastic company.
From there, we have reached now, this year we will reach around $720 million, with a very double-digit EBITDA. EBITDA that was is 14.2, and we have an LRP to arrive around, I mean, close to $1 billion in 2026. So that is a little bit the growth that you have. How we have arrived here, because now the point is that we from 6% EBITDA to 14, at the beginning, we have been seen like the black sheep of the group, no? Because in all the meeting we show, we, I mean, we are diluting the margin of the company, we have been...
So in this journey, practically, we have had a very important operating leverage, because from $271 million to $700 million, we have been able to leverage the cost of the structure, because having all the branches, all the product, the factory, is creating a sort of fixed cost structure that increasing the revenue has been one important activity that we have been able to increase the marginality. From the other things, we have been trying to make an M&A activity that was a creative EBITDA. Also from 2016, we have been only with Pramac in Latin America, with the traditional product.
We have been having some acquisition, like I say, Deep Sea, that is a profit profile, the margin profile is very interesting. We bought OffGrid in UK, in Rugby, that is doing the battery storage. That is also very important company, especially for product development, and they give us the knowledge on the mobile battery storage. That is very, very interesting. And we have also... That is mainly the two acquisition that has been creative the most, the EBITDA. But the other things, we have done this growth through a very strict cost control, and particularly also the portfolio evolution.
So we have developed our product, that we will see later, with new technology, with new, let's say, also, value-added product, value-added component, that is, creating, much more marginality than we used to have, in, in the traditional product, that mainly was the diesel, the diesel generator as, at the beginning. Here, what, which is our, I mean, the growth driver that we expect to have, in the next, in the next years. For sure, we'll, as we, as, Erik said before, the energy technology part has a big, potential growth, and so we, we go from a sum, of $11 billion to $16.5 billion, and the main growth is coming from the new energy technology, a market where we have been, not present so far.
So, the growth driver is more or less the same that we have in the U.S. So we have a continuous growth from the backup power, and that is becoming with the same dynamic that there is in the U.S. So there is all data center activities, there is the problem of the growth of the energy consumption, driven from the, from as we say, from the electrification of the grid, from the electrification of all the products. So, I mean, it's becoming the same driver. And also, we have...
The idea also for us to grow is, because we have, a repeatable playbook that we have done, also the ability to open a new market, new branches, and I think we can continue in this direction because, we have, a repeatable playbook, as I said, that is allowing us to penetrate a market with the same product that we have in the other. So we see a big potential in the Far East. We have a big potential in Africa, but we are now—our presence is not so strong. So the idea is to create a new market there with the same concept that we have done in the other branches.
And also, there is the other growth driver: the expanding of the portfolio of product that we are having now, also done with the recent acquisition, and that is allowing us to be, let's say, in a situation where we can enjoy the investment that we have done. Here, why I'm saying that, and why we are ready to powering the new energy solution? Because we have a portfolio of product that we have done through big investment in R&D, that is giving us, let's say, a clear positioning and a clear opportunity in the market. One, as I say, is the mobile energy storage.
The one that is here, that is, it's very, very important in many situation, like events, like rental business, like... And where we have the leadership in Europe for this product, and we have the leadership because OffGrid has been historically the market reference in all over Europe. The C&I, the battery storage, is also. We have done recently an acquisition in Germany, company called REFU, that is a very important technology leader in this area. They produce the inverter. The inverter was historically one for solar, now they have readapted for the energy storage. And this product is also contributing for the new energy transition that we have seen before, no?
The gas, the gas generator, this is the core business for Generac since many years, and was not in our portfolio, because in Europe is not so strong, the presence of the gas, like in U.S. So this is another activity that we are doing for creating more sales and particularly more margin. Because with the gas, the margin profile is much higher than the one that we have with the other product. And later, we have done in-house two product that is, for us, it will be very important.
The hybrid, the hybrid generator, that is, one is the Energy Hub, the other is the diesel generator, that is also very important for, for the, to create more marginality and to gain market share in this, in this kind of, of sector. I think especially the Energy Hub is a product that is new, is a gas generator with a battery storage inside, and is used mainly for EV charging boosting. Because, in Italy, like, in many other parts of, of, Europe, and also I think in U.S., the grid will not be able to support, the growth of energy of the electric vehicle. And so when there is, especially with the fast charging, there will be a very, big problem of, the grid that can support this, this, growth of electric vehicle.
This Energy Hub is a combination of gas generator and battery storage that is supporting the grid for the charging. We have already sold several to, mainly to, tank station in Italy. That, I think, it's a, it's a product that has received a very high welcome in the market, and I'm, I think that is something that can contribute to the, to this, to the growth that we are facing in envisioning. Sorry for my English, sometimes I'm not... That, coming back to the C&I energy storage and the international, the international demand driver, I think that here, we feel very confident that a big driver for the energy storage will be for sure, as I said before, the energy, the electric vehicle.
So the grid is not able to support the growth of electric vehicle fleet that is on the road. And especially when we go to the fast-charging structure, that now is not very, very popular in our countries, the grid will not will collapse. So the battery storage is something that will help. The grid will make, like, a boost to support when. And that, we have seen already a lot of activity in this in this sense, in this sector, and there is a lot of potential growth there. The other things that we see, it's that the regulator it's giving is very in favor of the renewable.
So this one, this activity, as we have seen before, is creating a sort of decoupling between the supply and the demand of energy. And so the C&I battery storage, for sure will be a big, I would say, demand to support the grid in this way. And the other things, we are facing a lot of self-consumption and peak-shaving activity. That is also another big driver of growth for this product. The other things that we are convinced that is becoming...
A very important product that is already, and here we have put a picture because we have made all, for example, for Sunbelt in UK, it's our biggest customer for that, and this is the mobile battery storage. The mobile battery storage is not, is something that is more and more used for events, also for in the construction site, because it's allowing to have a cost saving of fuel and also a big saving of emission. And this in many, many area now, especially in the city, is required to, let's say, to use more and more electric tool, electric components. And so that in Europe, especially in London, in many countries, is a big, is a big, there is a big demand.
Here, we can clearly say that we are the market leader for generator, combined with battery storage and hybrid generator. So this is something that for sure it will be another big growth, and we have quite an advantage in this area. To finish, here there is a which is the evolution that we see, that from the past we have we start only with the diesel generator, so with the market and also the margin profile that Erik was saying, that is mainly sale generator and leasing. From now present, that is a broad energy technology product offering, where we can combine the different things product that we have. Also, for example, I didn't put a lot of attention to the light tower.
