Get started here. Good morning, everyone. On the microphone here. My name is Michael Harris, VP of Corporate Development and Investor Relations here at Generac. I'd like to welcome everyone to our 2021 Investor Day. We really appreciate everyone taking time out of your busy schedules to be here this morning, along with those participating on our virtual webcast. We have up on the screen here the overview of our agenda for today. Obviously, a lot of topics we're going to take you through across our business. We're going to start off by giving you an overview of Generac and talking about the evolution of the company into an energy technology solutions company. We'll talk about our expanding Grid Services capabilities for really a global opportunity. We're going to go to home standby and talk about the significant penetration and DER opportunities that exist.
We'll take a quick 15-minute break, come back and give an update on our clean energy products. There is a lot going on there. A lot of exciting new products recently introduced. We'll transition to talking about global C&I products and solutions. We'll wrap it up by giving an update on our financial framework, as well as three-year targets and capital allocation priorities. At the conclusion, we're having a 15 to 30-minute, question and answer session at 11:45 AM. As a quick side note, I just want to let everyone know that the slides we're taking you through today, we actually have a PDF posted to our investor relations website. That went live at about 8:00 AM. It's available under the investor presentations links. You saw on the agenda for today, we've got all these different topics.
We have a total of six presenters. I'm going to briefly introduce them right now. They're laid out on this slide in the order that they will be presenting. To start off, we'll have Aaron Jagdfeld, President and Chief Executive Officer. Bud Vos, President, Grid Services. Kyle Raabe, Executive Vice President, Consumer Power North America. Russell Minick, President, Energy Technology and Chief Marketing Officer. Erik Wilde, Executive Vice President, North America. York Ragen, Chief Financial Officer. A quick comment here regarding forward-looking statements. We will begin our presentation and webcast 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 review the forward-looking statements slide within this presentation or Generac's 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. Lastly, before we have Aaron come up to the podium and begin our formal presentation, we wanted to start off by showing a cool new video that we recently developed, that really is going to set the stage for what we're going to be talking about today regarding Generac's evolution into an energy technology solutions company. Take a look and hope you enjoy.
Some people are driven by a passion for greater things. They dive into the fray with new ideas that few can imagine. Disruptive ideas, they call them. Bold, surprising, trailblazing ideas that lead the charge to a better world.
I deeply believe that what we're doing at Generac Clean Energy is going to change the world for the better, is going to put our planet's energy economy on a firm foundation for the next century.
More than 60 years ago, Generac set out to solve a problem, providing power to farmers in the field. Over time, the company expanded, adding new products to help homes and businesses in their darkest hours. The team at Generac worked tirelessly to perfect their products and make them more available to people in need. The challenges were different then. The world has evolved. We have, too.
Generac, it's very progressive. What I mean by that is the ability to pivot into a different industry and understanding the growth patterns and all the acquisitions that we've been currently doing and doubling down on clean is very refreshing.
We all know the current power grid is failing. It is reliant on fossil fuels. It is susceptible to intermittent outages. It is a one-way system rife with instability. We set out to find a new energy technology solution to create a power grid for the future, to create energy independence.
Generac is building the foundational technology to make grid independence a reality.
Each year, weather gets more severe, fires more regular, and costs rise. Alternative forms of energy have become critically important while creating unique challenges for our grid. The biggest names in energy have not delivered on expectations for a more balanced, resilient, and sustainable power grid. They force solutions into their rigid architecture. They make the market conform to their solution instead of providing solutions that best meet their customers' needs. Generac imagined something different. People and technology coming together to Power a Smarter World. We imagined a brighter world where our customers have access to multiple customized solutions, energy solutions that truly have a positive impact on our communities and planet. That's why Generac is now an energy technology company. Generac, Powering a Smarter World.
Audience is all warmed up or even fired up. I'll introduce Aaron Jagdfeld, President and CEO of Generac.
Thanks for joining us today, everybody. I know that trying to get back to regular travel, this was probably a little bit of an odd event for most of you getting back through an airport and on an airplane and coming to visit us, or in a car or wherever you came from. Really appreciate your commitment to time that we're spending together this morning and that we'll spend together this afternoon for those of you physically here. We've got a pretty full packed day here with not only the presentations this morning, but also the facility tour of our Whitewater, Wisconsin manufacturing plant, but also the innovation experience that we'll take you through this afternoon when we come back from the plant tour.
Really going to be a lot of fun, in terms of just getting a little bit more of a feel for who we are as a company. For those of you that have been around the company for a long time, I think you do know us. For those of you that don't, got just our standard kind of about Generac slides in here for you just so you can see a little bit, excuse me, at least through the numbers. These are through the second quarter on a trailing 12-month basis. Net sales of the company, $3.2 billion, and we'll talk to you about where we think we're going to end up the year. We're not doing anything new with guidance today, but we are just going to reiterate our guidance from the end of July.
We have over 8,000 employees today, and this was at the end of the second quarter. Actually, today, we're closer to 8,400. We continue to hire, we continue to expand the business pretty rapidly. We have a lot of openings both here in Wisconsin as well as down in our South Carolina facility. We're a global company doing business in over 150 countries. Very engineering heavy. In fact, that engineering number is really understated when you put all of the software engineering now that we do into those same kind of classifications. We used to classify engineering as kind of design engineering, right? An engineer would sit down at an old drafting table or at a computer and come up with a design for a product. Well, obviously, software designers, that's a different skill set. Nonetheless, those are people doing design as well.
They're just doing it through coding. It's actually quite a bit of a higher number. We'll have to update that to include that. Our distribution strategy here has been, and continues to be, an omni-channel approach, which I think is, today, maybe not as unique as it once was, maybe 10 or 15 years ago when we used to talk about it. Just a couple of other numbers rounding out. A very profitable company, north of 25% EBITDA margins. At least on the LTM basis through Q2, over $560 million of free cash flow generated. We generate a lot of cash flow. It's the same business model, frankly, we've been deploying here for a long time.
There's not a lot of differences in how we deployed it, but what is different is some of the markets and our approach to it, and I'll talk about that a lot today. Just rounding out the About Generac. Think about our products and our product classes, if you will, is how we report them in a residential side of that ledger and a C&I or commercial and industrial side of the ledger. On the residential side, obviously, our residential home standby products are a very important product for the company, and continue to grow very strongly, and Kyle's going to talk to you today about some of the things that we're working on there, in particular.
With all the new stuff we have going on, there's a lot of energy still going into, it's even hard to call them legacy products because there is so much opportunity that still exists with home standby in particular. We have our home energy storage products, which came to us through acquisition a couple of years ago. We have our new microinverter products, which also came to us through an acquisition just recently. We have some new products that we introduced here just this week, and that you'll have an opportunity to see and hear about today. You'll hear about them from Russ Minick. The Power Manager, as we call it. It's that white box there that is a load control mechanism that is really industry-leading. You'll also see it during the innovation experience this afternoon, an actual demo of that.
Got our portable generators and then our chore products rounding out our residential product categories. Residential makes up about 2/3 of the company's sales. That wasn't too long ago that we tried to set out on a path here to balance the company a little bit more between residential and C&I. The reality of it is residential just continues to grow at a fantastic rate. That's not because C&I is not also growing at impressive rates, it's just that the residential business, both on the residential home standby side as well as our clean energy products, are just growing so incredibly fast. On the C&I side, you've got our larger and smaller, for that matter, stationary C&I products, our mobile C&I products that are used in the construction industries.
We have a full line of transfer switches, which are paired with each generator, sense when utility is lost, and control that break point between the utility and the generator and how the power flows. Those are going to become very important devices here of the future grid design. We'll talk a little bit about that. We have some newer products here. That picture in the lower left on the C&I side is a unit that's designed by a company called Enchanted Rock. We just recently announced a partnership with this company to talk about producing that product for them, in concert for them. It's a gas generator, a 400 kW block of load that is used to put power back on the grid, as well as to use it in a resiliency capacity when outages occur. It's a really kind of unique product. We'll talk about that today.
You'll actually have an opportunity again to see one of those products during the innovation experience today. Then also on the far right side of that C&I, the lower C&I, is one of our latest acquisitions as well. That's a storage system, a C&I storage system from the Off Grid Energy that we acquired in the U.K. just recently. You'll also see that on the tour today. A lot of products to see. Then on the bottom, commercial and industrial, about 26% of our revenue, then 7% is the other category, inclusive and other are really primarily our aftermarket parts, product accessories, extended warranties. Our very small Grid Services business, revenues that flow through that today, the software revenues are in that other bucket as well. We've also got remote monitoring with our Mobile Link platform in there.
We're going to talk a lot today about Grid Services and Bud Vos is going to come up and talk to you about that, and I'm going to talk to you about that as well because it's representative of one of the really exciting kind of new tenets of growth here at the company, leveraging both our legacy products as well as leaning into some of our new products, and then really leaning into the grid of the future. This is what growth looks like. We've had a track record of growth. I've been with the company 27 years, and we've always classified ourselves as a growth company. We've had very few periods of time, certainly in my history with the company, but in the company's history alone, where we've actually experienced any kind of years of not growing.
You can see that obviously growth has been very pronounced in more recent years. The 2021E number, again, if you were to look at that with our midpoint of our guidance from the end of July, it would be about $3.7 billion. This morning we are unveiling, as we promised, new three-year targets. The 2024, the blue bar there, would be representative of that, and the midpoint of that range, the new range of guidance that we are offering here is about $5.5 billion in sales. We have grown at about an 18% compounded annual rate since we did our IPO. Our forward guidance off of the 2021E numbers are for continued growth of between 13% and 15% on that top line going forward. Obviously, we are going to dig a lot deeper into the numbers.
As York Ragen comes up, he's going to go into that in much greater detail all the way through. Really exciting, I think, that we see the kind of growth opportunity off of a very elevated base, right? The way we've grown so far in the last few years, in particular, to continue that trajectory going forward, I think is pretty impressive and indicative, I think, of some of the spaces and the places that we've put our effort into here over the last several years. Let's talk a little bit. This slide, this is a transition slide titled New Enterprise Strategy: The Evolution of Generac and our increased ESG focus, which we'll touch on all of these things. More broadly, it's about strategy. The company's strategy up until today has been something we've called Powering Our Future.
Powering Our Future has been in place for roughly four or five years. Prior to that, it was something called Powering Ahead. When I took over as CEO in 2008, we put in the Powering Ahead strategy really in 2009. I took over in late 2008. End of 2009, as we got into 2010 with our IPO, we called it Powering Ahead. That strategy in general, the way we've approached it here, just so that you're informed about our process, we really start with a review of what we refer to as the megatrends. These aren't holistically all the megatrends that are out there in the universe today. They are megatrends that we believe impact the industries that we serve and our business more closely.
We talk about these megatrends, we focus on these megatrends because we think they're important in terms of understanding where they're going to lead us in the future or where they're going to take our industry in the future or what kinds of changes could transpire as a result of these megatrends. If you've heard us talk here recently in any investor events or conferences, these megatrends have been pretty consistent over the last couple of years. We haven't varied too greatly from these. We've added one down in the lower right called Home as a Sanctuary. I'll touch on that in a second.
By and large, they've been pretty well intact, and these are a little bit tightened up from the version you may have seen the last go around, but in effect, they are Grid 2.0, which is the upper-left corner, really underpins much of how we think about our business and how we think about the industries we serve. The grid is going to change, right? Over the next 10 years, the grid is going to see some profound changes. Why does change happen? Generally, industries change because of two primary forces, and that's certainly the case with Grid 2.0: regulation and technology. Those two forces are accelerating, as a matter of fact, and conspiring, if you will, to create a massive amount of disruption in the traditional electric utility business model here over the next decade or perhaps even two decades.
That traditional model, and I'll talk a little bit about that when we get to Grid Services in particular, but that centralized power plant delivering power hundreds of thousands of miles across wires through transmission and distribution down to a meter at your home or your business, that model has been in existence essentially since the days of Edison and Westinghouse 100 years ago. That model is going to change, and the changes that are coming are going to be profound. As we think about megatrends and we think about the impact on those trends on our business in particular, that's a huge thing that we think about in terms of strategy, right? That's a big one. Underneath that, attitudes around global warming and climate change are changing. I don't think anybody would dispute this.
In fact, I think over the last several years, this has accelerated, right? That was even with the prior administration really kind of not really embracing the discussion there, right? We've got obviously a new administration. We've got, I think, a renewed political will to lean into the fight against climate change. Just to be very clear here at Generac, we're not climate scientists. I mean, that's not our role. Our role, though, is to see what is the impact of a changing climate. I think it's very clear. Air temperatures are warming, water temperatures are warming, and that's leading to more severe weather. 70 %+ of all outages come from severe weather events.
As weather severity increases, those extremities, whether they be temperature or whether they be precipitation, whatever the case may be, that is leading to some unique stresses and strains on the nation's power grid. That is a really important trend, obviously, for our business, because a good part of our products serve the resiliency end of the market, right? It's all about reliability for the grid and for homes and for businesses. If we think that power outages could become more frequent and they could be longer in duration, which has been proven with the data we've been seeing over the last 20 years, that has obviously an important impact on our business.
The third mega trend that I'll call out here is that we still believe that natural gas, although a fossil fuel-based product, we do think, and a more expensive one I might add, as of the last week. We do believe it will become or will still remain, I should say, an important part of our energy landscape, if you will, into the future. Well into the future. It has to. As much as we want to embrace lower carbon solutions, and I would argue natural gas is a far lower carbon solution than some of the legacy solutions or the traditional solutions for base load power. We are going to need natural gas for base load power in this country and in the world. Full stop. That's a fact.
That's something that I think that we should embrace as a populace and look to continue to improve on cleaning it up even further, right? The emissions that come from that. The processes to obtain natural gas. We have an abundance of it, not only here in the U.S., but also across the globe. It's a great fuel source for us to tap into. It's fairly low cost, and it's ubiquitous. It can be made even cleaner than it is today. It'd be a missed opportunity to move beyond natural gas. We talk about natural gas as a bridge fuel. You've heard people say that. Suddenly it feels the bridge has gotten a lot shorter when it comes to natural gas. I think that's a mistake.
I think that you're seeing some of the things happening in the grid today, as a result of us kind of leapfrogging existing technologies and energy like natural gas, energy sources like natural gas. We're a big believer in that. Thankfully, we are the nation's and the world's largest producer of natural gas backup power generators. I think we're well-positioned to continue to lean into that trend, and it will be around a long time. I think it can be made even better than it is today. Legacy infrastructure. No question. Maybe we'll get this tomorrow, maybe we won't. I don't know. There's $1 trillion on the table.
I've kind of lost track of the political shuffleboard that's going on there in terms of which bill is being held hostage to which bill, which party is the bad party, which parts of each party are the bad parts that we should be dealing with, which particular senators or House of Representatives, or representatives of the House are pursuing different courses of action there. The reality of it is, we need infrastructure. It doesn't really matter what happens tomorrow. This won't change. We still need infrastructure in this country. That's an important thing. I think any of us that if you're in your travels this morning, right? It's clear that our roads, our bridges, our ports, our airports, all of the critical infrastructure, I would say, I would throw our electrical infrastructure into that. Our water infrastructure into that. All of that is infrastructure, critical infrastructure.
We need investment there because we've been under-investing in infrastructure for some time, and we have to play catch-up now. We have a lot of catch-up to play, and we need that infrastructure bill to be passed. That's a big mega trend that we see, regardless again, of the actual outcome of tomorrow's proceedings. We believe in the telecommunications infrastructure, that the shift to the 5G next generation wireless technology, that that's gonna play a massively important role in our lives going forward. That kind of increase in the reliance on 5G technology is gonna have an impact on our industry and on our business. Because those towers and that network are gonna require a much higher level of reliability than exists in today's LTE or 4G network. The new technologies that are gonna run across the 5G network are gonna be really cool.
They're gonna enable some amazing things to happen. We're gonna need continuity of that network. Power outages, again, if we see that climate change could potentially lead to more outages, then how do we protect and harden the wireless network that we're gonna come to depend on even more in the future than we do today? That's another large mega trend that we believe in. Home is a sanctuary, as I said. This was one that we added last year. I think a year and a half ago when the pandemic hit, it became clear to us that this trend of everything at home, working from home, your kids learning from home, shopping from home, entertaining from home, exercising from home.
Look at some of the at-home plays here, Peloton and others that we've all kind of made our home our sanctuary as a result of the pandemic. I think largely the technology has enabled that, right? I shudder to think what a pandemic would have looked like even a decade ago in terms of our ability to do and the things that we've been doing throughout the last 18 months. I think we would have been in a very different place in terms of the impact economically, in terms of the impact on our productivity, on our daily lives, if not for some of the technologies we've employed and employed very quickly and widespread over the last year and a half. Unfortunately, none of those technologies work without power.
The importance of power, your reliance on power has increased as an individual, as a homeowner, or as a business owner. That increased reliance on power and increased reliance on reliability has made you that much more in tune with the importance of having a strategy that protects your power, whether it be, again, at your home or in your business. Home as a sanctuary, I think, is a trend that I don't think that's going to leave us even as the pandemic fades to memory at some point. I think work has changed forever. I think the way we learn has changed forever. I think all of these trends that we've been talking about, online shopping, that's not a new trend, but it has rapidly accelerated over the last year and a half.
I think it will continue to accelerate, as well as all the other trends we've been talking about. These megatrends are really where we start. It's kind of the apex of our strategic planning process. It's where we start with that. From that, we took a critical look at that this year, and we said, "Okay, Powering Our Future has been a great strategy for us." Again, as I kind of unpack that for you, Powering Ahead, starting out in 2009, we ran that for about six, seven years, which was great. It was kind of foundational for us. Remember, our IPO happened during that time in 2010. We were able to start to do some things there to accelerate strategy because we put our balance sheet in a much better place after the IPO. We started to do M&A.
We really kind of refined that skill set. Up until that point, we had never done a transaction. All the growth we had ever done up till 2010, so almost as a 50-year-old company, had been organic. We started doing M&A around that time, and as a result of that strategy, as a result of Powering Ahead, we also started to become a more diverse organization geographically and with the product lines and things that we did. We learned to operate within a matrix. That sounds pretty basic for large companies, but for our company at our size at that point on the maturity curve, that was a big deal. Those foundational things, learning to do M&A, learning to operate within a matrix, I think were really important foundational efforts for Powering Our Future.
Again, Powering Our Future was four or five years we ran that as well. From that, we really started to see when we looked at the megatrends, we said, "This is a great strategy, but we need to refine it even more." What we're debuting this morning is an update. This is evolution, by the way. Strategy is an evolution, not a revolution. We hesitate to use the word pivot. People get very nervous when that word comes out of a CEO's mouth or about a business. This is not a pivot.
This is about taking the things that we've done really, really well over our history, coupling that together with the changes that are taking place in our industry and in the world today, and taking all the goodness, all the competencies and capabilities that we've acquired and built, and applying them to those new things that we see out there in the future, out on the horizon. As a result, we're debuting our new strategy, which we're calling Powering a Smarter World. There are three core tenets of Powering a Smarter World. They are improve energy resilience and independence, which is one of the first core tenets. We think that that is going to be super critical going forward in terms of, again, talking about reliability and resiliency as a core part of that part of our strategy.
