Good morning and good afternoon, everyone. Thank you for joining us today. This event is designed to be an educational discussion for the investor community, media, and partners. Our intention is not to imply anything with regards to financial performance. We've expressed to many of you our excitement about the opportunity within the Battery Energy Storage Solution markets and received a lot of questions in return. What do we sell? Who are our customers? Why do they buy from Shoals? Our goal is to answer many of those today. We'll continue to share milestones about our participation in this market as we make our way through future quarters. While we're not making any financial forecasts today, we will be talking about the market and potential opportunity. While those projections come from respected industry sources, they do carry risks and uncertainties.
Those can be found in detail in our most recent 10-Q and 10-K filings with the SEC. My name is Matt Tractenberg. I'm responsible for investor relations here at Shoals, and I'll kick us off today. I'm also joined by Mike Everson, who is responsible for leading our efforts within the BESS market. Mike is an industry veteran joining Shoals in 2024 after a long career with well-known companies in the energy transition space. He specializes in custom-engineered solutions for power distribution, data centers, and energy storage. Thank you for joining us today, Mike. We also have Lindsey Williams with us. Lindsey is responsible for Marketing and External Communications for Shoals. She spent her career with industry leaders in the clean energy space and is the internal champion for Voice of Customer for us.
Lindsey has collected some questions in advance and will come in when Mike is done with his overview. Welcome to Lindsey as well. For anyone who does not actively follow Shoals or has been away from the story for a while, we wanted to remind you of who we are and what we are building. While our bread and butter has always been within the U.S. utility-scale solar market, we are actively and intentionally diversifying our offering and market presence. Shoals is the market leader for EBOS, or Electrical Balance of System, on a solar field. We enable electrons to move safely and efficiently from the panel to the inverter. We sell an architecture which emphasizes the highest quality custom solutions with engineering design upfront. What we do really well across all end markets is delivering high-quality customized solutions at scale. We manufacture our offering in-house, leveraging proprietary innovative processes.
While we've historically focused on utility-scale solar in the U.S., the company has been investing heavily in new growth opportunities, including OEM, CCNI, international markets, and BESS, which is something we're very excited about and why we're here today. With that, I'll hand it to Mike to take it from here. Mike.
Thanks, Matt. Hello. Thanks for having me today. I wanted to get started with what is the BESS market and provide an overview of what this market is. The BESS market is within the renewable energy space. BESS stands for
Battery Energy Storage Systems and is basically a method of storing energy using rechargeable batteries. BESS is the backbone of grid reliability for utility-scale and C&I projects. There are many different battery technologies out there, such as lithium-ion, lithium iron phosphate, iron-air, zinc, sodium, flow batteries, and more. The lithium-ion and lithium iron phosphate are the most dominant, though. There are also both short-duration energy storage systems that are up to four hours and long-duration energy storage systems that are up to 100 hours. There are also many other emerging technologies that are being developed as we speak.
BESS, in general, is universally applicable to any renewable energy source, most specifically solar and wind. Without BESS, it will be difficult to meet the upcoming energy demands. The global energy demands continue to grow, with AI and data centers being critical to this growth need. Solar is one of the fastest-growing areas in the energy space, and BESS will help support this growth. There are some key attributes that the BESS provides: intermittent management of renewable sources like solar, grid reliability and stability. BESS also supports peak power demand and rates. Also, the demand for energy independence and resilience for high-power outage areas. The market overall is expecting tremendous growth in the U.S., with hundreds of projects coming online in the next few years. The annual growth rate of nearly 30% over the next 10 years is expected.
BESS will grow from approximately 24 GW last year to over 200-plus GW by 2034. The market grew by 55% in 2024 alone. Eventually, the market is projected to be worth over $100 billion by 2034. Lithium-ion and lithium iron phosphate battery technologies will remain in the dominant position, but long-duration energy storage technologies are expected to grow significantly over the same period of time, making up more than 10% of the BESS market. Now, I wanted to go over a few of our solutions that we provide. For starters, we do not sell the batteries or the battery containers. We sell the interconnection between the battery and the inverters. This is DC power distribution at this point. Some of the products that we offer include combiners, recombiners, multi-load brake disconnect switches, BLA wire harnesses, and custom solutions.