The light tower also has, is having the same journey or development of the generator. Now, we are the leader of battery light tower, hybrid light tower, that is facing the same change of the normal generators. To arrive to the future, that is what Erik was saying to the end, end-to-end energy technical technology solution that is covering the whole the profile of and is giving the full support for any needs that any industries or house that they have. So that is practically, we will try to replicate as much as we can the general playbook internationally. And I think that the the...
I mean, we have proven that in this year, we have been able to triple the revenue, and I think we have all the investment and infrastructure that we can continue this way. Thank you very much.
All right, let's get into it, everyone. The financial framework that everybody's waiting for. I'm York Ragen, CFO of the company. I'm not in marketing, so the tagline of my presentation is Path to Doubling EBITDA Dollars. That's all I could come up with. But before I do that, I think just to level set, we've heard a lot of themes here this morning, and I wanna. How do we translate those themes into investment highlights? Obviously, everybody's taking notes. Some notes get published, many notes get handed off internally, and many of those notes talk about the investment highlights for the company. I'm hopeful and assuming that at least these top four will be on the list, and hopefully many, many more.
But if you think about from a market standpoint, we heard a lot about different markets and many different growing markets, and many different growing, served addressable markets. But they're all backed by compelling megatrends that are secular in nature, providing significant growth opportunities. So if you think on the home standby side, there's more power outages, driving a significant penetration opportunity for home standby. Massive opportunity that we've talked about for a long time now, and there's many, many, many legs to that, that opportunity. On Norm's world, on the residential energy technology side, Grid 2.0, that's just driving a rapidly developing clean energy market, globally, really, that Paolo talked about as well.
Then on the C&I side, just the infrastructure build-out is driving significant demand for C&I power, in particularly new, energy technology. So the markets are growing significantly, and I think we heard in many ways how we can win in those markets. And so we've got proven go-to-market strategies, combined with innovation, drive our market leadership. And so when you think about what Amanda and Kyle talked about, home stand... On the home standby side, we are the dominant player in that category. We've got a broad product offering with an omni-channel distribution, with the best distributor support, in terms of providing leads, and best customer support as well.
On Norm's presentation, we're gonna leverage many of those strengths that we have on the home standby side to grow in the clean energy markets, but also leverage all the deep technical capabilities that he's building in his organization, as well as the ecobee brand that is strong already. And then from a C&I standpoint, we talked a lot about the industrial solutions that we're adding, as well as the global presence and the relationships that we have to build growth. So strong markets, we can win in those markets. All that now is culminating in what's gonna be a strong, historically strong financial profile for investors.
We'll talk about that in depth when we go through my presentation, and more importantly, deploying the capital and the cash flow that's generated by that strong financial profile in a disciplined, balanced fashion will drive shareholder value for all of us. So I think just level setting the presentation around the key investment themes, you'll probably see how that will be all driven throughout the organization. So every financial outlook is a series of assumptions, and there's a lot of words on here. I'm not gonna talk through each one, but we have some very important assumptions that we built into our three-year financial framework, the least of which is our economic assumptions. We all know, and we've talked about here in 2023, we're currently facing a bit of a soft consumer, in particular, around big-ticket discretionary items.
We're expecting that to continue into 2024. In 2024, though, we're also coming off some pretty tough comps on the C&I side, and it's a late cycle business, so that coupled with the tough comps, there'll be a little bit more limited growth on the C&I side in 2024. But then when you look at forward into 2025 and 2026, we expect to the economy to recover and see stronger growth, and we'll talk about that next on the next slide. I'm only assuming one major outage over a three-year period, so you have to... You know, outages drive our business. Major power outages, this is millions of people without power for a week. That is, I guess, internally, what we, what we deem to be a major outage. We only assume one of those in 2025.
3 and 4, that's just the mega trends are gonna continue, that we've talked about, that Aaron talked about and everyone else talked about. We expect those to continue throughout the forecast period. 5, 6, and 7 are more around price costs assumptions. We're assuming commodities stay current at these levels, labor costs stay current at these levels, supply chain conditions normalize, and we're able to hold pricing that we put into the market over the last couple of years, given those assumptions. And number 7 is important because it's part of the DNA of Generac. We talked a little bit about our cost consciousness.
We just have an ongoing formal program every year that, cross-functionally across the organization, we go after margin enhancement with our profit, called our profitability enhancement program, PEP, that works on margin improvement throughout the business every year, and we set goals and targets around that. So that will drive positive price costs in the future. And then from a cash flow standpoint, normalizing our cash cycle days, CapEx is relatively modest. And number 10 is important. We don't assume additional M&A in these numbers, as well as debt repayments or share repurchases. So here it is. So here's the numbers. Many of you probably already flashed forward to this slide. Might have been the first slide you looked at when you went through the deck.
But this is how we plan to double EBITDA dollars over the next three years. More importantly, as Aaron talked about in his presentation, we're reiterating our overall guidance for 2023. So the starting point that we're talking about is about a $4 billion business, a $650 million in sales, $650 million EBITDA business. And over the next three years, we expect to grow on the top line 12%-14% on a three-year CAGR basis. That would take us to $5.85 billion in sales. We expect gross margins to improve, as well as EBITDA margins, and we'll talk through that in a couple of slides.
But EBITDA margins returning back to normal, that 21.5%-22.5%, that would, midpoint, would be about $1.3 billion. That's the doubling of EBITDA dollars from $650 million to $1.3 billion. And again, cash flow, normalizing CapEx spending. Again, we're an asset-light business. It only takes about 2.5%-3% of sales in CapEx each year. So not a significant amount of CapEx to grow organically. And because of the significant growth of 12%-14%, we're modeling a 70% conversion of adjusted net income to EBITDA just because of the growth profile and the working capital that requires. But still strong growth, still strong free cash flow that we'll talk about throughout the forecast period. So many of you are prob— "Okay, that's great.
You're at 12%-14% three-year CAGR. How's that gonna pace over the next three years?" And while we'll be growing each of the next three years and margins will improve the next three years, it won't necessarily grow in a straight line, mainly because of that first forecast assumption that I mentioned on the previous slide, on that we're just expecting a softer economic environment in 2024, in particular the consumer, with regards to big-ticket discretionary. Now, having said that, we do expect growth in that consumer power business because, as Aaron mentioned about field inventory, we've been under-shipping the market in 2023 here, allowing that field inventory to come down. So in 2024, we won't need to do that.