That's something that whether you're energy independent fully or whether you need a strategy around resilience, that fits really, really well into our business. Not only our legacy products, but frankly, a lot of the new products that we've been leaning into here over the last several years. Really important part of our strategy. The second bubble there, or the second core tenet is optimize energy efficiency and consumption. We think there is a tremendous opportunity to be a lot more efficient with our energy, not only in the production of it, but also in the consumption of that energy so that we can focus on sustainability. You'll hear us talk a lot about that.
In fact, a lot of our new business efforts are focused on how we can become more sustainable, how we can help homeowners and business owners become more sustainable, better monitoring of their energy usage, better management of their generation and consumption, obviously, the focus on lower carbon solutions overall. Moving away from heavier carbon solutions to lower carbon solutions. The last core tenet of Powering a Smarter World is protecting and building critical infrastructure. Again, this touches on the point I just made in terms of the mega trend around infrastructure. Many of the products that we build today and that we develop today can be used in not only deploying new infrastructure, helping people build it, but also protect it. We think that that's going to be a really important part of our future.
It's really these next-generation infrastructure elements of power and water and communication, transportation, and other elements. Those are really important kind of changes to our strategy. I think this is really liberating. It's been well-received. We debuted it internally here. Our teams internally have been focused on this for roughly the last month as we've started to roll it out and communicate it. It's been incredibly well-received. I think people really appreciate it and understand it. I think it is much more befitting of the direction we believe we're heading. It's not that we thought we needed to change with Powering Our Future.
I think we could have continued to run that for a couple of years, but I think we might have missed some opportunities to accelerate even faster and lean into some of the trends that we see accelerating out there in the broader marketplace. Alongside of the new strategy, we're also debuting a new purpose statement today. This is also pretty important. We're taking our vision statement and our mission statement, and we're combining them into a single statement. I think that's always been confusing to people, right? You go to B-school, and you're like, "Okay, I got a vision statement, I got a mission statement." The mission statement's kind of how I do things, the vision statement's what I want to be in the future, I think, or do I have them backwards? Companies, even internally, right?
Look, when you run a company, and you guys know this as you either run your own companies or you're members of a team, you want less words. You want something that's repeatable. You want something that you can drill into people's brains, that kind of worms its way in there, and so that people have a clearer understanding of what you are trying to do. That's your purpose. Let's just call it that. Let's call it a purpose statement. You've seen some companies move this direction. I think it's a good move. For us, we wanted to clean this up.
We wanted to take that vision statement and that mission statement and really tighten things up around this Powering a Smarter World concept. The words here, obviously words on a page are just words unless you turn them into meaning and action, and that's what we're going to talk about today. Lead the evolution to more resilient, efficient, and sustainable energy solutions. Full stop. We think that in those several words that are on the page, there's a lot of meaning, and from that will come a lot of action that we're going to talk about, not only today, but also in the future. It really helps, I think our teams and our other stakeholders, right?
It's not just our teams, it's our supply chain, it's our customers, all of the stakeholders that depend on us as a company for something, right? That purpose statement, I think, really has resonated quite well as we've started to kind of get it out there into the wild. I'm really, really excited about this because I can just see how we can line up behind this and really rally behind what this means and what it can mean to us for the future. Let's talk about what as we've evolved our strategy, just what else has evolved here. We're only going back to 2018, which is probably, we could have went back a little further than that. Really, if you go back all the way to 2010, it's like a $5 billion served market. That's what we were dealing with.
By 2018, we had grown that to $14 billion, and I think it spoke to the success of Powering Ahead and Powering Our Future and what we were seeing there. I think we were on the right track, so to speak. What we think we can do by 2024 with this shift into Powering a Smarter World, we think that this unlocks a tremendous amount of additional market opportunity for us, 4x, more than 4x, where we were in 2018. A $60 billion served market opportunity. That is going to come from a number of key drivers. If you look at the bottom of this, I'll just draw your eye to that.
The acquisitions that we've done really just over the last couple of years have really played an important role, not only in how we think about strategy, but the changes that we're debuting today. The opportunities that this enlarged served market is going to give this company going forward come and start from a lot of the things that we've acquired, either the technologies or the learnings, frankly, about the markets that come from these acquisitions. These are only recent, in the last couple of years. I think it's a really important thing to point out in terms of just how transformational many of these acquisitions are. I think what's really exciting is, for the most part, these are very modest costs in terms of what we paid for many of these companies, right?
They were small companies, in a lot of cases, startups that were just in the right place for us that we thought as we think about strategies, we think about mega trends, and what we've done with that, what we've been able to leverage out of a lot of these modest investments is pretty remarkable. Not only for the benefit of all of our stakeholders. You can see it obviously clearly in the enterprise value of the company, I think has grown dramatically. I think the opportunity, right? When I think about the future, I think about opportunity. I know that's how you think about it as well. I think about the future in terms of the opportunity, these market opportunities that have been brought to us through these acquisitions and through our organic efforts, right?
Let's not forget about our home standby business, our C&I gas business, and some of the things that we've been doing for a long time. Those are big market opportunities as well. You tack those on top of the market opportunities that we see from these key acquisitions, and it gets really exciting really quickly. That's what I think when we think about this in the future, you always have to think about what's the sandbox that we've given ourselves to play in? That's really what strategy is, by the way, right? Strategy is almost less about what you're going to do and maybe more about what you're not going to do, right? Because the world is your oyster, and you could do a lot of things as a company.
I think having some parameters around that and defining that as we've done here, although a large circle, I think there's a tremendous amount of opportunity and we fit very well in being able to go after this. I also want to tell you, I want to touch on something because this is really important. We debuted our inaugural ESG report, right? Yesterday. It went live yesterday. It's out on our investor portal, and I would encourage you, if you haven't gotten a copy of that, it's a pretty tight read. It's our first attempt, I think this will be, as most companies would agree, this is a journey, right? This is not a destination.
This isn't something we just do and put it out there in space, and we talk about it for a couple of weeks, do a press release, and move away from it. No, this is really a change in the way businesses conduct themselves, not only in their own operations, but really in how they approach their customers, their suppliers, their employees, right? The governance of their own companies. All the things that go into that they've always been important, by the way. It's not that they were any less important before. I just believe that I think the focus on it is appropriately aimed. I think it's really important. I think for us, we had to do a better job explaining what we were doing because we weren't getting a lot of credit for it, and we were doing a lot of great things.
This report, I think, helps us tell the story a little bit better, a little bit closer to what the mark is. We're putting some metrics out there for the first time. Obviously, we're going to continue to focus on those. We're committed to transparency in this process. We really have nothing to hide. We think we have a great story to tell, and we think that many of the things that we're working on today and focused on for the future fit what the whole ESG landscape is all about. In fact, when you just kind of juxtapose Powering a Smarter World against kind of the ESG goals, and you can pick whatever goals, sustainability goals you want to pick, right? The goals we've selected here are the UN's goals that they put out there.
We've got some really strong alignment with a number of these goals, and others, depending on, again, the source that you look at. I think what it says to me is that take away the ESG piece of that. If we weren't talking about ESG in the way we're talking about it contemporarily today, our strategy is spot on, right? It's really leaning into many of these areas that the UN itself has called out as important for companies and important for us as a populace to focus on. Again, I think especially when you talk about 7, affordable and clean energy, and 11, sustainable cities and communities, I think you've got some really important connections there, some really tight alignment with the ESG goals that have been set. Obviously, this is a changing landscape, right?
Everything from what the SEC may issue for goals, hard goals, and disclosure requirements for companies. That's fine. We're fine. Just tell us what the rules are. We're willing to disclose whatever we need to disclose, and probably more than that. Again, we've got nothing to hide here, we never have. We're a pretty open organization that way in terms of willing to have that dialogue. We think it's an important dialogue when we think that we want to be a part of that in a very positive way. We like the connection between our strategy, and ESG. With that, I'm going to just shift gears a little bit and talk about two particular area that our strategy has led us to.
Actually, I'm going to start the conversation, and then I'm going to hand it off to Bud Vos, who's the President of our Grid Services group. This is something that we just announced recently, I think about a month ago. We call it our Generac Grid Services team, our Generac Grid Services group. What Grid Services is all about, we promised that we were going to talk more about Grid Services at this Investor Day, so we're not going to let you down there. Really, you have to step back a second, and let's frame kind of the challenge and the opportunity. That's what I'll do, and then Bud is going to take over, and he's going to kind of add some additional context and really kind of tell you how it works. I'm not smart enough yet.
I'm still on the learning curve for Grid Services. Bud has been steeped in it, he's been living it for most of his career, he's much more qualified to talk to you about that than I am. I can frame the problem, at least. Because I'm a CEO. That's what CEOs do. We talk way up here, I got those talking points already. I can tell you what's going on in the world, this goes back to more about my comments. It really links to my comments about the changes around Grid 2.0, or maybe even Grid 3.0, if you want to think about it that way. It really starts with the deteriorating reliability in the grid. Again, whatever you believe causes that, right? There's a lot of things.
Reliability, when you talk about an electrical system and the complexity of the electrical system, and you talk about why something didn't work, it's a really complex discussion. There really isn't one thing oftentimes you can point to, right? It's a failure across many different pieces of a very complex system. What we see in the grid, if you go back to kind of the legacy model, right? You have baseload power being produced in large coal, natural gas, nuclear, whatever that format is, and it's sent across those wires, those transmission and distribution lines, down to a meter, and then it's consumed by a homeowner or a business. That model, as I said, has been changing. The first part of the change has really started to happen with technology. The generating sources on that supply side of the equation.
Let's talk about supply side for a second. The supply side of the grid equation, those sources are changing. We don't see the conventional heavy carbon sources like coal as much as we used to, right? That's probably a good thing for the environment. I think we would all agree on that. It's had to be replaced by other sources. Those other sources, while less carbon intense, arguably, like wind and solar, they are more intermittent. As more intermittent sources, frankly, they're more unreliable. There are days where the sun doesn't shine. There are days where the wind won't blow. We're seeing it today in Europe. Some of the challenges with rising natural gas prices are coming from this heavy reliance on some of these renewables, right? Wind generation.
Wind, for whatever reason in Europe right now, is not blowing as hard as it used to. Right? In particular in Spain. Spain in particular is bearing the brunt of much of this, but Spain and the U.K. are seeing much lower wind production numbers. Some of that is because some of the generating assets are offline. They oftentimes will repair them ahead of their heavier use seasons. The reliance on renewables as baseload power is a risky proposition. It just frankly is. You cannot bring on a wind plant or a solar plant, as reliably or as quickly as you can a gas-fired peaker plant. That's kind of just the way the technology gets deployed. As a result, you have the opportunity for supply to be less reliable. It's basically just more beta on the supply side.
As you introduce more beta and more volatility into the supply side, you increase the likelihood that you're going to have some kind of a problem. That five or five nines of reliability that we are shooting for becomes that much harder to attain in the current structure. Today's system is also a one-way system, which makes it very difficult, at least up until recently, to bring power the other way, have power flow backward from areas that you have it available to areas that need it. It's not as easy as just moving some of those things around. Again, the infrastructure underinvestment that's gone on in the power sector alone is really, frankly, it's stunning. It's led to, again, some of the reliability challenges we have.
You talk about regulation on the supply side, regulation is driving some of those renewables, right? These targets that utilities are given for less carbon-intense forms of energy in their generating fleets. Those targets by 2030 or by 2040, they need to be 50% or 60% from renewables. Those targets only work to reinforce the reliability problems that we're talking about here today. What you saw in Texas, that's the most recent manifestation of those problems here in the U.S., right? That's the number one state for wind production in the U.S. You can argue whether wind production was really the core issue back in February in Texas. It did have a contributing factor, because they relied on that wind to be a part of their base load power generation. The extreme temperatures that came with that, of course, caused their own issues.
It also caused challenges on the demand side. Let's switch to the other side of the equation here. Talked about the supply side and the challenges there. The demand side, we want to electrify everything. This is the new world we're going into. Think about your homes today. You think about, of course, you have electricity, right? We've all had that for a long time. You probably have some form of natural gas or propane that might be for your heating or your cooking, maybe even cleaning. You generally rely on gasoline or diesel fuel for your transportation. You have a balanced mix of energy that you use and consume in your own home today. We want to shift all of that to a single source, electricity. Again, in the name of good things, right?
The good things that come from that we believe come from that in terms of climate change and decarbonization. Those are important goals to have. This overreliance on a single energy source creates what? Creates problems for us from a reliability standpoint. If you have three energy sources in your mix of energy sources, and you consolidate that to a single source that you depend on, you have now, by the very definition, by math. It doesn't take a lot of hard math to do this. You can get it with sixth-grade algebra, right? I mean, it's pretty simple stuff. You now have a single point of failure that you've created for yourself with your reliance on electricity.
That reliance on electricity is, again, I think that it's noble in terms of the goals, and it's well-meaning, it's well-intentioned, but it does come with it more risk or reliability issues. We're seeing that play out. As you look at what's going on in Texas, again, I'll point to that. As the climate changes and you get extreme temperatures in that instance, down in a part of the world or a part of this country at least, that are not used to that, right? 65 degrees is cold in Texas. They start bundling up, wearing wool hats, and heavy parkas. Here in Wisconsin, we're running around in shorts until it's just about till the snow flies, and then we start getting a little bit uncomfortable. That reliance on electricity, that's how they heat their homes, with heat pumps and baseboard heaters.
What happened when it got very cold in Texas? The demand spiked. It absolutely went off the charts. You have this supply side problem, and you have this massive demand increase. We've run the numbers here. If you were to change in the state of Wisconsin, We use natural gas forced hot air furnaces in this part of the country, right? That's how we heat our homes here because we get cold winters, and they're long. If we were to change every home in Wisconsin to electric heat pumps with today's technology, baseboard heaters, your home in Wisconsin would require 6x more electricity. 6X. That's an extreme example because of the winters we have here. Just bringing electric vehicles, just bringing transportation over to electrification, that is 2x the power usage at the typical home. Double.
If we all go EV tomorrow, we're going to double the amount of power we consume. You add into that all the other things in the home around heating, and that's not only just your air temperature, but your water temperature, right? Water heating. It's cooking, it's cleaning, all of those things as they move to electric power, that is going to create a massive amount of additional demand. That is creating the setup here on the slide, is creating a problem between supply and demand being out of balance. The company we acquired a year ago called Enbala, which Bud was running, that company, in fact, the name Enbala means energy balance. It's an amalgamation of those two words. That's where the name of the company comes from.
Their entire mission, as Bud will explain, and what we're trying to do in Grid Services, is about helping provide balance to the grid. That's, again, an oversimplification, and Bud will take that a layer deeper. Really what we're trying to do is help grid operators, trying to give them another set of tools to help solve this problem. What do those tools look like? Those tools look a lot like the products we make, and we design, and we deploy, and we sell. That's what they look like. They look like on the residential side, they look like residential generators, gas generators. They look like energy storage systems. They look like load management devices. They look like water heater controllers, right? Company, Apricity, that we announced recently as an acquisition target. They look like energy monitoring devices.
They look like a platform in your hand for the homeowner to control how much power they're generating and how much power they're using and consuming or saving, right? If they need to store more power in a battery or some other system. Then you've got on the C&I side, well, that looks a lot like stuff we have as well. It looks like C&I gas generators. It looks like energy storage systems, like the Off Grid acquisition that we recently did. It looks like control platforms, like what we've done at Deep Sea and MOTORTECH, a lot of those components, and a lot of the microgrid controllers also in those technologies. We've got, we think, a lot of great assets. If we just think about the assets for a second. We've got a lot of great hard assets that would. Let's talk about a C&I generator.
Erik Wilde, who runs our C&I business, is going to come up and give you a couple more hard facts on this. Take a typical C&I gas generator. If you run, let's say, a distribution center somewhere, right? We sell them to Amazon, we sell them to others. If you run a distribution center, your reliance on power is pretty critical, right? The power goes out, your distribution operation likely stops. We're all measuring productivity. We used to do it hour by hour. Now we do it minute by minute because that's the world we live in today. Your productivity starts to suffer every minute that there's an outage. Most distribution centers today will have a backup generator of some sort. They do that solely, up until this point, solely for reliability. That has been really the reason for the deployment of that asset.
Think about that. It's a relatively expensive asset. It sits there waiting for a power outage. It's an insurance policy, right? It's an asset that's completely underused. When you really think about it's underused, and it could be brought to fuller effect. It could be brought to more productive use if it could be deployed for that productive use. In this case, the productive use we're talking about is helping balance the grid, that supply and demand problem. In that particular instance, it'll be putting more supply onto the grid. Perhaps it's a demand response program. It's taking the load, that distribution center load, off the grid, again, to help the grid balance supply and demand, to help those grid operators and those utilities that are facing this ever-mounting challenge of keeping their grid balanced. By the way, Texas, go back to that example, February.
The grid was out of balance in Texas. What happens when the grid goes out of balance is the frequency of the power, right, the sine wave of the actual power, if you were to measure the frequency of that, started to drop, right? It started to droop, as it's known in the industry. It was down to 59.8 hertz, 59.7 hertz. If it had gotten much lower than that, as frequency drops, you can do massive damage to the actual hard infrastructure of the grid. The Texas regulators, it was estimated, were eight minutes away from a complete meltdown of the grid. That's not a Generac number. That's ERCOT's number. ERCOT, which is the governing grid body there in Texas, said they were eight minutes away from basically destroying really important infrastructure. It would've taken months to get that infrastructure rebuilt.
Their only choice was to take people off the grid, to drop load. They had to drop load everywhere. That was their only choice to save the grid. That's the kind of challenge that grid operators are going to be facing here going forward. That's the kind of challenge we think that our Grid Services team, that Bud's going to talk to you about, can be a big part of helping them solve. That's really what we're talking about here when we talk about a DERMS system. What the Enbala team developed is a platform called Concerto. Concerto is really a way to control, to manage those assets. They enroll them into the system, and then they dispatch them. They aggregate them for dispatch, for use in virtual power plant-type applications for utilities, grid operators, energy retailers, people who would find value in that.
It's fascinating, really. The ultimate goal here is decarbonization, digitalization, and decentralization of the grid. That is the underlying trend that is driving this. We have great assets on both sides of our business, residential and C&I, and we have a platform and now a team that can deploy that and make that a reality. Really exciting stuff. Bringing this to a close in my section before I turn it over to Bud, is the fact that what you're going to see from Generac in the future here is a much higher percentage of our revenues coming from what we refer to as energy technology applications. Today, those ET or energy technology applications represent about 8% of our revenues, right, on our 2021 E, that $3.7 billion midpoint of the range number.
We believe that the direct energy technology application revenues coming from not only Grid Services, but obviously the assets that are deployed directly to affect Grid Services as well, will represent 26% of our revenues by 2024. That's only part of the story, though. Probably even more exciting is what we've been working on over the last year since the acquisition of Enbala, is to take every single asset we have in our portfolio that makes sense to be deployed as a distributed energy resource and make that what we refer to as Smart Grid-Ready. That oftentimes is nothing more than just updating the controls or perhaps the APIs that go back to the Concerto platform. Creating a very deep level of integration between those assets and the ability to be connected and deployed, aggregated into a VPP through the Concerto platform.
That will represent another 41% of our revenues going forward. 2/3 , if this all works out the way we're saying it will, 2/3 of our revenues coming from this business in 2024 will be from energy technology or at least those assets that are ready to be deployed in a Grid Services-type program. Really exciting stuff. This is, I think, really what gets us excited about our new strategy. It gets us excited about the mega trends that we think we can be uniquely positioned to be a part of. I think we've got a ton of competencies and capabilities that we've put together at Generac, not only over the last couple of years, but over our 62-year history.
