Good morning, everyone.
Good morning.
Is it open, Merav? Yeah. Good morning. Good to see you all here in a face-to-face meeting after a very long time. We were here just about 2.5 years ago, and we're happy to open the SolarEdge Analyst Day for 2022. We thank you very much for traveling, coming here, being able to attend this one. All those who are listening on the webcast today. We hope that you will find this day useful. As you may see, I'm not Zvi. Actually, in the life full of surprises, on Saturday night, we all boarded a plane. We were tested for COVID. Everyone was negative. However, Zvi yesterday was exposed.
We were notified that he was exposed to someone with COVID for a substantial amount of time, and therefore, we decided not to take any risks related to your health and safety. Zvi is sitting just a few blocks away here in a hotel. He will give his presentation using Zoom. Simply we wanna make sure that we all come healthy and come back healthy, and therefore, we will do it this way. In this sense, we will start this day that we have prepared. The day that is full of. Merav, it's not working? Maybe the battery. Just kidding. No. One second. Now it's good. Let's see. Okay, now it's working. We prepared a full day for you.
A full day that is packed with a lot of information. A little bit about the past, but more importantly about the future, about what are our plans, what are we going to do, with the technology that we have, with the markets that we have developed, with some of the funds that we have raised. Throughout this day, we will also be happy that you will be able to meet our top management that is here, representative of top management. We believe that a day like this is a good way to expose you to them, to listen to what they have to say, to ask them question, and hear a little bit how life looks from their end.
Usually, you meet Zvi or you meet myself, but this is a very nice opportunity to hear a little bit about the areas, the global situation and where the company is going to. We have today most of top management. We have our general managers from the Americas, Europe, and rest of the world. We will start by introducing Nadav Zafrir, Chairman of our board, to open the day. Nadav.
Good morning, everyone. It's almost 2.5 years since most of us met here for the first time. This is sort of a photograph that we took back then. You know, it's the world 2.5 years ago was quite different. It's almost unfathomable, but relatively speaking, the world was quite naive back then. A few months after we met here 2.5 years ago in Carnegie Hall, the worst pandemic in 100 years broke out. It has changed the way we live, the way we work, probably forever. We also made a giant leap forward in terms of digital transformation.
I think the digital infrastructure proved how agile we can be and how fast we can move when we're based on a decentralized digital framework, which in many ways allowed us to not be exposed the same way we were at 1918, about 100 years before this time the pandemic hit. We collaborated on a global level in almost an unprecedented way. We convene again in Carnegie Hall after a few weeks when the war in Europe broke out between Ukraine and Russia. The war, in many ways, has exacerbated the oil crisis. Oil and gas prices are at a 10-year high. It's only accentuating the need for independence around energy, around the world.
Generally speaking, the pandemic and the war have taken a lot of attention from all of us from the media, but I think we mustn't forget that the biggest challenge of our generation is global warming. In fact, in the last two and a half years, we have emitted an extra approximately 150 billion tons of greenhouse emissions only in those 30 months. I believe we're at a point of no return. You know, it may be a truism, but I think it's worthwhile talking about in this forum. I think as people, we're generally content when we know that we're leaving a better world for our children. I think for most of us, our parents left us a better world than they got. They definitely got a better world from their parents.
In the picture here, this is Adam, my son, and a friend. It's a photo I took a couple of blocks from here from Carnegie Hall this last summer. If we continue the current trajectory of global warming, we all know that we are in the process of leaving a world that's not a better world than we got from our parents. At SolarEdge, we believe that this reality is not something that we should take as a given, and we aim to be one of the leaders of what we call energy transformation. Energy transformation, I believe the main pillars are electrification, decentralization, and people. Electrification, of course, is at the heart of this. You know, we have to replace old hardware with new, and I'm using hardware here as a loose term.
Almost every existing element can be energized by electricity, whether it's mobile or stationary. Decentralization. I've been personally involved in the massive change that the telecommunication industry has undergone in the last 30 years, and I've seen how impressive the digitization of the world has been, and this transition that we now call digital transformation has basically made communication, collaboration, data flow cheaper, faster, more resilient, and democratized. If you think about energy as bits flowing in an infrastructure or network and make that comparison, I know that it's not trivial, but as we change the way we produce, the way we generate, the way we consume energy, thinking about this analogy to digital transformation as it refers to energy transformation, I think makes a lot of sense. At the end of the line, there are people consuming energy.
I think, again, as we change the way we work, the way we live, the way we commute, people are expecting to consume energy in a different way, localized in remote areas. People are becoming consumers and producers. This all relates to the digital transformation. Going back to COVID, you take away the digital infrastructure that we've built in the last 30 years and apply that to the current pandemic, and you get 1918 again. In fact, 2.5 years ago when we were here, if I'd have told you, "Listen, there's going to be a global pandemic in a few months, all of us, and the majority of the workers in the first world are gonna start working remotely based on a digital framework that was not built for that," you wouldn't believe it, but it's proved very resilient.
With electrification, decentralization, and the right people approach, we believe we can lead this energy transformation. SolarEdge is now an energy transformation company, and I believe we're well-positioned to be one of the leaders of this transformation. I think we have what it takes in terms of the building blocks. First and foremost, technology and innovation. At our core, we're an ultra-innovative engineering company, but we also have the system engineering, the data capabilities, the software capabilities, the machine learning, AI, and cybersecurity capabilities to lead this. Our culture is one of operational excellence. Beyond all that, we have the global presence that it takes to be a leader in this kind of market. All of that doesn't mean anything without vision and leadership. I joined SolarEdge almost three years ago, when my best friend and mentor, Guy Sella, passed away.
I followed him for about 25-30 years before that when we were in the military together. I wasn't surprised that this company has the vision and the leadership. I do have to tell you that in the last 2.5 years after joining the board, what I found were truly exceptional leaders. They're smart, knowledgeable. They work very well together. They're an outstanding team, and I'm confident that they can lead the energy transformation quest for the benefit of our children. They will present our performance in the last couple of years, our capabilities, and more than anything, our vision for the future. Again, thanks so much for coming, and it's great to see you all in person.
Thank you very much, Nadav. Merav?
Ready up and here I come. Hey. I'm beating fast like a jungle drum.
Ready or not, here I come. Oh, oh, oh, oh. Feel my power. Oh, oh, oh, oh. I take you higher. Feel the power. Yeah. Ready or not, here I come. I was born to be on the run. Shine forever wild and young. Bright and gold, eclipse the sun. Ready or not, here I come. Oh, oh. Feel my power. Oh, oh, oh, oh. I take you higher. Feel the power. Yeah. Power, power. Can you feel the power? I'm gonna take you higher. Can you feel the power? Ready or not, here I come.
Again, good morning, and thank you very much for attending. Let's start today. Most of this day is going to be around the plans for the future, a little bit about the present, but we need to understand in order to start where we came from and what we have achieved to date. The company was founded, as you know, in 2007. We started to sell inverters mostly in Europe in 2010, and we have entered the top ten inverter makers leadership board in the world in 2014. Throughout 2017, we were already in the fourth place, and actually, since 2018, SolarEdge is the largest inverter company by revenues.
We have IPO'd just about seven years ago and five days here in New York, and since then, we continue to grow, and we managed to remain the number one inverter company throughout 2020. There are many things that allowed us to grow and to come to this situation. The fact at the very beginning is that we have a differentiated technology and proprietary technology, the DC-optimized inverter solution that we had invented, but we were able to continue and maintain continuous leadership in all technology fronts that are leading the world of the PV and energy transformation that we see ahead of us.
We have a very trusted brand among our customers, a brand that knows how to deliver very good performance and at the same time to be very much customer-focused in a way that our customer really trust us and know that they can rely on us. We have a very well-diversified mix of products. These are products that go through different segments, through different geographies, and we also have today products that are not related to solar that lay foundation for future growth. We are vertically integrated.
As a company, we like to take the destiny of this company in our hands and to be able to control all of the major and critical areas that will allow us to get the performance to where we want it to be, to get all of the areas that will allow us to make products, to deliver products, and to continue and serve products. We were able to do it with very good operational excellence. Eventually, we have a very deep relationship with developers, installers, and players in the PV industry, as well as with investors and stakeholders. That led us to a situation where today we are the largest solar inverter company by means of revenues spread around 34 countries with physical presence, but actually installed in 133 countries.
We have over 84 million power optimizers shipped and working around the world. They are representing over 29 GW of electricity that we are generating. We have over 2.5 million systems that are constantly monitored using our cloud-based monitoring platform, and we have over 400 patents and about the same number in patent applications. We have a lot of knowledge that we were able to gather in this quest and in this journey. This is of course also reflected in our numbers. Our revenues grew significantly over the last few years with a CAGR of approximately 34%, even if you take into account the year of COVID, in which we grew only by 30%.
We were able to have an operating profit that is growing with the exception of 2020, and the same applies for the bottom line non-GAAP revenues. Even though we talk a lot and we love to talk about our past, the most interesting area is our future. Throughout this day, we will start by talking a little bit about the opportunity that we see in renewable energy. We are going to switch to our regional GMs that will share with you a little bit of insight about how do they see the world, what do they see, and try to shed a little bit of light on areas that sometimes we do not see in special applications or some of the benefits that we know how to bring.
We will then move to Zvi from his hotel room on Zoom, that is going to talk about the solar growth strategy and to discuss how we're going to deliver the technology that we brought in solar space and in the non-solar segments in order to continue and grow the company. We will then have a short break. We will have a Q&A session with Zvi, and then Yogev, our Chief Marketing Officer, will try to imagine with you about the new world of energy and how should it look like. This will be followed by Meir Adest, our VP product and founder of SolarEdge, that will try to tie this imaginary world to the technologies and capabilities that we have today and how we believe that we can fulfill some of these areas.
We will then go to lunch, and once we will reconvene, Uri, our COO, will provide an operational excellence presentation in which he is going to discuss the challenges that we see, the solutions that we have found, and how we're going to continue and grow in the future. We will talk a little bit about ESG. This becomes, of course, a major issue, and we're at the forefront of this trend, not just by the products, but also in what we're trying to do. Then I will try to summarize and give a little bit of prospect about how do we view the future from numbers point of view and help to understand how to model and how to look at our growth.
We'll be happy to interact with you, management, members through our lunch and through the cocktails that we'll have at the end of the day, and we hope that you'll find it useful. There will be a Q&A session, of course, after my presentation as well. Let's talk a little bit about what do we see ahead of us and where is the opportunity. The energy market is going through a very significant shift, and this is a shift that is driven by three major forces that are pushing towards much more electrification that is built on decarbonization, meaning the usage of less fossil fuel sources in order to create this energy. We also see that the world is becoming less centralized.
This decentralization of the world that is created due to the fact that today, solar installations, PV installations, allowing us to generate electricity almost everywhere and reduce the transmission distances. This is a disruptive change that is happening in this industry. When we try to understand each of the forces, we start from the electrification. The world population is growing, and when the world population is growing, we expect to see 2 billion more people towards 2050. 2 billion more citizens that are consuming energy. But they're not just consuming energy as we see it today, because a lot of them are sometimes living in rural or villages, and we see an urbanization. These people are moving to cities, and they start to consume more energy.
We believe, and researchers believe at least, that we're going to see double the amount of electricity produced until 2030 and triple this amount until 2050. This electricity will have to be generated somehow. While the pie of energy is growing, we see also a major shift in those sources of energy. All of these sources are actually going towards clean energy. We can see that within the clean energy sources, solar energy is expected to take the lion's share by 2050, being at around 38% of the entire energy generation around the world. This is a phenomenon that is not happening by itself. It is happening because governments is pushing towards more solar energy. We see it in Germany with the new government.
We see it here in the United States with the Build Back Better, whether it will come in one form or another. Actually, we see it, by the way, in Italy, where just a few days ago more incentives were given. Governments are pushing towards more and more renewable energy, and this is even without taking into account the impacts of the war between Russia and Ukraine. We also see, of course, the fact that companies are trying and corporations are trying and pushing towards more electrification using solar. You have all seen the SEC announcement about new regulations that will ask companies to expose their carbon footprint, the various levels of usage.
This will push companies to invest much more in simply reducing their carbon footprint, and the easiest way to do it is through solar. Actually, you, as investors and some of the investors sitting here, represent ESG funds and impact funds. Investors are pushing corporations to use much more solar, and this is something that we see that is gathering a lot of momentum. It is going to be pushed by individuals, and individuals are seeking many things. Some of them here in the United States are looking actually for resilience, because due to wildfires in summer or storms in winter, they do not have electricity. We do see citizens pushing towards, and individuals pushing towards more solar because when electricity prices are soaring in Europe, it is simply economic for them to put a solar system on the rooftop.
Now the interest environment is changing a little bit, but still, this is a great investment and in some of the presentation you will hear what is the return on investment time. It's simply good and economic. Also, individuals are concerned about the world that we're leaving to our children, and they would like to be a little bit greener. The last force that is driving this is decentralization. We used to live in a world where you had a power station, and you had transmission lines, and we were all basically consumers. Over the last few years, a new term was developed, and this is prosumers. We have people, we have companies, we have organizations that are producing energy and consuming energy. Now we don't see any more just a centralized way of generating electricity and distributing it.
We see actually a mesh with different nodes, where each node is generating electricity and is actually consuming it. Each of these nodes is independent and sometimes not coordinated. This is a new world that requires technology and technologies to manage it, to protect it, because there are cyber risks associated with it, and to control this network. The trend is that for us at SolarEdge, we believe that we see a very nice long and runway for growth in the solar industry, both in the inverter side and in the battery side that are basically completing this offering to be a resilient one. Because as we all know, we generate electricity from solar only when we have the sun. That means that a lot of opportunities are still there.
From the very beginning of SolarEdge, we understood that this opportunity is a global opportunity and is not just related to one specific market or one specific segment. We actually implemented a strategy where we're growing in almost every market that is interesting and every segment that exists. As you can see at the market figures of 2021, you just see how big the opportunity is, especially in those areas that we plan to go into. In order to give you a little bit of understanding of how this world of solar, how this regional solar is behaving, we've invited our general managers, and I'm happy to invite Alfred, our General Manager of Europe. Alfred, please.
Thank you, Ronen. Good morning. My name is Alfred Karlstetter. I live with my family in Germany, in the Munich area. It's a great pleasure to be here in New York and to give you a glimpse of the European SolarEdge business. After I finished my study in Germany as an industrial engineer, I started my career in the semiconductor industry. 12 years ago, I joined the PV industry, first in SMA Solar Technology in Germany and later then in Samil Powers. 7 years ago, I met the first time Zvi and Guy Sella, and then an excitement journey starts. Full of innovations, high speed, and very, very dynamic. In these days, optimizers were almost unknown in Europe. Now today, everyone knows in Europe what an optimizer is and using SolarEdge products.
Today, we are a leading company in Europe. When I began in SolarEdge, we had a team of 30 employees, low double-digit million EUR annual shipments. Today, we have about a team of 300 employees in 13 regional offices and a three-digit million EUR business. Our products are installed in about 25 European countries by around 10,000 very loyal installers. How big is the European market? It's about, in our estimation, a market of 32 gigawatts. The largest countries are Germany, Netherlands, and Poland, but there are much, much more. There is Italy, as Ronen mentioned. There is France, there is Spain, there is Belgium, Austria, Switzerland, the U.K., and even in the north, in Sweden and Norway is a PV market, and SolarEdge products are installed also in these regions.
Here is why we think Europe continues to gain such a positive momentum in PV. First, electricity prices have increased significantly. The last 2 years for homes by about 13% and 50% in the commercial electricity. This is even before the situation and the war in Ukraine started. Second, also oil and gas prices went up significantly. Europe and energy independence is the top priority in the European countries, which has an effect to go away and not heating homes anymore with oil and gas to go and use heat pumps. This is a big trend. It's also heavily subsidized in Europe. It's a very booming market. Of course, more electricity is needed, and renewable is understood as to be as a key to become independent.
Let me give a little taste of some countries. Let's start first with the Netherlands. In the Netherlands, it's a small country, but it's very big in PV. It's a 2 GW installed SolarEdge system already in over 520,000 systems, and installed by our very loyal more than 5,000 installers. Another country which is also very dynamic is Germany. Here we saw between 2021 a very interesting change. Usually, the residential market was up to 10 kW peak in the residential. Now we see, and we saw it between 2020 and 2021, an increase of over 500, and this is the blue one, 510 MW. Why it is so? It is because residential systems become bigger. What I said, why it is so?
On one hand, energy prices increase significantly. As I mentioned, heat pumps, so much more electricity is needed in the homes. Number three is the electric cars, which is also very, very booming in Europe and specifically in Germany. The homeowners cover more or less every space on the rooftop with PV to produce as much as possible PV power in order to become, let's say, independent. What comes with that, and it's coupled with that, the homeowners in Europe and, again, Germany, and you see it on this graph here. It is already 57% with some PV, homeowners want a storage system. In 2020, 57%, and in 2021, already 69%.
More than two-thirds of every new PV installation is with the storage system in the residential. When we look on the market and I hear what installers are saying, then this even will go up again. The attach rate will go up again in 2022. With this market development, we have the entire SolarEdge system. We have the full system. We have the inverter optimizers, the batteries, and the EV charger, where everything is in our ecosystem, very smartly connected. The commercial market is booming in Europe. What you see here is a typical German factory in the automotive area. This is a company who supplies its products to a more or less every or all German, not only German, European tier one car maker.
Because of the high energy prices, but also because of the increased prices for carbon emission certificates, because this is also a big cost factor for the companies in the meantime in Europe, and specifically in Germany. When this company or this is an actual project, if they invest EUR 4 million, have a return on investment of five years and have a significant reduction of carbon emissions. We, with our team in Europe and with my colleagues, we do directly with the investor, all the engineering and project support. We go directly to the investors. We work out all the engineering and doing the full support here. We talk directly with the management. This company has another 271 sites for solar globally. Let's look on my last slide.
This is what has been published recently, I mean before all the things in Ukraine started and which Russia started. This is the national plan from Germany PV expansion, for which has been introduced by the German minister of economics. As you can see here in 2021, the market new installations in Germany was around about 5 GW. The plan is to go up year by year, up to 20 GW in 2027. I said, this is all before this whole crisis started. Even with the change of the last couple of weeks, maybe this will be speed up. I'm very confident that the European market continues to grow in the next coming years. We have a very strong brand recognition.
We have close relationships to about more than 10,000 installers, and we are very, very well positioned to continue the growth like we had it in the last five years. Thank you for your time, and I would like to invite Daniel, who will share some insights about Rest of Europe.
Thank you very much, Alfred. Good morning, everyone. Happy to be here. My name is Daniel Huber. I'm having 15 years experience in the solar industry, and I've joined SolarEdge in 2010. Since then, I was holding multiple sales leadership positions in the company in Europe and in Asia-Pacific. I'm the proud general manager of what we call the Rest of World since 2019. Rest of World consists of 10 offices globally. In each one of those offices, we are having a local country manager, a local sales team, a local service team, which are serving and supporting the local market needs. Now, Rest of World is a highly diversified territory. Some of the markets are still feed-in tariff-oriented. Some of the markets are driven by self-consumption. Some of the markets, for instance, Australia here, are having a multiple segments.