We'll be shipping in line with the market, so that will be a tailwind to growth, just, just having that field inventory normalized here in 2023. And, so we'll expect growth in 2024 as a result of that in that consumer power business. Norm talked about how launching new products later in 2024, you know, that will drive more growth in 2025 and 2026 for that business. And then I mentioned C&I. We're just, the assumption there from a macro-economic standpoint is, you know, it's a late cycle business, so therefore, I expect some slower growth there for 2024 in C&I. And the reality is we're coming off some really, really strong comps with significant growth over the last few years in that business.
When you flash forward to 25 and 26, again, that assumption that the economy recovers, we've got that one major outage event in 25. All those energy technology new products getting rolled out, that will build momentum in 25 and 26. And so we expect, while there'll be lower growth profile in 2024, we'll see stronger growth profile in 2025 and 2026. And all of that will result in doubling EBITDA over the next three years. I guess, just peeling back the onion a little bit here in terms of slicing that 12%-14% three-year CAGR by our segments on the left, product classes on the right. Really, if you look at the right side, so residential, 14%-16% CAGR from 2023 to 2026, that's a three-year CAGR.
Again, I think you could say that we're coming off of some easier comps in the residential side of our business, and particularly because of the field inventory drawdown here in 2023. For C&I, you'd say that we're probably coming off some tougher comps, so you'd expect a little bit less growth on the C&I side of our business. So 14-16 on resi, 10-12 on C&I, and that would result in this level of mix. A little bit lower mix than we're currently experienced on the international markets, given the growth on the domestic markets, but pretty similar mix on the product class side. So I think this is an important slide. So where is this growth coming from? This going from $4 billion-$5.85 billion. Where is this growth coming from?
You talked about 12%-14% CAGR. You talked about the phasing. But when you sort of dig into the details, that home standby normalization out of the gate in 2024, we should see roughly $300 million of increased home standby growth, strictly because we'll be shipping in line with the market in 2024, where in 2023, we haven't. So that number is effectively what our 2023 activations were, less what we've shipped. So that's the amount we were under shipping the market in 2023. That should be a tailwind to growth in 2024, and obviously, the three-year forecast period. The next box, it's the largest box in the bridge: energy technology. That's sort of what we've talked a lot about here on this presentation.
It's the largest growth driver, opportunity for growth and the largest growth driver at $700 million. You can see, importantly, it's not just at residential energy technology that, and Norm talked about, and we've talked a lot about, but as Eric and Paulo talked about, there's a lot of opportunity with regards to energy technology on the C&I side as well. So $700 million of growth, that's how you go from 12% mix of energy technology to 21% in 2023, to 21% in 2026. So significant growth opportunity with energy technology. And then, if you look at residential and C&I, excluding energy technology and the home standby normalization, we're still gonna see growth.
On the residential side, it's tied to home standby growth, around making the funnel bigger, pulling those leads through the funnel more effectively, and then developing dealers to help to close the IHCs and improve close rates over the next three years. So that's gonna continue to drive growth in that residential business outside of the home standby normalization. And then you also have growth in portable generators, which is a product line for us, as well as our core business. But the main growth is headlined by home standby. And on the C&I side, again, outside of energy technology, our core traditional power generation business globally, we expect that to grow because of the mega trends that we talked about.
Global expansion, as Paolo builds out his global markets, and just distributor development and as telecom, rental, and data center markets grow. So this is how you get to $5.8 billion. So how do you double EBITDA margins then? It's... So it's not only the volume that was on the previous slide, but it's also gonna be through margin expansion. So how do you go from $650 million of EBITDA to $1.3 billion? A lot of that's gonna be the volume, but there's 600 basis point improvement in margin, EBITDA margins that we're expecting over the forecast period here, the three-year forecast period. Looking at that mix bucket, that 1.8% mix column, again, overall, 600 basis point improvement from 16%-22%.
About a third of that is gonna be that mix column. So just shipping more home standby from an overall basis will improve mix. It's our most profitable product, and as we ship more of those products, that will improve margins. That middle column, that's base leverage, 2.1%. Obviously, as you grow 12%-14%, we're gonna be leveraging our fixed OpEx infrastructure. That should be about another third of that 600 basis points growth, just through base leverage. And then the last bucket I'm calling it energy technology dilution improvement. So today, residential energy technology is... I think we highlighted in our last earnings call that it's today, in 2023, it's diluting as we're in reset mode and investment mode, it's diluting margins about 400 basis points.
As that builds, scales, breaks even by 2026, it's gonna dramatically improve our enterprise margins by about 1.8%, roughly about a third of the overall improvement, and it'll only dilute our margins by 220 basis points. But as Norm talked about, the end game for that business is to be closer to our long-term company-wide margins. So that 220 basis point dilution will continue to shrink over time after the forecast period. And then price cost, and then just additional OpEx investments to drive future growth, sort of offset each other. That's how, that's how I'm thinking about that. So we'll deal with that. So, so how do these 2026 targets compare from a historical perspective. So the top is net sales, gross margin trends, 2016 to 2026.
The upper right is EBITDA, EPS on the bottom, and free cash flow. So as you can see, resuming our normal growth trajectory, that's, you know, on the top line, we're back to growth. Talked about the phasing of that growth, but, more importantly, that margins are just getting back to normal in that 30, you know, high 30% range, gross margins. That's similar to where we were in our 2019, 2020 range. So we're back, getting back to normal from a gross margin standpoint, and then as we leverage the OpEx as well, EBITDA margins will get back to that, roughly called 22%, which is very similar to where we were in the 2020, 2021. So back to historical trajectory with the growth and margin levels.
EPS, you can really see the earnings power, driven by that EBITDA improvement, and I'm also making some assumptions around lower interest rates, and less interest expense as well. That's also a tailwind to our EPS growth. So strong earnings power on the EPS side, and then, just as important, very strong free cash flow as we, as we convert a lot of that EBITDA dollars to free cash flow. So that's just the 2026 free cash flow. Over the three-year forecast period, we expect to generate well over $1 billion of free cash flow over the next three years. Historically, we've deployed that capital in a very disciplined and balanced fashion. On the screen here is our historical capital allocation priorities. Number one is drive growth organically.