Our knowledge around not only the products we build today, but the codes and standards and technologies that are being deployed on the grid, I think are really, really important to our future success here. That's something that as we think about this, that's what gets us really excited. On that point, I'm going to turn this over now to Bud Vos, who is going to take you a little bit deeper into Grid Services and again, give you, I think, a lot more color on that background. With that, Bud.
It is truly thrilling to be here today. Thank you very much, Aaron. Thank you to the team. I want to just start before I go into Grid Services, just to take you back roughly one year ago. When the Enbala acquisition was nearing completion, we were, of course, in our final discussions, and we were negotiating things. Putting that aside for a moment, Aaron and I and some of the other management team members had a pretty deep conversation about what the future of Enbala is going to look like. At that moment in time, Aaron simply said one thing, which was, "Don't worry. We have a plan." The plan was big. The plan was bold.
I'm really, really proud to be here today to talk to you about that plan as we continue to unveil the Grid Services group and the team members that we're building behind the scenes to ultimately build a significant portion of this business. To Aaron, I just say thank you for trusting us, bringing us along, and actually allowing the Enbala team to now complete the mission. When we did the acquisition, we weren't done. We hadn't completed the mission. Now we have the opportunity to do just that. Let me start, first of all, by level setting, going a layer deeper into just exactly what are Grid Services, how do they play, how do they interact with the grid?
Aaron did a great job in terms of setting the stage of the supply-demand imbalance and looking at ultimately what's causing the needs of this technology and the need of us to actually step in and provide some of these key technologies. I do want to emphasize one key element in all of this, which is, as Aaron said, what's being driven, what is ultimately driving our customer base, is really around these three fundamental core elements that we're seeing across the grid transformation in and of itself. Deep decarbonization. Utilities today are being driven by either state regulatory needs, legislative needs, or frankly, political will to deeply decarbonize the grid. That fundamentally changes the game. Everybody in this room today has a cell phone. Most of you have a laptop or a tablet sitting in front of you. Everything is becoming a digital asset.
Not just the assets that sit on the grid, not just the elements that sit creating power or consuming power, but every single aspect of your life, from your vacuum cleaner to your toaster to, yes, your refrigerator. They are becoming digital assets. We now live in an entirely digital world. You take that transformation, you combine it with deep decarbonization, you now have a decentralized system. These three fundamental aspects of what we're seeing in terms of trends is going to continue to push every utility grid operator, energy retail provider, to not only provide reliable, clean, and resilient energy for their customers, but also to provide new services, new ideas, new programs, and innovate.
When you do that, and you start seeing all of these assets appear on the grid, and we have a picture here of a grid that you might see in a normal environment. All the little blue things that you see on this chart begin to appear. Boy, that changes the game. As Aaron said, we built a one-way system. We've had a one-way system for 120 years. We're now trying to take a one-way system and turn it into a two-way system. We're also looking at, ultimately, how we electrify things. We're seeing electrification not only at the home level, but think of things such as fleets, Amazon, distribution centers, et cetera. We see campuses moving towards a more resilient concept around microgrids.
Again, a lot of the products and technologies that Generac brings to bear play a role in the ability for our customers to build campus microgrids for increased resiliency and reliability. We see grid-scale renewables becoming a major portion of the grid at the supply side. Ultimately, if you're a grid operator or an energy retailer or an electric utility, all of the items that you now see emerging here in terms of intermittency, resilience, maybe even the fear around grid defection, energy trading, and volatile energy markets, changes the game. Our current Chairman of the FERC, Richard Glick, just two weeks ago announced as they were looking at an order called FERC 2222, and there are hearings going on around that we are clearly, obviously, in a major transformation. We've seen these types of transformations in the electric grid before.
They typically take many years, perhaps decades, to ultimately go through. When the transformation is done, we look backwards and we realize that we've created an entirely new system, an entirely new way of doing business, an entirely new way of utilities and customers interacting. We are at the beginning of that transformation now. Many of you say, "Great, I understand the physical aspects. I know that the transformation is occurring. I understand that electric cars are going to emerge, but where's the value?" Well, the value ultimately lies in two fundamental aspects for most of our customers. I want to mention that as Generac, we believe that this journey is about partnering with utilities, grid operators, energy retailers, aggregators. We want to be their partner in this journey. We want to help them unlock the value.
You start with economic value drivers, everything from participating in wholesale markets in a new way, offering ancillary services or capacity services, things like demand response, which we've had for years here in this country. Now they're becoming more and more valuable. They're becoming more and more important. Perhaps we're helping our customers reduce their costs. Just simply don't upgrade the substation. Let's use a new set of resources and assets to mitigate the need to do that substation upgrade. Those are all the economic drivers that we partner with our customers to find. There's a set of technical drivers that are ultimately needed. Deeply technical because, as many people have said, the grid is the most complicated machine that we've ever created on the planet. They're deeply technical. It is a complicated system.
In order for it to actually operate, remain resilient, remain reliable, you have to solve significant challenges in terms of managing variability, managing things such as VAR aspects. We won't talk deeply about that here too much today, but it is an important aspect when a system engineer with any utility stands before us and says, "You want to operate all of these systems with software? Make sure you don't break the system worse." These are deeply technical value drivers that ultimately have to be unlocked. The Concerto platform, which sits at the core of the Generac Grid Services offering, is capable of doing both of these things. It is a real-time platform. Because it is a real-time platform, we can solve some of the most demanding optimization problems and challenges that we see, and it helps unlock the economic value.
You will see a demonstration of this platform through the course of today in our innovation experience, and we'll talk a little bit more about that, and we'll talk some about some of our most extreme use cases. Understand that at the core, the value is driven both economically and technically for our customers. When we do this and when we do it right, everybody wins. This is one of the easiest things to actually talk about, which is there are four key stakeholders from a Generac perspective that help us make sure that we're delivering this value and that everybody wins. Obviously, the utility, and we'll talk a lot about the value that we create for our utility customers. The end customer has to be fully engaged.
They have to see some value, an ROI perhaps, on these assets and elements that they're putting inside their home or their business. The dealer, a key distribution channel of Generac, truly a game-changer in terms of our ability to reach the customer. The dealer has to see value. They have to be incorporated into the value chain or the distribution network, whether it's a dealer or a distributor. Lastly, the regulator. Regulators show how they're on this path towards either clean energy or key renewable energy goals, and we help them win because we help them accelerate those goals, perhaps even achieve them sooner than they had planned. When you have multiple stakeholders winning, when you have a core technology, and you have the ability to deliver value to your customers, frankly, you start to ask yourself the question, well, why Generac?
Why not just any other company in the world? Because we have unbelievable leverage inside of Generac. It's one of the reasons why we were thrilled when we were acquired and joined this great company. The leverage fundamentally comes from the fact that this is an engineering-driven company building products and technology that are fundamentally built around solving these challenges. We combine the 2.3 million to 2.5 million existing Edge devices, plus what we're deploying out over the course of the next five, 10, 15 years, and we integrate that with a fully integrated customer experience and, again, that distribution network that is second to none in the industry. We bring every single one of those assets and connect it to the platform. When we bring it to the Concerto platform, we now can unlock the value.
When we unlock the value, we then wrap it with fully integrated services and support, network operating services and network technology, and the 24/7 capability that, again, nobody else in the industry can truly deliver. We ultimately wrap all of those capabilities together so that we can deliver value to our customers. There is no company, in my understanding of this industry and everything that I've done in this industry with about two decades of experience, I can truly say I don't think there's another company capable of doing this type of achievement as Generac is. It's truly second to none. You get the Concerto platform, you understand it, you put it, you deploy it. What now? Well, this is the key to a platform. The platform allows our customers to continuously innovate. It is not a single solution.
We solve all kinds of different grid challenges and problems, and once the platform is in place, we enable our customer to perhaps look at new revenue streams, build new programs for their customers, operate the system in a different way to perhaps create more cost-saving initiatives. Fundamentally driven by this is the ability to help their customers, the end customer, have a more reliable, more integrated, and improved customer satisfaction experience. Core to the platform itself is the ability for us to grow with our customers. We talk a lot with our customers, utilities, and grid operators as a single pane of glass. It's one system that allows you to do multiple things all at the same time. When we bring that platform forward, we then give our customers the ability to innovate.
Innovation is fundamentally what's going to happen as we continue to drive these changes inside the grid. Transitioning now into, well, what does this look like for an actual customer? What does it look like when Grid Services, the Grid Services group ultimately works with a utility or grid operator? We fundamentally have three different types of contracts that we build upon as we work with our customers. First one is pretty simple, it's pretty straightforward. It's the core of the Enbala initiative that we did for five years, building a key optimization DERMS or VPP platform that's really delivered to our customers in a software as a service model. Roughly, we can see what our price ranges would look like on a megawatt or a kilowatt basis on an annual basis. Really, it is basically operating the software platform on behalf of our customer.
As we joined Generac and over the course of the last year, we've started to now wrap this with more and increasingly turnkey-type contracts where we increase the scope and we help our customers deploy the technology faster. Ultimately, we may help those customers reach end customers through distribution channels. We might help them with marketing campaigns. We will even run portions of the back office, and we're doing programs like this today, helping utilities in places like California and N.Y. and others deploy our PWRcell products faster. We're helping the utility bring a better solution, and we're wrapping all of those technologies together and then providing that turnkey service. Ultimately, some of our contracts look more like a performance-based contract, where we are not just required to deliver the services and the hardware and the technology, we have to deliver the megawatts.
The value of this dramatically increases and our ability to create a fully integrated solution for our customer ultimately improves. You can see here the scale in terms of the types of pricing, the types of revenue models that are ultimately in place. Ultimately, that's directly correlated to the amount of work that we're doing as a business. Fundamentally, we believe that the grid and the transformation that we're going to see here is going to take on multiple different flavors, all three of these flavors we will see, because not all utilities contract the same way. Some utilities and grid operators might contract directly for performance-based contracts. It's the world that they like to live in. Others like to build the technology themselves, and they want to bring in key vendor partners to help them deliver the software.
Generac Grid Services is here to partner with those customers, partner with those utilities. We will work with you the way that you want to contract. Building upon our base of key software-as-a-service-based contracts that Enbala established prior to the acquisition and since that time, we're going to see a rapid expansion of our contracts. We believe that fundamentally, over the course of the next couple of years, you're going to see us start announcing a lot more turnkey-type contracts, a lot more performance-type contracts. Ultimately, the value of those increases. It takes time. Not only is the sales cycle long with these types of customers, building out the network, ultimately capturing the value of those assets deployed at the edge of the system, it takes time. That's what's going to create a scalable business.
For our key stakeholders here, what is important about these is in one aspect of every one of these contracts is that these are recurring revenue contracts. These are not one-time sales, one-and-done-type initiatives. These are recurring revenue, and when you begin to stack and build that revenue over time, it is creating enormous value. That value ultimately is passed on to our stakeholders, our employees, the ability for us to grow this business and then continuously reinvest in the business. That is what makes me excited about our opportunities as part of Generac and ultimately growing the Grid Services business. You might say, great, where are you going with this company or this part of the company, and how are you going to ultimately tackle the huge market opportunity, and how big is the opportunity?
Today, we sit today with about 1.1 GW of connected capacity to the Concerto platform. It's about 18,000 assets themselves. Some of our key customers you see here that have been great partners of ours for many, many years and continue to be our partners as we go forward. Some of these examples go from everywhere from Australia to Europe to other parts of North America, really, really key innovative utilities doing all kinds of different things and solving very, very different challenges. We've also grown a very, very large ecosystem network. We believe in the power of an open platform. We believe in the ability for all of these partners to participate. Even though we're part of Generac, we will continue to maintain our open standards approach, our open APIs approach.
We'll continue to work with key partners to deliver and deploy our technology. These partners are actually what helps us grow the network even well beyond just the elements of what Generac can deliver. They create enormous value. Where is this happening? We're seeing these types of grid transformations occur all around the globe. You really can't open up an energy news feed today without hearing about stories from places like Australia, where we're putting massive amounts of solar on the system, to places like Japan, that has undergone a fundamental transformation of their grid and network following the Fukushima disaster, to places like Europe, where we see renewables being at such a high level of penetration that as Aaron said, we're now seeing other types of instability occurring.
Of course, right here at home in North America and Canada, where we're seeing massive grid transformation, grid modernization projects, or renewable energy projects. This transformation is global. Fortunately, we're part of a global company. We can capture that value. Of course, we're focused very heavily here on North America, but we are looking at how we're going to expand, and I think you will hear the Grid Services team talk about global expansion and work that we're doing with key utilities and grid operators all around the world. What is the opportunity? You're going to see one instant number is going to jump off the page at you here, which is we believe the served market capability is around $6 billion over the course of the next couple of years.
That $6 billion number comes from looking at all of the grid edge devices that are ultimately being deployed on the network. Whether those are our own types of generators, home standby, C&I, C&I solar, storage, water heaters, smart thermostats, electric vehicles. This is a company estimate where we took many third-party sources, and we looked at what are the numbers of these devices that are going to be deployed, and then what is the grid service value that can be created if we're able to flex a thermostat, if we can move a generator, if we can flex an energy storage device. How many megawatts does that create? Ultimately, how much value can that create?
We believe we can become a major, significant component of building out the Generac business over the course of the next couple of years by tapping into this $6 billion market. We're going to tap into it by continuing to expand that ecosystem partnership, expanding our platform capability, and of course, partnering with many, many more utilities and grid operators around the globe. I want to thank you for your time. With that, I'm going to be introducing Kyle Raabe, who's going to be talking about our home standby opportunities, and he'll touch a little bit on the distributed energy resource mix that he's looking at as well. Thank you.
Good morning, everybody. Appreciate, again, you taking the time to be here. Got some really exciting things. I think Bud touched on something, big and bold, right? Big and bold concepts, big and bold ideas colliding with what today is Generac, big and bold already. I'm going to talk to you a little bit today about some things that you know. Those of you that have been with us for some time, you'll get a little bit of history that is part of who you are and what you know about Generac. Those of you that haven't been, I'm going to bring you along a little bit to a story of where we were, where we are today, and then how the things that Aaron talked about this morning already collide with what Bud has just walked us through from a DER perspective.
We talk about some of the mega trends that are out there in the market today. As Aaron walked through six of the most important ones that have huge relevance to Generac as a complete organization, when you get closer to it and you start to bring it down to how do we execute against these mega trends and which ones are significantly important to who we are as consumer power here in North America, I show up in the screen and online in front of you, three that we focus on every day. When I think about home as a sanctuary, we talked about all of the things that go into someone and how they think about their home today versus one year ago, versus two years ago.
One of the things that you see up on the screen is that it is about working, it is about learning, it is about spending more time in the home, but it is also significantly about aging in the home. Less tolerance for those minor interruptions that used to be something that you'd walk away from, used to be something that just rolled off your back. As we become more dependent, our tolerance as a society, as an American, comes down because it touches us more frequently. We're not at work anymore. We're not at school. We feel every blip, and the sensitivity to what goes on with the grid, as Aaron explained, as Bud explained, continues to touch us more and more frequently.
In addition to those regular touches to the consumer, while we shift our dependence towards energy, towards electricity, our attitude, the way we think about global climate continues to move. The weather, as I'll talk to you here in a little bit, continues to have a greater and greater impact on everything that is creating an electrical environment for us to consume. The outages that we've experienced here in the last 12 months, very different from what we saw two years ago, three years ago, four years ago. As all of that happens, we continue to put more and more demand, more reliance on the grid.
Of course, not only because we believe that that is a great way to decarbonize everything that we do, but also because socially, it becomes a way that the government is pushing us to think and to believe that we're doing good for the long term of the environment. How do we monetize that? How do we go after that opportunity as consumer power? We take a look, and I'm going to walk you through what that traditional market looks like today, what it looks like in 2021, and how we believe that's going to go forward. In addition, I'm going to bring together some of the unique positions that we have through the technology, distribution, and the path that we're going forward as we meld the technology into the market. Rolling backwards here, five years of power outage history.
What you see on the screen is our correlation to our organic business as power outages continue to rise. Just checking out the blue bars, you look at the last 12 rolling months, three of the largest quarters in the last five years of total outage influence has been experienced over those three quarters. Q2 of this year, looks like it took a little bit of a breather, right. When I think about Q3, which is not complete yet, you think about what went on in Michigan right at the start of the quarter, Ida affecting Louisiana, Ida rolling up the East Coast, right. Michigan again just a few weeks ago. We fully expect Q3 to look much like you see Q3 of last year, Q4, and Q1. What's also really interesting is just the impact of Texas, right.
one outage in Q1, one major outage that is, that really exploded awareness of how sensitive the grid is and how bad it can be in just one fell swoop. As Aaron mentioned, turning off the power, three days, in a state that's never seen weather like that before. At the end of the day, the outages keep rolling. They keep getting bigger. Because of social media, because we experience it, because we're at home, right? The sensitivity that we have continues to be a major catalyst to homeowners every day raising their hand saying, "I need something to solve that problem.
I'm not willing to deal with it because of who I am, because of what I do, because of my age, or what I need to go on every day in my life." As we think about outages, I wanted to share a little bit, and we haven't gone this far with you in the past as to say, "Well, hey, how are we utilizing all of this opportunity to actually penetrate the United States?" There's a couple of things that I want you to take away as you take a look at the map behind us. First of all, I'm going to explain it here a little bit. As you see the colors going deeper, that's total home penetration within that state. If you look at it, you say, "Okay. Hey, Kyle, that's great.
We've got Maine, a really rural state, West Virginia, a really rural state. You can see how we penetrate those populations and those households. You roll down a little bit deeper and you take a look at Michigan, high population. Louisiana, certainly been affected by outage after outage, storm after storm, year after year. We would expect those states to look the way they are. What I think is really great is we take a look at some of those dark green states, as we take a look at those areas that are now starting to approach 20% penetration at the household level of our serviceable market. You pan that out across the entire country, you see, hey, we're getting close to, and we will end up this year on 5%, almost 6% of every home in America having a standby generator. That's an impressive number.
You look at the map and you say, "Well, hey, there's a lot of wide open space." Look at all the light color. Look at all the white where we're sitting sub 5%, sub 4%, sub 3% penetration. Wide open spaces that when we take a look and we watch power outages happen, not just in the areas that are traditional, up and down the East Coast, and even the state of Michigan. As we watch power become irregular to homeowners in Portland, Oregon, in Oklahoma City, in California, areas that aren't used to having their power taken from them, being stripped very, very quickly. The ability to go penetrate those wide open spaces is what we see as fantastic opportunities to grow. The reality is, you'll hear me say this again, having a standby generator is no longer a luxury item.
Having power available when you want it, when you need it, is not a given right. It's something everyone is going out, looking to acquire, and as Generac, we're here to provide it in any way, shape, or form that you need. If I peel it back a little further and I start walking through a little bit deeper, two of the lightest states that you saw on that map, one being California. We've been talking about California for a couple of years now. Since 2019, when the PSPS event started happening and California started turning it off the power. PG&E started regulating who was going to get that power to minimize impact of fires, right? The fires to impact larger disasters going on. We started working very, very hard.
When you look at how consumers are reacting to our marketing efforts, our ability to grow the business, our ability to provide products and solve a problem that will pop up irregularly to those homeowners, we're seeing 2.5x growth of consumer interest just over two years ago, since 2019. We continue to execute on that demand. We continue to execute on homeowners just not being able to put up with it. Our dealer base is now 600 dealers and more and growing, continue to install, drive product, quote, work with municipalities, and put home standby generators on the back of homes in that state. We're just scratching the surface. That's the most populous state in the country. You think behind that, roll that down to Texas, where there's another 4 million homes. We've been great in Texas for a long time.