Some of the markets, for instance, South Korea and India here, are dominated by a single segment. This is what's unique about rest of world, and this is where SolarEdge opportunity and strength is. Because SolarEdge is having today a very compelling offering for both residential, C&I, and recently small utility scale as well. Now let's talk about strategy. Our strategy in rest of world is based on three pillars. The first one is to increase our market share in every segment, in every market that we are operating. This is what we try to do every day. The second is to expand our reach and presence through additional applications that we are developing and that we are entering into. The third one is to continuously expand our reach and presence geography. Now let's talk about market share increase.
Our main market in Rest of World is the C&I market. In the C&I market, we are growing, and we are growing fast. We are growing faster than the market, which represents the market share increase that we have, and also represent the growing adoption of MLPE technology in Rest of World territory. The shift from C&I to small utility scale is a very, very logical expansion. It's a very logical continuation. After all, C&I and utility are sharing very similar financial drivers, very similar financial schemes, and also they share many times common customers. This beautiful installation that you see here is installation in Taiwan of 77 MW that is under construction as we speak. The investor behind this installation is an investor that we work with for a couple of years.
Initially, he was doing with us only small commercial rooftops projects, later expanded with us to larger commercial rooftops as he was very satisfied from the increased yield and performances of the system. After he was satisfied from the performances of the large commercial sites, he was moving with us to do utility scale sites. This is the type of dynamic that we see in the market, and this is what I was referring to earlier. Now let's discuss about applications development. In Japan, there is around 25 GW of ground mount installed base in different sizes, from 50 kW up to double-digit MW sizes that have been installed, and the inverters' warranty are now approaching the end of the warranty period. Now, the investors behind those projects, they are now facing the dilemma whether to replace or to repower the sites. Now, what is that mean?
Replace means replace your old string or central inverter with another new string or central inverter. Repower means replace your old string or central inverter with an MLPE technology that not only provide you now an inverter for the rest of the system lifetime, but also boosting the performances of your sites. Now, Japan is a very, well-positioned market for repowering for multiple reasons. The first, the old feed-in tariff in Japan was very high. The second, many of the original Japanese manufacturers are no longer in the business. The third one, many of the Japanese old installations were done either in shaded conditions or on an uneven ground, like you can see in this picture. This type of installations are ideal for mismatch recovery, which MLPE technology can do.
SolarEdge is very well positioned in this application, because SolarEdge not only having a very compelling MLPE offering for this application, we are also having a JET certification, which is a significant advantage and significant plus in this industry. To date, we have repowered around 200 sites in different sizes, from small sites to larger sites, and we are building a very healthy pipeline for 2022 and for the years beyond. Another very interesting application that is evolving recently is the floating PV. Floating PV is evolving because there is now a growing limitation of space for utility installations. Now, floating PV also are an ideal fit for MLPE technology. First of all, because of the mismatch, the mismatch is coming from two different directions. One direction is the mismatch that is driven by the floating itself.
The movement of the water up and down during the year based on the weather conditions is creating an inherent mismatch. The second is the very common usage of bifacial panels in those applications. Bifacial panels are having, by definition, a mismatch between the front and rear side. Again, this is something that MLPE technology can recover. The third one, obviously, electricity and water are not operating well together. As a result, rapid shutdown and safety features, safety capabilities are highly important. Now, even in markets where rapid shutdown is not regulated, like most of the markets in my territory, there is still a very good understanding about the importance of safety and the capability that SolarEdge is having is highly regarded.
We have been securing up to now more than 100 MW of floating sites, installed more than 85 MW sites globally, and seeing this application as a growing opportunity. Now let's discuss about geographic expansion. We recently certified our commercial inverter to the South Korean market and now aiming to start and scale up the operation over there. In Brazil, which is a market that, we have been present and we have been active for a couple of years, we are now expanding the team. We have opened an office last week in São Paulo. Australia is one of our core markets in Rest of World. We have already reached 100,000 sites installed base, which is roughly 1 GW. Last week, we have launched officially our SolarEdge home battery, DC-coupled configuration, and we'll capitalize on the installed base that we have.
In Japan, which is one of the largest residential energy storage markets in the world, we have recently certified our single-phase inverters to the JET certification, and we start to see a ramp-up in installation starting April. Thank you very much. I will call Peter. All right, Peter.
We're off? Okay, there we go. Good morning. My name is Peter Mathews, and I'm the general manager for SolarEdge North America. A little bit about me. I grew up in Maine, went to Cornell up in up in Ithaca, and then moved to the Bay Area in 1986. Spent 25 years in the semiconductor industry, sales and marketing, engineering. About 15 years ago, I decided to move into solar. Ten years ago, actually, next month, I joined SolarEdge, working for Zvi and my VP of sales, Amir Cohen, who's here. We started the SolarEdge North America organization. It was 3 people. Today, we're 320 and growing fast. A little bit about the North American PV market. 2021 was a big recovery year for the industry.
2020 saw a big downturn, and today the market prospects look excellent. According to EIA, about half of the electric generating capacity in 2022 is gonna come from solar. Solar is larger than natural gas in terms of new generating capacity, larger than nuclear, larger than hydro and all the other generating capacities. The U.S. PV market today is a little bit over 20 gigawatts, and it's the second-largest market in the world after China. It's made up of three segments. It's made up of residential, commercial and industrial, and utility. Each of those segments is expected to grow healthily over the next five years. Specifically, C&I and residential are predicted to grow about 10% annually.
Utility this year is gonna be down because of inflationary pressures on modules and steel and other components used in utility, but is expected to resume growth next year. Now last year, 2021, about 500,000 U.S. homes got solar for the first time. If you add to the fact that about one-third of those residential systems also got batteries and backup, you can see that the market opportunity for the residential segment is excellent. Now let's talk a little bit about the residential home solar. Last year, one in six residential homes in the United States got batteries and backup. Lower than Europe, many countries in Europe, but growing fast. It was higher in California, and states like Texas, Florida, Puerto Rico are now close to those attach rates we're seeing in California.
This trend is growing very, very fast, and we expect by 2025, 1/3 systems in North America to get a battery. This translates to about a $2 billion battery market by 2025. As you'll hear from our team later, we expect to have substantial capacity in place to support a very significant portion of this opportunity. Okay, with this great opportunity in front of us, why do we believe that SolarEdge is best positioned to take advantage of this opportunity? One of the reasons is we have this very unique architecture known as DC coupling. With DC coupling, you're able to tie all these DC devices together. When you think about it, a solar array is DC power. A battery is DC power. An electric vehicle is DC power. And even your heat pump, air conditioner is DC power.
What SolarEdge is able to do is to connect all those DC devices together in our proprietary DC architecture. We can freely convert the energy amongst those different devices, use the energy without converting it to AC. If the homeowner wants to power the rest of his home or export the energy to the grid, then we convert the DC to AC in one simple inversion. We're the only company that does it with this very unique way with our unique DC architecture. When you control your system with DC, the benefits are you get more energy because of fewer conversions. You get the ability to put more solar panels on your roof. Think about, let's say we had a 5-kilowatt inverter.
We can put 10, maybe even 15 kilowatts DC on the roof, share that energy with the battery, charging your electric vehicle without converting it to AC. Then if you want to again export it to the grid or use it in the rest of the home, then you convert it to AC. This means you can avoid very significant upgrades in your home. Many older homes have smaller electrical panels, and often the biggest expense on upgrading your home is actually converting, let's say, from a 100 amp panel to say, a 400 amp panel. In many cases, SolarEdge enables the homeowner to avoid that very significant investment. Lastly, all of this is brought together with what we call our SafeDC technology, which is very unique in the industry.
Let's change gears here a little and moving on to the C&I segment. The largest component of the C&I segment is this new area called community solar. What is community solar? Community solar is a program that allows people with easy access to solar who might not otherwise be able to get it. In the U.S. alone, there's millions of people that lack access to solar, either because they rent their home, their financial situation, and they can't afford the investment, or maybe their roof can't site solar, either due to shade or it's an old roof or the roof is too small. This includes many families in the low- to moderate-income who can't afford it.
Community solar is unique in the sense that you can site a very large C&I project like the one you see here in areas that normally cannot site solar. This happens to be a community solar project in Rhode Island, and you can see from the picture, it's undulating land. It's in a wooded area. The shape of the system is very unique. The only way that this developer could install solar in this particular community solar project was with the SolarEdge inverter. We allow the designer to go over different shapes of the land because of our ability to handle mismatch. We allow them to do different shapes, and we allow them to site the inverters all through the different site. The community solar opportunity is very significant, growing very, very fast.
Let's take a look at one specific spotlight. New Jersey today is one of 41 states installing community solar. New Jersey decided in 2019 to make a major investment into community solar, and they approved a plan to install 1.1 GW of community solar throughout the state over the next five or six years. The first award went out in 2020, and SolarEdge was selected for this particular project. The first award that went out was 160 MW. Of the 160 MW that was awarded throughout the state, SolarEdge was selected for 130 of those 160 MW across both rooftop and landfill sites. This was done over 100 different individual locations spread throughout the state.
Now, this 130 MW is gonna provide the ability for 33,000 New Jersey homeowners and businesses to go solar when otherwise they couldn't, because either they couldn't afford it to put it on their roof or their home didn't allow it. 33,000 sites, when you look at the big numbers, New Jersey, as of the end of last year, had 153,000 residential and commercial solar systems installed over all of time. This single program, this single installation from last year, is gonna add 20% to the amount of energy being produced by New Jersey homeowners. It's a very, very significant program, and SolarEdge is doing very, very well in this community solar space. In summary, North America, we have a very, very strong team in place.
Very proven track record across residential, commercial, industrial, and utility. The market looks excellent over the coming years, and we're expecting growth in all three segments. Energy storage, as I've shown you earlier, with backup, is expected to accelerate the opportunity for SolarEdge in the coming years. Lastly, our DC architecture offers many advantages for the types of systems that we're building. With that, let me turn it back to Ronen.
Thank you very much. I hope that you managed to get a little bit of taste for our different applications and market. Of course, Peter, Alfred, Daniel are all here, and during the breaks and our lunches, you're most welcome to talk to them. With this, I'd like to turn it to Zvi, to our main presentation for solar growth strategy, and let's see how technology will serve us here. Zvi?
Yeah. Can you hear me, Ronen?
Oh, yes, we do. Okay. I move it to Zvi.
Okay, thank you. Good morning, everyone, and again, I apologize for not being able to be there in person, but under the circumstances, it seemed like the wise path to pursue. When I gave a snapshot of the opportunity that we see ahead of us and the regional GMs laid out the understanding of some of the markets and in particular, the infrastructure and capability that we've grown over the years globally, that is the channel to which we can bring to the market new solutions and new technologies.
What I'll try to do in the next 45 minutes to an hour is talk about the type of technologies, products, and segments that we are active in or plan to be active in, and that on the basis of that infrastructure, we believe we will be able to bring them out globally. A bit to Merav, if you can move with me. Yeah. A bit to share how we view the world. First, our objective is to be a leading global provider of hardware, software, and services in the renewable energy markets where technology can improve the production, storage, and consumption of energy.
We look at our activity and divide it into three, and that thread will follow through throughout some of the presentations today, starting from scale. In scale, we refer to our markets where we already have a mature offering, and we can grow either through gaining market share or evolution of our offering or adding onto our offering elements that until now we were not generating revenue from. The second element is what we call develop. Develop is where we have roadmaps and plans to enter adjacent markets or new segments or significant missing parts in the markets that we are already serving. The third element is what we call explore.
Explore is more where we look and think about applications and markets in the renewable space, where we believe that the infrastructure that we have, the capability that we have, could potentially allow us to come up with new ideas and identify markets where we can eventually end up with a differentiated offering. Throughout all of these elements, we are focusing on building our capability and infrastructure from a technology point of view, in all of the disciplines that can serve these markets, and of course, doing so on the basis of our global infrastructure, as I discussed earlier. In the presentation today, I will focus in more detail on the scale and develop elements of our program.
Later on, Yogev, under the part we call imagine, will share a little bit what we are thinking about under the category of explore. Another way to look at this is basically we identify that there is a need, and as a result of that, an opportunity for us in all of the segments that we serve to have a cohesive operation of the elements of generation of renewable power, of storage of renewable electricity, and touch on the way the energy is consumed in order for the consumer to have, or the customer, to get the best return on investment for their investment.
all of that can be achieved through a smart energy management that operates these three elements of the energy cycle, be it in the home or in the business or in any other elements. that is where our roadmap is focused on building all of the building blocks over time to be able to serve these applications in the markets that we are active in. with that in mind, let's start with residential. what we coin as Residential 1.0 is basically the residential of a few years back, where there was an installation that consisted of modules, inverters, eventually module-level power electronics like our optimizers or other solutions.
The objective was to harvest maximum of the power from the sun and feed that into the grid, either in a feed-in tariff scheme or in a net metering scheme. The residential solar evolved into what, for the sake of this conversation, let's coin residential solar 2.0 in some markets. Some markets are still very feed-in tariff driven or net metering driven, but some markets, in particular, those that are more self-consumption oriented, then the solar system evolved into an energy system that is aimed to enable maximizing generation and maximizing self-consumption of that generation. As a result of that, you began to see the addition of other elements like batteries, like EV charging, like meters, in order to enable that maximization of self-consumption.
Within that transition, we built our offering to serve this application as well. Today, under what we call the SolarEdge Home, we have this offering that includes obviously, inverters and optimizers, a battery and EV charger that is operating by the energy management system, a water heater that is operating by the energy management system and using the generated power from the solar system based on the economic considerations as to whether to heat the water or fill the battery or whatnot.
We have a set of additional components, meters, plugs, and the relays, et cetera, all aimed to have a cohesive operating system that is maximizing the energy generation, enabling storage of that energy and smartly using the energy, based on the considerations of the consumer. Now, the system can operate as a whole, but there are different countries where different specific elements are important or required, so it can operate partially. Of course, in many countries, it's still the very basic solar installation of inverters, optimizers and solar panels. The next few slides, I'll try to describe a little bit how the system operates today and some elements of our roadmap, how we plan to move forward.
Starting with the topic of load control, which is a topic that has a lot of attention recently. The objective load control is important both in self-consumption or on grid, but probably more important in backup scenarios. In backup scenarios, the idea is that you want to be able to operate only the essential needs and disconnect quickly the loads that are not essential, and especially if they are heavy loads that could quickly drain your battery.
In our load control system, we do that through a set of dry contacts that you can connect to those loads, and you can program such that when the system goes into backup mode, it automatically disconnects those loads and ensures maximum use or longer use of the energy that was stored in the battery. In particular, as was mentioned earlier, in a DC architecture, you're able to replenish the energy in the battery in a more efficient way. What is nice about the solution is that it is a simple one.
Everything is wirelessly connected through our Energy Net system, and it is relatively easy to install and comparatively a cheap solution for achieving the results of efficient backup and long duration backup, especially if someone needs to be out of power for an extended amount of time. This is the first profile of the system, and obviously there's a lot of evolution that can be done to increase ease of use, to increase the wisdom of the energy management. This is an evolution that we will continue to develop in the coming months and years to make this system more and more seamless and more and more easy to use. Looking at some of the other elements, let's start with the inverters and optimizers.
Inverters and optimizers, our basic roadmap is, first of all, focused on size. As was mentioned by Alfred, in many regions, the average size of a residential installation is increasing. The average size of a solar module is increasing. Having the right solution for those size increases enables generally a reduction in cost per watt, and with that, further proliferation. We are continuously increasing the size of our inverters and optimizers. We released recently our 11.4 kW single-phase inverter in the U.S. and in Australia and up to 15 kW residential inverter in Europe. With that comes module optimizers that can support today modules of up to 550 W.
We have in the works optimizers that will be able to support modules of above 600 watts. All of that without any clipping in a way that you can get the maximum energy that the sun is providing at the time. Additionally, the roadmap includes elements of improvement in the core inverter technology with the introduction of SiC silicon carbide components to more of our inverter offering, and as well as developments with gallium nitride for our future optimizers in our next generations.
On top of that, a key element of the roadmap is improving the control from the inverter of the other generation and consumption elements in the home, and especially focusing initially on generators, heat pumps and water heaters as I discussed earlier. Moving from the inverter and optimizers to talk about the battery. Battery has been highlighted a lot recently. We are shipping our single-phase residential battery globally with positive acceptance of the battery as part of our DC systems. We're launching our three-phase residential battery in Europe in the second half of 2022. We're very focused on ease of installation and time of installation from the installers, and we're getting positive feedback about that.
Our battery is UL 9540 certified, the batteries that are shipping to the U.S. At the beginning of next year in 2023, we will be adding to the battery offering of today, which is based on the Samsung SDI cells, batteries that are using our own cells produced from Sella 2 factory that we'll discuss in a little bit more detail later on. Other elements of our residential offering are the various load control elements which I discussed earlier. Today we are shipping already EV chargers both in the U.S. and in Europe, SolarEdge EV chargers that are controlled by our operating system.
We have in the works our next generation EV charger, which will be a DC EV charger, enabling faster charging and using more power coming from the battery, from the solar system, and if needed, from the grid and the AC source. It will eventually also be a bi-directional EV charger that we'll be able to charge the battery in the vehicle, or use the battery in the vehicle for the resilience of the home.
On top of all of that is a set of applications that, as I mentioned earlier, is focused on making the experience for the homeowner optimal and giving the homeowner maximum control of their system so that it fits their needs and preferences, and at the same time, it gives them the best return on investment with suggestions on how they can choose to use the system for various motivations. At the same time, giving them the flexibility to decide eventually how they want to use it. This is part of the highlight of the technology and product roadmap in the area of residential solar.
One of our main focus areas in this segment is ease of installation and time of installation with the expected growth in this market in this segment. Some of the markets are being constrained by the availability of manpower. With that, the amount of time that it takes to install a residential system and the level of expertise that are required are becoming a bottleneck for the growth of the industry. In order to help with this challenge, we are putting a lot of effort and focus on ease of installation, starting with the fact that we are gradually moving all of our elements to the Energy Net mesh communication system that makes installation very easy. Gradually all of the components will be able to test themselves and eventually self-commission.
We are assisting the installer from the design through automatic uploading of the design into the monitoring system to save time on that, as well as the ability to commission the system from remote and load the updated firmware from remote, and saving them having to go back to the site multiple times later on. This is a big area of focus for us. I think the battery was probably the first significant step in terms of focus on time and ease of installation. We're getting very positive feedback on that and expanding what we've learned in that experience to some of our to the rest of our product offering in the next couple of years.
In short, to put the residential story in perspective, we are comfortable with our position today. Our systems are being installed by roughly 52,000 installers globally, residential installers. We have residential installations in more than 110 countries. And an installed base of close to 2.3 million residential sites, which are a basis for very active learning on consumer behavior, on the needs in the various markets, and the need of one market today is a differentiating opportunity in another market tomorrow.