Investments in technology, innovation, R&D, capacity expansions, systems automation. But as you can see, by the historical period, we're relatively asset light in that it only takes about 2.5%-3% of sales to, of CapEx to drive that organic growth. And like I said, on my financial framework slide, we expect that to continue over the next three years. That 2.5%-3% of sales is what you should model as CapEx. Number 2, strategic M&A. So over the years, as we've diversified our... not only our product offering, but our geographic reach and evolved in energy technology, we've executed roughly 28 deals since 2011. Those are all deals that accelerate our strategy, and we continue to have an M&A funnel that will continue to foster in the future. That's the number 2 priority.
Number three is maintaining a healthy balance sheet. So we've publicly said we wanna have roughly a 1-2 times target leverage ratio, debt-to-EBITDA leverage ratio. As you can see, we've sort of cycled, you know, from 2 to 1 back to 2 as EBITDA contracted a little bit in 2023, but given the doubling of EBITDA dollars that we're targeting in our financial framework, that leverage will just come back down naturally back down to the low end of the range over the forecast period. So as cash flow permits, then we've opportunistically bought back shares. That's the number four capital allocation priority. Over the last, I'd say, eight years, we've bought back roughly a little over $800 million of our shares.
That $800 million includes $100 million of shares that we completed here in the third quarter. So we're back in the market buying our shares to date, Q3 to date. And that all that, on average, over the last 8 years, has been an average share price of $70 per share, that $800 million of share buyback. So again, as we generate well over $1 billion of cash over the next 3 years, we would expect our capital allocation priorities to look very similar to what our historical priorities have been. So with that, I'm gonna turn it back over to Aaron just for a final recap, and then we get into Q&A.
Thanks, York. Always appreciate the financial slides. As a former reformed accountant, I have a special place in my heart for CFO's role in these presentations. So, look, we've talked about a lot of things this morning. Really appreciate your attention to all the presentations. I know it's a lot to sit through. You know, I think we tried to summarize here, in one slide, the basic takeaways that, like, if you did nothing more than read one page in this entire deck, right?
We don't like to boil it down to that 'cause we want to read the whole deck, but if you don't wanna read the whole deck, there's really kind of this one page of six items here that I think are the key takeaways from today. First is, you know, powering a smarter world, it's all about the megatrends that we talked about and how they influence our strategy, how they influence our actions, and, you know, it's the push and the lean forward, as you can see, based on those megatrends, into the energy technology space. And this is at the heart of what is the evolution of this company from, you know, primarily being a backup power-focused producer of hardware manufacturer to a broader solution provider in the energy technology world.
And with that, as York said, if we, if we do this right, that energy technology element of our sales goes from 12% this year to 21% in 2026 in the forecast period. So that's a big, obviously, a big assumption, big takeaway, but again, we've not only acquired a lot of a lot of companies, a lot of technology, a lot of market opportunity through our activities here over the last several years. But we're now, you know, obviously investing very heavily in the team, as evidenced by that drag on EBITDA margins, investing very heavily in the team to scale that up. And that's in both the residential side as well as the C&I side. So again, I think that's a really critical element of this.
Not to be lost, of course, though, is the continuing opportunity that exists with home standby, just being north of 6% penetration rate forecasted for this year. The forecast period would take us to something just shy of 8%. Every 1% being a $3 billion market opportunity, we just continue to see that as being a really great business opportunity. Notwithstanding that those are engine-powered products, but they're used for emergencies, and we do think there's a place for products, in particular, like that, that are gonna be used in that fashion going forward. We think they have a role in the energy ecosystem, as we've said, in the long run. And they can run off of natural gas, they can run off of propane, and they are the best way to solve for an extended outage.
Kyle went through that today, showing you some of the other options, in a rudimentary way, but nonetheless, you know, in terms of bang for your buck, the home standby generator is by far and away, the most cost-effective and best way to protect against long-duration outages. And remember, at the core of our presentation today, and these are not Generac data points, they're known data points, around the U.S. and the federal agencies that track them. Power outages are occurring more frequently, and they're lasting longer. There is no debate about that. And that's a trend that's continuing. It's not leveling off, it's not dropping off, it's not abating. It's only going to continue. And with that, you as a homeowner, you as a business owner, are left to figure that out on your own.
Government's not gonna help you with that, in any fashion that we can—that we've seen. And it really is, your own threshold for pain, in terms of where your... We call it a tipping point. What is everybody's tipping point? Everybody's got a different tipping point. You know, my tipping point, when I hit 4 hours of outage, and I'm sitting in the dark for 4 hours, I'm kinda done, right? Thankfully, I have a generator, so I don't have to worry about that. But other people can sit, you know, they talk about how it's fun, it's like camping at home and all this. I'm sure it's great for the first, you know, 8 hours, 9 hours, 10 hours. You get to the second day, and that's not so fun camping in your living room, right?
You don't have anything to eat, and your kids are getting squirrely, right? I mean, I think the reality of it is, we've come to depend so heavily on a continuous source of power in everything we do in our lives. Not just what you do in your home, not just what you do at work, but everywhere you go, everything we want to interact with, a continuous source of power is a requirement. And so solving for that in terms of the reliability challenges that are coming at us is absolutely critical. We think that the home standby has a lot of legs, and there's a lot of runway left in that market. Marketing and brand strategy, I think, well, you know, Amanda, you know, she's joined us here recently.
I think she's gonna bring a great new dimension to the opportunities we have in front of us. We've collected a ton of data, like we talked about today. We understand who our customers are. We know that the market's growing, we know that there are opportunities to tap into incremental segments that we're not talking to yet, and we're not talking to in the right voice or with the right content or with the right level of intensity, in some cases. And so changing that conversation to be more tailored for the right audience, I think is a remarkable opportunity that we're just scratching the surface on. And I think we've done a lot of things in the last decade to put ourselves in this position to take that next step.
It's a big next step, and there's gonna be a level of investment with that, that's built into the plan here. But we see the continued investment in marketing as just another way to use our scale, where competitors can't. Because for them to start out with 5% share or 6% share, and to spend and to invest at the level that we're going to invest in, there's no way that you'd be able to make that business case work. And that's what I love. That's what I love about being in that market, in particular, on the home standby side, is that amazing position that we've built. Now we have to use it to advance the category even faster and to keep others out of it. And that's what we're doing. And I think that that is where we're gonna, we're gonna excel in the future.
And it's really, it's less about the competitors, to be honest, and more about building a market. It's a market that's only 6% pen rate and needs to be higher. Residential energy technology. Norm came up here and talked to you about the things we're working on there. A lot of great things. We're doing a lot of things to invest in that. That has... You know, that's a hard, hard journey. I'm not gonna lie to you. We've, we've got the scar tissue to prove it. We're not through it yet. But I'm telling you right now, we're gonna be successful.