We've been great along the coasts. Right? Houston, Corpus, all up and down where storms generally plague the population. What happened in February and March actually opened up the entire state. Areas where we had harder times penetrating because the power just was frankly more reliable. It was a single season. You go to North Texas, right? You go to the Dallas metroplex, weather. It's cold. You get ice storms from time to time. Was there great impact? No, there wasn't. San Antonio, Austin, all of those metropolitan areas are now becoming what we call a dual- season market. In fact, the state of Texas is a dual- season market. The coast, very, very worried about hurricanes, about storms coming off. The rest of the state, very, very worried about being frozen. Not something that they've worried about ever in their history.
When you take a look at just those two states, our focus to go penetrate those two populations, every time we move up 1% in just those two states, it's another $500 million. Those are subpar states from a penetration perspective. We really see these two markets as a place to go grow alone, let alone Oregon, let alone Oklahoma, let alone Michigan, Illinois, and all those other states that are regularly seeing outages that we've been working in for a long time. As Aaron and Bud mentioned a little bit earlier, we're in a different position than we were a year ago. Generac now has a dual value proposition. We go to the left, providing a resource to the grid at the home level.
Bringing on the Enbala technology, bringing on the Concerto platform allows us to go work with the 2 million units plus that are installed today, along with every unit that goes forward, to create what is really a backup plan for the grid. That grid operator obviously has to be on board, and we're going to rely on the technology and the partnership that we have with that grid. Being able to provide a value for more than just emergency standby for that unit to the grid is one brand new way that we're going to help take market share and help present our products to that homeowner that's having a problem. Number two, if you take a look at the homeowner value proposition, for years, 60 years, we've been talking about how much we are an insurance policy, an assurance policy, right?
You're assured when your power goes out, if you have a Generac, we've got your back. We've got all control of your home, you're not going to notice the difference. Well, tomorrow we do that, we allow that individual, that homeowner, to get cash back, to be, from an ROI perspective, in a better position than they were yesterday. That 22 kW, that 10 kW that sits in back of the house, that sits on the side of the house, is now something that not only pays them back, you get an ROI, they're participating in the entire community. They're participating in helping the grid be sustainable for more than just themselves, for the entire community. How do we take and bring that all together? We talk to you very frequently.
In fact, every quarter, we talk about how many dealers we're bringing on, how many dealers we're growing inside of the U.S. and Canada. We shared with you a couple of quarters back that we're pushing up north of 8,000 dealers across the U.S. and Canada. Why is that so important? That's important because every solution that we bring out, every new technology, every way that we need to talk to a homeowner, it's great to be on the web, it's great to send emails, it's great to connect with them socially and digitally. To have a dealer sit across the table and talk them through the benefit, not only now of backup power, but of all those other things that a home standby generator brings to them, is something that no one else has. An extremely unique position in the market today.
Those dealers are also the backbone that when these units are running, when they're being flexed, when they're being utilized, they ensure that that homeowner is good every single time. The maintenance, the support, the monitoring, the engagement into new programs and platforms, that dealer network helps us above and beyond any other competitor in the market. We leverage that every day in and day out. Having 8,000 dealers in all the retail outlets and wholesale outlets that exist, we have an unbelievable competitive advantage when you think about bringing a consumer into the market. We started this process years ago. Way back in 2015 or so, we launched our first infomercial, right? The first real mass advertising and marketing to bring someone in. You can see the ramp up. Obviously, Mother Nature helps us out, right?
Obviously, the outages in California are helping awareness. Every time that touch comes to the homeowner, our brand is there, and we're bringing them into our ecosystem, our lead system, into the funnel, and to deliver over to a dealer in a way that no one else can. The ramp that you see to the right there, we're well beyond double just two years ago in the way that we attract homeowners and the way we bring them through to our dealers. On the right-hand side, what you see is what it costs us to get them there. You can imagine the leverage, right?
The same advertising, the level of sensitivity that a homeowner has, the brand that's been out in front of the consumer for years now in some of our traditional markets, and now is building huge in California and is expanding beyond our expectations in Texas, is really driving the efficiency that we need. When we think about advantages that this brings, more people, better cost structure, handing it off to more dealers than ever before. It's really creating something powerful. As I walk you through that process and we deliver those leads to the dealer, I want to talk about a little bit of an investment that we're making. Actually, it's a really big investment we're making. Those dealers, those partners that we have in the market, are our mechanism to lock down that homeowner and close them.
Years ago, we invented something that I believe we introduced to all of you. For those of you that are new to us, it's something called PowerPlay. It's our sales ecosystem that grabs a homeowner, brings them into our system, our network, our platform. We deliver that homeowner to a dealer, right? The dealer goes, does their work with the homeowner, proposes the solution, which we have visibility to, and then closes the deal with the homeowner. Our new platform, which is launching here in Q4, is a reinvention of the product that we invented back in 2015. The concepts and the advancements that we're going to see here will manifest themselves all the way through from the start of a dealer knowing exactly where they are. Dealers who've expanded their sales forces now will have visibility to how is every sales team member performing?
Where are they winning? Where are they losing? What products are they good with? What products are they failing at? What markets are they having trouble succeeding in? What markets are they winning in? Full visibility between us, Generac, and our dealers to successes and failures. We're going to deliver a better level of knowledge on the home from the second we pick up the phone call, from the second that we take the web inquiry, grabbing pictures, grabbing profiles, home loads, sizing, delivering that to the dealer, delivering that to the consumer, having visibility here at Generac to, again, understand, where do our products win? Where do they lose? How do we best solve for a homeowner that's had something presented to them and it didn't hit, it didn't strike home, they didn't buy? What did we miss? How do we go back with a better solution?
Because we know everything about the process. We know everything about the home. One of the other new technologies that we're bringing, which is really innovative in the home space, in the selling space, and certainly in the consumer management space, is a warm transfer. If you think about it, if you call into a manufacturer and they say, "Yes, I'd like to schedule an appointment, and I'd like to have a dealer show up at my home on October 31st ,2021." Hey, great. What happens? We put them in a digital system, the dealer picks it up, and there's a call back. Sometimes one, sometimes two. Do they miss, right?
How long does it take? The technology we're putting into place is really to enhance the consumer experience and get them to a point where we have them on the phone, we pass them right to the dealer, a person on the other end of the line, warm transfer on the phone, find out the problem, let's schedule a date the first time. Let's get to the home the first time on the date that we committed, and get the Generac solution on their property, solving the problem. We'll also be integrating financing, as you can imagine, as people continue to invest in their homes, of all ages, of all demographics. The ability for us to finance that over a longer period of time continues to grow. We're going to bring that right to the kitchen table.
We're going to bring that right to the page, right to the website, right to the Zoom call, right to the virtual consultation. Let's get approved for financing and get that hurdle out of the way. Last but not least, and maybe the most important, is the ability to sell add-on functionality. As we bring on Grid Services, as we bring on Tank Utility, as we bring on remote monitoring, this platform will allow us to train and teach our dealers how to sell those new technologies instantly. It's great to have a webinar. It's great to have a deck that you learn about the new technology and then go out to sell it. It's better if I have a cloud-based platform that tells me exactly how to talk to it in front of a homeowner, that tells me exactly how it integrates into the solution that the homeowner has.
As we grow as an organization, this platform is more important than ever to be able to bring our dealers along with us as fast as we're moving today. All of this happens. We bring more consumers in, we grow our dealer base, we close at the homeowner level at a better pace. How do we fulfill? Our fulfillment from the beginning of 2020 through Q2 of 2022 next year, will be 4x what it was. Investments in our Whitewater facility, which you're going to see this afternoon, to increase the output. Investments in our Jefferson facility to add home standby assembly.
Certainly, as you're all aware, investments in a brand new facility down in Trenton, South Carolina, will get us to a position, again, 4x what we were before, but it will enable us with the production, with the output, to manage the base business and have headroom to serve in the case of surges. It's a difficult business. The grid can be calm, the grid can be smooth, there can be low levels of outages, and then within a split second, within days, it goes down and your homeowner demand goes from one level to 2X, or it goes from level one to 3X. Well, our ability to bring air-cooled home standby generators, as well as ramping liquid-cooled home standby generators, we talk about that a lot less frequently, but the demand there, especially with Texas, especially with the South, continues to increase as well.
Our overall output, 4x, to be able to deliver to the consumer ultimately what's been designed, what's been promised, and what's been committed to go on their home, either solve an emergency problem when the power goes out or to participate in Grid Services, helping themselves and helping the community that they live in. Bring it all together here. We're in a pretty unique position between the way we attract the customers, the products we have, the dealers, the way we sell, the way we close, our ability to produce, all unmatched in the industry. It's a great position to be in.
Couple that with a new value proposition to the homeowner, an ROI for a homeowner on an emergency standby device, an ROI on something that used to just sit in the backyard, sit on the side of the house, waiting to run once a year, once every other year, just simply being maintained. Brand new way for every homeowner to lean in and say, "Yeah, that makes a little more sense. I can get my head around that." Couple that with our ability to help the grid, to stand as a backup network, 2,000,000 strong devices today, and every device going forward, smart grid capable, able to be connected to the web, able to be connected through the Concerto platform, able to turn on when the grid needs it, not when the homeowner needs it. Pretty unique value proposition. Where does that put us?
Took us 26 years to hit 5% penetration. We're going to go from five to greater than eight in less than four years by 2024. That's a powerful statement. It's not a luxury item anymore. It helps people live their lives. It helps feed the grid. It helps keep everyone stable going forward. Thank you.
Thank you, Kyle, and thank you, Aaron and Bud. We're making great time here regarding our agenda, running a few minutes early, actually. Just a quick side note for anyone who still needs it, the Wi-Fi password is hashtag PowerStage with a capital P and a capital S. That's hashtag PowerStage, capital P, capital S. Regarding a break, let's take a 15-minute break approximately, and then come back here, let's say at 10:25. We'll take a break right now. Thank you.
We are going to Texas College of Optometry. We are going to Texas College of Optometry. It's unfortunate, and it turns into another permanent project. How you doing, man? Congratulations.
Appreciate it. Good to see you.
Yeah. Big stuff.
Yeah. Hey, how's it going? David Ruderman, Dave, Endurance- Yeah. In California. Okay. I've been on the Zoom boxes. Oh, okay. All right. Good to see you.
I saw you in August.
In California, I come down. I did. There's some good weather out here. Beautiful day.
Yeah.
Important.
That's gone well.
Yeah. Yeah.
Good job.
Being there is important. Good. Good. I'm glad you could make it. Yeah.
Oh, I didn't see you.
kind of questioning whether you're sandbagging on the numbers. The market traded that way almost the entire year.
Yeah, fair enough. This whole thing.
Yeah. Well, I own the company, so who's to say that I'm not sure.
Jump in.
That wasn't the MO behind it.
So from point of interest-
York's going to unpack that a little bit more.
For the market, we're two and a half billion dollars.
We've always been somewhat conservative.
you guys-
Maybe I wouldn't say it's overly conservative. I mean, I thought.
Let's round up to 6%.
Two and one percent is two and a half.
That's two points. That's roughly $3.7 billion.
More than double.
Plus whatever it is.
More than double.
Why is the 2025
We're assuming it'll be a single juncture that year.
Punk that. I'm going to punk that one back to you. All right. Sorry.
We can handle that internally.
I'm honestly just talking about the Grid Services piece and how that's playing out.
Other years. Well, you can't. You can't.
Sorry.
Our guys-
It is I mean, it's a good question. It's a solid question.
We don't. Definitely. This is going all right. It ends up being a three option kind of stop.
David, are you jumping in on this point?
Yeah, because I'm a former sell side, now on the buy side.
Sure. You get cornered by two sell side analysts.
Long the stock, even though I do run a hedge fund. Okay. Fair enough. Appreciate the full disclosure. Yeah. Like the guys in Shark Tank that I have to swim with probably beating the shit out of the stock right now. I'm buying it, but I. Well, I think it's a good buy. That's me. I'm biased. Yeah. Our guys always. We don't put constraints on the guys. As a result, you don't assume that that's what drives your box or Trevor's dream. At one size, again.
I can take it. Just using the numbers you put out.
If one point penetration is three and a half billion, that's the whole market, right?
Right. That's the whole market.
Okay, let's say it's about $1.7 billion.
Sure.
Let's kind of be conservative and say you're gaining two points in penetration between now and 2020.
Sure.
That's roughly $3.3 and a half billion dollars you just gave up. That's just Generac, right? Plus your other businesses.
Sure.
The whole revenue guys.
It's not incremental, though. Remember, every point penetration is cumulative. That three, that would say that the total, just to be clear, that period is $3.7 billion.
Okay. All right. Got you.
Yeah, yeah.
All right. I guess.
No, no.
It's incremental.
It's not incremental. That's not an incremental. That's a build. That's an aggregate penetration.
Okay. All right. Now I get it.
It's layer cake.
What you're saying is that 8%, that the whole HSB business would be $4.7.
That's it.
All right. Thank you.
Exactly.
I was a little-
No, that's an important nuance.
Well, I'm getting a lot of emails from-.
Oh, yeah.
confused hedge fund managers this morning because I think.
I would say the whole business will be $8.7 billion.
Yeah. Right. Thank you.
Maybe that's what the confusion is. It's nice to have the in-person meetings.
Yeah. Yeah, yeah.
I mean, it's a lot easier to have that conversation in person.
Good to have you. I was so excited for you to come on here.
I'm glad you were able to come in.
Yeah.
The best weather in town. Great weather here today.
It is. It's been so nice driving over here.
Yeah. Yeah. It's perfect. It's a great day. Look, our guys, we have the time to be straightforward. I think it's the traction, doesn't matter what I'm doing. I know you guys have been talking about it for a couple of years now. You talked about how the event in Texas really kind of spurred some of the people to totally realize and start generating your bucket of consultation. What's happening on the ground?
Congratulations.
Do you want to go into anything about like that to kind of create some.
So, how do you-
Obviously, we've got to run through Mike, if you wanted to come talk this kind of call, so be it. Yeah. That would be fantastic.
Right. I promise I won't ask any questions.
Yeah.
Yeah, yeah. I think that's.
Everyone's going to last. I mean, that's a problem. It's re-aligning things over. It's either added cost. Well, sometimes it's just standard, but you still have to do it. It's problematic. It can't be drivers. It can't be chassis. It can't be trucks. What's amazing, I mean, gosh, I remember talking to you a couple years ago, and I was trying to gut it out, and you saying, "Oh my God." Whatever happened to going- Yeah, it's frustrating. Rerouting. Yeah. Charles. You know? Very good to meet you. I don't know what it was, but I think I- Yeah. We haven't got to see it yet. The problem is spot rates. They're increasing prices.
Erik gives the chassis everybody wants it, but they can't get it right now because of how many people are returning to the office. We can scale. Well, we know. That's a great question. That's still on it. I think we know the answer. Our operations team gets somebody comes through and they say, "Hey, we have this deal with this small company in many places." We have, I think it's called logistics. There's a group of logistics people that are taking on third-party from supplier to the manufacturing facility. Supply chain, which is typically- Yeah. They're like probably- Our number seven. Yeah. Absolutely. Maybe it wasn't. Let's say in Betsy or Salt Lake. Just in California. That's why I get excited about it. At all, it had to not be the answer. We did one option to go to the cloud.
Of course, they don't go to term. 100% regardless of time. Who you are, I'm sorry, first. Who are you? What do you do? I built the gen packs, the house. Exactly. Huge. They do stuff from things that are more complex. It's the states are pushing next generation. They are. There's a huge move against ICE because it actually covered like half. That's right. I understand that. Absolutely. Yeah, you're seeing that. Yeah. We selected a CMS based on its supply chain. It really sounds great on paper. Okay. That's how you get around it. Right. What are you going to do with the top heavy? Yeah. Supply chain partners is really good talent, new systems. We use Ariba. It's an SDLC. It's our platform. Did you have to go through the painful SAP implementation?
Well, we went through that five years ago now. We put the base SAP on-premise, added a region. Is it cloud? Ariba is a cloud product. Our ERP is on-premise. That would be one thing. Because the ERP system was done five years ago. That's like a recent one that was on the approach. Now if you were doing it today, you would go all cloud. It's a really solid foundation. I like being in control of it. That's incredible. We have the cloud. We have that security. It does. Gives you a job. Cost savings. No doubt. That's what we call cloud. There's a reason. That's what I discussed with that customer. Really what are the key pieces to this whole thing is response time. Sure. Absolutely. We're working obviously today to go virtual. Do you own a network?
It's harder and harder. Yeah, that's a comment. It's a good example. In the Bay Area, Desk construction, Ariba. I mean, they're super smooth. Yeah. It's a really good example of actually our existing platform. The value is the highest licensed platform. How did you put that on? Once you've got, then it's localized back here in the data center. They're on-prem. The whole new platform is all cloud-based, and it's also global. You can do this now with local stuff. Bring your PC, your tablet in Android, iOS. The big asset from a cloud perspective, this is like an inspection for a truck. That's where the future is headed. That's absolutely where it's headed. My ask of discussion on bankable is the sound of these phones because they're not trained. I mean, you put them up, they'll map themselves. Sure.
Yeah, you move into places, you have missions. It's easy, yeah. That's why these actually right there. That's all new. It's not the engineer. The science is much less figured out. Well, what they should do is even more. Yeah. We've got our team. Basically in 1993 was the big phone switch. A lot of people went to the cloud because it was less expensive because they weren't putting a different unit exercise in the data center. Actually, the performance. Yeah, provide a great product. Yeah, you couldn't have. If you were to go back two thousand and. It's a new product essentially of power inverters that technically is going to help out. We have like industry rep meetings. The majority are. I received that.
I was curious how you guys did the drilling. What that may look like?
What I was going to get at is that from that one chart that showed software to be performance, like the light through software install, you can release an aggregation of DER. Then you create more DER from that. We also took this take of all of our. Seemed to work out fine. Yeah, we did.
If everyone can return to their seats because I want to continue here. Okay, great. Thank you very much. It's 10:25 A.M., so we want to kick off the second half of our formal presentation here. Speaking next would be Russell Minick, President, Energy Technology, and Chief Marketing Officer. Russ has very important updates to talk about recent new product launches. Without further ado, Russ, take it away.
Okay. I was waiting for Joe. Should I get seated?
It's all right.
It's all right. Sorry. We're happy you made it, honestly.
Always late.
Just happy. Yeah, as Mike said, welcome everybody. It's exciting to give you an update on where we're at with the Clean Energy business. I'm going to start off with a little bit of a timeline chart here to give you a sense of some things we've accomplished since we launched, because it wasn't very long ago. We acquired Pika and Neurio in April, May of 2019. Those were really small startup companies. I think there was 25 to 30 people in each of them. There was a lot to do. We built out lab space here that you're going to see some of that today. We tortured the heck out of the products. We rebranded because everything needed to be rebranded. We created TV ads, lead generation things, built a sales force, moved it to production in Vietnam once the product designs were frozen.