This installed base is also serving as a potential for further growth in business later on, for instance, with batteries or EV chargers or other elements that some of the older installations don't have and might need in the future. Moving on from residential to commercial, which is, I think, gaining a lot of attention for sure from us, but also from many of you in the last few months. In general, the commercial market is moving quickly lately. There are two fundamental reasons. One which was also referred to by Alfred and some of the others is the price of electricity.
The second is the push to sustainability, which as you can see from the quotes over here, is coming also from the private sector and investors that are pushing companies and corporations to strive towards carbon neutrality. As well as governments and regulatory bodies that are requiring corporations to do the same. The combination of these two forces is driving an increase in the installation rate of C&I systems. If you move on to the next slide, Merav, and on top of that, one of the dynamics that we see is that businesses and companies and manufacturing and storage companies are trying to use as much of their exposed surfaces to generate solar power.
That way, offset some of their emissions and reduce some of the taxes or penalties that they are paying, as you heard from Alfred. Maximum use of available surfaces, roofs, carports, and any other surface is one of the drivers. On top of that, this segment is following probably a couple of years behind the residential trend of increasing self-consumption by adding EV charging, storage, and other elements. The first challenge or the first drive is get the most you can out of your exposed surfaces, and over time, they will begin to be the drive for other elements of energy management and self-consumption.
The offering that we bring to this market, which was for the most part released during 2021, is based on our Synergy inverter platform, which as you can see, is a Lego-like modular inverter system, which assists the customer in being able to size very flexibly whatever size of rooftop or carport they need to install because they can use, where needed, the larger inverters and then augment with a single or double configuration to get the best or the maximum out of the exposed surface.
That comes with the optimizer. We're moving into the latest generation, our fourth generation optimizers with today up to 1,100-watt capability and in the future going up to 1,400-watt capability to support the large modules that are used in this industry, and that way reduce the cost per watt. As well as the ability to manage and use various sensors, accessories, control mechanisms that are needed for these type of installations. Also today, where needed, people are using a third-party battery in conjunction with our inverter system.
This offering is what has enabled us, as I mentioned, released for the most part last year, has enabled us to ride the recent increase in this market, and satisfy the drivers that I mentioned before, starting with the drive to sustainability. If you see on this slide, there is a sample of several very well-known and large global brands that have either used directly or specified to the EPCs that are, or developers that they are working with, to use the SolarEdge solution because of the benefits that it brings to their type of scenario.
Not only our typical safety and additional harvest, but what in many cases over here is important to them is the ability to receive service globally, the ability to standardize globally on a common solution. As I mentioned before, satisfy the needs thanks to the MLPE and the flexibility of the inverters of addressing all kinds of sizes of roofs and all kinds of shapes of roofs or carports, et cetera. This has been one key driver for our growth so far and where we expect to see growth in our C&I market going forward. We can share one representative of global, of a global company and their comments on this topic.
Four years ago, we planned to invest on a sorting facility, allow us to sort 19,000 shipments in 45 minutes. We thought about a lot of things during designing of this facility. One thing that was in focus was how this building could be a zero carbon emission, meaning that we want to make sure it's gonna be a green building. We are obligated on a corporate level, investing EUR 7 billion to reduce our emissions from 33 tons to 29 tons by year 2030. The first things that we did, we equipped all our roofs, not only of this facility, all our facilities, with a PV that would provide us with the electricity for the future, not only for us, even we have an extra to sell to the electric company.
SolarEdge got the best score in terms of price, utilization, and support, which is very important for us. Our choice was easy, going with the SolarEdge. I'm sure that we have a lot of product now that we can use to make our environment.
A better place for us to live. We have electric cars. We have even electric airplanes that DHL invest in. I don't see any other choice, not only DPDHL or DHL Express, but any other corporate that would not invest in renewable energies. I said, the one key driver in this market is this adoption by corporations and the drive to sustainability by companies and all around the world. The second challenge and again, when there's a challenge for us it's an opportunity in the C&I market, is the diversity of applications. While also the residential market is diverse, at the end of the day, homes are consistent to some extent in the way they look and what their challenges are.
The C&I market is much more fragmented in terms of the type of challenges and needs, and at the same time, it's much more accurate or mathematical in assessing the solution. C&I investors are usually making their decisions based on an Excel, and we have the challenge to make sure that they can see the value in our solution for their application and the return on investment that they target. Some of these different types of applications you can see over here, whether it's industrial rooftops, public buildings. We have a very large installed base on schools and government buildings, floating and other examples.
I'd like to share with you on top of those that were shared earlier, a couple of such applications and what are the benefits we bring. It's starting with the floating, as Daniel referred to. The specific challenges of floating that the flexibility of our architecture enables to serve are the mismatch challenges from water motion and from the reflection back from the floats that are typically right in order to generate more energy from the bifacial modules and of course safety, and in some cases, resistant to harsh environment if the water is not 100% clean or if it's salt water. Another segment with specific needs is the carport segments.
Again, the driver here is to use maximum of the surface, exposed surface that the company or a mall or a shopping center might have, and at the same time, provide the protection for the vehicles and build an infrastructure also to add EV charging later on. Here, the design flexibility and the flexibility of the system from the inverter sizes point of view is what has helped us secure a lot of these opportunities all around the world, as you could see in the illustrations on the picture. To maybe close the C&I portion with a number illustration, which is usually the most convincing one.
You see on the left the growth of our annual commercial shipments since we pretty much began commercial shipments in 2015. Our growth rate was quite impressive at a CAGR of close to 50%. Where we sit today in 2022 is that between what we shipped already in 2022 and orders that we've received and confirmed and intend to ship in the rest of 2022, we expect to ship above 5.5 GW of C&I product compared to 3 GW a year ago.
The year has just begun, so this is not the total that we will ship to the year, only what we have already confirmed to customers that we will be shipping for the year. This is a representation of what we are seeing in the C&I market, and hopefully the understanding on what is driving the market and where our solution has its advantages to fit those drivers and enable this nice growth in 2022 and hopefully go beyond that of course as well. As Daniel mentioned, C&I is a lead-in to utility. Now utility is a very broad definition of.
Different analysis and different companies slice it in different ways and might call utility anything that is a ground mount installation or might call utility anything that is above 5 MW or anything that is above 10 or 50 MW. For the sake of this conversation, I think we'll go with anything that is above roughly 5 MW in size. The utility market is already a large one and is expected to grow in the future for all of the reasons that we spoke until now. Our evolution into the utility market started a couple of years ago.
To date, we've established an initial footprint of about 400 MW of utility type projects from the scale that I defined. Out of those, about 15 are more than 10 MW in size. We have definitely been able to take first steps into what you would call the small utility segment. The project that was shown by Daniel of 77 MW is our first project of what is maybe beginning to be mid-sized utility projects.
We expect to continue this evolution into the utility market, but it is a process that is going to go step by step based on a long-term plan, and not something that we expect to happen very quickly. The first step that we took and that has enabled what I discussed before was leveraging our existing technology from the C&I segment to evolve into small utility. This is based on the Synergy offering that I showed before and the power optimizers of going up to 1,100 watts in power.
The opportunities where people adopted us for small utility were those that had some type of constraint either unusual terrain, as you saw in the pictures from Japan, extensive use of bifacial module, where recovery of the mismatch enables a good return on investment in places where people had specific cybersecurity concerns that we were able to address. In some instances, our flexibility enables to save balance of system costs or operation and maintenance costs, and these were the drivers for the adoption today. This was our first step into the utility segment. We are now beginning our second step into the utility segment, which is focusing on cost per watt reduction. We are introducing...
We will be introducing during 2022 our 330 kW inverter and increased size power optimizers that the main benefit is cost per watt reduction together with all of the benefits that we discussed above. We believe will enable further penetration into the small utility or mid-size utility market where all of the advantages were of interest but they didn't yet pencil in from a cost per watt point of view. Here as we reduce the cost per watt we believe that will help further adoption in the small and mid-size utility project. Some of the benefits for instance are longer strings that and through that a reduction of balance of system costs and other monitoring and cybersecurity benefits.
We are today with beta sites of this offering, and we expect to release it within the year and see a growth of meaningful revenue starting in 2023. The third step is the more significant type of evolution and maybe even more to the point where we have a comprehensive and complete utility offering. We expect that utility systems in the future will have much higher attach rates of storage. We already do utility storage with Kokam, but not for photovoltaic installation, so we need to manage that shift to fit the solution to large scale PV.
We will be offering a skid-like or centralized-like architecture of the 330-kilowatt inverter that will make installation easier, save work and labor, and save some significant cost on the AC balance of system when there are multiple inverters sitting on a prefabricated skid and coming to the field, and the whole AC is shared by all of them. We will be adding other elements to make this a comprehensive solution where we think there is the opportunity to evolve into larger utility sites. Additionally, we are working on a SolarEdge tracking system that aims to be innovative as a tracker and especially integrated into the overall SolarEdge solution.
This is an opportunity to share with you a little bit about that.
Hi, my name is Gil Kroyzer, and I'm the co-founder and CEO of SolarGik. In 2006, I joined the team that started BrightSource and led for the company the engineering and the software development. Together with my friends, we decided to found SolarGik, understanding that there is a place for a new, strong combination of algorithms, optimization, and trackers in the PV world. The big challenges that the utility PV plants faces in adapting to the huge challenge of flooding the world with PV power is to change the position of the PV from being part of the energy mix to be the base load for the energy mix. PV power plants will need to be more reliable. They will need to cope with weather and predict and react to weather in a better and more optimized way.
All this together will need to be wrapped in stable and reliable solutions. In this new world that the PV is walking into, only holistic end-to-end solutions for PV plants will allow for these plants to be truly efficient, truly reliable, to truly take the place that they should take in the energy mix of the world. The solution that SolarEdge and SolarGik are bringing will make this possible. SolarEdge has vast experience and novel bright technology in many of the aspects in the plant, together with the fact that we are experts in trackers, and we bring to the game new trackers. Combining this all together, the result will be real synergy between the different components of the technology. This is surely one plus one equals three.
A bit to elaborate on what was shared by Gil. Obviously, trackers are widely used in the utility market. Today, and probably even more in the future because of grid congestion and other elements, the optimization of the entire system at the utility scale is going to be critical to maximize the value for the investor. We're also seeing a lot of need for dual use. Floating was one type of dual use, but agri-PV and use of agricultural land for electricity generation is something that we are running into quite a lot, in particular, in Israel, where agriculture is an advanced technology. The need for smart trackers for that type of application is evident.
With all of that in mind, last year, we acquired SolarGik, which was a small startup founded by veterans of the thermal solar industry, including the founder of BrightSource, which was one of the leaders at the time when this industry was evolving. They established SolarGik on the belief that tracking in PV can be improved based on some of the experience from the thermal solar industry, where tracking is fundamental. Our intent, together with this team, is in the coming years to develop a tracking portfolio that is customized for the various applications and integrated with the SolarEdge commercial and utility offering.
Obviously, this is a process, and we don't expect a significant or meaningful revenue from this business stream before 2024. With that in mind, we are already running a few ground mount installations, and gradually building experience and capability in this area. I think that ends the coverage of what falls under our definition of scale, our activity in the markets that we have been serving for some time and how we grow with the growth of those markets, how we grow share in those markets, and how we grow our revenue from every installation by broadening our offering for every such segment.
I'll now spend a couple of minutes on the topic of development and then we'll release you for a break and come back for some Q&A and move into the explore segment. In recent years, we made a few moves for long-term growth opportunities. The most significant one is in the area of storage. For all of the reasons that we discussed before, having our own storage or battery cell control of battery cell technology and production for our PV applications is critical for our growth and a meaningful source of additional revenue that we began to see in 2021 at a small scale and will be already significant in 2022.
Our opportunity goes beyond the solar attached storage system. Kokam has had the for years, and we are continuing to invest in cell technology, cell manufacturing capacity, and complete storage product offering. This is a very significant market. Kokam history and our focus is on what you would maybe consider as niche applications that require high power and high energy, where there is a lot of experience and technology. These segments are growing, and as we come on board with Sella 2, that will shift our price point to a lower level and increase adoption in that area as well.
Some of the interesting applications here are marine and high power mobility applications where use of lithium ion is growing. The type of technology that we have at Kokam is suitable for these applications. As we have more capacity and a more attractive price point, we believe that we can accelerate growth again, on top of the additional revenue that we will be generating from the Sella 2 capacity that will become available for our solar-attached storage solutions. On top of this, we are investing, obviously, in new and alternative chemistries for future batteries. Our core strength is in NMC. We formed a development team and are developing our own process for LFP as well.
We're looking at future anodes, and we're looking at new manufacturing technologies. Actually, to augment the history and capability of Kokam in Korea, we've built an R&D team and are in the process of building a lab in Israel, where there is a lot of access to capability and innovative know-how in the area of batteries and storage. This is one developed element that is progressing well, and will begin to bear fruits already late 2022 and more significantly in 2023.
The other growth areas that we were pursuing, we consider to be more long-term in nature, starting with e-mobility, where we've shared many times that we are active in one primary project and with Stellantis, and we are in full swing and production on the Stellantis powertrain, delivering kits and batteries for the E-Ducato electrical LCV. This project is planned to continue at least till the middle of 2024, and, depending on their demand, they will decide if to extend it. For us, it's been a tremendous learning experience to serve the automotive industry, and we've been able to meet those challenges.
Actually, some of the learnings from this area we've adapted and implemented in our inverter and optimizer line. Some of the numbers reflecting this project, you can see below. We've delivered close to 2,200 kits, and which in total have traveled more than 1.5 million km, which is definitely valuable experience in the e-mobility space, and conducted more than 160,000 charging sessions. We expect all of this know-how that we are accumulating to serve us in new opportunities that are in different early stages of evaluation. We don't see any immediate fruit beyond this project and the extension of this project.
When we have something to notify about additional projects, we will do so, but we don't see anything in the immediate future. Another similar long-term type of investment is in the critical power space, where we made a small acquisition in Israel a few years back. Here we're actually in beta testing of the first product that we developed since this is under our umbrella. It's a three-phase UPS that is in beta testing today and will be released in the second half of the year. We're developing a single-phase UPS.
We are adding onto it what is not very common in the UPS market, a cloud monitoring system on the basis of the infrastructure that we built in the solar industry. We are beginning to see what we really consider the long-term opportunity over here is the convergence of backup energy storage with the need for fast response and UPS type behavior. We are engaged in very preliminary projects of this sort. In the long term, we think that these two needs, at least for parts of the market, will converge into a backup energy storage with UPS capability. That's where we expect that our technology on both fronts will give us an opportunity to differentiate.
Kind of looking back at the last 45 minutes or so where I discussed how we plan to scale in our existing markets of residential, commercial, and utility, where we stand on some of the new markets that we are developing. After the break and opportunity for Q&As, Yogev will share what we call Imagine, which is forward-looking thinking on what the world might need in the future and where the capabilities that we've built that you see over here on the y-axis could potentially give us differentiation in those evolving markets and applications. For now, you've all earned a break, and when we get back, I'll be happy to answer any questions.
Thank you very much. Thank you very much, Zvi. Let's start and take a 15-minute break. Let's meet at 11:15 for a Q&A session with Zvi and continued presentation. Thanks.
Yeah. Well that, yeah, I know. Hey, how's it going, sir? Yeah, yeah.
Okay. We're building as we produce the winner?
Yeah.
I think this is not scaling well.
With some acquisitions.
Yeah, I know. No, but I mean, seriously, like, use of cash, and, you know, you can talk about this, inspiration.
Mm-hmm.
Yeah. We will of course relate to this, you know, when we discuss.
Later.
I think later. In general, I think that we don't have anything specific. Sorry, it's not even that. We have many things in mind, and we have a whole team that today is doing only the development. It's a guy that used to be in the Israeli, came from the same unit of Guy Sella, and he was in charge of, like, technology in the special operations units in Israel. We basically built very nice, I would call it prongs, that we believe that we can take our technologies and grow. All of them are around technology, but we're pushing the limits to various areas that we already. We already identified areas that we want to go to today. It is mostly around areas of storage and additional sources of storage.
Additional sources. You'll get to discuss what we call augmented power. Because we believe that in the future, the home will basically be almost an independent unit, maybe sometimes even without PV. Someone needs to manage this. Just imagine that, you know, you have various energy sources. The grid may be one of them or not. PV may be one of them or not. But everything needs to be basically augmented into one area, and the home needs to know how to manage everything, because solar cannot be here, cannot be there.
Thank you very much. Okay, let's,
I'll let him go.
Let's sit and start the Q&A session. Because this is the part of the day that every minute is getting us more far from lunch, and we wanna be efficient, right? Okay, we have Zvi here to answer questions that you may have. Erica will help to get questions. Please, if you want to ask a question, please raise your hand, and Erica will come with a microphone so Zvi can hear. Erica, Julien is here with the first question to Zvi.
Thank you. Hey. Julien Dumoulin-Smith, Bank of America. Good morning to all of you. Thank you. Well, first off, congratulations on everything of late. If I can, maybe just to kick things off, you've raised a lot of capital of late. Certainly there were some questions about it, and here we are at the Analyst Day, and I know that there's perhaps some future conversations, but you've already talked to some of the points that you're expanding into in the first half of the presentation. Can you perhaps delineate a little bit further how you're thinking about allocating and where you're leaning in and using that capital to grow, if you can, on the margin? Then I got a couple more specific follow-ups from the first half here.
Okay. Zvi, would you like to take this one?
Yeah. Yeah, I think, Julien, first, thanks for coming. I think the answer is in line with the messages that we gave and what we discussed. I think we described, if you will, the board that we want to fill and where are all kinds of applications or technologies that we think will be important in the future. You know, whether, just as an example, not that there is anything particular over there, whether it's commercial or utility storage or other elements that have an opportunity to provide better systems for generating electrical power, for storing it and for consuming it. That's the breadth of the applications that we're looking at.
In the combination of in-house development that at some point might require capital or getting something from the outside that might become mature and might come with some capital investment needed alongside. Where we're looking at are the spaces that we described to a large extent or differently as a priority, but to reach the point of a complete comprehensive offering sooner rather than the path of in-house development only, which is what the path that we've taken for the most part so far.
If I may add one more thing to what Zvi said. I think that, again, the SolarGik acquisition is a good example. Even though the acquisition by itself was relatively small, it is a business that requires the ability to invest in R&D, to invest later on in prototypes, to invest later on with providing the infrastructure that SolarEdge can give to such a company. Because you know, we have access to developers, we have access to owners of utility fields, and this requires also a significant amount of cash.
I think that we look at acquisition in a more broader sense of not just what is the technology, but also what is the maturity of the company, of the levels of the company that we are buying, and how much funds are needed in order to make sure that we take them to a mature place that they can contribute significantly to our EPS.