We have every right to be successful there, not just because of the things that we've acquired, the things that we know how to do organically, but because of our brand, because of our distribution, because of these go-to-market attributes that we've created and that we've honed, and that we're going to accelerate with. We think we can take those other products in residential energy technology and do very similar things to what we've done to build out the home standby market. As Norm told you, those markets are nascent as well. You think about energy storage, less than 1% penetration rate. Rooftop solar, 3% penetration rate. And in Eric's world, on the C&I side, the pen rates are very, very small for some of these new technologies. We're in the very, very early innings.
And I feel like we've put ourselves in an awesome position to be first, to get there and, and win. It's not gonna be without some broken glass, and we've shown that. These are hard things, but hard things generally are worth doing.... if you can get to the other side, and you can see the good things that come from those hard things. And so I'm very excited about that, and we're very committed to it going forward. In the global C&I growth, you've seen what we've done from $271 million back in 2016 when we acquired Pramac to $721 million this year. Fantastic growth opportunities for us. And again, you know, 20% of what we're doing today comes from international markets.
I could see that being a much higher percentage in the future, and not just with our traditional solutions, with the energy technology solutions, with the energy storage solutions, with the home standby solutions. These are also market creation opportunities. This is not talking about going into an existing market and fighting it out for some- with somebody else for a point of share. This is about creating a market. These are hard things, but they're worth doing. Global C&I growth potential is huge. And then last but not least, as York told you, you know, we're gonna double EBITDA, EBITDA dollars on an absolute basis, and we're gonna get those EBITDA margins back to that, I think, the 22% level in terms of kind of the midpoint of that guide by 2026.
We think there's a ton of opportunity to not only do these hard things, but actually create a tremendous amount of return and value for our constituents here at the company. So these things are absolutely worth doing. They're not easy, but we're very committed to them, and I think if there's a company on the planet that's got a better opportunity or a better chance of making this work, it's not evident to me who else that might be besides us. We've put ourselves in this position, and now we've got to execute. And we know that, you know, we took a kind of a step backwards with some of that here in the last year, but that's what... You know, some of that's company cycles, some of that is our own doing.
But in the end, I think we're, we're taking accountability for that, and more importantly, we're taking action to make sure that, we've got the right team and the right playbook in place to execute on the strategy over the next three years. So with that, we're gonna move to the Q&A phase of our presentation. So what we'd like to do with Q&A is, there, there are little red dots above you. Don't be alarmed by that. But we're gonna open them up to green when you ask your question. Please speak up so that people on the webcast can hear. If it doesn't come through loud and clear, I'll repeat the question, and then I'll either take the question or I'll direct it to, one of the presenters this morning. So with that, in the back. Tommy.
Aaron, thank you. Tommy Moll from Stephens here. I wanted to ask about home standby in the outlook to 2026. Am I right in assuming there's an embedded growth each of those three years going forward, and just in terms of home standby units? And, and then if I'm right about that, which is the bigger driver? Is it the close rate, or is it expanding the funnel and more IHCs at the top of the funnel?
Yeah, it's a great question, and we are assuming home standby one returns to growth next year, and a lot of that is with the $300 million headwind that York was talking about. You know, that's a new number. We haven't given that previously. We've been asked about it a lot, but you know, that's our calculation of what we think we undershipped the market by this year as a result of that field inventory burndown. So we get through that, and as I said, as we kinda get into 2024, that'll be the field inventory will largely be normalized, and it won't be a drag any longer, and we should be shipping at the market.
So right there, we're gonna grow in 2024 over 2023, and in order to get to the guidance that we're providing this morning, the assumption is that that category does grow over the forecast period. Now, to answer your question, the second part of your question, it's a combination of both a recovery to the close rate. So just to give you some data points there. So close rate, you know, we peaked in, I think it was 2021. 2021, we peaked on close rate, and that came down in 2022 by 40% off the peak. Today, we've grabbed some of that back. We've recovered some of that, but then, you know, that was the change to our most recent guidance, is it kinda flattened out, right?
Because we saw the consumers are in a different place today than they were in 2020 when that peaked. So that's something that, you know, we have to kinda square with. And in looking at that, we've said: Look, the consumer probably is gonna remain in somewhat of a... There's gonna be a bit of a malaise, especially with large-ticket discretionary purchases in 2024, but that in 2025 and 2026, our assumptions are there's recovery there. The punchline is, by 2026, we think that we'll get back half of that 40% drop. So we won't be all the way back to the peak, maybe because the consumer is not all the way back to where they were at, and interest rates aren't all the way back to zero again. But, you know, they...
There is gonna be some additional work to do to get that close rate back ultimately to those high rates. And then the top of the funnel filling with IHCs is absolutely critical, and that's the heart of what Amanda's program is all about, is going out and finding more opportunities to engage customers, not only more frequently, but just engage with new opportunities, new parts of the demographics that, you know, we think are out there, that we're just not talking to, that we're not touching in the way they need to be touched so that, you know, they become engaged. So it's about improving engagement, it's about driving more IHCs in, and it's about improving that close rate. Yes.
Stephen Gengaro of Stifel. Thanks for taking the question. When you look at close rates, maybe historically and now, I know you mentioned the health of the consumer, do you have a good sense for what drives the close rate? I think you also mentioned there's a bit of an emotional aspect to it. I know when we bought ours 20 years ago, it was like: We gotta have one. We have it in power in 5 days.
Right.
So we went, did it, and ordered quickly, and it feels like if they wait and there's a backlog, they may walk away from the purchase. So I'm just curious...
That's a-
Tell us about it.
Absolutely. So close rate, there's a couple of major factors that influence close rate. The first is certainly that emotional element, right? And so when we saw close rates come off of that peak and drop 40%, you know, it wasn't because we didn't have the emotion. At the time, there was a lot of emotion. We just didn't have enough product, right? So it gets back to you have this, I think we're calling it. What are we calling it? The lost opportunity, the lost window of conviction or something like that, I don't know. But you know, there's a time period when your concern about losing power or having lost power, the further time goes, the more that feeling abates, right? Like, it's like, okay, you start to do different types of rationalization in your head.