They didn't have apps. We built all the consumer apps as well as the fleet monitoring apps, built a training function, built customer support and tech support. We went to SPI, which many of you I think might have went there, but in September of 2019, we showed this stuff at SPI, and we started taking orders then. We didn't really start shipping orders meaningfully until Q1 of 2020. It hasn't been that long, really. Right after we launched, we started doing a lot of things to the current products. We increased the battery capacity from 17.1kWh up to 18kWh. After that, we tweaked the output of the inverter up to nine continuous with a 50 amp surge, and that's important, and I'll talk about more in a minute. That's really important, actually.
I guess it was a stroke of brilliance in a way, but we designed our own battery module that made the cells that go in it literally commoditized, and we could use almost any cell that we qualified. We bought a bunch of equipment. You'll walk by some of it today, but we can qualify and test about 150 different cells simultaneously at different thermals, and that allows us to qualify cells. Essentially what we've done now is we've got a pack, and we can use numerous different cells into it, and that allows us to have access to the cost flow, adjust quality, do all the things we want to do with cells. We've taken control of that, which was a huge move.
We've hired a ton of people, which I didn't really put on here for some reason, but we're pretty close to 300 headcount just for clean energy, and the vast majority are seniors. It's a big effort that's taken place, and again, all this since Q2 of 2019. We launched whole home positioning and a switch that went with it in Q4 of 2020. We finished the year at about $115 million with a pretty sizable backlog. We could've shipped a lot more. We actually could have taken more demand as well to even make that backlog bigger if we wanted to have. That was huge. Arguably a bigger play, and I'll talk about that when I get to the SAM/TAM slide, but the acquisition of Chilicon microinverters opens up the vast majority of the market for us.
What's cool about that is, again, it's really small. It was a couple of guys, but those couple of guys happened to be Jet Propulsion Laboratory NASA guys and a guy that wrote a video game when he was 15 years old and sold it for a ton of money. They're pretty good guys. It's a lot like the Pika situation in that we bought ourselves a technology platform, some really high-end engineers, and a way through all the different compliance and intellectual property things. The ability to then to torture the products, harden the products, get them placed in the right manufacturing environment, and plug those into our infrastructure we have in place, the sales force, things like that. We've got that playbook, and it's a pretty fresh playbook.
We're excited about our ability to parlay this thing into a pretty meaningful deal for us. Bud went a minute ago, but as we sit here today. All the PWRcell products are smart grid ready, the Enbala APIs are all built into them. If a homeowner buys a PWRcell today, there's actually a sticker on it that says, "Smart grid ready." We can engage with that customer and utility company and enroll them in programs, and they'll get compensation back for that. That's cool. In addition to that, just the other day, we launched some products, and I'll review those today, and so I won't go into that much deeper at this point. A fair amount done, huh? Not bad. I had a full head of hair when I started, and here we go. Yeah.
A lot of it is a product business, and Mike said it's a product update. It really is a product business, particularly when you're coming from where we came from, which was we didn't have anything, right? We have to build it out more. People ask, "How do you view the market? And when you think about product, what's your philosophies and your tenets around that?" Admittedly, I think we're biased or jaded by our legacy of doing Whole Home Generators for a lot of years in the residential space. Come to find out, that's probably not a bad bias to have. The first one we think about is energy independence, and I'll talk about more of these in detail here in a minute. The second one is whole home power, and the third one is a concept we call the product supermarket.
When we bring those together and we do that under the Generac branding and umbrella, I think it creates a pretty unique go-to-market philosophy, and I'll get into this, and you decide. Okay? Energy independence. Energy is an emotional topic. We knew that because we've been in it for a long time. When people don't have power, they don't realize all the things they're going to miss. They get really emotional about it. Today, it's worse than ever because you're injecting things like climate change, and so now you're getting snowstorms in Houston and fires in California and all these people that have never really experienced it, just like the Hurricane Alley, not so much anymore. The ability to take control of your power is really, not only is it a long-standing desire by humans in America, it's more even intensified today.
When you think back at it, electrical co-ops, nonprofit, locally-owned utility companies, they were formed in 1935 under President Roosevelt. The whole sole purpose was we don't like monopolies, we want to take control of our power, and today it's even more so. Today it's different because what good is it unless it's clean, it's super reliable, and it's cost-effective? Those are the things. Why make your own power if it's not those three things? The missing piece, I think, to energy independence And energy independence, and what I'm speaking of now, because we kind of beat around it a little bit sometimes, but I'm talking about the meter not spinning. I'm talking about potentially not even having a meter. I'm talking about when there's a power outage, you have no compensations whatsoever. It's a full lifestyle.
Even more important, when there's not a power outage, the ability to be a nanogrid and standalone. Okay? That's a big market, right? To do that, and I'll get into more detail on this, but you need a really good solar array on your roof, the right size. You need to be able to store and time shift that power in a battery, right size battery. Right? You need to be able to control smartly what's going on in the house, so you're not wasting any of it, okay? If you get those three elements right, you can run your home on stored sunshine and a wee bit of natural gas, okay? The meter will never spin.
The missing link to that, because we have, and I'll talk about the power ratings and things on the inverter and the battery, but the missing link to that was the generator. We introduced, just the other day, a unique product in the marketplace. It puts out DC power. It puts out about 9 kW of DC power, not AC power. Your house runs on AC. All of our generators make AC. This makes DC. The way this works is, and I'll show it in a minute, but basically, it senses the state of charge of the battery. It will kick on and top the battery off, and then shut right back off. It's pretty cool that way. If the array is the right size and the battery is the right size, that isn't going to happen very often, by the way.
Now you can kind of see it here on the side of a house. It's a small footprint. This house is a nanogrid. Okay. This is a house that doesn't have a meter. You can see it doesn't take up a lot of space, and I'll talk a little bit more about the generator in a minute in terms of sound it makes and things like that. There you go. Scenario, it's midnight, grid's been down, battery's low. No problem. What's going to happen is the battery's going to start draining itself down. It gets to 30% state of charge, generator senses that, fires up, and will pass right through the inverter and top that battery off in just about an hour, and then it'll go back off. This generator is a little bit different.
Not only does it put out DC power, it runs at a greatly reduced speed over a normal home standby. What that means is 60 decibels, which is really quiet. It's quieter than I'm speaking right now by a lot. I don't know. Not a lot of people understand decibels in the nonlinear fashion around that. If your microwave was running, it might sound like that. Like a lawnmower is, what, 73 decibels, Aaron? Again, this is a nonlinear curve, so 60 decibels, believe me, super quiet. That's pretty exciting. Also because it's running that slow, wear and tear, durability, friction, all that stuff is greatly reduced as well. The expected lifetime of this product is significantly higher than would be a home standby generator because it's designed to do such. This is cool.
Again, this is not just for power outages. The whole promise around renewable energy. What happened with these products were, quite frankly, solar was built and batteries were built to basically spin the meter backwards or to trick time of use rates on your utility bill. That was essentially it. The batteries didn't have to be very big. What happened in the meantime was all these products launched, and all of a sudden, we got into a crazy power outage environment, and it hasn't slowed down. These products were called on to do backup power. The problem is their power output was low, and the size of the battery was small, and so you ended up with a pretty disappointing backup power.
What these products do now, because of the size of our battery and the output of our inverter plus this generator, is our ability to actually store sunshine all day instead of selling it back and then run your house on it all night is there. That's the ultimate impact on climate change. That's big. It's all integrated in with our app. On the bottom, you can see the icon that shows the grid's down. You can see that you're taking in 1kW of solar. You can see the battery is providing about 4.2 kW. The house is using five. The generator is kicking in at seven. Everything's integrated in the app. Okay. That was tenet number one, energy independence. Second 1, whole home power.
I get fired up on this one because the thing we came into this industry, and we thought it was odd because what we saw is that these products are expensive. They're $10,000, $15,000 installed for a battery. Yet what we found was that it's not uncommon to have a power output of 4 kW and a battery of, say, 10 kWh. 4 kW output, that's what's going to run your house. That's the equivalent of running your microwave and a hairdryer. That's it. That's it. You're not going to do that very long. You're going to do that for three or three hours. In that three hours, and that battery's done, less than three hours. So we thought that was really a miss. You spent that money. I don't think homeowners even understood it.
Contractors got it. They were just selling. Then the power outage happened. Homeowners were calling contractors saying, "Hey, you put this battery in, and these three things or these five things aren't working." He's like, "Yeah, I didn't wire those in because your inverter won't run it." We thought that was a miss. What we did is we upped our power. Again, some of these products are 4 kW output, many are five. We're nine. Okay. We're more than double. Remember that house showing a 5-kW drain? That's pretty typical. We're not. We can run the whole house and then some. Okay. We surge to 50 amps, and what that means is I can start a 3-ton air conditioner. No one else can do that. That means you're not making compensating behaviors in your life.
That means, who wants to be sweltering in Memphis on a 10-day power outage if you can't run an air conditioner? You can with ours. Power and surge is important. Our battery is 18 kW hours. It's big. It's big. A Tesla is 13.5. The new Enphase is 10. Almost double that, right? We have a big battery. We got a lot of power and a lot of capacity, and that means you can run a lot of things for a long time. There's one missing link. If you want to get the most out of it, if you have the biggest climate change impact, have the biggest financial impact, you got to smartly manage loads. You see products out there today that have This is all early innings on smartly managing loads.
We've been doing it at Generac for a long time. We basically had a pioneering approach to it where we could lock out certain things from running that would consume a bunch of power. For example, you might lock out a pool heater or something that in a power outage, you don't have to worry about. They're wired that way. The customer, once it's wired, it's wired, and that's the way it works. There's no flexibility after the fact. There's really eloquent approaches to this that actually, I think, actually over-deliver. We see smart breaker panels that cost $5,000 and $6,000 before you even install them, where you can shut circuits off on your phone and turn circuits back on and things like that.
We looked at that and we're like, "Wow, that's a hell of a chasm from a simplistic approach to this really over-the-top approach." We created a product called Power Manager, and you're going to see it today. It's about the size of a shoebox, curvy, it's good-looking. You pull 12 circuits, whatever 12 you want, usually the biggest, most impactful circuits that are using the most power, into this Power Manager. On your phone, I'll show it in a minute, on your phone, you can turn them off and on as you please, and it recalculates your battery life all along the way. We'll take a look at that. One thing I want to emphasize is the affordability of this. This is an extremely affordable product. There's nothing else in the marketplace.
I'm talking it's 4 to 5x cheaper than some of these other products. We just did our webinar with our contractors, you can look at the comments as they're typing them, the words game changer came up a lot. Here you are on your phone. You can look at this. Let me put my glasses back on here for a minute. I can see that I got 65% of my battery left. I got 6.1 hours remaining, I can swipe off the air conditioner, I can swipe off the heat, I can swipe off anything, really. I got 12 high-volt circuits and two low-volt circuits on here, I can control 14 things with a swipe of my finger. Here's an example. Russ comes home from work, power's out, it's hot.
He wants to turn on the downstairs air conditioner while he's having dinner, flips it on. All right. Going to go to bed at 9:00, so I'm going to swipe off the downstairs air conditioner and swipe on the upstairs air conditioner. Okay, those moves, by the way, would save you hours of battery life. Absolutely hours of battery life. Major impact. You just swipe it off with your finger. It's that simple. It recalculates your battery life the whole time. This is a super cool, very affordable product. When coupled with a high-power inverter and a big battery, that's whole home power. You're not making compromises. Nobody, I'm going to repeat, nobody in our industry delivers that package. Most people install with what they call a critical loads panel, which is they pick eight things roughly, maybe 10 things, and they only back those up.
The rest of that stuff goes dark, and it's not coming back. Here's what a system looks like. This is an actual install in San Diego. You can see it's small. It's good looking. There's the 12 high-volt circuits, two HVAC loads. It fits between the studs and the wall, so it can go flush, or it can go on the surface easily, which is great. It's all good with PowerCell, and there you go. Whole home power, plain and simple. Okay? Third tenant, product supermarket. Again, we come in new, we're looking around, and we're like, "Okay, there's some good products out here from competitors." The one thing is, they're all about a specific format. They could be about DC Rooftop optimizers. That's what we do. We don't do anything else. That's what we do. AC micro inverters. That's what we do. We do nothing else.
SMA, which is a string inverter company. That's what we do. We don't do anything else. This is our format. Everybody's out there selling their format. As we know, all families, all homes are different. Contractors run into a variety of installs on a daily basis. To meet those needs, they end up kludging together various manufacturers of products. They have to speak to each other because these systems have to work together. Something goes wrong, and the contractor calls one company, and that one company goes, "Oh, well, that's not my fault. That's the other company's thing you hook to it." He calls that company, and the finger-pointing goes back and forth. You're sitting there in a laptop on something called SunSpec trying to get things to work. It's kind of goofy.
We looked at this and we're like, "Why don't we offer it all? Let's pull it all together. Why should we be about a format? Why shouldn't we be about contractor and homes, not about married to a format?" That's what we're doing here. Now, I'm telling you, we're early, but this was the impetus around the Chilicon acquisition. Okay? We're not done. There's more to come. This product is the latest product that we're stocking in our supermarket, AC micro inverters. It's a great differentiated product. They make one solar panel to one of these, but primarily what they sell is two solar panels into one of these. If you had 20 panels on your roof, you'd use 10 of these. Okay? The other guy, you have to use 20 of them. All right?
You have double the stuff on the roof, double the install time. These have to sit on a roof for 25 years, hail, rain, snow, baking heat, 25 years. That's what the warranty is. They need to work. Having half the amount of things up there is good. If you talk to solar installers about speed of installation and simplicity of installation, big deal. This product's differentiated, and I'll talk more about it. This will ship with a Generac brand on it, and this product specifically will ship April 1st 2022. Okay. You can see the two-to-one approach. There's a one-to-one at the end, if you had an odd number on the string, you can use the one-to-one as well to finish the string off, it looks exactly the same and connects exactly the same.
Works on the same app, everything, so it's good that way. What you end up with, this thing's rated at 720 watts, the two to one. Some of the other guys out there, their best-selling product is a 295-watt product. You need two of those, right? You come in quite a bit, 130 watts less than one of these Chilicon design products. We think it's got a lot of power. We think it's got a lot of cost advantages because of the two-to-one format. We think it's got a reliability story because you got half the stuff on the roof. We own it. We're making it. We're doing our same thing, which is torturing it and getting it into the low-cost country environment.
We're going to set this one up in Mexico, because we're tired of air freight and we're tired of 73 ships in Long Beach and all that stuff. We're going to set this one up in Mexico to be a little bit closer to market. There you go. The supermarket. Today, up on the left side there, you've got somebody that's all about the DC-connected system. You can probably guess who that is. On the right side, that's somebody who's all worried about the AC-connected systems. I'm back to this format, and we're dropping in on all this stuff. Our current PWRcell is an integrated DC system, so that would be similar to a SolarEdge, right? Our PV Link sit up on the rooftop electronics. Of course, our new PWRMicro, the Chilicon product, will compete most closely with Enphase.
For those of you that follow the market, you know that between SolarEdge and Enphase, that's a pretty good chunk of the market. Which is super exciting to us. We're really excited about that. In addition, we got really cool things like this DC output generator, that load control device I just showed you, all kinds of different transfer switches, installation materials. The supermarket's open. Not every aisle is 100% stocked. We're still working on it, but it's stocked more than others. Again, you don't want to go to the butcher shop, then to the vegetable store, then to the drugstore. One-stop-shop, that's what we're putting together here. When we talk to contractors about that, they're like, "Hmm, cool." No one's done that. That's unique. Okay.
On the far left, when you think about it, the current PWRcell product, because it's an integrated DC system, it literally only works if you use our optimizers all the way down to our inverter, all the way down to our battery. It has to be our complete system end-to-end. Okay? What are attachment rates on batteries to solar today? 25%, 30%, roughly, right? 25%, 30%, something like that. That means we were sort of competing only in 25%-30% of the market because we were selling an attached battery, essentially, with our system. Okay? 75%-80% of the market we weren't 75%-75% of the market we weren't, or this case, 66% of the market we weren't participating in. With Chilicon on board, we now pick up solar-only installs, right? We weren't getting that.
Now if somebody's just putting in a solar system, which is the majority of people, we can compete in that space. Huge space, right? PWRcell battery will integrate and be attached to these AC microinverters at day of launch. That battery will either go on the PWRcell DC system or it'll go on the PWRMicro AC system. The battery will go each side, doesn't matter. Okay? On top of that, you'll be able to AC couple the DC PWRcell system on top of that, which is another item in the supermarket, and that happens this month, actually. Of course, because of that, if there's a retrofit existing solar system on the roof, been up there for two or three years, and they want a battery, we'll be able to attach a battery to that because of this as well.
Now essentially we've opened up the entire market. These market numbers are basically Wood Mackenzie numbers that everybody has access to. Basically, our market goes from about a $4 billion market to a $10 billion market. This is why we're so excited about the Chilicon acquisition because of the amount that it opens up. We've got a lot of work to do. We won't ship it until April, so we got a lot of work to do, no doubt about it. The arena that we're playing in is massive, and we've got a little bit of a track record of having some success in this space, so we're excited about it. I think it's going to be really good. Big, broad product range, market growth, really important things.
I like this because we had a lot of ideas when we got into this space of things that could happen, and one of them was: Would our brand work in this space? We're generator guys. Would solar contractors see us as pariahs or something because we're using natural gas? What we found out was no. It's a new industry with cutting-edge technology, so there's been buggy products and availability issues, and so it's been a bit of a bumpy road, which any new sharp edge technology probably is. They see Generac and they're like, "Wow, you guys have been around a long time. You can make generators. If you can make generators, you'd be able to make this. You got a couple million generators on the ground. That's good experience." So they see the brand as a huge strength.
Sure enough, homeowners only know two brands in this space, really. They know Tesla, and they know Generac. In California, they know more Tesla, and in Florida, they know more Generac. Homeowners don't know what a SolarEdge is or what a Enphase is. Those are components that sit under a PV panel for the most part. Those aren't customer-facing brands like Generac is, and Tesla for that matter. Plus, we've been able to invest. I got to tell you, we've had great investment by the company, great support by the board and Aaron on this space, and so our ability to ramp up quick, invest in inventory, invest in TV shows, all the stuff that we're doing to build the business has been fantastic. That's been great. The product approach, I think, has been refreshing.
The whole home power, the energy independence of the supermarket, people are excited about that. Smart Grid ready as well. We've added a lot of distribution out of the gate pretty quick. We've got 2,200 dealers, contractors, distribution partners out there that we've signed up. We only started at the beginning of 2020. We're pretty pleased with that result. We've got great distribution partners, all the industry's biggest names, and they've been wonderful to work with. We've been doing a lot of lead gen, which is pretty unique in the industry as well. Just like we do in home standbys, we created an infomercial, we run it all the time, and we drive those leads to our contractors, and they appreciate that because it's very expensive for them to acquire customers.
We've stood up big time sales training, big time ground game, as it says there, contract support. That truck, we're building a second one now, but this particular truck has got solar panels on the roof, and it drives up and down the five in California and stops at contractors by appointment, and everybody comes outside. What it is a moving nanogrid. It actually is a self-sustaining nanogrid. So it's got our battery system, it's got solar, it's got our optimizers. On the other side is a Generac generator integrated into it. It also has a 3-ton air conditioner in there on the other side, so we can start it because people are like, "There's no way a solar system can start a 3-ton air conditioner." Yep, watch. It's got TV screens, so we can show our apps live.