Got it. Excellent, guys. Just if I can, one more specific here. The commercial shipments obviously see a big uptick from 2021 into 2022. How are you thinking about that annualizing perhaps into 2023, right? I mean, some of the dynamics that are spurring this acceleration clearly didn't happen as of January 1 per se. So how do you think about that sort of compounding from here first? Then secondly, you've already got 5.5 gigs shifted in backlog, and then you're only committing to 5.5 for the year. I just wanna try to reconcile those. Is there some upside potentially?
On the first part, what will be the scale in 2023 is a good question. If the dynamics that we discussed continue in terms of power prices and awareness and attention to carbon neutrality, then this is an underserved market. You know, any type of view, like how many rooftops are available and surfaces that are available suggest that there's a huge opportunity out there, but the driving forces are what make the opportunity happen. Now, the driving forces that we see, we can't see right now any reason that they won't continue.
If you look at what Alfred showed, for instance, in Germany, that is a combination of residential, a lot of commercial, and to a certain extent, a revival in Germany of the utility or small utility market, which was slow in recent years. There are reasons for us to assume that the momentum will continue, but it's not something to say for sure, especially not at this growth rate. To the second question, it's a matter of lead time. This is what we've shipped and orders that we've confirmed for delivery in the year.
There is still, with the lead times that we're quoting today in commercial, there is still opportunity for more orders to come in and be confirmed for 2022, assuming they are of the products and flavors that we have still capacity available within 2022, where we do have but not necessarily for every type of order that might come in.
Okay, next question comes from Brian.
Hey, guys. Thanks for taking the questions. Just maybe a follow-up on Julien. The commercial business, I mean, you're effectively doubling year-over-year. I know a lot of that is Europe, but it would also seem to imply you're gaining share, just given the level of growth. Maybe level set us where are you in terms of market share in the commercial end market? I know that's a question we get a ton from investors and it's a fragmented market. What's a reasonable expectation around where you can get to in terms of share? And what is the maybe 2022 number of 5.5 gigawatts maybe imply based on what you're thinking about the end market?
Yeah. Very difficult to be specific. First of all, Brian, we count share once shipped. So what we were showing there is to a large extent orders and backlog, which eventually will translate to countable share. But until it does, we don't consider that share one. These many of these markets are not reported or tracked, so it's more at high level. If you look at like what Daniel showed in the rest of the world on the markets that he's tracking, we know roughly what was the growth rate, roughly in previous years of the market. We know that we were at a higher growth rate, even in some places, a significantly higher growth rate.
We know that we're taking share. Similar to what Peter described. Community solar, we know that our foothold in community solar until recently was practically nothing, and we know that we're closing and installing in community solar. We know that we're taking share that way. Quantifying it in any way on a broad scale is very, very difficult, in particular in commercial.
All right. Fair enough. Maybe just on storage, a question. You guys obviously did very well in solar and resi, and then expanded into commercial, and now you're talking about utility scale as well in 2023. A lot of focus on this new residential battery solution, the energy ecosystem at the home. Kokam was historically, you know, more C&I and utility scale focused. If you think about the TAM for utility scale storage, it's much bigger, sort of medium term, longer term. What are you guys doing specifically on the, you know, the sort of bigger scale, utility scale storage type of opportunities? Is there something going on at Kokam?
Is that part of the new development roadmap or maybe part of the M&A strategy that you would try to exercise here?
Yeah. Ronen, do you wanna try and-
Yeah. I think that we first of all need to understand that Kokam did have an ESS and has an ESS business, but it's a business that is a little bit different from the one that is connected today to photovoltaics. First of all, you know, Kokam had small or has until Sella 1 comes very small manufacturing capabilities and cannot be a competition for mostly products coming from China when it comes to the very large scale ESS. By definition, most of the work that we do today in Kokam, and we sell few projects in Australia, are more of a niche products related to spinning reserves or I would call it non-PV tied ESS that are required just to back up facilities either mining facilities or other facilities.
Here, the fact that we can give very high, I would call it, reliability product, even though it's relatively, expensive. At the same time to give the engineering capabilities to really tie it into the field and help the developer to embed it into the field is something that allowed Kokam to grow. When you move to solar-related, ESS on the utility side, two thing needs to happen. First of all, cost structure needs to be different from where it is today. Sella 1 will definitely provide us with the ability to do so, but some of the other developments that we're looking will allow us to do it.
The second thing is to have a offering that is more, I would call it, system tied to the overall solution that we provide in utility, that you can actually justify a little bit of a premium when you're actually pricing the system. This is something that is on the roadmap. As Zvi mentioned in the utility presentation, we are aiming to have a full utility offering with the inverters, with the trackers, with the battery storage. But our focus is, first of all on the residential C&I will come then, and ESS will come later once we have the volumes that can really justify the price.
Next question from Joe.
Yeah. I was interested to see that you're talking about moving to wide bandgap power electronics as part of the presentation. I was wondering if we could get an update on the kind of timing and speed of that transition. I have one other question.
I think there's a presentation later on that details our component level technology and technology roadmap. There'll be more detail over there. Silicon carbide we have in the battery and in a 1 or 2, I think, inverters and the introduction will be gradual from here. Gallium nitride is a prototype. It's not yet in a product and it's early stage development.
Meir will expand in his presentation.
Great. Thanks. The follow-up, talking about utility scale storage, you know, if I look at the people out there who are doing system integrator work right now in that space, the margins are not great, right? I guess I'm curious as to why you would regard that as an attractive part of the portfolio for your utility offerings.
In particular, you're talking about utility storage?
Yeah, if we look at, you know, Fluence, for example, and, you know, being a battery system integrator is, you know, it's a 10% gross margin business on a good day. So I'm just curious as to why that's something you would be interested in.
Yeah. I think that as you have, excuse me, as Ronen mentioned, which is part of why, you know, we're not giving a positive answer to say the current Kokam offering is relevant for utility storage, because it's not. It's not at the right price point. So this is something that is an offering that we need to develop and complete, where we believe that doing it from the cell up and based on the know-how that we've accumulated also on the residential battery and also at Kokam that we can provide a differentiated offering. Obviously it is about cost and it's.
How do you implement safety measures on a container scale and all kinds of challenges and things like that. We see a path, but we're not there yet, and that's why it's something that's on the roadmap for the future. It's not a simple conversion of the utility storage that we have from Kokam today to fit energy storage applications with solar.
Maybe if I can add, Joe, is the fact that we need to understand that today most of the integrators, they go, and they buy the battery for itself from someone else. They go, and they buy the inverter. They go, and they buy the package, and they do everything. As we've mentioned, one of the pillars that we've built the business is the vertical integration. Just imagine in a situation where you're coming to a utility field, and you want to build an ESS, you will have the inverter coming from SolarEdge. The gross margins are the gross margins of the inverter, so of course we're keeping those in our pockets. The next thing that will come will be our battery. We do it all the way from the chemistry to the module to the pack.
We leave all of the margin in our pocket in this end. We are, because of the ability to give the full product, can take a little bit of a premium. This kind of vertical integration and controlling as many elements of the chain which allow us to simply harvest some of the margins and leave it in our pocket, which will result in higher margin. I think that another element is to understand that, yes, usually in utility or commercial, margin profile is not the same on one hand as we can see in residential. At the same time, if you look at the operating leverage because of the fact that it's a very large-scale sales, you get to very similar result, I would call it, at the bottom line eventually.
I think that this is something that this vertical integration will allow us to be or to take to a different level of margins.
Thank you.
Jed.
Hi. Yeah, Jed Dorsheimer. I'm with Canaccord Genuity.
Hi, Jed.
Thank you for the presentation. Joe beat me to the wide-bandgap question. I guess. Well, I applaud the system, you know, system-level integration in terms of what you're doing from a value proposition. I remember, you know, the discussions with Guy and you, Ronen, back in 2012. It was very clear in terms of the DC optimizer and the decentralization, how you were gonna take share from string inverters in terms of efficiency. My question is: As you look at improving the efficiency through the use of GaN or SiC, what is the value proposition that you're thinking of? Is that again to increase at the optimizer level, you know, 2%, 3%, or is it something else?
I have a separate question on the inverter side.
I don't know to quantify it specifically in numbers, and that's why it's still work in progress. Especially at the optimizer level, but it's true also for the inverter as the electronics. We're getting better and better at designing the electronics, and then the mechanics and everything around it becomes a bigger part of the cost. Any gain on efficiency and heat dissipation can allow you to reduce some of that cost around mechanics and cooling. There's potential gain over there beyond the direct gain of more efficient harvesting.
More efficient harvesting means lower costs on mechanical parts that are becoming a bigger part of the total cost of the offering, and this is true across the board. That's where the dual opportunity sits, but it needs to be validated, and you need to really get to the design that maximizes that benefit. Yeah.
On the inverter side, particularly on utility, as you've alluded in terms of C&I and utility and expansion. There is a difference between a grid-forming and grid-following inverters and the complexity associated with both. As you're doing more in the utility work, it would seem like there's a lot of room to grow the offering. Where are you right now in terms of... Is it mostly grid-following inverters that you're developing or that you're selling into the marketplace? And in particular-
Uh-
If we look at Germany, for example, as you increase the percentage of the grid that's going to be renewables, the grid-forming starts to become much more important, which would, you know, add to that complexity.
I'm not sure that I'm the best person to answer in detail on this. I think if Meir is there and can catch you in one of the breaks and elaborate. As I said before, what today we are selling is our C&I offering for these small utility projects. Whatever grid requirements exist in different countries on C&I and are part of the small utility needs are met, but it's not yet a utility dedicated offering. That is something that is expected later this year or early next year.
Thank you.
Okay. We'll continue. We'll have, of course, another Q&A session after the next meetings. I think that following on Zvi. Sorry. Okay, let's take one more. Just to complete what you said is that one of the advantages of having the senior management team, both technology people, business people, and I would call it financiers. We can basically interact with them and get all of these questions, and especially on the technological side. Meir will be a great address for this. Yes, Mark, last question from you.
Yeah. Pressure's on. I hope this is a good question. In the overview of the Europe market, you gave some pretty impressive growth charts, and I think you were talking about that was pre-invasion. Just at a high level, can you talk about what you've seen over the last month, and can you break that down between resi and C&I, and kind of what the any change or acceleration that you're seeing in attach rates, anything like that?
I'm very cautious in giving indicators that are coming from really extreme events that have been going on for one month and trying to draw conclusions from them. Maybe it's the background of an intelligence officer that is making me cautious. There is a sense of urgency, and there's definitely, you know, an increase in interest. Installers are talking about more people calling them, residential owners that the whole set of events is raising their awareness, the need for resilience and the concerns about power prices increasing.
I was talking to a utility developer the other day, who's talking about their PPAs closing at higher prices because companies or whoever their offtaker is is concerned about what will be power prices of the future and is willing to close the PPA at a higher number, and in their case, that allows them to close the project even with the higher module prices. As a general sentiment, you see and you hear about the sense of urgency for resilience and the sense of urgency for protecting from future price increases. I don't think we can look at the trends of our.
You know, the backlog that I showed before was not, you know, it's like Rome, it wasn't built in a day, and it wasn't built in the last month. We don't see it as related to recent events. The trends that we've described have started before recent events, and we don't think will be negatively influenced. Whether they'll be positively influenced and by how much, I think it's just very early to say.
I think, Zvi, just borrowing the phrase that you used during the last few weeks is the fact that, you know, we feel that we're, like, riding a very big wave, and we do not know what is the height of the wave, if it's getting higher or lower. We're simply riding it right now, but it's a big wave and we're just in the midst of it. With this, maybe I'll turn it to Yogev to help us imagine a little bit how future energy may look like. Thank you very much for the questions.
You can see Ronen tarnished my punch line, but, nevertheless. My name is Yogev Barak. I'm the Chief Marketing Officer for SolarEdge. I joined SolarEdge early in 2021 after working for 13 years at HP and before that, at about the same time at Applied Materials. I'm the only one not having a beautiful PV installation on the opening slide. The reason I wanted to have this wave is, as Ronen just said, you know, we're right now in the solar PV industry, riding this huge wave, trying to stay on the surf, trying to make sure we fulfill our customers, we take care of our operations.
It's very hard when you're kind of laser focused on being on the surf to imagine how the next wave will look like, where it will come and when it will come. What I'll try to do in the next kind of 5-20 minutes is share with you, imagine together, how that next wave might look like. My presentation has no revenue attached to it has no timeline, and it doesn't even have a clear roadmap, and it's definitely not gonna be in Ronen's model that he's gonna share later today. Nevertheless, let's dive in a little bit. Zvi earlier shared this concept of how the energy market might look in the future.
We imagine a very different energy market than what it is today. It will have these multiple nodes connected together. You think about a house connected to an electric vehicle, which in turn is connected back to the house, and houses connected to each other, and maybe even to the next door retail store that has PV on its roof or in its carport and is trading the energy between all those different nodes. The building block that are associated with building this mesh, this new energy mesh, are the same ones that we have discussed before. They're all about generating power, energy, storing energy, consuming energy, and managing energy.
What I want to do is kind of take you into a little bit deeper into this mesh and take a couple of examples of how those nodes inside the mesh might look like in the future. We start with a home. The future home will probably be different than what it is today. Not design-wise. I'm not a designer, so I'm not gonna talk about the actual looks of the home, but look really into how it's being powered and what energy system it has. It's gonna be an electrified home. I think we all agree to that. It's gonna have one or two electric vehicles connected to it. It's going to have an electrical heating system and electrical cooling system, water heating system based on electricity.
It's probably gonna be connected to other homes in the neighborhood and forming a microgrid, and it's likely to have its own storage embedded. When we kind of try to look at the architecture of the energy architecture of this future home, we're looking at several things at the same time that form this new home. It starts with the fact that this home will need more energy. It will want to be isolated for prolonged backup events. It's likely to have a battery of its own high efficiency, high-capacity battery. It can be a lithium-ion battery, or it can be any other form of storage that will emerge in the future.
That battery is kind of the cornerstone of the energy system of the home. This is where the loads are connected, this is where the sources are connected, and it serves kind of the cornerstone of the energy system at the home level. It might be connected to a PV array that is loading it with energy from the sun, maybe even from building integrated PV systems that are covering the facades or the windows of the house, and they're all loading into the battery. It might even not have a PV at all because even if you live in an apartment or in a building, you might want to have your own battery to store energy and use it in the most appropriate time.
You might see batteries in apartments or maybe as part of the construction, central batteries for buildings that actually serve the same purpose. Those batteries, again, might be charged from a PV, but they'll probably be charged from multiple sources. It can be the grid, it can be a PV array, or it can be a long-lasting low emission generator, each one working in concert to top up the battery when it makes most economical sense or when it's needed the most. There will be an energy management system to orchestrate all this. When you look at the infrastructure that is involved with all this, it will probably also be different because we're not bound anymore by existing buildings.
We're looking at buildings that will be redesigned, so the battery system and the energy system can be embedded in the construction of the home. Think about batteries that might be part of, you know, in the wall or under, or in the rooftops or the floors, or maybe even embedded underground, where they can benefit from, you know, a favorable climate environment that helps conserve the battery and make it more efficient and more long-lasting. Also, the wiring of that home doesn't have to be bound to the standards of today because if we have the PV on the roof and we have the battery underground, they might be pre-wired by a DC conductor, so you have more efficiency.
You don't have to convert the energy into the AC form in order to feed it from the PV to the battery. Now looking at the loads of the home, they're probably also gonna be a little bit different. Zvi just talked before about, you know, first steps in load control and how we manage them through backup. If you look at the future home, the loads are probably all gonna be all interconnected to each other, and they'll have one management system that will operate them in a most efficient, most convenient way. Again, the homeowner will be able to choose whether they want to have more efficiency, more power conservation or more convenience. Just, you know, and the system will be able to adjust accordingly.
You take that one step further, if you think about the entire energy cell of the home, it doesn't have to stop at the power electronics because you have also thermodynamics happening at the home. If you build them together, some other forms of energy sharing might appear where power electronics and thermodynamics work together to conserve more energy. 'Cause if you have a generator, you can use the excess heat it creates in order to heat water and vice versa. Not even talking about, for example, a future biofuels that can use the waste created at home to create energy. You're looking now at a complete energy system that actually works around the home to optimize energy.
If we look at that ecosystem and how it might look, we have the PV array, we have batteries, we have loads, and many of them share the form of being operated by DC. We're looking maybe at an infrastructure that combines the existing AC infrastructure with something that looks more like a DC infrastructure. It might sound a little bit far-fetched, but it's not necessarily because nature runs on DC. A lot of the loads, the PV is DC. The storage is DC. The electric vehicle runs on DC. A lot of the electronics at home run on DC. Lighting, LED lighting runs DC. If you look at a lot of the modern appliances, refrigerators, air conditioner, they are run by inverter motors, right? You have inverter air conditioner, you have an inverter refrigerator.
What is an inverter refrigerator? It actually runs with an inverter as its name implies in front of it. What does that inverter do? It takes AC form of energy, turns it into DC, just to turn it again into AC at the right frequency to feed the motor, so the motor can run at variable speed and conserve energy. Now, if we have a DC infrastructure at home, why create this initial conversion from AC to DC? You can basically feed the inverter with DC, create the AC sine, and you save one conversion, which are typically known to be wasteful. Just another way to save on electronics and to save on energy. If you look more specifically at what could be a future home energy consumption profile.
You have the heating environment, which can be in the form of a pump that runs on an inverter motor. You have the electric vehicle that runs native on DC. You have air conditioning, again, an inverter. You have lighting, which are LED, again, native DC. Then you can go down the list and see. Actually this idea of combining DC architecture in the home was discussed before in many different forums.
You have here a chart from one of those studies that actually shows this combined infrastructure of AC feeding from the grid and running some of the loads, but then having a parallel infrastructure that takes energy from the solar PV, runs it into the battery, and then feeds directly into the DC loads, never having to pass through an AC conversion. Actually having zero conversions on the way. This idea is being discussed at different forums. One of them is the EMerge Alliance, which is an alliance of companies from the utility space, from the component space, from the appliance space.
I want to show a short video of the chairman of this alliance, Brian, and he'll talk a little bit about what they are doing in this regard of the DC home.
The EMerge Alliance is a nonprofit collaboration of industry and academia and government working on new energy technologies. We have about 100 organizations formally, but a much larger network of thousands of people who are indirectly involved with EMerge. We're focused on DC power technology, and of course most of the world today is powered in electricity by the AC form of power. We've been slowly moving over to a digital DC world in most of the equipment and other apparatus that's involved with it needs electrical power. People would be able to start producing their own power, as many are, have already started with solar and solar storage systems and so on.
As they add things like EV charging and induction cooktops and all kinds of electronics in their homes, DC can make the use of electricity simpler, easier, more economic, and more even socially equitable.
What we're really trying to do with our energy systems is to do for energy in the form of electricity what the internet did for information, and that is to make it available, more available to everybody and to network people into an infrastructure that's just not a one-way from a big power plant to their home, but rather that people would be able to start producing their own power, as many have already started with solar and solar storage systems and so on, that the home is really a center of DC, and if it's going to be able to produce power for a home, the next step of that would be to network it into a network just like the internet.