Immediately after the outage, you're like: I'm gonna buy one of those things. I'm never gonna let that happen again. A couple, you know, a month goes by, you get the IHC, maybe you do, maybe you don't, because we're so busy 'cause everybody around you is, you know, had the same experience. Maybe, you know, the problem becomes you, you start to think about, okay, you get that quote, you're like: Whoa! Okay, I didn't think it was gonna be $12,000. How do I feel about it now? I get the $12,000, and then, oh, I gotta wait 3 months, 4 months, 5 months, 6 months to get the machine. What are my odds that I'm gonna get another outage, right? Like, this is the emotional kind of feedback loop that you start going through in your head.
And so there's absolutely a high emotional component to this, and there's a high component that is availability, right? If the product's not available or if we can't get dealers to you to do the... to actually do the in-home consultation, right? When you have an event that drives a, you know, a tremendous amount of demand in a particular market, and a lot of the events that happen happen regionally. So you can imagine the dealer base, the distribution in that market, they become overwhelmed to some degree. I think the beauty of this is we have 8,700 dealers, and it's growing, right? We need more. The point is that we're taking those IHCs as they come in, and we're using intelligence to distribute those leads to maybe dealers who do have bandwidth in a market.
Maybe they're a little further away from you than the dealer would like or that you would like, but that's an opportunity that we can exercise quickly. There are some other things we're looking at to also try and, I would say, speed up the IHC process. Other things that we can do, if I can get 6 pieces of information from you, either online or on a phone call, perhaps I can get within a 95% confidence interval, I can get confident enough, I can give you a number of an estimated range of installation cost. Right? Now, it might not be a precise quotation, but at least we'll give you some sense of whether you're still interested or not, right?
That is helpful for us to calibrate what we do to match you up with a dealer and get a product in your hands. Thank you.
Thank you.
Yes.
Donovan Schafer with Northland Capital Markets. So I have two questions tying to very kind of acute customer pain points, where I think you may have, you know, sort of solutions to. So the first one is around the Texas text alerts, and, you know, it also happens in other states. I've gotten that before in California, and I know... You know, I think it was just in the last few weeks in Texas, they sent those alerts out, but they didn't actually have significant outage events. But I can imagine for some people, the text message alone itself might be sort of either annoying or a reminder or something that makes them-
Disturbing.
disturbing, something that makes them feel like, gee whiz, my utility is not on top of things. Clearly, they can't handle it. I need to take matters into my own hands. So the first question is, have you, have you gotten to a point yet where you can look at, you know, early indicators of interest and whether you get a bump from those text alert events where you don't get an outage, but you just get, you know, a text alert going to tons of people? And then the second question is around the EV charging, where it sounds great. Paolo talked about the, you know, a single unit that includes a battery and a natural gas generation unit for the Italian market.
It seems like that could be a fantastic solution in the U.S. market, you know, where maybe you don't have the ability at a particular point to—for the grid to service the demand, but you might have excess natural gas, that you could tie into at a, the nearby, you know, timeline.
Yeah, I know. Thanks, thanks for the question, Donovan, and I think... So the first part of the question, in terms of those text alerts that go out to people, and so we track outages very closely, right? So what you're talking about is this isn't an outage. It didn't manifest in an outage, but it was a near outage, like a near miss, right? Like, it's-
Yeah.
I don't know how you want to classify it, but it's, you know, a heightened sense of awareness around a potential outage. We don't have a way to necessarily track that, but what we can track, of course, is the IHCs that come in, in those markets, Texas being a great example. We saw elevated IHC activity as a result of the stress that the grid was under in that, you know, over the summer. I mean, the entire summer in Texas has been, you know, just brutally hot and grid stability has been front and center.
So it may not be discreetly tied to that text message that you received, but the media voice over, in its entirety about, you know, grid stress and, you know, all of the things that can potentially lead to outages, the fear of outages, had people in a buying mood. Certainly, shopping, right? This is one thing, I think Kyle mentioned it, is that we are, as the category continues to grow, we've got a lot of people coming in now, shopping. This is the difference, I think, between somebody who gets a text message in a near-miss situation and somebody who actually experienced an outage. People... This is back to the question about the emotion involved in this category. You experience an outage, and your lights are out, your likelihood of buying, you're much, it's a much higher, right?
So we've got a lot of data that shows people who come in right away into the funnel after after having experienced an outage, and the longer that outage is. The higher the propensity is that you're, you know, you're thinking about buying the product. That starts to abate as you move down, if the outage is shorter or if there wasn't an outage at all, but there's just a fear that there could be outages. So, you know, we look at that, and we say, okay, the IHCs, we're seeing a ton of IHCs.
The close rate, this might also be part of not only the consumer being a little bit softer, but we've got a lot more people shopping because they didn't actually experience an outage, but they were, you know, they were pushed, if you will, into getting an IHC because they're concerned about a potential future outage. If, if your utility sends you a text, you know, or your grid operator, in this case, ERCOT, sends you a text 10 days in a row, you need to turn your power off or curtail power, you probably start to think through just what happens if I don't or if everybody else who gets this text isn't as, you know, good as me that way.
Just to clarify on the IHC, so to take Texas as an example, you did have elevated outage activity at the beginning of the summer, but then subsequent to that, you know, I mean, that might have been like in June or-
Mm-hmm.
Maybe it might even been May. I don't remember, but you know, July and August, all of these alerts and warnings. So was the level of IHC increase in kind of Texas, Louisiana, the southern area there, was it kind of higher in proportion than what you would expect just based on the raw number of outages? Or was it, is it even with the text alerts and all the media coverage, was it still kind of more or less in line with what you'd get from outages earlier?
I would tell you that we're seeing IHC volumes today that are in excess of what we would normally expect, driven purely by outage.
Okay.
Now, I'd say that, but the caveat, that that's been the case since the pandemic hit, right?
Okay.
There's this, the amplification. Now, I think the pandemic amplification has, has waned, but you have this new element that's emerging of, you know, a grid imbalance issue that's becoming a bigger talking point, and I think has people maybe, you know... I don't wanna say that replaces the angst that the pandemic brought, but it is, in effect, a different element of angst. And then on your EV question, you know, the EnergyHub is a cool product. Paolo's got a couple of orders for that. I think that Europe's further along in the EV pen rate, so you know, I think it is something that could be a potential product here, certainly in areas of the country where the pen rate's greater, like when you get out to California. You know, you do need natural gas lines present because that is part of the equation.
Natural gas lines, historically, are quite expensive to run if they're not already there. So you know, they would have to be in areas... I think it would make the most sense in areas, and this is where it makes the most sense in Italy, most sense where gas lines are already there. 'Cause to bring gas lines to the highway, if it's not already there, this is a bit of a problem. But if you already have it there, you know, it is, I think it's a possible—the EnergyHub could be a product that's got far greater opportunity beyond just what we're seeing today. It's very early innings, though. Yeah.