This is a moving house, essentially, with solar and storage attached to it. It's pretty cool. This is the ground game. You got to get in with contractors and walk them through this stuff, and it makes all the difference. We're building a second one now for the East Coast. Those are good things. Tech support. We've got a big tech support team. All these things have been really great. Again, we had to build apps from scratch, fleet apps, so a contractor can go pull up every one of his installs every morning, and it's blinking at him. If there's something wrong, he can click into it and find out exactly what that is. Then we've put a lot of effort on the supply chain. We've got a big supply chain team, and we've got corporate scale.
We've got feet on the ground in Asia. We've got an office in China, people in Vietnam. We just don't only work at the plant level, we go up several tiers of supply to try and make these things happen. We've been relatively successful in navigating these tough times. Every day it's something else. I found out the other day, it finally got off the boat in Long Beach, and finally got through customs, and then we couldn't get a chassis to put it on to pull it to our warehouse. Now it's chassis. That was the latest thing. It's crazy. Crazy times out there. Yeah. We're pretty excited about that. Again, that battery approach we've used has really helped us taking control of our own pack where we can use a variety of batteries.
With that in mind, again, we're really excited about what's going to happen moving forward here with that TAM slide. Just keep in mind that that $4 billion to $10 billion pool is really important. It's on us to execute. If we execute it properly, it's going to be a big number for us. It won't be gated by demand. It could be gated by supply or something, but it won't be demand, I can tell you that. With that said, I'm going to hand it over to my colleague, Erik Wilde, to talk C&I. Thank you.
Thanks a lot, Russ. Good morning, everyone. Tough transition going from the high cutting-edge technology to what many of you think is the slow, lumbering industrial side. I'm going to hopefully change your opinion over the next few minutes on that. When we look at the Generac business, this is our global business. We have it split in North America and then outside of North America. It's a little over a $1 billion business. Although Aaron mentioned earlier, not growing at the same pace as our residential business, we're getting really strong growth in that category as well. When we look at our TAM, Russ talked about $10 billion a minute ago. Going into our TAM right now, 2020, what we classify under our industrial space is roughly $25 billion, growing to $30 billion during the 2024 period. Really mid to high single-digit CAGR.
The products along the bottom, those are some of the product categories that you see fitting in there. Really what we're best known for in the space is large industrial generators. Throughout my presentation, I'm going to talk a little bit more about how that's weaved into our energy technology and the transition we're seeing rapidly evolving here in the U.S., as well as Western Europe and throughout the world. Beyond standby is a term that really why we talk about beyond standby is traditionally our products are used for standby power applications. When the power's out, the generator runs and keeps either the hospital going, your food cold, whatever it might be to keep that business up and running.
As the market's evolved and our ability to extract value from the assets has changed, we're moving it to what's beyond standby, and so you're not just dealing with a stranded asset. What we classify in our beyond standby business, it's really the non-standby use of clean-burning natural gas generators. One of the characteristics of our products, and hopefully everybody knows we manufacture all our own natural gas engines that run into the products. They're much cleaner burning than our traditional diesel generator or diesel engine that's going to run on that set. By doing that, we can actually EPA certify it to run when the power's present.
That's a really big differentiator, is that without after-treatment and special systems, we can actually run the generators with power there to either take the load off the grid or to push power back onto the grid to support grid stability. That's one of the key flag points in this global TAM for what we're calling the new technology growth opportunities, which right now, 2020, we've put at $2.5 billion- $5.6 billion by 2024. Other things that are lumped into that are multipurpose microgrids, and those might be at a utility substation, or it might be at a facility or in a field powering community. C&I energy storage. Recently we've jumped into energy storage. I'll talk a little bit about that with the Off Grid acquisition. Hydrogen fuel generators.
A lot of people are starting to come out with press releases about, "Yeah, we're coming out with new hydrogen technology." Actually, for more than 20 years, Generac's been gasifying engines, and hydrogen's one of the fuels we've run through our generators. We're very comfortable in that space, and as the storage and delivery of that fuel becomes viable, we're ready to offer solutions into the market that'll actually be able to power the sites. The next thing is hybrid systems, and that's really a combination of all the systems together, and it's to meet the customer's need to actually match up with their power and load requirements. Really, I think the jumping off point, just to leave you with, is that we're viewing over the next three years, this space is going to grow to greater than $350 million of revenue for Generac over this coming period.
It's new energy technology, however, it's based on the foundation of all the solutions we've been offering today, just modified and leveraging Bud's Grid Services team and other assets we have in the marketplace. How do we win? Really, obviously, you say, well, resiliency, you're selling a standby power. Really that's how we go into customers and talk about solutions with them is saying, "Well, we know you need backup power, and so resiliency is step one." Once they get their head around the fact, yes, I'm willing to invest.
I'm not willing to invest in just backup power. We move into, okay, well, these are the products and solutions we have. Based on your financial requirements, we can actually work with you to develop a solution that maybe takes it from just a stranded asset as a standby generator to something you can monetize. That's really how we start, why we're going to win in the market, because we have that discussion and dialogue. We're leveraging. The past year, we've really grown to, instead of other third-party companies, we now have been able to leverage what Bud and his team have done. We've gone through the process of making all of our generators Smart Grid-Ready. Now all the products in our categories are available to launch in the Smart Grid-Ready application to really extract more value from those assets.
Just to help the group here, this is new from Generac talking about it. Maybe you're seeing this from in the market otherwise. Really to talk about how we're changing the economics of a standby generator. Traditionally, it's a stranded asset put in the marketplace, and we're moving that into a continuous source of value, so not just risk mitigation. In the past, it was viewed purely as an insurance policy or code-driven. Maybe the codes required the hospital to have backup power. Now they're able to capitalize that and use it as an annuity and actually turn it into either a revenue generator or actually a cost mitigator. We're really well-positioned with our natural gas portfolio. One of the differences in what some of our competitors put out there, they talk about lean burn engines.
Our product categories, we have a rich burn engine, which means it's very responsive. When the power comes out, we're online with less than 10 seconds. We're up and running, powering the facility, powering the grid, whatever we need to be. We're leveraging those products to be very quick responding to the market needs. Just the different categories. Customer-owned model, traditionally, a customer buys a unit. They pay upfront for it or do some sort of financing, and then over time, they just pay for the maintenance of it. Particularly when you're looking at a diesel product, there's a lot of fuel maintenance. Whereas natural gas, you don't have that requirement. It provides on-site backup power, so they don't have to worry about spoilage or issues with the generator going down. As that's moving, we're seeing more customers wanting to lease their assets.
Traditionally, when a generator is just standby and, the generators can last over 20 years, people are like, "Well, I'm not going to lease the product for that long." It was difficult for people to get financing. Now that we're able to monetize those assets, it's a more desirable asset. It actually can offset the lease payments. We're seeing more people jump into, hey, well, financially offering lease solutions and allowing the customers to participate in different markets. I'll cover that in a little bit about how they're generating value. Then the bottom one, which has become very popular in the last probably 18, 24 months, is people looking at energy as a service. They don't want to have that on-balance-sheet asset. They're looking at how they can defray the cost as well as treat it financially different. They're using those types of solutions.
The big difference between when Kyle talked about the residential product, is a small block of power, 20 kW, where a lot of our generators, they're in that 200 kW to 1 MW range. When you think about the number of home standbys to offset that, we have huge blocks of power that can actually be monetized in the markets or to help manage a customer's power expectations or requirements. This example right here, it's similar to Aaron mentioned earlier about like a Texas distribution center. There's Grid Services opportunities. On those top left side, they can enter an energy management program, time of use programs, emergency response programs. There's lots of different ways that a customer can monetize that asset. There's actually more than that, but these are just some of the more popular traditional things.
In this 1 MW gas generator example, in Texas, this is Texas-specific. There's programs that ERCOT has available and that people can participate in the market. The 4CP savings are basically during those four peak summer months, if the customer can actually reduce their energy load, they can actually change their rate structure for the year. In this particular case, monetizing that 1 MW unit, they can generate $42,000 in upfront program value they're going to generate per year. They can enroll in an emergency response program, so when they have an issue like they did earlier this year, that the utility can actually call on their asset to help stabilize the grid. They're going to generate $27,000 a year.
Basically, they're coming in and they're going to get $69,000 for this 1 MW asset before they even participate in any monetization programs where they can actually rate arbitrage or play in the markets, which for a 1 MW generator, could be between $1,000 per year up to $50,000. When you look at it, previously, they put a diesel generator in and it sat there, ran for 20 years. It was an expense. Now they can generate over $100,000 a year with that given asset. We jump down into actually a detailed model, and this is actually a solution we would provide to a customer. The first column is an owned generator. Customer buys it. That's the facility owner. They deal with someone that's going to do the market dispatch for them. This is an example of RPower, a company we work with down in Texas.
Their total install cost is just under $800,000. They're going to have to pay $6,000 a year in perpetuity just to keep the systems running. When you go into that, they're going to actually be able to generate $70,000-$120,000 a year. Definitely, they're going to cover the cost over the period of time on that 10-year period. Really more like in year six to eight, depending on how they're monetizing it, they can start generating income beyond the cost of that generator. On the right-hand side, we work with different firms. Sparkfund's a great one that will actually do the energy-as-a-service portfolio for the customer so they can take it off-balance sheet. They can sign them up for a subscription.
Basically, when you look at the cost of this subscription, $137,000 a year, they might generate $120,000 unless they get in more extreme programs. They're basically getting their resiliency for free and managing their energy consumption, and they're actually able to really defray the cost of that fixed asset that they previously would buy. You turn it, and you actually make an asset that it's a big investment, almost $800,000 investment to have standby power. Do I really need it? How often my power's out to? Well, it's a very minimal investment for me to make that change. As we take our beyond standby activities and focus more into the energy-as-a-service, providing ROIs for customer rather than just fear of losing power, it completely changes the game, and that's why we think there's big upside opportunity in the marketplace.
Microgrid partnership, Aaron touched on it briefly. We have deployed our own microgrids, but we started working with Enchanted Rock on developing a solution. It was really made possible with a lot of people question, well, Deep Sea integration, how is that helping you? Now we can offer this complete turnkey solution using the Generac designed engine, the Deep Sea microcontroller, and bundling it into the super quiet Enchanted Rock package. Really, this solution is really considered a dual-purpose microgrid used for resiliency and also for monetization. We're now providing this to them. They've deployed projects in that 1 MW up to 50-megawatt range. It's provided us with an additional access to market. They have their own sales team. They're making a lot of progress in the data center market.
We view this as a great partnership to leverage our assets and not have to utilize our commercial team to fulfill this microgrid solution. It's been a great start, and we look forward to growing that relationship further. We talked earlier about the Off-Grid Energy acquisition. Really, that's our first jump forward. It's a U.K.-based company. We closed September 1st, so very new for everyone to get their head around. Really, when you look at their product portfolio, that was a big gap for us. Russ' team is great home packages. We do some light commercial work, but we didn't have the heavy industrial or mobile solutions. Now with Off-Grid Energy, we have that jumping-off platform to leverage up and scale, invest our knowledge and capability on the packs and cells and drive that into the product.
We have now a formal product offering to roll into the market and really expand. We're really excited to have that team on board and really get our feet in the door with that proven product into the industrial space. Jumping into the last topic. That's really the beyond standby view. Just talk briefly. In the last conference, we actually talked about the global opportunity for telecom, 5G growth, what we're seeing, and the changes in the marketplace. There's been a few changes since then. Our idea was to update you on what we're seeing and really size that prize and what we're seeing going forward. On the global tower count, basically, the cellphone has become a necessity, and it's become critical to really the way people work every day. We're adding new technologies and services.
When you talk about autonomous vehicles, surgeries, remote surgeries. Using 5G technology, the resiliency and reliability becomes even more critical. At the last conference, the trend's basically been online. The 2020, the power systems, which are the products that we actually sell and market into that telecom space, has grown to $3.3 billion, and we're forecasting that to grow again to $4.6 billion annually. Really, we're the primary global supplier in this space. We have relationships with all the tier 1 carriers, all the tower companies globally. Aaron mentioned earlier, we're operating in 150 different countries. We have the distribution capability to actually support the telecom carriers. We've really leveraged our footprint to grow globally. However, we are the number one provider in North America. Really that's the market that we touch every single day.
It's not an emerging market opportunity for us. Since our last call, really the market's grown for tower sites over 30% to 410,000 sites. Really, at the last meeting, we talked about 40% of the sites were hardened. As the sites have ramped up, they're actually hardening more. It's because the necessity, the AMBER alerts, and other things that are transmitted by phones. It's become more and more reliable and customer expectation to always have their phone on. Typically, when you talk to a group, an audience like this, and you do a survey, well, how many people still have a landline? It's typically less than 20%. Your primary form of communication is now through the cellphone, where previously your landline was backed up and there were government regulations to require power there. Now it's shifting to the cell sites.
The estimated opportunity, we make some assumptions that based on the overlay of cell sites, that only 75% are going to be hardened. Actually, because you have the coverage maps, actually, they do have tower-to-tower connectivity, so they don't need to cover 100% of the sites. The average value, if you remember their last conference, which you probably don't, but you might have looked at it, the value of the generator has gone up significantly because the size of the generator has. Now we're seeing more power consumption at the sites, as well as co-locators doing shared generator programs, which is driving that product size up even more.
When you look at our 60%+ market share, that we estimate that in the next 10 years, it's a $1.2 billion opportunity just for the generators alone, not to factor in additional service and opportunities that would be brought on with that type of volume. Something that's changing, I'll cover in the next slide here, California backup power mandate. Obviously, this is like a separate microcosm. California does their own thing. However, a lot of people are looking to mirror what the California Public Utilities Commission did on mandating backup power. Not only did they mandate backup power, but they changed the paradigm. Typically, sites have been backed up for 48 hours, and that's the on-site fuel storage so when generators do go out there, they plan for 48 hours.
In this particular case, on the bottom left-hand side there, really 70% of the towers in California have to rely on temporary power, which means a mobile generator, they're pulling something else in. They don't meet the requirement at all with stationary. Then 24% of the sites, so another big block of them, actually can't run long enough, so they need refueling. There's either a fuel delivery program. Part of the submission that the companies had to submit, like who's going to be their fuel provider? Were they going to be able to credit the site with being able to run for 72 hours? When you look at that, a lot of things have to change. We're the best-positioned company to provide that. We have a great mobile product. If they want to do temporary power, we have battery solutions.
Looking at other alternatives, people are looking how they can get out there in the marketplace and back up their sites. Roughly from our estimates, 20,000 sites need to actually have some sort of auxiliary power brought in. In California, that's the next two-three-year opportunity of $200 million-$300 million of backup power, depending on how the carriers try to deploy the solutions. I think really the primary, when we bring this up, yes, it's a great opportunity for us to sell some generators, but it's where the utility or the governing bodies come in and said, "Backup power has become critical infrastructure," and the paradigm shifted. We're seeing things throughout the U.S. The FCC is evaluating again, do they make a backup power mandate?
It creates another opportunity for our market segment and a category where we're a strong player in to really grow. For those who don't know, really why does Generac win? We customize and tailor solutions to the carrier or the tower company's needs. We develop a solution from a product standpoint. We listen to them, we deliver that solution, and we have over 4,000 trained technicians through our dealer networks to be able to support those customers. We provide the best service and support with the most creative solution to meet their economic needs. That's the last slide I had, and I'll turn it over to York Ragen to do the deep dive on the capital allocation.
Thanks, Erik. The slides that everyone's been waiting for, although you probably cheated and looked ahead by the first slides you looked at. Let's package this all up. We heard a lot over the last few hours here. Aaron talked about our rollout of our new strategy. Kyle talked about this massive home standby penetration opportunity. Russ talked about how this rapidly developing clean energy market is growing and how we're expanding our product offerings to grow into that big opportunity. Erik has a lot of exciting things on the C&I side. Energy technology applies to C&I. I think that was my takeaway out of that. Telecom, we got a lot of competitive advantages there, big opportunity there. Bud, with Grid Services, the interesting thing there, that's a cross-business group effort.
You heard a lot about smart grid ready from all three of Kyle, Russ, and Erik. Bud's going to be working with all three of them to drive Grid Services across the business. If you package that all up, we're going to see what that looks like in terms of numbers. Before I do that, let's just talk a little bit about our financial framework. When you're talking to your colleagues, when you're out in the hallway talking about Generac, what do investors think about Generac from a financial framework standpoint? They think about a company with very attractive growth profile. They think about a company with very strong margins, that generates a lot of cash, has a strong balance sheet, and then we deploy that cash in a disciplined and balanced fashion.
From a growth standpoint, all those mega trends that Aaron talked about, I thought that SAM expansion slide was very compelling. That's the reason why we have a massive attractive growth profile. We're a leader in the markets that we serve. Home standby, our flagship product, 75%-80% market share. We are the market effectively there. We execute. I think that goes without saying, but we have a track record of execution. That's how people think about us on the top line, on the margin profile. We're innovative. We go to market with innovative strategies. We get paid for that. As a result, we have more energy technology margin type profile. We take that profit, we convert it to cash. Pretty much all of our profits we can convert to cash, and then we aggressively deploy that cash back into the business for future growth.
Organic growth, M&A growth, and where it makes sense, opportunistically return a capital to shareholders. The takeaway below, we've developed a significant amount of value creation for shareholders over the last decade, and I think our share price indicates that. That's the financial framework slide. In the next couple of slides, let's just give a little history lesson of where we've been over the last 12 years since our IPO. I blinked and it's been 12 years. Busy slide, but the upper left is our net sales with our gross margins. Upper right is our EBITDA. Lower left, EPS. Lower right, free cash flow. Obviously, a lot's going on over the last 12 years, and Aaron talked about how we've really diversified our business. In the past, right or wrong, people thought of us as more of an episodic growth business.
They thought of us maybe as a stair-step function business. I think really what's happened over the last five years is we really, I think, decoupled away from that. The takeaway up above is a big part of it. The megatrends that Aaron talked about have really driven a secular growth trend in our top line. Getting into energy technology, getting into clean energy storage, et cetera, has driven that growth. Just this last year, over $1 billion of growth in one year is pretty phenomenal, in my opinion. It's an excellent chart. With that it's driven operating leverage. Our margin profile, in addition to a favorable mix, we've gotten a lot of operating leverage. Our gross margins have come up the last five years.
Our EBITDA margins have come up the last five years to the point where now we're generating over $900 million of EBITDA, where at the IPO, it was $150. Dramatic growth, 17% CAGR on the EBITDA line. It's driven a lot of earnings power from an EPS standpoint. That chart looks very similar. We've taken those earnings and converted that pretty much all to cash. That's what you see on the lower right. In fact, over the period here, we've had a 92% of free cash flow conversion. That's free cash flow to adjusted net income, which takes out amortization. Taking out amortization, I think that's impressive that almost all of our profits are converted to cash.
Just, again, with that dramatic growth we've seen over the last few years, we've seen a dramatic growth in our free cash flow profile, which has allowed us to redeploy that back into the business, into all the exciting things we've talked about today. Peeling it back again, looking at it, the top by segment, on the bottom by product class. Again, our segments domestic, international. Domestic, a lot of it's tied to, given that I'd say the majority, maybe 2/3 of it is tied to residential. We'll talk about that in a second. International, we built over the years. We've talked about it. We built out a Latin American business with our Ottomotores and our Selmec acquisition. We built out a European business or a rest of world business, we call it, with our Pramac and Powerlite acquisitions.