We discussed a little bit about the home, and I want now to focus on a totally different node on this mesh. This is a farm, agriculture farm. I personally grew up in a farm in the kibbutz in central Israel. As a youngster, I used to work the fields, grow crops. Coming back now, visiting my friends there, agriculture hasn't changed a lot in the last 20, 30 years, but the world has changed a lot. There's more people that need to be fed. There is less land to do so. There's not a lot of people willing to work in the agriculture space today.
The cost of inputs are going significantly up, and climate change is creating havoc in, you know, in the agriculture system. SolarEdge is not gonna solve all those problems, but there is one area where agriculture already today is kind of converging with the PV industry, and this is agri-PV. You saw a little bit examples from Daniel, and Zvi talked briefly about it. But if you look at it for a second from the side of the farmer, not the side of the PV side, what does agri-PV actually provide to the farmer? First of all, he's creating his own energy and probably making money on it, and, you know, he has this vast land.
The combination of crop growing and agri-PV can be leveraged in different ways because some crops actually need shading, need climate control, need to have sun at particular times. You combine now the fact that you're covering some of the area with panels and with smart trackers, you can see how you can actually have a mutual benefit, not only on the PV side and the electricity, but also on the farming side. If you take a zoom out a little bit and you look at the farm as a whole, well, the future farm might be actually its own energy cell because you'll be generating your own power in the form of PV or maybe even wind.
You're likely to have a storage device in the farm. Of course, there's a lot of energy consumption going on in the farm in forms of tractors, machinery, etc., which today are mostly based on fossil fuel, but that will change, as we have seen, in the electric vehicle transformation. It is possible that in the future we'll see electric tractors, electric machinery, more robotics in the farm. All of these have to connect to power. They have to have uninterrupted power because the last thing you want is your expensive tractor sitting down waiting for the power to come. Storage comes into place. Now we're starting to see this ecosystem around the farm becoming like an energy center itself.
At least as Israelis, this is super exciting for us because it's a culmination of, you know, the high-tech side of it and also the advanced agriculture, which is both areas that we're super interested in. Trying to imagine, you know, how this might happen, just looking at one example, a greenhouse, right? It's a big structure. It's lying out there in the sun. It has its own climate control, humidity control, and you can put on top of it a PV. You can put on the side of it integrating building PV, and you can generate electricity, but you can also control the humidity and the shading and the lighting that's coming into the greenhouse.
You can have a local storage, so you store your energy, and you have your machinery that's working around the greenhouse or inside a greenhouse that can benefit from being electrified and actually using the electricity that you generate. So it all goes back to this concept of these energy sources that work together around the same building blocks that we discussed before, which are generation, storage, consumption, and management of energy. They all work together. At SolarEdge, this is exactly what we're looking forward to, as Zvi discussed before, the different building blocks that we master today, which are around power electronics, storage technology, manufacturing technology.
They all come together to actually feed to the same energy revolution that we just saw, transformation that we just talked about. To get a little bit more details around these different building blocks, I want to invite Meir to talk more in details about the technologies behind these different blocks. Meir is our SolarEdge founder and our Chief Product Officer. Meir, it's all yours.
Thank you, Yogev. Hi, everybody. Nice to meet you. My name is Meir Adest. I'm one of the founders of SolarEdge, and its Chief Product Officer. It seems like for the next 20 minutes or so, I'm the guy who's standing between you and your lunch. I'll try to keep it interesting and hopefully not too long. What I wanted to do in this session, though, is talk a little bit about what's the edge in SolarEdge. Go a little bit into a description of the R&D team and the disciplines that they have.
We're not gonna go into an exhaustive list of everything that we do, but just give some examples which I thought would be interesting for the technology starting from the component level, how those are built into the products, how it works in an entire system level, and the applications that the system could be used for. It all starts with the team. SolarEdge, as you've seen time and again today, focuses on complicated, complex systems. Obviously there's a lot of system engineering going into it.
In order to have these products done, we need all elements of the system, hardware, software, mechanical engineering, chemical engineering, and materials, and automation to later help with the production of the products. Of course, within each of these disciplines, there are many subdisciplines, power electronics and magnetics and embedded software and cloud software, etc., etc., etc. There's a very large team that has the needed know-how. When you have such a large and dedicated team, there's IP that comes out of it. To date, we have over 400 granted patents in many different areas.
You can see here a breakdown of the areas. The main basket in dark blue here is distributed power systems, which I guess you'd expect for SolarEdge. As you can see, there are many other areas in which we have patents, mechanics, chemistry, materials, etc. Of course, as the team keeps on working, this patent portfolio is growing. We have 420 patents, patent applications which were already filed and are now in the process. The team is working on more. What I wanted to do is explain a little bit about the technology behind the building blocks.
Starting with the discrete components, moving on to the sub-modules, material science and chemistry, mechanical design, and how does this all integrate into a product. Of course, the end part, which is how do these products come together into a system, in order to give the benefits. Let's start with the discrete components. There were questions before about wide gap semiconductors. Today, most products are silicon-based, but looking into the future, it doesn't look like it's gonna be a one-size-fit-all type of switching elements. From what we're seeing for higher voltage applications, mostly inverters, the best fit seems to be the silicon carbide.
What you can see here on top are two examples of products which are in the market today, which have already silicon carbide built into them. One is the DC to DC converter of the residential battery, which is now released. And the other is in our European three-phase backup inverter. These are already in products in the market today, and of course, in products, inverters that are about to come out, we're gonna continue use of the silicon carbide. For lower voltage applications, mostly for optimizers, it looks like Galluim Nitride is a better fit and gives a better performance. What you could see on the bottom photo here is the layout of an optimizer.
This is still work in the lab of an optimizer where we replaced the FETs, the silicon-based switching elements to GaN switching elements and saw an improved performance. This is currently in work, but I'm guessing we'll see it later on also coming into the field. These are. Maybe I should say in GaN we have two paths of development. One is using third-party GaN switching elements, and we're also working on our own fabrication of GaN switching elements. If I was talking about switching elements, the heart of these products is the ASICs. There's a large and very experienced ASIC team.
It's 35 engineers with more than 200 years of combined experience. These guys come from companies well-known in the industry. If in the last analyst day, we had an ASIC powering our optimizers, today we already have ASICs which are powering also our inverters, or at least some of our inverters. We have our next generation of ASICs powering the optimizers, which provide more control, basically a software-defined control of the optimizer. This gives us more flexibility to update the behavior in the field or change according to what you were seeing. Moving from components to sub-assembly to sub-assemblies and modules. Vertical integration is super important.
We don't necessarily do everything by ourselves, but where we see that there's a chance to optimize the design of specific components or modules to our application, increase the performance, increase reliability, reduce the cost, and definitely in the last year or so, gain control of the supply chain where we see that there's an issue or a risk. Those are sort of the areas where we go and focus on vertical integration and develop sub-assemblies or components by ourselves. What you see here is just some of the examples of internally designed and internally manufactured magnetics. Anything from small inductors going up all the way to 300 amps or so for our largest inverters.
Similarly, these many of them are already in the field. Similarly, in the lab, we're working on capacitors, which have promising potential to improve the lifetime and have higher, be able to work in higher temperatures, which is almost always a tricky part of getting capacitors to work over a long time. So these are some example of modules, but modules could also be more complicated. So two examples you could see here. One is, which you see on the right, the integrated power module. From the outside, it looks like one large chip, but if you could see internally, it has a number of switching elements and drivers.
This is basically a whole power supply, which provides all the outputs needed for our products, in this case, our inverter, and is built internally. It increases the thermal performance, higher reliability. This is something which isn't deployed yet, but we already are working on. A similar example which you could see on the bottom left is proprietary current sensors. This is basically one module which has a wide array of current sensors, so we could sense and change the inverter of, especially the higher power inverters that we're using. Moving on to chemistry and material science.
There are a number of different material science teams in SolarEdge, but I thought really the most interesting one to focus on is the Kokam and the storage team, which own the full technology stack needed for batteries, starting all the way from cell chemistry, different variants of NMC chemistry, which could be optimized either for high power or for more energy and longer life, more cycles in the life. We're developing also LFP chemistry and looking into other future chemistries.
Moving from the cell chemistry to the cell design, for example, you could see an example of the design, which was able to reduce the series resistance and therefore the temperature, which then extends the longevity of the cells. Moving on through cell manufacturing, thermal control, all the different variations of thermal control, natural cooling and forced air and liquid cooling.
The team has knowledge and has had applications in all of these different types. Integrating into the battery packs, the electronics, the BMS, the Battery Management System, and finally closing the loop with sending the information and the measurements from all the way from the cells to the cloud, so we could later do battery analytics and have a better understanding of the expected performance and also change the behavior of the battery to make sure that it works properly for a long time. Finally, all those technologies have to come together with basically the mechanical design team. In power electronics, especially high power electronics, mechanical design is tricky. It's a multidisciplinary job.
There's a combination of thermal constraints, structural constraints, design constraints, usability, manufacturability, automation. It all has to come together and this is something that the mechanical team has had quite a lot of experience doing in the last 15 years or so. Just three examples. What you see on top is an example of the mold flow. Basically, when the mechanical team designs a part, then it has to be molded for mass production.
You wanna make sure that it could be done properly with the minimum amount of material, but still also answer all of the structural integrity requirements, which is what you see on the bottom left here, and thermal performance, which is what you see on the bottom right. Of course, everything has to come together to work as a system. This is, I think, really where SolarEdge is different from other providers. I'm just gonna dive into some of these main elements of the system.
We're gonna talk about the communication, the safety and security, both physical security and cybersecurity, data and what we can do with the data, and eventually energy management. It all starts with communication, and robust communication is key. In order to make sure that the communication between the inverters and the optimizers we have is really robust and not subject to interference, we have power line communication over the DC lines. It's wired. There's no interference, but on the other hand, the installers don't have to wire a whole other set of communications wires. Today, we're already in our third generation of DC power line communication, what we call high-frequency PLC.
We're getting ready to deploy this higher bandwidth power line communication together with a shortened pairing experience, which really becomes critical when you want to have large inverters, utility scale inverters with many thousands of optimizers connected to the inverters. This enables us to move from the C&I inverters that we have today to systems which will also support the utility scale inverters. Between different inverters, if it's a site with multiple inverters or between inverters and batteries or other smart control devices, where we don't want to force the installer to wire everything together, we have a wireless mesh network which is relatively low frequency.
It's under 1 gigahertz to provide long range, and it's a mesh network to make sure that the signal always finds a way to get through. Now, once we have this communication, of course, safety and security is super important. This has been an area of focus from day one with the built-in SafeDC and rapid shutdown and an arc fault detection and interruption. These have been in the systems for years. I just wanted to show two examples of relatively new features which have been deployed in products in the last year. One is connection validation.
Especially in larger inverters, if an installer doesn't correctly tighten all the wires going into the inverter because there's high currents and a lot of energy going there, it eventually might start a thermal event or a fire. What we have is. What you see here is the connection box of the Synergy inverter, which thermally monitors each of the different wires going into the inverter, and in case of any installation error and not closing a wire properly, detects the temperature starting to rise and automatically notifies the installer before they leave the site, so they're able to fix it. If necessary, even shut down the inverter to prevent damage before the installer comes and fixes it.
Similarly in our optimizers, we introduced the SenseConnect technology, which basically has a thermal sensor in the optimizer, which detects a temperature rise in the connectors, in the MC4 connectors of the optimizer or between the optimizer and the module, so that if there's any degradation over time, corrosion, whatever, we're able to detect it and prevent, instead of waiting for an arc to happen and then stopping it after some damage was already done, we could detect that something bad is about to happen and shut down the system and flag for maintenance before any damage is happening. Okay. That was about physical safety and security.
Of course, cybersecurity is a key feature as well. Cybersecurity is baked into the products from the design stage through the integration and all the way down to deployment. In the design stage, we have automated code review and static code analysis and vulnerability detection, basically making sure that we're not baking into the product anything which could then be used against us. In the integration stage, we have automatic integrity checks. We have built into the inverters an intrusion prevention system which constantly monitors the behavior and the code of the system and could raise a flag and eventually also do the same in the deployment. In addition to all those layers, also with authentication and encryption between the devices. Finally, data.
Let's say something between 80%-90% of our systems are connected to the Internet. There are over 2.5 million monitored systems which constantly transmit data into our data platform. There are over 7.5 billion telemetries per day coming into the system. Telemetry, some of these are production related, and some of these are consumption related. If we're talking about first of all, they're geographically diverse. There's real-time PV information coming from almost 500,000 zip codes around the world, which we see every day. More than 71 million, the energy about them is flowing into the system.
Consumption profiles from households and sites in 100 different countries, time of use rates, utility plans, et cetera, et cetera. There's a lot of data flowing in. This data asset, what I'm showing here is what we have today. Keep in mind that some of this information is coming from the last 10 years or so. We have also a lot of historical data. I think really we're ready to move to the next step. We're just scratching the surface regarding all the things that could be done with this data. I just want to give you some examples, though, of things that we're already doing. For example.
What you see on the top left is an example of computer vision. This, if you go into the design tool and upload a photo of the roof of the house, we have with computer vision the ability to automatically detect the contour of the roof, understand what the facets look like, detect the trees around it, which might do a shading analysis, provide an estimate of how much energy would you be able to get on each of the facets. That's what you could see with the different shades of yellow versus orange.
Given a requested size of an installation, say 10 kW, already automatically recommend where to put the modules, and of course, the installer could then move around whatever they want. This streamlines the process and already gives them an automatic recommendation. Another example which you see on the top right, Weather Guard. Weather Guard is a feature in which if you have a battery and there's an expected outage, you want the system to fully charge the battery before the outage, so that once the outage occur, you have maximum amount of energy. There is meteorological data showing the risk of floods or storms in different locations.
What there isn't public knowledge of is, given the risk of a flood, what's the chance of an outage? But because we have this large deployment of systems and we have the historical data, we were able to see in the past for a given county, that this is a county-specific machine learning algorithm. So in a given county, given some sort of weather event, what's the chance of an outage? Predict that in a fairly robust way and then automatically, if you have a battery, automatically charge up the battery and give you a notification without you really needing to do anything or worry about it.
A similar example of the use of the large install base you could see on the bottom left with the predictive analytics. What you see there is a map of Germany with all of the SolarEdge installations in Germany. Those are all the dots. As you can see, it's spread out through the entire country. Germany as an example, yeah. Because we have all of this information, we're able to predict for each installation what we're expecting that installation to generate based on what the neighbors have done in the past. What you can see in the graph here, it's a little hard to see, but there's a blue line which is a satellite-based performance estimate.
This is based on high-tech and satellites, et cetera. The green, without any additional sensors, without satellites, without irradiance meters, just based on where you're located and what we know about your neighbors. In the green, we're able to estimate what we think you're gonna do. This is a non-trivial day. You can see all the dips is because there's clouds coming in and out, et cetera. In the red is what the actual looks like. Pretty good predictive analytics, better than could be done with or better than is done in this event. The final example which I wanted to give is an AI-based battery management.
What you see in the graph on the left here is the blue baseline is the baseline, that's the consumption. The green is how much energy is produced by PV. What a typical system with a battery would do is you're consuming whatever excess energy you're producing, you use to charge the battery. The problem with that is that at some point, you fully charge the battery, and now there's excess energy which is getting lost. You can see it in the red on top.
If we were able to predict ahead of time how much energy we're gonna have later on in the day, and then maybe we could postpone some of the battery charging until later, we're able to actually utilize all of the energy and not have any of the energy lost. This is something which is still in development. It's not deployed yet, but this is, I thought, an interesting example of what could be done with, on the one hand, a lot of data, and on the other hand, a talented machine learning team in the R&D. Okay. Those were some examples of what could be done with data. Everything at the end gets tied together to the applications.
There are a number of applications, be it the homeowner who has the mySolarEdge app or the battery recommendation, the installers which use a designer and another suite of tools. Even if a specific customer doesn't have the exact application that answers their needs, there are professional services so that we could help and custom design anything which could be helpful for them.
Just to summarize some examples of our technology based on the talented team which was able to bring us thus far, and we're pretty confident that they have what it takes also to execute the plan which Zvi and Yogev showed you moving forward. On that happy note, thank you very much, and enjoy lunch.
Thank you. Thank you, Meir. If you can look at your watches, some Swiss trains can work according to Meir's timing. This is the right time to exit on the left-hand side, go one floor down, to have lunch, and we'll be back here at 1:30 to continue with our operational review by Uri.
Okay. After lunch, it's time to introduce Uri. Uri is our COO who will present our operational presentation. This will be followed by a Q&A with Uri and myself. I know that operations is an issue that is of interest today, because there is nothing happening in supply chain. After this, we will continue with ESG and conclude with finance. Without further ado, Uri, please.
Hello, everyone. I'm happy to be here in this 2022 Analyst Day. If you'll allow me, I would like to walk you through a few of our achievements in 2021. I need a clicker. We've set up and run our Sella 1 factory, and it's in full production now, and it has achieved all that we have set for it. In early 2021, as part of our geographical diversity and our footprint strategy, we kind of evaluated where would be our next manufacturing factory. There, we have concluded to go into Mexico in Guadalajara. Today, I'm happy to say that we already ramped the site. As you know, a major pillar in our operational excellence is automation.
I'm really happy to say that we have moved all our optimizer manufacturing line to be fully automated across all our manufacturing networks. Alongside with that, we also have been able to introduce our new inverter automated line, and we have introduced it in Sella 1, and it's now in ramp-up. Despite all the COVID challenges we had last year in H2 in H2 2021, we've been able to start and ramp our residential battery. We have set up factory in Hungary, where we design two operations manufacturing line, and we already manufacturing in 2021 in the range of 60 MWh batteries. Our e-Mobility division, we have set an automotive certified tier one factory in Umbertide, Italy, to produce powertrain and to produce battery packs.
We manufactured in 2021, roughly 1,500 kits of powertrain. Last but not least, the last two years have been very challenging in a variety of ways. Inbound logistics and component shortages, manufacturing disruptions, followed by COVID breakouts and a factory shutdown. We had a factory shutdown in Vietnam for a period of almost 3 months. However, with the strategy that we put in operation and the tools we have applied to operations, and together with our very committed team, we've been able to meet all our goals for 2021. I would like to refresh a little bit the memory. We've discussed that about our system, our manufacturing system back in two and a half years ago when we laid out the bricks, articulated bricks of our manufacturing system.
I would like to touch a couple of pillars that are important for what we have achieved so far. Our product design process includes design and manufacturing for automation from the very beginning of the concept design. We are actually combined together design and design for manufacturing, design for automation. The machines when we set up the residential battery line back at H2 2021, it was already coupled with automation as a process that as opposed to having a process that you bring the automation after that. Quality and reliability is embedded through our life cycle of the product and is internally auditing every process to the production and from the concept design to sunset.