Yeah, just on the clean energy product, it seems like the rollout maybe got pushed to the right a little bit. I'm just wondering what's driving that? And then just as you rebuild distribution and installers, is that something that you can do while you're working on these products, or is that something that has to wait? And what's kind of the strategy to kind of reinvigorate that distribution?
Yeah. Thanks, Jeff. So I think, you know, getting pushed to the right a bit, I think is probably a good way to characterize some of that. I think the next - I'll say with the next generation storage device, we always - we'd always pegged kind of 2024 for that device. It's really probably gonna be, you know, later half 2024 product launch for us. You know, I think the one that I could tell you, you're absolutely right, it's been pushed to the right, is the rooftop solution. So we acquired the Chilicon company two years ago. We had high hopes. In fact, we had talked about it at one of the RE+ shows, launched the Generac-branded PWRmicro .
Then, you know, we had some of our struggles with the Snap RS device last year. We brought in a whole new team, and that really triggered for us a complete kind of step back, look at the technology, assess the technology, make sure it's the technology we think is the right technology, but can we execute on it? And what do we need to do to get it to the level of quality and reliability long term? Again, these are 25-year warranty products, and they're in a brutal environment.
These are underneath the panel on the rooftop, so you can imagine the kind of conditions that they, you know, depending on where you are in the U.S., kind of conditions in terms of temperature variation and just, you know, the humidity and wind, and rain, and snow and ice, that they are subject to. So to make that product, you know, really a product that would be befitting of where we're trying to go with all of these products, that's been a push out to the right, for sure. In terms of a holistic... I would say it's almost, I don't want to say we started over the project, but we kind of started over the project with a new team. And it started with evaluating whether the technology made sense at all, to be frank.
I think the good news is, we're saying the technology makes a lot of sense. We like the AC-coupled microinverter solution. We think that's a good solution. We have a decent solution today with the DC-coupled solution through the Pika acquisition, but we do believe that, that this is a product worth bringing to market, but it, it needs, it needs more work, needs more time in order to bring it to the level that we think is scalable in the market. And so, you know, can we continue to grow distribution in, you know, in between now and when we launch those products? I would say this: We have a very modest view on 2024, right? We said 2023 was a reset year. Truly was a reset year. We took a step back.
2024, you know, we're not gonna grow a ton in 2024, a little bit more towards the back half as we get some of the new product into the marketplace. But I think we're being pretty modest about what we think we can get done in 2024 without the new products. We do have, you know, we've got a stable platform today that's salable. We have a good product today. As Norm said, there's a lot of great attributes of it. It's one of the largest capacity batteries, energy storage devices on the market. In terms of the capacity and throughput of the inverter, it's one of the largest on the market.
It's a great product, but we've obviously, you know, we've lost the confidence of some of the market participants out there, based on some of the challenges we had, and we're doing everything we can to work them back in. But, you know, if I'm realistic with you, it's—if I'm one of those dealer partners, and I had a bad experience, and I walk in, my sales team walks in with the exact—it looks the same as the product I had a bad experience with, I'm like: Yeah, maybe I'll just wait till you bring something else out. And that's, that's the reality of how people buy and sell. I think there are areas where we can overcome that because we can demonstrate to channel partners the improved quality levels.
We can talk to them about the things we've done, but it's. I think we're, you know... Until we get those new products in the market, you won't see that acceleration of growth. And that's why we're saying 2025 is really the return to growth, right? That's when we accelerate. 2026, that picks up. We, we hit breakeven, and then, you know, it's, it's not too long after that. It's like, you know, a couple of years after that, we think we can get somewhere pretty special in terms of getting to closer, anyway, to those corporate EBITDA margin averages. Yes, Chris.
Yeah. Hey, Aaron, Chris, Oppenheimer. I had a question about in HSB, your core demographic, kind of the two-thirds of sales into age 60+. So putting aside the kinda 6% penetration rate, the saturation in that core demographic is gonna be much higher, and I realize you guys addressed some different demographics that you're targeting, but it feels a little like chasing a rabbit. And so I'm curious, you know, what, what really are, so are you anticipating pinch points with respect to that? And the second question to that is, what do you think potential degrees of incremental saturation in that core demographic have played into the diminished close rates?
That's, I mean, that's a great question. I would say that... I'll answer the second part of the question first. I don't think that, and it's because I'll answer the first question. I don't think we're at saturation. I don't think we're saturated at all on that demographic. That demographic, the baby boomers, are retiring, right? They're graduating into retirement at an amazing clip here. So there's a lot of people that are aging into that demo at this stage. That said, that can't carry on forever. And so, you know, the last thing we wanna do is, you know, there's... There are examples of companies that, you know, haven't shifted when their demographics have, and so we don't wanna be left, standing there as our demographic ages out, so to speak.
But I do think that a really important element of that demographic is the aging in place concept, that that demographic, in particular, there's so you have that demographic, and it's I don't have the raw numbers in front of me in terms of the millions of Americans anyway, that fall into that demographic. But of that demographic, the people that, especially after the pandemic, have concluded that the only place they wanna get old is in their home. They do not wanna go to a congregate living setting. Full stop. They, I mean, it was on full display in terms of how challenging congregate living, just, types of settings are in a pandemic. Now, are we gonna have a pandemic again? I hope not.
The reality of it is much like the work at home, work from home trends accelerated, we believe the aging in place trends accelerated as well as a result of the pandemic. And so that cohort, that is the two-thirds of the owners of our systems, of the home standby systems, we think only have that much more conviction now to protect themselves, right? In their own home and stay in their own home as long as they can. Adding a generator makes that home livable a lot longer in your life cycle than it might otherwise be.
So just in terms of what it does for you, for climate control, general lighting, in terms of your home not being a dangerous place to get around in, refrigeration of medications, you know, the medical devices that are coming into the home today that require a constant supply of energy. Those things are all critical elements that I think feed into that demographic and why they'd want the product. That said, the second part of your question, I... Again, I don't—because I don't believe that that is a problem today or a saturated element of the market for us anyway. I do think that even within that, that kind of older demographic, there are ways to reach that demographic differently than we've done before. We talked about new incremental demos that we wanna go after.