We built out a controls platform with our MOTORTECH and our Deep Sea acquisition. That effectively has built out a rather impressive international business. Looking at the top line. You can see the impact of the pandemic last year. It did impact our international business pretty significantly. As you can see this year, we're expecting things to be well above pre-pandemic levels, and we're seeing rather impressive growth with our international business recovering off those pandemic lows. On the residential side, again, I think, the commentary holds on maybe almost the overall side of the company, where in the past, maybe the business was a bit episodic from a stair-step function growth standpoint, but we've really grown that residential business as Home Standby. The tipping point of Home Standby has become more mainstream for all the reasons we've talked about here today.
In addition to that, our clean energy business here, residential clean energy business is a big driver of our growth the last couple of years as well. Just seeing fantastic growth there. C&I, again, as Erik mentioned, he gave a little bit of overview of what C&I is for Generac. It's about a billion-dollar business, about half of it's international, half of it's domestic. It's grown nicely over the last 12 years, from $184 million to roughly $1 billion. A couple pauses there in 2015, 2016 with mobile and telecom CapEx declining, but it built up pretty rapidly after that. The pandemic obviously impacted the C&I business more so. I guess point there on the residential side, the pandemic was actually the reverse. That was actually a catalyst for growth on our residential side of our business, given the home as a sanctuary megatrend.
That's the history lesson on the top line. Aaron already revealed our future three-year CAGR target here, 13%-15% growth in the next three years. What are the assumptions underpinning that? You can read them. I'll point out a few on this slide. Probably the number one assumption here, which is probably conservative, is number three, that we're only including one major outage event in the three-year forecast period. We actually baked it in 2023, so it's not even in the 2024 number that we're basing off of. That's an important assumption. Only one major event in the entire three-year forecast period. Obviously, that could be different. There could be more, and with that, could drive more volume. That's the assumption. We tend not to put that many major events in our forecast. I guess, number six and number seven go together.
We are assuming a moderation in commodities with where supply chain is, supply chain constraints, logistics challenges, et cetera. Everybody knows commodities, currencies, logistics costs, labor costs, whatever it is. Mainly commodities and logistics have really taken off here this year. Well documented. We're assuming that commodities, currencies moderate a bit, not down to where they were historically, but maybe somewhere in the middle between the peak and the trough of where those commodities and currencies have historically been. It's an important assumption from a margin standpoint. We've obviously raised price this year to meet those higher input costs. We're assuming that as commodities, currencies come down, that we have to give some of that back, but only certain price increases. We are keeping some in our pocket in the forecast period. Then I think that the last one I'll highlight is the last one, number 10.
We are not assuming any additional M&A, debt pay-downs, share repurchases in any of these numbers. As you'll see on my last slide, there's a significant opportunity to redeploy the cash that we're going to generate in this three-year period to drive future growth over and beyond these numbers. That's an important distinction to make in what we're looking at here. With that, before I go through the details on the right side of what our next three-year targets are, let's just take a little bit of a look back. The last time I stood up here in 2019, at the 2019 Investor Day, we rolled out three-year targets. Embedded in that model, there was 2021 numbers inside that model, and the 2020 numbers in that model were $2.5 billion, 20% EBITDA margin, et cetera. You can read that.
Obviously, where we're at today is a much different place. The mega trends have really accelerated. There has been a pandemic in the middle of that, which drove resiliency needs and a lot of outages, et cetera. As Aaron pointed out, our current guidance at the midpoint of the range that we reported on July 28th, would be about a $3.7 billion business. It's a little bit bigger than the $2.5 billion we thought it was going to be a couple of years ago. The margin profile is dramatically better as we've ramped that growth. The higher mix of home standby as well as the operating leverage has taken our margins to a much higher place than we thought we'd be. Interest rates have declined much more than we thought they'd be, its interest is lower, et cetera.
That's sort of a look back on where we thought we'd be a couple of years ago today in today's numbers. Now rolling out our next three-year target. 13%-15%, that's the grounding point that Aaron talked about in one of his first slides. The midpoint of that range would be a $5.5 billion business. On the top line, we believe we can sustain these energy technology-type margins that we're guiding to today at 24.5%-25%. We expect to maintain those margins here in the future, three years from now. The tax rate, I guess, the one point I'll make there is we have enjoyed a sizable tax shield for the last 15 years, actually. We've outlived the tax shield.
Back at a change in control back in 2006, we had a massive step-up that has provided a sizable $30 million a year tax shield for the last 15 years. That's going to go away this year. Our tax rate's going to go up. I'm not predicting what Congress is going to do with tax rates in this number. Wherever Congress ends up on future tax rate increases, we'll have to layer that into our model once that happens, if and when that happens. Interest expense, actually we did roll in some interest rate swaps at a rather low rate back in the bowels of the pandemic. Once those kick in, that will reduce our interest expense actually pretty considerably from where we're at today. CapEx spending, we're still assuming roughly that 2.5% to 3% that we've always guided to.
It's a bigger number, a bigger base, $5.5 billion. We expect that there's going to be some capacity increases, and particularly on the C&I side of the business as that grows in the future. A lot of system platforms from an IT standpoint, a lot of automation to continue to improve efficiency in the factories. We're assuming still about 2.5, 3% of CapEx, and that we're still assuming we're going to convert a lot of our profits to cash. I have 85% here because as you grow, you're going to put some of that cash into working capital. That's the main dip there. Let's talk a little bit more about where this growth is coming from. This is a busy slide, so I probably should have used some animations to bring the concepts in.
Let's talk about the top part of the slide right now. And peel back that 13%-15% growth. By segment, again, domestic, international are our segments. Still seeing probably pretty broad-based growth across domestic and international. We're not necessarily showing in our three-year targets that one region is going to grow more than the other, maybe a little bit more on the international side, but pretty broad-based growth geographically, which is good. More interestingly then on the product class standpoint, we're showing again 13%-15% total. Residential, a little bit lower than the corporate average at 11%-13%. C&I, a little bit higher at 18%-20%. Underlying that, probably lots of questions there. What's in there? Residential, one, you've got a really high base in 2021 here. Obviously, residential has taken off. You saw that on the previous slides.
Got a high base. Remember that assumption that I'm only assuming one major event in the three-year forecast period. That's an assumption in that residential number. The reality is, if you peel that back, our legacy residential business is still growing strong. What you also have is a residential Clean Energy business with storage, microinverters, like a power generator, Power Manager, that's growing very strong obviously. That's underpinning that. I think I just wanted to highlight some of the overall assumptions on maybe what's causing that to be a little bit lower than the company average. On the C&I side, Erik talked about some of the exciting things from an energy technology standpoint that are going to drive growth in the C&I business.
That, coupled with being still probably having some impact and further recovery from the pandemic, that will drive outsized growth relative to the corporate average on the C&I side. Let's talk a little bit about the pie charts here. What are we looking at? On the left side, it's our 2021 sales mix. In the About Generac section that Aaron presented, you saw a 67% residential pie. About two-thirds of the business was residential, 26% C&I, and other was 7%. As a subset of the residential pie, we have that clean energy business. We have our storage business, our energy management business, a little bit of electrification going on there. It's mostly our clean energy business is that subset, that 7% that's shaded a little bit different color in residential.
On the C&I side, that 1% subset is effectively our DeepSea business that we acquired that, again, with microgrid capabilities, selling into microgrid applications. We're calling that part of that Energy Technology subset. That's what we're looking on the left side. On the right side, in one of Aaron's slide he alluded to a 26% piece of the pie related to Energy Technology. Backing up, though, just staying on product classes, residential, C&I, other. Residential, the mix actually is going to be somewhat close. 67% now, going to 65% in the future. C&I, 26% going to 27%, other going from 7% to 8%. What's extremely interesting is that that Energy Technology subset on both residential and C&I is expanding dramatically. That's basically everything that we've been talking about the last three hours. You got that residential Clean Energy business.
We're growing our PWRcell sales. We're getting into the microinverter market, all the energy management around that. Residential clean energy is a big part of that. I guess that is the bulk of that residential subset there. That's going from 7% share, or size in terms of mix from now, going to 17% in the future. On the C&I side, C&I clean energy, that's effectively the storage, C&I storage that Erik talked about that we're going to continue to grow that business. Grid Services, this is what Bud talked about. This is the software, the hardware, and the performance business that Bud's team is going to work across the company to talk to utilities and effectively sell turnkey solutions, be it software, hardware, or performance contracts, selling power to utilities. That's for the most part included in the C&I space.
Energy as a service, so that Enchanted Rock model that Erik talked about. There's some really big opportunities there that Erik is excited about, and we're going to see some pretty big business there, we believe, in the future. That is, we're encompassing that in the energy technology subset. Electrification, that's effectively getting more into portable battery products as well as continuing to electrify our core product line. If you put that all together, that's the 26%, the 17% and the 9%, that's the 26% energy technology mix that we're growing into, which is driving a lot of the growth for the company. That's the top line. I alluded to the EBITDA margin profile a couple of slides ago. Again, still expecting to sustain these attractive energy technology-type margins. Our current guidance, we're guiding to 24.5%-25% EBITDA margin.
Call the midpoint at 24.75. Our three-year target is to be somewhere between 24%-25%, call it midpoint 24.5%. What are the puts and takes as to how we're going to get there? I alluded to one of my assumptions was commodities, currencies, logistics costs were going to moderate, but we're probably going to have to give some of that back. When you put that all together and couple it with improved overhead absorption on the growth, as well as a continued focus on our profitability enhancement program, we expect price cost to be a favorable, good guy, if you will, relative to the current run rate, about 1.6%. That's the green bar there. Positive price cost in the future. That's a good guy. Mix, it's a slight reduction or moderation in mix, given that C&I is going to be growing.
C&I and Energy Technology will be growing a little bit faster than that residential side of the business. Slight moderation due to mix. I think spend a second on OpEx now. The biggest number there, minus 1.8%. We've talked a lot about Energy Technology. There's a lot of Energy Technology initiatives around the company to continue to drive that growth, that 26% piece of the pie that is the 2024 Energy Technology mix. It takes a lot of investment to do that, investment in OpEx, some CapEx. You need to put that OpEx in well ahead of the ultimate achievement of the top line revenue. We're expecting that with those Energy Technology investments, that'll probably moderate our EBITDA margins roughly almost 2%, call it. Consider that an investment in future growth.
Obviously, then with the top line growth, you'll just get normal OpEx leverage on our base OpEx. That's how we expect to maintain neutrality relative to current run rate on EBITDA margins. On the bottom, it's our segment EBITDA profile. Domestically, it's about the same, but I'm happy to report from an international standpoint. We were talking about single-digit EBITDA margins for our international segment for a while. I think as we grow, and build out the top line and roll out Energy Technology solutions, as well as natural gas solutions around the globe, as well as build out our controls platform around the globe, we expect our EBITDA margins for international segment to go mid-teens, 16%. That's going definitely in the right direction over the next three years. This is my last slide.
When we achieve these targets, and given our strong free cash flow conversion, we're expecting to generate about $2 billion-$2.5 billion in cash flow over the three-year forecast period. Remember that assumption on that assumption slide? I'm not assuming that we're going to deploy that cash flow back into the business. The forecast is not assuming putting that cash to work in future growth. That's an important assumption because as we know, we are going to deploy that cash. Again, in the past, we've deployed it in a very disciplined and balanced fashion. We've deployed it in a very, I guess, similar priority uses of cash fashion. That priority uses of capital is on the right side. We've always said we're a growth business, so first and foremost, we want to deploy our cash to drive organic growth.
Because our CapEx is only 2.5%-3%, it's not as significant. The base is growing, so in raw dollars, it's growing. Given as fast as we're growing, we definitely do need to add capacity. Global systems, high ROI automation projects, those are what we're going to invest in the organic growth for our business. That's first and foremost. We always said we wanted to maintain a healthy balance sheet, and when our leverage was higher in the past, we had to talk about this a lot more. We were paying down debt, and we were bringing our leverage down, but you guys saw how fast EBITDA went up. Our leverage right now today is at the low end of the stated target of 1x to 3x . The reality is we don't need to pay.
As EBITDA grows even future over the next three years, that leverage will even come down even more. We don't need to pay down debt. The fact that our term loan and ABL doesn't mature till 2026 emphasizes that. The comment there about swapping $500 million notional fixed shows that fluctuations in interest rates shouldn't be an issue. Where we've deployed in recent years, a significant amount of our capital is on the M&A side, and Aaron talked about many of those acquisitions to really transform or at least drive the evolution of Generac into more of an energy technology company. We do maintain a robust M&A pipeline. We've demonstrated that we can execute deals, we can integrate deals. We have a new strategy, Powering a Smarter World. We want to accelerate that strategy. M&A is a way to do that.
Once we step through all those priorities, if there's cash left, as cash flow permits, we've always opportunistically took an approach towards return of capital, more so in the form of share repurchases. We do have a $250 million share repurchase authorization that's outstanding. We have the optionality to deploy that should the opportunity be the right opportunity. With that, I'm going to turn it back over to Aaron, and he's just going to have some closing comments before we go to Q&A.
Thank you, York. Appreciate that. No clapping for York. You don't clap for the CFO. That's the way it works. I'm sorry, York. It sucks to be the finance guy. There we go. Thanks. Make him feel better. He doesn't need that, by the way. A couple of key takeaways today. We throw a lot at you. This is a really exciting time for the company. Again, I've been here a long time. I can't think of a time in my history with the company where our opportunities were as large as they are and where I think it just feels right in terms of where we're aiming our effort, where we're taking our team, the trends that we're following. I think all of that starts, again, with those mega trends that we spent quite a bit of time on.
A lot of growth opportunities there, definitely around resiliency, also, again, some of the new things that we talked about with Grid Services. Our new strategy, Powering a Smarter World, there's going to be massive changes in the energy landscape. I think our new strategy positions us really well to capitalize on those changes and come out on the other side. In fact, I would argue, we talked about this with a couple of presenters today, we are very uniquely positioned to capitalize on this. There are very few companies that have the breadth of product offering that we have that is aimed at this area that's going to change so dramatically.
I think the combination of that, alongside some of the things that we've decided to do here through acquisition and through other organic developments, puts us in a really strong position to capitalize on the changes that are coming. We talked about this. You saw the video. We're now an energy technology solutions company. We've been talking about ourselves in that regard for quite some time now, a couple of years at least. We think that, in particular, when you talk about clean energy, the things that Russ was talking about to some degree, and then Bud's discussion around Grid Services, those two spaces in particular, the future of the company is very bright when it comes to those two particular areas.
The Smart Grid-Ready capability of our products, we only touched on that briefly, I think maybe we undersold it, because I think it creates an opportunity to take every asset we sell and create a dual-purpose asset. It's not just for resiliency anymore. It can be used also as a grid support asset, as an asset that can be deployed to greater gain, both for the end customer, monetarily, and obviously for grid operators and utility companies that are faced with this massive challenge of the changing landscape in trying to balance supply and demand. I think that that is going to help us sell more assets. I think it's going to reduce the friction to a sale.
If you are in the market for a generator, and you're in that market for the generator thinking about resiliency only, and you're told about this potential additional use case for the product and this additional way to perhaps buy down your capital costs and your investment in that product, I think it just makes it easier for us to convince you that you need that product and that you should buy not only a generator but buy ours. I think this is one thing we also didn't talk about. Nobody else in our industry is doing this, right? Sometimes you look out across the landscape and you look at your competition, and if other people aren't doing it, you start to think, "Okay, why?
Are we wrong?" In this case, I know our competitors quite well, and I just know that, frankly, we move faster, we're generally further ahead on the curve, and we execute better. Those are three things that have held for my entire career here and will continue to hold going forward. I think that Smart Grid-Ready capability that we've now built into all of these products, and as we begin to sell these products with that new functionality, it's going to be a huge tailwind to the sale of those products. Energy tech we talked about is going to be 26% of revs, going forward out to 2024. It's only 8% today. When you include products that are going to be smart grid ready alongside of the direct assets and software sales going into energy technology.
That's two-thirds of the company's revenue in the next three years. Our three-year targets that York just went through, pretty impressive targets, I think. We continue to execute. The way we provide guidance, you can argue, is it too conservative? I don't know. We don't assume a major event every year. Maybe we should. We've talked about that. We've done that in the past, a long time ago, when we first became a public company. That didn't work out real well. We disappointed because if you don't get a major event. Predicting something you can't predict, that's always the challenge in this business. What we do is we build a forecast that we know we're going to hit. When those major events happen, we can't tell you when they're going to happen. We just know they will. We don't know where they're going to happen.
We just know they will. We don't know the impact of each event, we know they're going to happen. That becomes essentially the free option in GNRC, we've talked about that a lot over the years. Again, maybe we're underselling that as we talk about our targets, that has always been the challenge in forecasting for this business because you have to make assumptions that people can argue either side of. They're assumptions anyway. We think we're making good assumptions ending up with really robust numbers as a result. Last but not least, our ESG report. This is the first year that we published that. I would encourage you to read through it, maybe on your travels back to wherever you came from later today or tomorrow.
I think you'll hopefully come away understanding that we're linking our strategy very tightly to these ESG metrics and goals, and we're going to continue to do that going forward. Again, reiteration of our targets. York just said $5.5 billion on the midpoint by 2024. That's a 13%-15% compounded annual growth rate over the next three years. We still think EBITDA margins are going to remain very robust between 24%-25%, and we're going to generate a lot of free cash flow, as we always have. We're going to deploy that to great effect. Also, another thing we don't assume in the guidance that we are supplying, I think we've been very aggressive. Bud mentioned the word bold.
I like that word because it's a word I think that best describes how we've been investing and how we've been managing the company and growing the company over the last several years in particular. That's the last of our prepared remarks today. What we'd like to do now, we've got roughly 50 people here in the room, over 100 people on the webcast. We're going to open up questions, Q&A. The way that we're going to do this, rather than run around with a microphone, you'll look up, you'll see these, it's almost like a Star Wars moment. Those are microphones, the little things with the red lights on them. What we're going to do is we're going to turn those on. We're going to go live.
I just will caution you, they're very sensitive, if you're having one comment or a question over here, or if you're talking in one part of the room, it is going to pick it up across the entire spectrum. If you can, let the question-asker just speak during that time, and then we'll go back to mute. Those lights will turn green.
Turns green.
It turns green when we're doing that, so you'll see that. What we'd like to do is we're going to start with questions in the room. If you could, please, as we select you, if you could announce your name and your affiliation just so that folks on the phone can hear that, and we can record it for, if not for posterity, for something else. We want to make sure that we get that on the record. We'll go through that Q&A period here roughly for the next 25- 30 minutes. Then we'll wrap up with some logistics and get us onto the tour. With that, I'm going to ask you to go ahead and ask away. We'll have people come up here from our team. Yes, sir.
Yeah. Hi. Mark Strouse, J.P. Morgan. Thank you very much for having us today. Just with the assumptions, looking out to your home standby business and the backlog, I think you used the word alleviating by end of 2022. Can you just give more color? What does that mean? We've kind of got into this concept of thinking about backlog in weeks. What does alleviate mean when we think about weeks of backlog?
Yeah. In the assumptions in the model, just to be very blunt about the way we assumed this for the purposes of guidance, is that remember, recall that we talked about our capacity for residential standby is going to go to basically four times where we exited 2019, Q1 of 2020, right? 4X. Effectively 2X from where we exited the second quarter of this year by the second quarter of next year. That's assumed in the forecast, in the guidance. That's our potential output. When we hit that and couple that with the forecast that we're looking at for HSB, we would bring that backlog down roughly by the end of the year. Okay? We would eliminate, if you will, the excess. Today, we're sitting somewhere in that 30 to call it 36 weeks, depending on the product that you're looking to order.