Our automated testing platform and process control data are vertically integrated into our Q&R processes and enable us to control everything that we do in manufacturing. Vertical integration for key components, as Meir explained in the last presentation, is the key for our manufacturing strategy and regional manufacturing embedded by smart automation is part of what we do. I would like to show you a glimpse into our manufacturing line. This is our manufacturing line, Sella 1. You can see the front-end manufacturing coupled with automated testing machines, both optical and electrical. When you have a line like that, and you can see the line is not breaking, it's a full manufacturing line end to end, followed by our automated line for optimizers.
In a short while, you could see our new automated inverter lines that we have launched late last year. You can see here, this is the automated line in action, and this is our inverter. We, of course, will Copy Smart this automated line to other manufacturing node as we progress with it. On the left side, you can see the gauges, and there's a huge amount of data that we collect from the production line, analyze it and to perform and improve our products. Let me zoom in to a couple of our manufacturing system. First and foremost is our data platform. We have started many years ago with our automated testing machines that produce all the data around the world.
Gradually, we have evolved into connecting every single machines that we have in our production line and harvesting the data in order to analyze the data to control the manufacturing process. As you saw, the front-end manufacturing line is consist of many stages of manufacturing, and you need to control it, otherwise you will lose your quality. We are using this enormous amount of data to improve our manufacturing, to improve our productivity, and finally, to improve our cost. Sella 1 Copy Smart facility. When we set up Sella 1, we had a lot of intentions and a lot of variable elements that we want to harvest from having a site which we own.
A few attributes that I want to continue and discuss. First of all is R&D. Our R&D is close to our Sella 1 factory, and it enables us to have a fast new product introduction, both for debug, analytics and launch to production. Actually, we've discussed our new utility-scale inverter, the 330-kilowatt. This has been manufacturing in Sella 1. In COVID-19 period, we've been able to execute on that very rapidly. Sella 1 is also a test bed for our manufacturing technology, so we do have a lot of innovation that comes from manufacturing. Automation lines, data platform, process control, jigs, control, and so on.
One example of what we did in innovation in Sella 1 is that we have looked at our automation lines that had a specific capacity, and we ran a very specific time stamping analytics on the lines, and we have been able by doing that to reduce or to increase the productivity of the line by 20%. We have validated these analytics and been able to copy smartly to the rest of the world very rapidly. Today, if we had a capacity, let's say, of 5,000 optimizers per day, now we can produce 6,000 optimizers on a single line. This kind of innovation in manufacturing is happening and allowing Sella 1 to do that.
Being part of the extended manufacturing, so Sella 1 is also a production line, and being part of our resilience manufacturing system, it gives us a lot of flexibility in planning, which is really needed in this environment that we are in today. Sella 1 is also a training system center. We have two contract manufacturing, and we have people of our own in manufacturing all over the world. We have them in all three continents. Sella 1 is a platform for us, first and foremost for to train the people from all our supply chain network and also to develop our new e-learning systems within Sella 1. As a segue from that, we had really the chance in 2021 to put to test our manufacturing system.
As I told you, we have decided to go to Mexico, and Mexico to fulfill the North American side predominantly demand. It is a quite, I would say, major site for us. We took all of what we have learned, the data platform, the automations, the Copy Smart, and we actually brought more than 20 people from our Mexican side, both our contract manufacturer, and trained them for 3 months at our production site. They were actually working on our lines. We certified them, and then when the site was ready with all the machines and the setup, they started production.
We've been able to cut a ramp-up of a line in 7 months from kickoff to the first shipment. We are very confident that going forward, when it will be needed and when we need to put more resilience into our manufacturing production, we really feel comfortable with the system that we have developed, that we could be able to copy the same thing again and again. We talked about resilience, so I'll touch some numbers. In the charts that you see in front of you can see the production plan, records and the future for 2022 for optimizer and inverters. The difference in colors is the difference in manufacturing sites that are going to produce it.
We invested a lot of efforts from 2020 to 2022 to onboard new sites in order to create resilience in our manufacturing and to split between the continent. Basically, we have achieved this resiliency, and by the end of 2022, we will have a more robust solution and a backup solution to our region. This regionalization also gave us resiliency in supply chain. I've mentioned before the challenges in supply chain and probably outbound logistics is one of the critical elements or the critical challenge that we have today in production, both in lead time. We used to have a lead time of transit time from China to Europe of, let's call it, 5 weeks.
Transit is 10 weeks if you can get the shipments and the soaring prices of shipping. You probably all analysts and bankers see the profitability of the shipping companies. By having this resiliency in manufacturing and having the three-continent presence of manufacturing, we've been able to cut down the transit time and put more resilience into logistics, and it will further down the road reduce our cost for transportation very significantly. For example, if you take the cluster of Hungary, Israel, and Italy that are predominantly producing for the demand of Europe, we moved from a transit time of 10 weeks to a transit time of an average of 1 week. Sometimes we can ship in 1 day.
For example, a residential battery, we ship it in one day to Italy. It's something that we couldn't do before. This is what the resilience that we put in supply chain is really helping us. For sure, Mexico line is instead of 10 weeks in ships and sometimes 12 weeks, we will move to even one week of shipping from Mexico to North America, both to the East Coast and the West Coast. We have the Asian footprint, which will allow us to serve the rest of the world. In general, we have a 3-continent system that we are becoming more regionalized as opposed to centralized in one place in Asia.
Altogether, with that said, we also, while we moved our assembly to this region, we also moved and localized supply chain. For example, plastics, magnetics, extrusion, all the elements that are essential to building our product, and we did them both together. Supply chain resilience. I have to say from a personal point of view, supply chain has been the nightmare of anyone in operations in any hardware company in the last year and a half. However, when we discussed our manufacturing system and supply chain three years ago, we based the fundamentals to cope with resilience within supply chain. Meir discussed about it in his presentation, but on manufacturing.
We're really mastering and evaluating each one of our components whether it's worthwhile to vertically integrate the manufacturing into SolarEdge or to source it outside or maybe do both. I mean, sometimes to have resiliency. There are a couple of components that we have evaluated, tested, and executed by our system and we have that mastered pretty well. A few of the elements that we are producing in vertical integration, it's magnetics, Sella 2 batteries, the factory itself, and the production, the machines, the takt time, the software, everything that we laid on the floor was designed in the same way that we designed the magnetics.
This is a key, and allows us to have allocation of components, critical components to our manufacturing line without being subject to general allocation of a manufacturer. Also, basically, you cut a lot of margins in the way of every manufacturer, and you basically it boiled down to the cost of the magnetics and the value add, and that's it. It gives us also a pricing advantages. Dual sourcing. On dual sourcing we have key components, ASICs. With ASICs, you cannot play a lot. You cannot really buy it from any source that you want.
You design it once and if you have challenges, for example, with the main foundries, you can't produce your product. It takes something like between 6 months to 1.5 years to design new ASICs on a new foundry. Before COVID, we understood that and we had dual sourcing on the two major foundries on our ASICs. I have to say it's there but we still got a good traction from these foundries and we didn't have major supply issues from them, but we have these ASICs dual source. If something happens in the supply chain, we have a very good backup solution.
Our networks, and if you saw in my first slide, we have something like 400 suppliers. On the key suppliers, we... I mean, like in these events, we tend to work with the C-level of each suppliers, if it's this silicon, predominantly silicon providers, and making sure they understand who we are, what we do, what is our technology roadmap, and what is our expansion in the next three years. That help us a lot to create a resilience in supply chain. Not saying that we don't have challenges, but definitely there was not single week with a line shutdown due to supply with these critical suppliers. I'm sure that you heard of the names above and the challenges that they have.
Some of the automotive industry was down for many months because of that. Inventory management. This is something that we applied every week and we look at every week. We check what is the really lead time of our components. Due to the fact that we have a good strategic relationship with the suppliers, we get a heads-up from every supplier what they want us to do and how they want us to plan the supply chain going forward from firms firsthand. We decide what we produce or what we procure for manufacturing, what we procure for safety stocks, and it depends on the components.
If it's a single source component, we can stock it for a quarter or two quarters or three quarters, depends on the importance of the components. I think that allows us kind of a smooth production through this critical time in manufacturing. Once we became regionalized, once we have moved our production into the continent and with proximity to our end markets, we also had to localize our manufacturing system. By the way, Sella 1 has not only assembly of product, but also plastic, for example. The reason that we have plastics is because all our products have plastics, and when we master the technology, we can transfer and copy some other technology from each of the suppliers.
For example, in some of the regions that we just opened our manufacturing system, I mean, injection of this kind of component is tough. What we did, we also brought the suppliers back to our Sella 1. They were trained on our machines, and then really fast and ramp up the molds and the production pretty fast. Localization of supply chain is a key for us. Actually, in Mexico, we localized the components before we even started production. This is so important for us. Let's take a glimpse. In the last, I think 15 months we started the groundbreaking of Sella 2 in South Korea, January 2020. Maybe a little bit more, but roughly there. We finished the shell building in 2021, the end of 2021.
I would like to show you a short clip of the building. This is only in 15 months in COVID time period. I think it's a major achievement for SolarEdge. Let's discuss a little bit about our battery production. I will start with Sella 2. We already installed all the machines. All the machines went to factory acceptance test at the suppliers, and then installed in Sella 2, and now they are waiting for what we call site acceptance test. Which means that the machines will be qualified and tested through all the site. That's gonna happen at the beginning of H2, all together with the production of the cell and qualification of the cell. There's a period of qualification. You just...
We start with our residential battery cells. We have installed the capacity. We are targeting 2 GWh capacity, but in a very limited investment, the site can go up to above 3 GWh. It roughly depends on our demand and how we want to ramp the site. As we discussed, our residential battery is being manufactured in Hungary at one of our contract manufacturing. We have installed the capacity of 1.2 GWh per year, so this is the capacity that is installed. It's installed in two lines that have some redundancy within them. Same for the battery.
We have implemented all the bells and whistles that you have seen here and all the manufacturing system. We designed the line, we designed the inspection, the automated inspection, the data platform and the automated machines, both for sorting and laser welding, the same as we did for the inverter and the same as we do for the optimizer. These lines are ramping to the capacity that you can see above. Battery manufacturing. This is our residential battery capacity on the right side. We can see we are almost increasing 20% quarter-over-quarter the capacity. Last but I would like to end this presentation on our key takeaways. Number one, operations is key. Execution and operation is key for SolarEdge.
We are selling hardware. We are a hardware company, as a system company, but you know, without manufacturing, without building the products, we cannot do it. We are mastering the technology, and that helped us during COVID-19 to operate the different manufacturing site without even being there. For example, in Asia, our people from the headquarters could not travel because of travel restriction, so that's really helped us. All the key elements of the manufacturing system, I'll just repeat them. It's the three base pillars is our own controlling our own manufacturing, right? So we know what we are building, we know our product, and we can build it embedded, automated in every step of manufacturing.
Every product that we build, we strive to automate and Copy Smart to help us copy that for any supply chain or manufacturing site that we will have worldwide. All of that together help us to achieve our goals in 2021 and be able to show growth of 50% in sales. Thank you so much.
Okay, since we know.
Is it open? Oh, yeah. Since we know that operations has been in the center of many of our questions over the last few quarters, Uri is open for questions. Anyone that would like to raise same drill. Yes, Joe. One second.
Just combining this with some of the technology observations earlier. I'm curious how you think about the roadmap in terms of chemistries for Sella 2. Can you run, you know, 62, 811, LFP at the same time?
All right. What's that plant gonna look like in terms of product mix? First of all, the factory was built for NMC, designed for NMC. Even though it can be converted eventually to LFP, it is something that requires a little bit of time and usually reduces a little bit the production capacity because LFP cell is usually less condensed in the amount of energy, therefore you get the same amount of cells, but you get less energy in them. In a sense, in future technologies that we see in NMC, we see no issue to grow the capacity, 2 GW now going up to 4 GW. If we want to move to LFP, it will require some changes, but then it can be done. You cannot run usually LFP and NMC at the same time. It's different materials.
You need to change jobs. You need to clean all of the infrastructure if you do. We do not expect it to run LFP and NMC at the same time. You can make the change with a relatively small adjustment, though. The implication then is that you're really committed to NMC for this 4 gigawatts you're talking about? I think that we are committed for NMC for the time being at least because, as Zvi mentioned in his presentation as well, the core competency of Kokam is actually in NMC. They did LFP in the past, by the way, so there is knowledge there.
Right now, given the demand that we see for the products that we're looking at, especially residential storage systems and all of the, I would call it traditional Kokam businesses, NMC is the right technology. We do have the flexibility. We are exploring LFP, and we will need to decide whether we would like to take this route and what will be the trade-offs in doing this because, you know, when you change a little bit energy density, price is changing a little bit. So there are a little bit of implications there, but the idea is that we have full flexibility. We just need to decide and then act upon it, but again, not in the same time, at least. Thank you. Yes, Cash. Here, are you here?
Can you give us a sense of your manufacturing capacity for inverters and power optimizers per year once the Mexico facility comes online, and then I think you're also doing an expansion in Hungary. We're just trying to get a sense of your theoretical capacity of production.
First of all, as we showed in the chart, we're gonna have a kind of an even capacity on the three continents combined. We installed more capacity, spare capacity at each site in order to support rapid growth. In general numbers, we could produce in 2020 numbers, but not dollars. Manufacturing numbers of roughly 30 million optimizers and north of 2 million inverters. We already talked about 1.2 gigawatt hour, our residential battery. That's in terms of capacity and manufacturing capability.
Just to add one more thing, this is the fact that our operational model when it comes to inverters and optimizers is to rely on contract manufacturers. We do have Sella 1, of course, that is providing us with a fixed capacity. It is today at its peak. I don't think that you can squeeze a little bit more, 10% of our capacity exactly, especially 10%. In general, once you work with a contract manufacturer, it's only an issue of floor space, machinery, and the labor that is needed. This kind of dual, I would call it fixed capacity that we have and scalable capacity allows us to grow within reasonable timeframe if we need the capacity.
The question will be mostly the lead time for the machinery to come because it takes the time. In some cases, and we saw it also here in COVID, I think, is floor space. In some of the factories that we come, simply the factories are already loaded, and now it's a little bit hard. Mexico in this sense adds a lot of both capacities, floor and ability to put machinery. More questions to Uri? Good. Thank you very much, Uri. Thank you. Let's move to ESG and then finance. Rachel was supposed to do this, but she was not going on a plane due to COVID. Yogev will take her place here presenting this.
Hello, I'm back again. No, I'm not Rachel, as Ronen said. What I want to do is really quickly give you an update about our ESG status and our plans going forward. SolarEdge started its corporate responsibility or ESG journey back in 2019.
That's right.
...when we released our first corporate responsibility report. Since then, we have set up specific goals and actually adopted the full methodology for sustainability. We've set long-term goals, and we reported already two consecutive years a full sustainability report according to the GRI and SASB standards. At the core of our strategy are three pillars. One is powering clean energy, which is basically at the core of everything we do. The second one is powering people, both our employees, but also our communities.
The third one is powering our own business in how we work as a company, but also helping our own customers in their sustainability journey, given the nature of the business, the nature of the market we operate in. We've been rated both by MSCI and ISS with improving ranking over the years and even recognized as prime status with ISS. Actually the bar now has been raised since we joined the S&P 500 because now the expectations are higher, which is a great challenge for us to take on.
I want to talk about a few elements of our ESG strategy and start with the core of everything which we do, which is mitigation of the climate change. This is what the SolarEdge product do. Every installation we do actually creates sustainable energy and avoids CO2 emissions. We have set a target to reach more than 2.5 million homes powered by sustainable SolarEdge energy and avoiding emissions. As of the end of last year, we have reached close to 2.3 million homes already powered by SolarEdge. If you look at that install base over an entire year, it actually avoids the creation of more than 23 million tons of CO2 emissions every year.
Of course, this number will continue to rise as our install base continues to grow. At the same time, we've set up targets for our own emissions from our own operations, and we set a target to reduce those by 30% by 2025. We continue to rigorously work to reduce our own emissions. Another something else that we have done very recently, we have commissioned Carbon Trust to do a very detailed third-party life cycle analysis about all our manufacturing of inverters, and optimizer. They're basically looking at the entire supply chain from the sourcing of the material, the manufacturing itself, all the way to the logistic.
We have a very detailed picture about all the emissions that are happening during the creation of our main products. We use this data primarily on one hand to help our own customers in their ESG journey as many times they are required to report this in their own reports as they use our products. We also use it to look very detailedly at all our supply chain and operation to actually be able to minimize the emission that we're creating in this process. Very specifically, this gives us a head start as we start looking at Scope 3 emission control that we'll start doing actually this year already. Another totally different topic is gender equality.
employment, being in the technology sector, this is something that is specifically challenging, and we're determined as SolarEdge to actually promote women in the technology sector, both in managerial and in technical levels. It's something we have a lot of focus on. We're working with universities, we're working internally, and we've set very specific targets and actions to advance this. I want to show a really short clip about the great women of SolarEdge.
When I started to work in the PV industry, I was the only female in the room.
I started out as a student in SolarEdge, and about a year after working part-time, I moved to a full-time position as a product marketing manager.
Me and my team are responsible for all the materials in all SolarEdge products.
I learned how to design a solar system without any engineering background. Got up on roofs, went into homes and sold it. It was super frightening at first, but very rewarding in the end. I loved it.
There's a lot of pride involved. I think it's a true honor to work for a company with such huge success and growth.
Just being a part of SolarEdge, you are making a difference.
You're always encouraged to bring out your ideas and bring out your creativity to promote your own initiatives.
Getting my first patent in SolarEdge was very exciting because apparently I was their first female inventor.
I think, women's leadership in the PV industry is absolutely critical. It has been traditionally male-dominated. It's come from an engineering background, power electronics.
Every day, women are contributing to success around the world, and the energy industry should also be able to share in that.
If you don't leverage half of your population, you're missing out on 50% opportunity.
More and more women in leadership positions and across even our R&D departments and in operations really is leading important parts of our operations and our development.
In operations, we have more than 60% of women, and this year we are able to double our outputs in production.
We're succeeding to promote women inside the company in all layers, only because of their capabilities and growth potential.
At the end of the day, it doesn't matter if you are a woman or a man, we just need to deliver.
On top of that, we are managing development programs for women inside the organization in order to boost their career and be in a situation where we close the gaps between how many leaders, women, and men we have inside the organization.
The lady you saw there, Ifat, that works in Uri's organization, she's responsible for all our supply chain, and you can imagine what that entails, and having that team, 60% female actually, I think makes that organization much better. That's a great role model for the rest of our organizations, how to include women in the tech industry, and again, specifically in positions in research and development, where by design, it's harder to find women that went through technical learning and have the background that is necessary. This is something that we really are looking to improve over the coming years. Last but not least, other topics that we're focused on, specifically responsible procurement and governance.