We've also talked about, and we probably didn't do a great job of it this time, but is: How do we change the voice in which we speak to the current demographic? To you know, kinda pinpoint some of the concerns they do have around aging in place and the medical devices in the home. And, you know, we're not really - we don't really take that angle today when we're selling. So I think there's an opportunity, even within that current demographic, to double down. I would say it's a double down opportunity, and again, there's a lot of people moving into that retirement bracket over time. Yes, Jerry.
Hey, Jerry Revich, Goldman Sachs. Aaron, I wonder if we just talk about how backend weighted is the margin outlook. So based on, you know, the fourth quarter implied guidance, if you do hit numbers, you'll be on a run rate, essentially entering 2024, that's halfway to the margin expansion targets. And I just wanna make sure there are no moving pieces that we need to think about, and maybe just confirm for us that we still expect to be done with the destocI by the end of the year as well.
... Yeah, so I'll take the destock one, and then I'll probably kick the margin, your margin question to York. So what we said on the destock is, you know, look, I mean, it's, first of all, it's pegging what is normal? So that's a number of our making, right? We look at history, we look at what it was kind of pre-pandemic and before things got out of whack, and we're saying that as we get into early 2024, it's not gonna be December 31, right? Like, it's not gonna be, boom, we wake up the next day and, hey, it's normal. It's, there's a progression here. The good news is, you know, if we wound the clock back 6 months ago, we had too much inventory everywhere.
Today, we are in some really good places in certain markets, in certain regions, and with certain customers, certain channels. I think, some commentary we gave on the call on August second, our dealer channel, pretty close to normal. And that's our... We've called it out. It's one of our most important channels, certainly from majority of the sales through HSB. It is, it's basically at normal. In fact, I would tell you there's some regions of the country, and there's some areas like Canada, in Ontario and Quebec, where, you know, they need more product, and we're working to get them more product. We do have some Canadian-specific models that go up there, because the regulations are different, right? So this is the same issue Paolo has with selling a unit in India or Australia.
The regulations guide what that unit needs to look like. So I would tell you that we're in that channel, in that dealer channel, we feel really good about where we're at today. We moved kind of through the progression of channels. Our wholesale channel is still overstocked, right? But we've got some regions where we're in better shape. And then you move to the retail channel, the retail channel is a laggard there. They have probably the greatest, you know, amount of inventory to still burn down to get back to their normal position. But when you kind of shake it all out, we feel like as you get into 2024, we're gonna be in a much better place. And then on the margin progression, I know York?
Yeah, Gary, I think your question was, is there gonna be a more level-loaded margin progression over the next three years? With the top line, maybe it won't grow in a straight line. I would say the margin profile and improvement should incrementally improve, probably more evenly throughout the three-year period.
York, sir, can I ask just a clarification? So, you know, if you hit the fourth quarter margin guidance, that'll be, you know, 19%-20% margins on a seasonally adjusted run rate. So that's all the way halfway to your target. I just want to make sure there are no idiosyncratic items in the fourth quarter that we should be thinking about as we level set.
Just a heavy, heavy seasonal mix. So the first half of a year, of a normal year is always... margins are always lower than the second half. So Q4 is, is the highest level margin that you'll experience during a year. So that'll come down in the beginning of 2024, and then it'll come back up in the second half. But overall, year-over-year, you'll see some relatively even margin progression over the next three years. Improvement.
Yeah, I think that's great. We've got time for one more question. We'll go to the very back.
Hey, thank you very much, Julian Smith. Thank you very much. Hey, thank you again. Maybe to build off some of these, these few questions here, if I can. How do you think about the, you know, the ET build out, the composition of that pie, you know, through 2026? You talk about that reboot, you talk about the pieces of the pie, kind of deciding what you want to go with, what you want to emphasize. When you think about that one, two, you know, what is within, say, you know, what does ecobee, you know, comprise or what have you? What, what products are you saying, "We're gonna double down. We're really gonna reboot this?
Yeah.
Then can you elaborate a little bit on the margin? You talk about the EBITDA commitment. What is the gross margin dynamic of ET through that period, maybe on the C&I residential?
Great, great question, Julian. So, you know, in terms of just the breakdown that we're gonna give in terms of... You know, we're not gonna get down to the level of each product within there, whether it be smart thermostats or, or even at the ecobee level. But if you take that one, two, so again, level setting, $500 million of total energy tech, as we've defined it, with C&I and Res this year, about $300 million in 2023 for residential, $200 million for C&I, growing to $1.2 billion in the total. That's the 12%-21%. The $1.2 billion is comprised of about $700 million of residential, $500 million of C&I. So the growth from $300 million Res to $700 million Res and from $200 million C&I to $500 million C&I. That's kind of the breakdown.
When you think about the margins, and obviously within Res, by the way, because we're, you know, we're introducing a lot of new product and we're assuming pretty modest residential year next year, we got a lot of growth from new products coming in in 2025 and then in 2026 as they get market traction. So obviously, ecobee is gonna be a big part of that in 2024, and, you know, will grow throughout the period, but less or so as part of the mix of Res. And then on C&I, you know, there, there's basically two, you know, kind of major components there. One is the battery storage for C&I behind the meter, which today is very small.
The majority, a good chunk of what we're selling today, in the C&I space is that, what Erik referred to as Beyond Standby, right? The natural gas gen sets being used in applications other than emergency standby. We do have some battery storage and some mobile storage that are in there that round that out. But that $200 million, the growth that's gonna come from that, we do expect the growth in that Beyond Standby category to be very solid, but the battery elements of that, actually, we feel are gonna be the bigger growth. So I'm directionally, that's how it kind of lays out. And then in terms of the gross margin part of your question, it is interesting because gross margins actually are really good.
And I'll talk to the residential piece in particular, and that is, you know, the IRA provides us some tailwinds. The way we're thinking about this is we're going to have domestic production capability for those residential products and the ones that are available for the production tax credits. You know, you're gonna see that be helpful to margins, but the margins, the gross margins overall, are actually quite good in these product segments, and that's what gives us confidence that we can get to those corporate EBITDA margins over time as we leverage the operating expense load that we've created here because of the intense level of investment that we're going through today. So that, that's kind of where - how I'd answer that. We need to leave the Q&A there. I know it was short.
I apologize. We do want to make sure that we've got time to do lunch and get on the buses. Chris, I'm gonna turn it back over to you for, like, kind of logistics around that. Oh, Jenny's coming down. I'm sorry. So you'll hear from the real person who knows what's going on, neither Chris or I do. So, Jenny, do you wanna give them the instruction needed there?