It's been extended even from where we were when we exited Q2, we were at about a 28-week on average. Today, we sit somewhere around 32 weeks. We're about a month further than we were just on average. The normalcy, if you will, is what we've assumed is zero-two weeks. That may or may not be a good assumption, but it's what we've assumed because that's what it was prior to getting into this situation. By assuming that, it does clear that backlog number largely in 2022, and that provides, in effect, for some difficult comps for 2023 because you're shifting all of that backlog in 2022. This is guidance, so you have to make assumptions. We're assuming then an event in 2023, that's the year in which we put the one major event. You do claw some of that back.
It's not a complete headwind against the entire backlog, but it is, nonetheless, something you have to account for. I'll just point this out. Again, because we only make an assumption of one event in the forecast period, in the three-year period, if it's different than that clearly is going to work out differently. Could we hold a backlog situation further than that beyond 2022? We thought we would clear the backlog by 2021. That was our last guidance that we issued prior to the Q1 guidance we issued.
The budget.
Assumed the budget, assumed that we would clear the backlog here in this year. That didn't happen, isn't going to happen. We're going to end this year with a backlog that's very robust coming into 2022. Again, that's the challenge of forecasting that business. You have to make a set of assumptions. You live by them. Again, we try to make sure they're numbers we can hit, but it's a great question, Mark. Next question. Yes, sir.
Yeah, Rob Lutts from Cabot Management, Salem, Massachusetts. In Massachusetts, we've really incentivized installations of solar over the last 10 years with tax credits. A lot of what you talked about in technology today is new technology that hasn't been adopted in a great way yet. What do you see going forward from federal tax credits for state to support your batteries or other things like that? I think that's a really important part of the solution going forward.
Yeah. Russ, I think you've got a pretty crisp view on that. I don't know if you want to come up and give a couple comments.
One breath. Okay. Yeah. Obviously, we track what's going on at state level on incentives. Today, the integrated power cell system, when put in as a brand-new system, qualifies for most things like ITC and things like that. I think as targets are set in states like Connecticut and Massachusetts and New York, we'll see standalone retrofit batteries be allowed to be added on and count, which is a gray area today. I think that'll get addressed. Of course, I think Joe Biden's green energy plans, there's an interesting wrinkle in that on the amount of U.S. content, and the product could create a tiered-up escalating ITC. There's been talk of up to 55%, which would be an incredible win in the sales of the industry.
Of course, the Chilicon microinverters are registered in most states, except for Hawaii is one that When we launch it, we'll have the Hawaii compliance, but they don't have it currently, it'll be 50 states when we launch on that as well. Yeah.
I might just add to that. The landscape's shifting pretty quickly on incentives. I do think that we've moved from a place where we were perhaps even a year ago with the previous administration to where we're at today, that is going to be a lot more amenable to incentives around solving the challenges of climate challenges themselves. I think this is only something that's probably going to increase. The ITC, which we talk about, the Investment Tax Credit at the federal level, was scheduled to go away. Now the current bill before Congress or one of the two bills before Congress contemplates that sticking around for much longer and even increasing in some cases. Batteries, which in a standalone basis today, as Russ said, are not eligible for the ITC would become eligible for the ITC. Those are big changes.
We've assumed some of those things in here, but again, it's such a shifting landscape that I think we can only say what we know today. State by state, also in addition to the federal regulations, every state seems to be coming up with, in particular blue states, coming up with a lot of incentives around this. Our thesis here is this only is going to accelerate, not decelerate, as the political will has shifted, if you will. Maybe I'll go to the back row up there. Yes, sir.
Hey, everyone. Michael Halloran with Baird. Thanks for the crisp introduction. Two more questions here. First, distributor response to this supermarket approach you're taking, secondarily, how are you guys thinking about the competitive response and whether it's partnerships that might have to happen with the various different types of product categories or even the ability to respond to the capability relative to what they have and what, et cetera?
That's a great question, Mike. Maybe I'll start, and then I'll probably pass it back over to Russ because I think there's some things in there that he probably got some unique views on as well. I think in terms of the supermarkets, the receptivity of that approach by distribution, they've been very receptive, right? When you think about the way a solar dealer today has to deal with a number of OEMs to complete a project, right? It's almost as if we send them off to RadioShack to buy a bunch of different pieces and ask them to build a stereo, right? Effectively, they're engineering a solution for the homeowner. They're grabbing different racks and panels and power electronics on the rooftop and power inversion, and then you've got power monitoring and power management.
There's a lot of different OEMs that they become responsible for trying to integrate a solution. For them, they see the supermarket approach, and again, I'll let Russ comment off of this. The early returns have been that they're thrilled that there's a single OEM that's willing to position themselves as in the center of all of that. Invariably, when you have a challenge, and these are complex systems, right? You're putting a pretty complex system together at the residential level, and most homeowners don't have the engineering technical competency to troubleshoot a problem. These are systems that last 20 to 25 years. The ability to troubleshoot that falls back on the dealer.
The dealer, again, is having to work with multiple OEMs to figure out, "Okay, why is the system not producing as much power as we thought?" "Why is the battery discharging at a different rate than was expected?" "Why am I seeing this fault code on this particular piece of equipment? Is it the inverter issue? Is it an optimizer issue? Is it a panel issue?" The dealer has found themselves in the unfortunate position of being the lifetime support mechanism for the homeowner. I think what they see in this is an opportunity to have somebody help them with that, somebody that's well-established. That we're very used to supplying the kind of support that these types of installations need. We do 24/7 support for our legacy products, and so we're just going to extend that into these new products.
I think from the competitive response, I think maybe Russ, you probably have some interesting views on that, but I'll let you talk about that.
Okay. Yeah, I think penetrating the market, particularly with microinverters, will be interesting because the response from the solar market's been really strong on both distributors and contractors, as Aaron said. I think because what you're seeing today, obviously, right now is an availability concern, first and foremost, out there by contractors. Contractors tended to be lined up on a single company. You're a SolarEdge guy, an Enphase guy, whatever it could be. I think everybody's looking for a second choice now just to diversify their business to have two suppliers. I think the ability to have a credible alternative to add to their business is what we're hearing a lot about that, so that's good. I do think also the ability to not be buggy is another big issue in the industry.
If you got availability and you're not buggy, I think is the bar that gets you entry today in the space, which is good. Competitively, it's an interesting space because the market's growing so fast that you're not necessarily fighting over a point of share per se. If everybody just executes, there's a lot of business out there. We're not seeing brutal head-to-head competition. It's a little bit more of a friendly industry, I think, than what our legacy industries are that way, just because it's growing so fast, I think is part of it. We know many of the players that would be competitors. In fact, in some cases, we actually sell stuff to one of them, where it's actually a supplier and a competitor. It's not uncommon to have frenemies in the space. Yeah.
Yes.
Hey, Erik. Can you hear me? Chris Glynn with Piper. Quick question about the C&I clean energy outlook. You're going to 9% of $5.5 billion from 1% of $3.7 billion. Curious how much of that you see coming from Off Grid Energy, and maybe a little time specifically on what the ramp slope you expect from that businesses?
Yeah. Thanks, Chris. I think maybe York, you want to unpack that a bit? I think you've got some of that.
There's, like you said, I think a lot of it was Erik's one slide, that $350 million additional opportunity. A large chunk of that was, in fact, C&I storage with its foundation being the Off-Grid acquisition. I think what's interesting is I think Aaron mentioned, and Erik mentioned, we can leverage that acquisition to drive C&I storage domestically as well. We've assumed some, at least a modest amount of growth domestically, building out the base Off-Grid business in the U.K., predominantly in Europe, but building some growth and extending that product offering domestically. I'd say a good percentage of that $350 million is that C&I storage opportunity globally.
Yeah. Pearce Hammond with Piper Sandler. I was curious with Grid Services, how much would it reduce the cost of ownership for the purchaser of the generators? Just say it was $1,000 a kW. If you apply the full Grid Services, does it drop it by 50% or 25%? With Grid Services, do you see that starting first really in the C&I market before it migrates to the residential market?
Yeah, great question, Pearce. I think, I may let Bud come up here and tackle this as well. I'll just answer it. The thing that you have to know about these programs is they're highly variable, right? They're very different from one utility to the other, one grid operator to the next, one region of the country to the next. A lot of it depends on the unique situations that they're trying to solve for. Because of that, they ascribe different values to the power that can either be exported to the grid or the load that can be disconnected, and quote unquote "saved" on the demand side. It's really difficult to put a precise number on that. I will say that the C&I side of the business appears to be where the bigger opportunity is. It's simply because of this.
You're talking about bigger blocks of load, right? Go back to that 1 MW distribution center gas gen set, right? That's a product that if you think about in the residential market, we sell a 24 kW gen set, right? Really, all you get is the connected load. When you disconnect the home, the value of that generator is really in the value of the home's energy that they're consuming. On average, that really is only about 4 to 5 kWh . It's pretty small. Now, it spikes when you turn on certain heavy amperage loads, motor starting loads when you're talking about a compressor load for air conditioning, things like that. That's why you need a 20 or 24 kW generator is to start those loads. You don't get the full nameplated rating value of that. Different in C&I.
In C&I, you actually have the opportunity to export the full 1 MW or very close to it back onto the grid. If you just think of that in the context of, do I want to have 200 conversations with homeowners, right? Versus one conversation with a distribution center owner, right? We think that C&I blocks of load, they're just going to be easier to get added into this Grid Services mix first. I think longer term, certainly the power of just the scale of the residential market can't be ignored. The value of that will come to bear as it becomes easier and easier to connect those systems to platforms like Concerto. I don't know, Bud, if you've got any other comments you want to add to that.
I would say the only other comment that I would add to it, and I think Aaron pretty much hit it right on in terms of the variability that we see across the grid or across North America, is remember that one of the fundamental tenets here is that we are helping a customer monetize an asset that they were probably already looking to buy. That's an interesting aspect in terms of accelerating the funnel, accelerating the sales, and accelerating the value proposition for the end customer, and that is true in both residential and commercial and industrial. When you put all of those things together, you could actually argue that even if it improves the ROI by $1, you're helping, if it's $2, if it's $3. The variability certainly is something we have to understand in the business.
Either way, the ability to help monetize that asset should help accelerate the sale.
Great. Joel.
Yeah, just further to this, I think my screen light's on, this point of monetizing distributed assets, right? If you look at the way that it's working right now with, say, Sunrun and Sunnova and these people, typically, they tend to be third party owned, right? You haven't seen that much of it on the cash or loan side. When you think about your business and people buying these assets and trying to get them to participate in the Grid Services market, how does that work?
Yeah. Today, I'll touch on C&I first, then we can talk a little bit about res as well. On the C&I side, we're using partners like Sparkfund to help us do that. Now, I think there is an open-ended question, longer term, as we go deeper into this market, how do we do that? Do we want to continue to partner? Do we believe that there is value in us doing something with that more directly? I think we've stopped, certainly for the purpose of the guidance we've issued, we're not assuming that we're putting any of that on our balance sheet. At least at this stage of the game, we don't feel that there's a need for us to do that. We feel there are enough companies to potentially partner with that can help us with that. You're right.
Other companies are deploying perhaps a different model where they're either owning and operating that asset and then selling off the underlying paper that is associated with either the asset itself or the tax credit. They're monetizing the tax credit. We have a very good partnership with Sunnova. Sunnova, for us, they have I think a program there. They could end up being another partner for us perhaps on the residential side because they've got a very strong set of capabilities there. Those are core competencies that they have that I would argue we don't have internally around true finance, right? We're a manufacturer. We're a distributor. We're a servicer of products and solutions. We want to turn that into a recurring revenue stream, but I'm not sure we want to have it rise to the level of us putting it on the balance sheet.
I will reserve the right with my response to perhaps change our views on that as the market continues to mature. At least in the early stages here, we believe there are enough potential partners out there that we don't need to do it at this stage. Great question, though. Yes, sir.
Maheep from Credit Suisse. One question just on the EPA NESHAP rules on generators. I think the prior rules were 100 hours is probably the limit. This is probably more a question for Grid Services as you sell that for resi and commercial. Have you got any clarification or if you can go beyond 100 hours, whether that's for both emergency and non-emergency? Second is just on the supermarket, which you talked about OEMs Sorry, dealers prefer one OEM. As you expand that supermarket, could we expect a module or racks or your own preferred brand sold as a kit along with the whole ecosystem?
Yes. On the EPA question, I'll tackle that first. I think those regulations allow for 100 hours of run, 50 hours of testing, 50 hours of run in a product, whether it be residential or C&I, that is certified to emergency standards. What we're going to be doing with our products going forward is today on our C&I products, as an example, we're going to be offering those products with that non-emergency rating certification as a standard feature of our gas generators. Remember the diesel side of things, you have to effectively move to a tier four engine platform on diesel. That becomes a much more costly solution. There are people that are offering tier four stationary sets for particular applications like this. They're very expensive. We believe that natural gas is a much better way to do it.
The after-treatment that's required to still meet the EPA's standards, even the non-emergency standards are, frankly, they're easier to achieve starting out with a natural gas product than you would with a diesel product. There's not as much hardware in the aftertreatment. That 100 hours today is a limit, but in the future will not be for C&I. We are looking at, and I'm looking over to this team, I know we've got different views on this even within our own shop, but the current residential standby generators can go beyond emergency duty in terms of certification. There's a bit of work to do that. There's really not a ton of extra cost to add to be able to certify them that way. That is something that we're going to consider because I would say even 100 hours is a lot, by the way.
In terms of what your ability to monetize, that's still a far better use of the asset than what is being used today. It is something that we have to watch in those EPA regs. The products in the natural gas side will meet those regulations. I'm going to keep moving. We can come back maybe offline to take the rest of that question, but I think we've got time maybe for one or two more questions. Yes.
Yeah. Hi, Aaron. Ross Gilardi from Bank of America. I think I know the answer to this first part, but I just want to verify. Can we assume that your growth rate in 2022 is comfortably above the 13%-15% CAGR for the next three years? Just within the residential technology business going from 7%-17% over the next three years, I think that's a $250 million business going to $900 million+. Can you break that out at all between PWRcell, Chilicon, and whatever else is in there? What's the risk of foreign competition in the microinverter market?
Got it. I'll take the first one. I think I'll have York Ragen unpack the res energy technology application bucket, the 17%, Ross. We're not issuing 2022 guidance today, obviously, and we're working on our AOP here for next year, so we haven't even actually finished it. I would say this, my comments would be in relation to the long-term rate that we're at 13%-15% range. Clearly, the comments around backlog being taken out next year, that is going to give us a pretty massive tailwind as we do that. I think it's likely, again, we're not issuing guidance, but it's highly likely that next year would have to, just mathematically, would have to be greater than the 13%-15% rate.
Again, I'm not saying anything other than the math that exists there to take a 32-week backlog and drain it down to two weeks. There's going to be a lot of dollars there that will shift next year. York, if you want to maybe unpack that 17 points.
Yeah. Your math is right. Resi energy technology's growing significantly over the next three years. I'd say more than half of that $900 million you quoted is our storage business continuing to grow. Also included that is getting into the microinverter market. Now, I guess, first, before I talk about that, from a PWRcell standpoint, we're assuming, what we have about roughly a 15% share today. We're conservatively only assuming, call it 20%-25% market share in resi storage three years from now. Conservative growth there from a market share standpoint. Could be more if we do things right here. On the PWRMicro side, that one, we haven't even launched the product yet. That'll come out in April? April. We're being cautious there in terms of market share assumptions.
2024, we basically assume, call it mid-single digit market share in a really, really, really big market here domestically. It's a nice piece of the growth for us, but it's a smaller piece relative to the storage business. Also fleshing out the rest of that is basically selling hardware into Grid Services opportunities, be it home standby, be it some of the other grid edge devices that we have. There's a small amount of just electrification there in terms of portable batteries and chore products.
Great. Maybe we'll squeeze one more in, and then this'll be the last question. Yes, sir.
Just double back on your home standby plan. It sounds like 4X capacity by the middle of next year, or end of next year, you catch the backlog, you're down close to a month or less, give or take.
Right.
Is there another scenario where you look at the cost per lead, which has been trending pretty steadily, and you say, "You know what? Let's lean in a little more on the marketing and customer acquisition," et cetera, et cetera. You'll look up at the end of next year, you haven't caught the backlog, and you realize you need more capacity. Is that a reasonable scenario there?
Absolutely. Yeah, no, I think it's a great question. We have this debate about capacity, not only externally with interested parties, but clearly internally, right? We've been behind the curve for the last two years on capacity. We don't even have any surge capacity now, so when we do get events like Ida and things that have happened later this year, we've been unable to go higher, and that's why the upside for the back half of this year has been really limited. The debate here is, of course, what happens to demand? Are we truly at a point where the category is going to continue its growth rate in spite of whether or not you get events? Will we get more events? Do we get another Texas event in February? That's not contemplated in the guidance we issued this morning.
Those scenarios, if they play out, and they could play out, right? They have played out over the last few years. If they continue to play out going forward, they're not assumed to be, but if they do, we would certainly have to add additional capacity there. The 4X capacity that we are bringing online is, frankly, it's a very large number. When you just look at the raw numbers over our per-day rates and things, which we don't give because it's competitive information, but they're big numbers. To assume additional capacity beyond that, we just were uncomfortable saying that that was going to be needed. We feel that the capacity we're putting online gives us good surge upside, again, with the assumptions we've made about the end market. If those assumptions are incorrect about the end market, we would react.
I will tell you that in full disclosure, we're planning for that next ramp if we have to do it, right? Say, is it going to happen, or we can do this debate going back and forth. I've always said I hate the what if game, but that's one that we need to play because the lead times to put a new factory online, the tooling that we need to acquire. The current lead times on tooling, for the type of tooling we need internally, are 60 weeks. That's more than a year. That's why it's taken us this long to stand what we've got going on here in Trenton. We brought the facility online quicker. We found a building quicker and occupied it quicker than we could get the equipment in it and get it completely equipped.
We got it partially equipped, it'll be fully equipped by Q2 of next year. We're already starting to lay down markers around future capital requirements for new tooling that we may need, either as a replacement, a spare, or potentially additional capacity, at least on the longest poles in the tent as we think about adding capacity. I think the short answer in this really long dialogue that I'm giving you is that we will be able to react quicker the next time around because of some of the planning we're doing today, both in the supply chain and with our own needs internally. With that, we're going to have to conclude Q&A. We are going to do some more. We got bus rides two and back with the Whitewater plant tour.
What we're going to do here right now is I'm going to have Jenny Burkle, who coordinates all these types of events and many, many more, come down and give you a couple of really important logistic things. I'll only say this about Jenny. She's the one you want to listen to. If you haven't listened to anything else we say up here today, you could really end up somewhere you don't want to be if you're not listening to Jenny from a logistics standpoint. If you could do that, we'd really appreciate that. Jen, if you want to come down.
Can you just say we're ending the virtual webcast?
Oh, yeah, I'm sorry. We're ending the virtual webcast. I knew I was going to miss something. The virtual webcast is going to log off. We want to appreciate everybody joining that today, and we'll collate all those questions that unfortunately we didn't get a chance to answer, and we'll get back to them. Ms. Burkle, if you would like to give them the logistics, I'll get out of your way.
I don't think I need a microphone, but so we're going to head out here. You guys can