We're making a lot of improvements there. I'm not gonna have time to get into the details here. I'll be available for any questions you might have, and you are all welcome to take a look at download our sustainability report that will be issued in the summer, later in the summer of this year, and we'll have all the information in it. With that, I think the presentation everybody was waiting for is the CFO.
If you'll give me the clicker.
Enjoy.
First of all, if you'll scan the barcodes on your tables, you'll have the financial presentation, which I hope that you will find interesting. Let's just wait till we switch here to mine. Great. Okay. Thank you everyone for presenting. Let's start a little bit to talk about our financials, the way that we are modeling the revenues and the profits that we expect for the next few years. By definition, if you talk about forward-looking statements, these are the places that you'll find most of them, and therefore, of course, you're well urged to treat everything that's being said here with the right, I would call it, critical eye.
In that sense, let's talk a little bit, just a little bit about the past before we move into the future. As I've mentioned at the beginning of this day, the growth of SolarEdge was accompanied with very strong growth, both in revenues and profitability. Despite of COVID year in 2020, we were able to grow at a CAGR of approximately 34%. If you look at the quarterly results, actually since Q1 2021, and especially into the guidance that we gave to the first quarter of 2022, you do see that everything that we talked about, the market growth, everything that we discussed about the trends that are moving are increasing our revenues over time. Of course, this comes, of course, with gross margins.
The gross margins of the company has been affected over the last 3 years, at least from acquisitions that we have done, especially around the Kokam acquisition, the acquisition of the Critical Power and the e-Mobility. Both Kokam and e-Mobility were diluting, in a sense, our margin due to the fact that these are businesses that are characterized with lower margin and are also, in a sense, at a stage of initial development. Margins are not yet there. In the last 3 quarters, we've also experienced many pressures and headwinds for our gross margins coming from the supply chain environment and the component shortages and shipping environment.
The end result, if you look at it on a year-over-year basis, we are able to continue and steadily increase the operating profitability and bottom line profitability, because at least in the way that we are measuring our business, shareholder value is created and generated by simply getting to better EPS that allows, with the right multipliers, to affect the stock price. With that said, I want to take a short look at where we were just about 2.5 years ago. I was standing here presenting our model for the years to come. Nobody thought that COVID would come. Nobody was expecting global pandemic, as Nadav said. We were expecting a revenue growth of approximately 15%-25%. We actually grew at 31.7%.
We were expecting to see in the solar business gross margins of 36 ±1%. Actual were 36.4%. We were expecting 13%-15% operating expenses as percentage of revenue. We missed this a little bit, mostly around costs associated with currency changes and due to the fact that some of the activities that we do, like insurance and other areas, became much more expensive. Despite the fact that we were not spot on the OpEx's percentage of revenue, we were able to meet the operating income of 20.6%. We wanted to be at 20%-23%.
All in all, I think that what we presented in 2019 was well translated in 2021. We still see challenges that are happening in our margins and headwinds. We've mentioned before, we're growing very rapidly. We showed you the amount of products that we need to supply. Actually, what we see is that the demand is ahead of the supply. We basically saw a great demand. We are increasing the number of products that we're manufacturing. The only way to bridge between the time that we see the demand and the time that we're able to actually manufacture this product is by expedited shipment. Expedited shipment is sometimes costing 10 times more than ocean freight because it can be air freight or anything else.
When ocean freight is about five times more expensive than it was just about two years ago, this is a major headwind that we see on our margins. The factory in Mexico is a great solution for this. Once we will have the Mexico factory, first of all, we are increasing the capacity, so now we can start building inventory in the various regions, and we are able to actually support the growing revenues. The other thing that is actually happening is that we are shortening the lead time or the shipping time, and this, of course, creates a little bit easier or shorter response to customer demand.
Another issue that we need to remember when you see such a big growth is that, especially in time of component shortages, not only that you need to pay expedited shipments to send finished goods, you need to pay expedited shipments to get components to your factories. This is, of course, multiplying the cost. The second area that is a headwind and still is the tariffs or a portion of products that are subject to U.S. tariffs on products from China. When the Vietnam factory was closed during Q3 2021, the thing that we did was actually to shift everything to the most available capacity that was there, and this was China. We moved from approximately 90% of non-tariff product to about 60% of non-tariff products, and this, of course, affects margin dramatically.
The elevated maritime and shipment costs were already discussed. I believe that all of these three trends will, I would say, be mitigated a little bit as the time goes by. First of all, because of Mexico, and also because we do understand that once air shipment come back with more, a little more air traffic, that will be around the world, and once you'll see more capacity put into water in shipping capacity, this will go away. The two items that are here, and we do not have a good horizon of understanding when they will change the margin profile or headwinds are the increased commodity prices that we see and component prices for our inverters and optimizers, especially on the metals, on aluminum and on copper.
When it comes to batteries, everyone was dealing with nickel because they saw what was the impact of the Russia-Ukraine war. Actually, we need to remember that all of the prices, cobalt, magnesium, all of them, lithium, all of these prices hiked dramatically over the last 18 months, almost doubled, or in some cases, tripled. This is something that we will need to follow. Usually, you see a kind of cyclicality in these kind of product demands, but the fact that the world is manufacturing much more does not give us a lot of confidence of when exactly we're going to see a little bit of relief there. When we're trying to build the model for the next years, we are basically looking at three kind of activities, as mentioned by Zvi. The first one is what we call the scale.
Scale are mostly residential and commercial products. These are products that exist. We see growth there coming especially from market share gains or new products that are coming. This is, of course, going to deliver growth in our revenues. The next phase of product is what we call the Develop product. In Zvi's presentation, we were discussing the utility, we were discussing the trackers, we were discussing a little bit the batteries, of course. These are basically products that today we have the product, we have either the idea that we're already developing or the product, but the market is not yet developed. Therefore, we see higher growth trajectory coming from these numbers or from these products. The last are the Explore.
All of these future ideas that are supposed to jumpstart revenues in the years to come. In the model that I'm going to present to you, we do not have any Explore. All of the products that you will see are related to the Scale and the Develop. These are products that we already know, that we know what is going to be the cost structure, that we understand what are the market dynamics, and therefore, give us a little bit of confidence when we are building the model.
The way that I will do and present my model is that I'm going to layer for you each and every element of our product in order to understand how the big pictures looks like, and especially to allow you to understand how we're thinking when you're building your models, because we do understand that the number of products, the number of markets, segments, are making modeling our company becoming a little bit harder. We'll simply try to give a little bit of anchors that will help you to see whether the model makes sense.
The model that we present you is based on our expectations coming from the growth that we see in Germany, as Alfred said, the business that Daniel and Peter are generating, and the new businesses that we are building now. The first element, and all of the graphs that you'll see stacked now one over one, are related to revenue. The first element, of course, is residential inverters and optimizers. This is the most immediate opportunity for scale. We do see that the demand for solar is increasing. We do see that the ASP when we're selling this product is increasing because our products become either more feature-rich, the ability to add storage or to embed additional capabilities into the inverters.
We also see, by the way, that because of the fact that the size of the installation is increasing, actually the revenue that we see from the U.S. residential installation is growing as well, given the fact that simply every installations means larger inverter and much more optimizers. This is a business that enjoys the best margin. In many cases, we see margins north of 40% in this business, and these margins are usually driven either by the competitive environment. Here in the U.S., we know what is the competition landscape look like. Even in Europe, we do see that the differentiation that we have compared to other string inverters allows us to justify premium.
These are numbers that enjoy very nice margins, and we expect them, by the way, to continue and enjoy the nice margins because we do not see anything, at least in the near future, that is changing the landscape there or the pricing landscape there. In 2013, we started to sell commercial products, and the commercial products are growing very nicely on the megawatt basis, but we know that two things are happening when it comes to translate these megawatts into revenues. The first one is that the installation size is growing. Usually, when we measure cost per watt, the cost per watt for larger installation can be sometimes half of the cost per watt of a smaller installation.
Therefore, when you do see, and TV showed this, a 5.6 GW of orders that we have, if they're coming from larger installations, they will represent a little bit lower revenue per watt. This is why you see that we see growth and we see expansion of the segment itself, but because of the fact that we're constantly moving towards larger installation, it is not yet translated to growth, or at least in the years that we forecast, to a growth in revenues that will be the same size as the growth in gigawatts. These are products that have lower margins usually, and the margins vary between the installation. The bigger the installation is, the smaller the margin is.
That means that in many cases, the overall commercial business is dragging the entire business by approximately 500 basis points. If we were talking about residential revenues of forties or north of forties, actually commercial is getting us to these 35%-37%. These are products that are expected to continue and grow. We saw the trend of new product. When we start with a new product introduction, and I'm not sure if the colors are coming right here, and you can see the gray one, we usually see smaller contribution at the very beginning, but then when we are gathering more and more installations, the pace of the growth is increasing, and this is what we expect to see in the area of utility.
Our 330-kilowatt new inverter that will generate significant revenues from the beginning of 2023 will allow us to start penetrating into the smaller utility-scale, and we expect that at least in the beginning, although quantities are not big, the margins will be relatively smaller even compared to commercial due to the fact that we do not have yet the economies of scale when it comes to the manufacturing capabilities. That means that at the beginning, margins will be lower. Once we start to make more units, once we have more units in the field, we started the journey of the cost reduction because we know how to analyze the product, the product behavior.
We are able to remove some of the margins of error that we bake into the design, and then we can actually increase the gross margins. The best way to look at it, because it's very hard for you guys to look at it, to analyze what is the stream of each and every model, is actually to still take for the next year 35%-37% gross margins on the inverters and optimizers. What we will see is that on one hand, you see it clearly on the revenue, the proportion of the residential revenue that is bearing high margin is very well compensating for the growth that you see in commercial and the dilution that it brings.
You may actually see, if you would be able, a little bit better margins maybe on residential that is compensating for the lower margins or the higher weight of lower-margin products. We still, when we are modeling and taking all the assumptions that we know about prices, about market dynamics, we still see 35%-37% in the coming years when it comes to the solar products. The next product that is going to come and going to be a major contributor is actually the batteries. We have just started to sell the batteries in the third quarter of 2021. Uri showed you the quantities. We are growing very rapidly. First batteries are coming from the SMI agreement. Next generation will come using Kokam agreement, the Kokam battery coming from Sella 2.
This is a business that will be very high contributor for revenues because if you look at residential installation, the cost of battery can be actually three times the cost of the inverters and the optimizers. Every sale is very meaningful, and this is why you see the steep growth rate. It does come with lower margins. Today we are seeing approximately 25%, as we've mentioned. We believe that once Sella 2 will start operating, we will see better margins. You cannot ignore the fact that a lot of capacity is being placed today, and that means that you will see more players, and you'll see more capacity, and you'll see more supply.
Therefore, when we analyze margins of battery companies, some of them are public, you look at cell battery companies are at margins of approximately 16%-17%. We believe that 25% for a full system is something that makes sense, and we believe that we can justify it. The result will be that those batteries are going to push down the solar margins to around 30%, but at the same time, they don't come with the OpEx burden needed to sell them. Because when someone is going to sell a product to Sunnova or Sunrun or CED in the United States, basically the same salesperson is selling everything. It's the same operating expenses. Because of the fact that the unit cost is very high, the cost of R&D, or percentage of R&D to sales is not very big.
Therefore, we do expect to see from batteries similar, not exactly the same, but at least similar operating profit margin compared to the solar products. This will be the next item. We then add the RP. If you remember, the ancillary products. RP is additional revenue per installation, and this can be many things. Today, we're talking about EV chargers, we're talking about water heaters, we discuss communication devices. All of them enjoy very, very nice margins. By the way, in some cases, smart modules. The margins are relatively nice, but when you combine all of them, are at the similar to the overall company margins. We do expect that at the beginning of 2024, we will start to see tracker revenues coming into this mix.
Because it's going to take a while until they ramp up, we believe that at least in the coming years, we will see approximately 30% gross margins coming from the RP elements and the impact on the overall segment. You can see now how it is stacking. You understand that the size of the RP revenues is not going to be very dramatic when they are diluting, in a sense, the inverters and optimizers margin. All of the products that you saw here are the solar division. As you know, we have the non-solar activities. The first one is the non-solar non-PV tied batteries. These are batteries that are coming from the Kokam business. They're going to marine applications, xEVs, this could be trams, trains or buses. We see ESS, mostly spinning reserve.
Again, not the ESS that is tied to PV. We see UPS, uninterruptible power supply systems. These also start to give you a little bit of connections between the various product lines that we have. This is something that, of course, is going to increase based on the fact that we will have more capacity coming from Sella 2 factory. The excess capacity that we will not utilize for solar will go there. This is something that we can continue and expect to continue and grow. Today, the margin of this business is higher than 25%, but it is because of the fact that we have such a small capacity that we can go to the niches that are really less sensitive to price and, in a sense, harvest a little bit more margins.
We believe that once we will have more capacity, we will have to find ourself within this 25%. The last area that I'm showing here is automotive. It's not that we do not expect automotive to grow. As Zvi mentioned before, it's very hard to predict. The time to get a new product project in automotive is very long. We are working to utilize the platform that we have built for the E-Ducato to other areas. We are trying to find maybe customers that can use some of the elements. We're not baking this to the model, not because we do not believe that it will come, and not because we do not believe that there is a value there.
It's simply that we prefer, at least when we're modeling, to be very cautious on the way that we are expecting to see the revenues. These are revenues that are associated with relatively low margins. We're talking today about mid-single-digit, but it's one mid-single-digit that comes on a very thin layer of revenue, and therefore, the overall effect on the entire revenue is expected to remain relatively low. Once we summarize all of those, and once we are looking in our models at our assumptions about growth of R&D, growth of our sales force, the investment in small companies like SolarGik that we acquired is already built into our assumptions. We expect to see higher growth profile than we presented two and a half years ago. We presented in the past 15%-25%.
We're now looking at growth rate consolidated in the solar, segment, both being at 20%-30%, so we're accelerating the growth in a sense. We see gross margins consolidated being at, 30%, give or take 1%, and solar being slightly higher, given the fact that, on one hand, we are back or we will be back to the regular inverter and optimizer business, but the batteries will erode some of these gross margins. The thing that is accompanying this is that if we discussed in the past, a 13%-15% operating expenses as part of revenues, we expect them now to be 11%-13% in the overall business and 10%-12% in the solar business.
reason, by the way, is the fact that in the other businesses, we simply need to invest much more compared to the revenues that we're yielding, and therefore you see the higher number. The result is that we expect to see for the entire business, this is something that we didn't present, by the way, two and a half years ago. We're expecting to see 17%-19% operating margins. On the solar business, which is the comparable for the 2020-2023 that we have presented two and a half years ago, we still expect to see 20%-22% operating margins.
The fact that these operating margins, similar operating margins, come on a higher revenue base is, of course, translated to the fact that we expect to see growth in our bottom line, profit over time, which is the justification in many senses of the fact that we're taking these businesses that are coming with lower margins. We sometimes get this question, why do we take lower margin business? Simply because it increases bottom line, and this is what we're trying to achieve. Capital expenditures. We invest quite a lot. The investments that we see are divided between investments in manufacturing capacity. We showed you the automatic assembly lines that we build with our contract manufacturers. We invest in our facilities, in R&D labs.
We invest in testing equipment because once you allow the CM, the contract manufacturers, to invest there, you're basically bearing their financing costs that are dramatically higher than ours. In our case, we're able to get very nice ROI. Plus it's also equipment that we design and we control, so we see a lot of benefit coming out of it. These are the numbers that you see. In 2022, sorry, we're seeing a growth of, you know, from about $65 million to close to $90 million. Main reason is Mexico. We are ramping up quickly in Mexico. We will need to make investments there.
Actually, this investment rate, or I would call it a fixed asset rate, I'm not sure if it will become or stay exactly at $90 million, but at least as much as long as we see the fast growth that you saw, we need to match it with capacity. We estimate, at least for the next few years, to see $90 million. Sella 1 is built. Sella 1, all of the future investments are mostly enhancements that we do, either to machinery or to a leasehold improvement. In Sella 2, $50 million will be invested or completed to be investment actually within the next 2 to 3 months, once we are finishing the construction and paying for all of the machinery.
Since then, basically, the factory has the majority of the capacity that is needed in order to expand. Once we decide to step on the gas and actually move from 2 gigawatt to 4 gigawatt, the level of investment needed in Sella 2 is very minimal. It's mostly around areas related to the cell assembly and not in the coating and mixing areas. These are the investment that are fixed to the ground. You need to make a decision when you build a factory and not afterwards. You cannot change them. In general, you see here the OpEx, sorry, CapEx, we expect to see approximately $90 million for the years to come, as long as we continue to grow, and we certainly expect to do so.
The last one is capital allocation, and it may be a little bit of a strange issue to talk about given the fact that we have raised money just about 10 days ago. It's important for us to explain how do we envision capital allocation and what is the philosophy around it. In general, we're a growth company, and I believe that the model that we have presented demonstrate at least visually how we expect to grow. The first thing that we will need in order to do it is working capital. You need working capital because the bigger you are, the more inventories you are moving, the more inventories you are holding in order to make sure that you can reduce expedited shipments require more working capital. This working capital is the first priority, and it's increasing.
If you look at our balance sheet, especially when you see longer shipment times, you see that basically the time between the period that we need to pay our vendors and the time that we can collect from our customer is extending, and this is why the working capital needs are growing. The second area is capital expenditures. We discussed here some of them, but you know, we did Sella 1, we did Sella 2. When we find an attractive ROIC, we will discuss and whether we want to do another investment in a manufacturing capacity. But capital expenditure will be the next one will be actually manufacturing capacity expenditure. The next one is M&As, and M&As were discussed a little bit throughout this day. M&A is not just the money that we pay for the company.
This is also the money needed in order to take this business, jumpstart it, and make it growing business. Once we are exhausting this and we understand that we cannot increase more the EPS, then this will be time for us to look at whether we would like and how we would like to return money to investors. Here, at least as a company philosophy, the thing that drives us is that we will not do something that is opportunistic. If it will come to distribute dividends, we will do it once we have predictability, and we see long-term predictability of being able to do it.
If we would like, and we will believe that we cannot achieve more growth by utilizing the capital, in this case, share buyback will be done in a way that will actually be performed in a schedule that is fixed, that is, known in advance. We do not want to basically just use it as a leverage for people to make assumptions. In the event that we will need more capital, right now it's hard to see how, but still, if we will be able, we're very minded to the fine balance, I would call it, between what is going to be the dilution that we will dilute our shareholders. Of course, you know, stock price reflects a lot of the expectation for the future, and we understand that diluting is taking some of these expectations away.
We need to remember that debt, and today money is relatively cheap, it's still money that you need to serve. It's still purpose that you need to make sure that you have enough funds. When you see, especially, markets that are volatile, a debt for us is still debt as long as we have not seen it converted, if it was a convertible. If it's going to be a bank loan or a term loan, we need to make sure that we have the right cash flows in order to serve it and to make sure that we can do it. In general, SolarEdge is a company that does not have very high risk appetite in this sense.
We will always try to optimize the debt to equity ratio in a way that we're minimizing dilution, but at the same time feel that as a prudent management, we do not put the company in risk in the event that something goes sour and we have a little bit of less cash flows or something like this in the future. This is how we see it. Of course, again, we just raised money. We do not expect to do something like it in the near future, but at least it's important for us that you will understand how we are thinking about usage of cash. I think that with this, I conclude my explanation. We'll be happy to answer everything, and I see Cash already raising hands. Microphone, wait a minute.
Thanks, Ronen. First question on the long-term or the revenue growth guidance slide that you had there.
Mm-hmm.
You didn't give a timeline for the 20%-30%, but it looked like in earlier charts you were going all the way out to, I think, 2027, just eyeballing the graph that you had there. Should we think about that 20%-30% as a growth rate for that year?
The reason that we've given we didn't give exactly the time is because we're living in a much more volatile world. On one hand, I think that the phenomena that we have described today are there. They're happening. The energy transformation is happening, solar is growing, and we therefore believe that at least in the coming years, and I don't know if these coming years are three, five or seven, at least now, you know. Guy used to say all the time that it's very hard to predict, especially the future, but at least in the foreseeable future that we see this 20%-30% is something that we feel comfortable as a company.
As a follow-up, the consolidated column, is that operating income GAAP or is it non-GAAP?
Sorry, I apologize. It is a non-GAAP basis. Reason is that we assume that the more acquisitions we do, the GAAP becomes a little bit more hard to predict. Everything here is non-GAAP.
In the earlier slides, you provided, I think, maybe six segments or so. Are you gonna change the way you're presenting your KPIs so that we can track these more on a regular basis? That's it. Thank you.
No problem. At least for the time being, we will continue to do solar and non-solar because, you know, this is how management is looking at the business. Everything that you see within the three layers of inverters and optimizers, PV tied batteries that are coming from our solar division, this is where we are actually developing them. The RP will be there. When it comes to the non-solar, it is very much dependent on what is going to be the portion of this revenue out of the total. In general, once you reach 10% or more, you need to open it, and I think that this is what we will do to follow.
One of the reasons that we are I would call it gathering the product lines as we see them is because this is how we look at business. When management is looking at the KPIs of the various general managers of the division, we're looking at these segments, and we simply want to give you the same way that we're viewing the business and the same KPIs that we're using internally in order to check them. Okay. Yes.
Thanks for hosting us today. Ameet Thakkar from BMO. Just thinking about the 25% gross margins for the battery business for the next couple of years, does the roll-off of your existing Samsung supply arrangement actually get you to 25%? Do you stay the same or are you actually stepping down? Just to follow up on that, is that contract kind of fixed right now or is it actually kind of indexed to any of the raw material prices?
Okay, I'll start from the second. Unfortunately in batteries, everything is always variable. In general, agreements are tied to their raw material indexes, and they are moving with them. One of the benefits that you have when you work with large companies is the fact that they're sometimes hedged against changes in those places. You get a little bit. You're riding a little bit on their hedging capabilities. This is something that is just softening a little bit the waves of the growth. It is not changing the trend because eventually, you know, it'll catch up. At least the agreement that we have today with Samsung SDI does have raw material index adjustment.
In this case, when we look at pricing, we will have to unfortunately roll some of this to the customers because, you know, we cannot observe numbers as they are. There are always a little bit of latency between the time that you see the prices going up and until you can actually increase prices to customers, but at least this is what we intend to do. From the contract itself, it's a contract that is, we must take all of the amount of the 1 gigawatt. We can discuss with Samsung and increase this, or lengthen this one, but we do not expect due to the cell-to-capacity, at least at the beginning, it will be much more than that in the very near future we will do it.
If we see great demand coming, we have the product based on the Samsung cells, so we can do it, and I believe that Samsung will be happy to sell. When you look at the margin profile, we are today. I'm taking away a little bit of hiccups that we have in Q4, given the fact that due to component shortages, we had the line stopping for a few weeks, and we needed to pay for this because when you work with contract manufacturers, you know, they bring the employees, they pay rent. In general, we see the 25%, approximately now across all regions, some less, some more. We believe that once we'll have Sella 2, not at the very beginning, because, you know, the ramp-up takes a while, and the margin on the cost of the sale is not yet optimized.
There is a chance that margins will be improved a little bit, let's say a few quarters after Sella 2 comes to the right capacity. The market will make its own move because you see that the amount of capacity that is placed today for storage, both, by the way, automotive, but also residential, commercial, is very large. We therefore expect to see that you will see the prices moderating. When we are looking internally, we're looking at 25%.
Thank you.
We'll be happy to be surprised if something is better.
Sure.
Yes, Joe.
In that revenue build-up, you showed relatively little revenue from automotive. This is kind of a two-part question. Let's imagine that you're handed an opportunity to ramp that business, but it would be dilutive to these target margins you've articulated. Would you do that? And then the same question applies to M&A. Are you gonna? If you buy companies, are you gonna try and make them fit into these target margins you've articulated?
We judge ourselves at EPS. Eventually, when we decide on M&A, first of all, we need to see that within reasonable amount of time, the M&A should be accretive to the EPS. In general, we don't see the gross non-GAAP margin number as holy. You know, if we could do five times bigger business at half the margin, I'm happy because that means that we're staying with bigger margins. I think that, in effect, there's a little bit of anomaly. There are not many companies, at least in this space, that are making money for a long time. Margin, gross margins is very easy because everyone has a gross margin. I think that for us at least, the way to look at it is operating profit and EPS. We are EPS-driven.
Whatever business that can give us accretive EPS is something that we will consider. We may not take, but we'll still consider. When it comes to the automotive business, the answer is relying on the first one. It means that yes, if we do see another contract that is coming and that can bring lower margins but still contribute to the overall profitability, this is business that we're willing to take. When we came into automotive by acquiring our e-mobility division in Italy, we knew that margins were lower. We looked at mid-teen margins, but we understood that because of the fact that the unit cost of everything that you sell is so high, you can get to nice profitability out of it.
I think that whatever business we take, either it's a business that we buy or a business that we develop, the only thing that we're looking is what is time to an accretive, and it needs to be meaningful, accretive contribution to the EPS.
Okay. Just as a follow-on there, since you are putting cash to work and you're relatively unlevered, is there some sort of, you know, IRR hurdle rate that you apply as well or?
I'm not sure that we're there yet, either that we're not yet so sophisticated to look at it, but I think that right now it's mostly driven from the fact that we manage risks around the company. We do understand that debt is eventually something that you need to serve and you need to return if needs to come. Therefore, it's not that we do not feel that we'll continue to be profitable for the years to come. We've been profitable since 2014, and we have not been unprofitable for even single quarter since then. Our view today is that, first of all, let's make sure that the combination that we take is not risking the company, and then we will start to build the measures.
I think that, you know, if we need to start a little bit more again on IRR and eventually also again, return on invested capital that we do in the other investments that we do. I think that right now we're still in an early stage of at least this review.
Thank you.
Thank you. Yes. Yes.
Hi, this is Laura Sanchez from Morgan Stanley. I was wondering, in terms of your assumptions around European policy and volumes, what's embedded in your revenues and margin profile?
In general, we do not take them as a major driving force in Europe right now, the policies. In a sense, they may have a positive effect, but it is not built to our model right now. The reason, by the way, is that policies come and go. You know, this is a market that at least, and Alfred will know better than me, used to see feed-in tariffs in Germany until 2012. When they went away, the market simply disappeared in Germany for many years until it came back. We in general prefer to look at the economics of the business, and if it makes sense economically, then that means that it's healthy. I think that most of the government incentives that you see today are supportive of solar.
Again, just yesterday I read that Italy is going to increase dramatically subsidies for photovoltaics. I think that Alfred showed you what's happening in Germany. That's definitely positive. The way that we're looking is that what is the size of each and every market, and we build our models very much bottoms up with the help of the general managers. We look at the markets, we look at the competitive dynamics, we understand what they are, the puts and takes of our competitive advantages in each and every one of them, and we'll build it bottom up. If something comes and raises the market, we may be surprised for good.
Follow-up there. How are you seeing the market in Europe right now in terms of how fragmented it is? I know in the US you have two key players, but in Europe is a little bit more fragmented, so I'm not sure how that's changing with the current environment.
First of all, Europe is more fragmented than in U.S., and especially by the way, when we discuss U.S. resi because we know that the competitive landscape in the U.S. resi is that you have two major players and maybe a few more in the niches. When you look at Europe, I think that you see two-three buckets of companies or players that are there. You see Asian-based inverters. This could be Taiwanese or Chinese. You see the European string inverters players, and you see MLPE, which is they mostly us. In this sense, the market is fragmented through more players and definitely through every market have a little bit different dynamic. The Dutch market is not necessarily like the Poland market, but it's more fragmented.
The right way to look at it is not just by the number of players, but I would say the type of players. Here, I think that what you see is a kind of a depolarization. You see more and more Asian players that are growing, you see us growing, and you see the Europeans in the middle that are finding their way, depends on the market, prices, and the competitive landscape there. Yes. Oh, sorry. Hey, you'll come next.
Big Pon here. Yeah, Julien Dumoulin-Smith with BofA. Just first off, coming back high level, right? You talked about an earnings EPS company. Let me ask you the direct question. When do we start to talk about EPS targets themselves, right? We talked about the model, right? Love the granularity, but just wholesale, when you think about being a large company, a lot of them have those kinds of targets.
We are evolving as well in this, I must say. I think that today we, as a company, first of all, look at the operating margin, because when you go all the way to EPS, there are two things that are impacting you. First of all, currencies, and we have a very violent currency moves there. Second is taxes. Unfortunately, we're becoming profitable in all jurisdictions, and taxes are going up. We pay too much. In any case, this is why we're looking today at operating margins. I can tell you that at least within management, this is something that we've already started to talk about, you know, to try to give operating profit targets and later on to start.
By the way, we already did it here if you saw. When it comes to the guidance, we'll need to understand how to do it. The targets are here. This is how we measure ourself internally, and I believe that over time we'll go down. I don't think that we'll come to the EPS as long as we know how to project better currencies and taxes.
Excellent. Just a quick follow-up then on the storage side. As you think about scaling it to maybe 4 GWh or what have you, right? Especially at low incremental costs, as you say, how do you think about that going into different end markets, specifically residential, right? Presumably, that's, again, you didn't quantify it per se, but much higher margin than the alternative here, right? That seems like that's really where you wanna be.
No. I think that there is a little bit of evolution here. First of all, residential market is always characterized with better margins than the other markets. By definition, this is the reason why we decided to start with RSS, because this is the highest margin that we have. Today, the two competing areas will be actually the RSS business and the business that we have from Kokam. Here, I think that the message will be is that batteries, and especially residential batteries, are supporting the bigger business of the inverters. If I will need to allocate, I would assume that resi will go first. As long as we have limitation on capacity, we are trying to basically have everyone share the same pain by not getting products.
I can tell you that we do see different margins sometimes in Europe or the US, but we do not want to dry any markets. We're trying to balance those. You know, the more capacity we have, we will try to direct it to markets that have better margins. We will need to decide again between the business of Kokam and business of SolarEdge, if there is a competition on capacity, where is the highest margin and how do we direct the business there.
Excellent. Quick last question here. Just to clarify on the model, if you can, just on the revenue growth numbers. I mean, I know you obviously have this target number, but again, it's tough to read exactly what your trajectory is for 2023 and 2024, but it doesn't exactly seem like it's in that 20%-30%. Again, it's tough to eyeball it. Can you talk a little bit, especially considering the dynamics that we alluded to earlier with commercial or Europe, again.
Mm-hmm. Sure.
What that means for margins, too potentially.
Okay, in general, the 20%-30% is coming from the model. The reason that we are providing this growth, and usually, by the way, you know, when we give a range, we're aiming at least at the middle of it. The reason that we're projecting it is because when we build bottom-up, you understand that every segment of the market have a little bit of different dynamics. For example, if you take resi U.S. In resi U.S., given the competitive environment, unless something very dramatic happens, you grow with the market. There you take market assumptions. When you look at Europe, you understand that in some of the markets, they are growing a little bit faster. In some cases, you can take share. We're looking at this.
When you look at outside of U.S. and Europe, then every country has its own dynamic, and again, we look at it. When you look at commercial, the opportunity is bigger. First of all, you saw already the growth. The growth is much faster than in residential. Second, we do see that our product line is more suitable for higher portion of this segment. This is why we assumed a little bit of a bigger growth there. When it comes to utility, we took our past experience, and we understand that, you know, revenues don't just drop. They're trickling. At the beginning, people start to gain confidence, and they grow them.
When we give this 20%-30%, it comes from multiple assumptions that we do across regions, market, and competitive environments. At least again, even if it is not looking at the scale this way, this is how we view it from the model, and these are the ranges that we feel comfortable when we measure ourselves. At least for the next, again, few coming years, and I don't know if it's gonna be two, three or four, I think that this is the number that we feel very comfortable with.
Got it. It's not back-ended, it's pretty consistent.
I believe so, yeah. Yes.
Hey, Christopher Souther, B. Riley. I was just curious, as we're moving towards larger commercial utility scale offerings, you know, cost reduction becoming more and more of a focus, can you talk a little bit about the premium price that you think those customers will be willing to pay? I think it's well-established in the residential space, you know, the advantages you guys have. But just, you know, from a pricing standpoint as you're entering some of those larger markets, can you kind of walk through, you know, how customers are, you know, valuing that?
Here, by the way, I invite also if Zvi would like to add something. In general, the way that we look at it is that we are in many senses, first of all, trying to justify the premium rather than just understanding, you know, how much we can take and or just setting the price. What we try to understand and what we believe that we are trying to message in this day is that if this was a very, I would call it cost-driven market in the past, we're used to see very dramatic ASP erosion and cost reduction that needed to follow or to actually accelerate. I think that now the way that the market is judging the products and the competitive products is actually throughout the offering.
You do see that if there is a full system that you're selling, if you can get a battery and the inverter from one player, if you can get one day in a utility, the trackers, the storage, the management system from the same player, the premium is there. I don't think that we have like, you know, rule of the thumb number, what is the amount of premium that we need to take, but we do understand that with what we provide to the market, we need to take a little bit of a premium, especially when you compare us to string inverters. I think that it's a kind of more art than science to simply try to figure out what is the right amount. It is changing over time.
Today, in this demand that you see, there is almost no price sensitivity in some cases. In some cases, again, when the competition is with more abundant offering of products, you need to be a little bit more competitive. I think that to date, simply build the offering, make sure that you provide something that is valuable and try to price it right based on the market, based on the customer, based on the application. Zvi, I don't know if you want to add anything to this.
Yeah, I will add a bit. I think our C&I sales force think and talk like project developers. We model expenses of O&M, and we know that they're different in India because of the labor rates than they are in the U.S., and we model cost of cabling. If our offering enables to use a different transformer that is a little bit cheaper, we model all of those factors and review those with the customers and with the developers, and on the Excel aim to validate that this is a better investment that starts with the additional harvesting of energy, but goes through all of the factors that affect the return on investment.
Occasionally, we identify opportunities where we can do a better job and save them money on a controller or a monitoring contract or whatnot, and improve their profitability, and then enable us to achieve the premium that we need compared to our cost and the price that we need to sell. We're constantly pushing our costs down. We're constantly pushing our value up, and we're constantly measuring that against the market and in daily discussions with the developers and project owners. Definitely residential is a whole different story in terms of pricing and decision-making, but once you go to C&I and extend from there to utility, that is the dynamic of the sale.
That's what we're focusing, and that's where we're seeing recent success.
Actually, by the way, if there are questions, Zvi is here with us at least. Questions, either to me or Zvi. Yes, please.
All right. Thank you for the time. David Momi from Ashford Capital. I just wanted to follow up on Julien's question a little bit. I think, at least the way I was taking it, basically, I understand the 20%-30% is kind of like the long term as far as you guys can see, but taking the building blocks that you guys have kind of already given us of, you know, commercial at 5.5 GW, it's growing, you know, 77% year-over-year on almost half the business and resi growing kind of in line with the residential industry, 15%-20%, just kinda seems to point to something, at least for 2022, that's like well above kind of the range that you guys are talking about longer term. Is there anything, you know, that we're missing there?
'Cause it just kinda seems like, you know, at least initially, you should be growing faster than that.
First of all, when we talk about the growth phase, you know the financial data and consensus numbers that you guys have put in place in a cumulative way are already there, and they represent something. I think that the broad question of growth is built out of many things. You know, we are, I'm included, financiers. We look at Excel, we are multiplying, we're changing, we put brackets or not. Uri needs to build it. He needs to build it in an environment of component availability or shortages. We need to basically ship those, and there is a world of shipping capacity. Someone needs to install it. I think that Alfred would agree with me that I think in Germany today, one of the issues is lack of installers.
The fact of whether you grow quickly or not is not just dependent on you. It's a whole world of so many factors that you cannot even imagine. The fact is that most of what you show for 2022, and again, I will not guide for 2022, is expecting relatively large growth. I can tell you that this company, whatever opportunities we have and we can fulfill, we will take, and we will try to fulfill. This is a company that Zvi and Guy before led to a culture where if we need, we'll bring it to the customer, and we'll do everything in our strength. It's getting, by the way, much more complicated as we grow because simply we're a bit of a bigger animal.
When we're looking towards, let's say, exiting even 2022, I think that the numbers that we give, and even though there may be surprises, good or bad, this is well reflecting how we are analyzing the market. We're already a large company. It's already a large market. You don't see many $2 billion company growing at a rate of 50%-70% year-over-year. Don't see many of those because of these reasons. I think that, again, expectations are there, demand is there, but at least from exiting 2022 and moving forward, I think that this is a number that we as management feel comfortable enough to guide and not to stray too much.
Okay. Thank you.
Any more questions before I move to summarize from Zvi? Zvi, floor is yours.
Yes, I will keep it short 'cause we really appreciate the time that all of you invested in listening to us and the patience that you displayed during the day. When we built the agenda for the day, we were aiming to be as detailed as reasonably possible and as transparent as reasonably possible about what our plans are from a technology, from a product, from an operational and market point of view. In the background of this are the organizational challenges that are very relevant for a company in our position and at our size.
On the one hand, capturing the opportunities of today and executing on those, and that is becoming more difficult and requiring more management attention, making sure that we are prepared for the opportunities of tomorrow, and getting ready also for the opportunities of a year and two years from now. What we try to lay out for you is how we are dealing with that, also from an organization point of view and also from a vision and leadership point of view. In our mind and goal for every organization of the company is to create a sustainable differentiation through technology and execution in the markets that we serve. That is what we try to do.
That is what is enabling us to get the profitability that we need and the growth that we are showing here. I hope that we've been able to get that message across about the opportunities that we see, the vision and the leadership that we put in place to try and capture the opportunities and the backbone of infrastructure and execution capability that we have that will help us deliver these results. Again, thank you very much for the time and the patience, and I hope to see you again in a couple of years in a much more relaxed environment.