We sell a combination of these units as well, as combiners and MOBD put together. A combiner basically consolidates the multiple DC circuits, like solar strings, into a single output switch, then goes to an inverter. The recombiner consolidates multiple DC circuits as well, but from solar and battery storage, or even battery storage alone, into a single output switch and then goes to an inverter. The main difference between the recombiner and the combiner is it can accept much higher currents. Recombiners are energy agnostic. They are capable of combining any energy source, like solar, wind, hydrogen, geothermal, etc. Also, the recombiner can be designed for behind-the-meter solutions, supporting microgrids and data centers and other 24x7 power needs. We also sell multi-load brake disconnects for battery containers. These are used for safety, convenience, and maintenance purposes.
Like I mentioned, we can combine the recombiner with the MOBD and offer a packaged solution. We also sell the BLA wire harnesses for interconnecting multiple battery containers together. We also sell customized solutions for interconnecting batteries and combining, recombining DC circuits to simplify deployments. These are not low-margin, low-value products. These are highly valued engineered systems. I wanted to go through and give you an example of one of our applications. From combiner boxes to recombiners and custom skids, our products are integral to how a solar-plus storage field or standalone storage are built. I'm going to show you a diagram of where our solutions sit in the system architecture. As you can see, here's an example of a solar-plus BESS application.
Our recombiner consolidates the DC circuits from the solar array, and the BESS combines them into a single output, which then goes to the inverter. DC-coupled is where we play. Our products are suited for DC-coupled applications, meaning we consolidate and distribute the DC power from the battery containers, delivering it to a single inverter. This application method will lower the inverters required, increase overall efficiency, and simplifies the installation. Versus an AC-coupled application means there is already AC coming out of the battery container, and the solar array has its own inverter. Therefore, multiple power conversions are required, ultimately lowering the efficiency. Additionally, you can see how the power then flows to the off-takers, like the data center in this example, providing the energy stability and reliability they need. So who are some of our customers?
We have multiple paths to the market, that market being solar-plus storage or standalone storage, all while using our products, which are universally applicable to any battery technology and any renewable source. Some of those customers include EPCs, integrators, OEMs, and data center customers. We have a long history of success under our traditional solar path to the EPCs, and now these EPCs are looking at solar-plus storage and standalone storage projects. We're also working with OEMs, collaborating and co-developing EBOS solutions with BESS manufacturers. In fact, we're currently partnered with a tier-one emerging technology BESS manufacturer. We also work with integrators. We have new developments underway for these integrators, where we continue to educate them and collaborate with them to help them develop turnkey designs with our solutions. Lastly, data centers require consistent high-energy demands and need support and stability with high reliability, which BESS will provide.
What are some of our competitive advantages? For one, we have long-standing customer relationships, constantly developing innovative products, investing for our future, and have product roadmaps aligned for future growth. This is how we will win in the market. Loyalty, our reputation with our key customers will help us win. Our product offering, we deliver high-quality EBOS solutions. No one else offers the combination of custom engineering, in-house manufacturing, and field-proven reliability that Shoals does. Partnerships, we continue building relationships, co-developing new solutions with emerging OEMs. Investing, we are well situated to grow, which includes investing in engineering, project management, and logistics infrastructure to support high-volume, high-complex builds. To meet that demand, we are scaling to a new mega plant that is over 630,000 sq ft, and we will have dedicated space for BESS production. Lindsey, do you want to see if there's some questions that folks have?
Yes. I appreciate the overview of all of our solutions and where we fit in the market. A couple of clarifying questions. Why aren't you selling batteries?
We don't sell batteries because we prefer to focus on our core product offerings, which are new interconnecting EBOS solutions.
There are other large players in this space. Can you share with us again what advantage you have over these competitors?
The biggest advantage we have is long-standing customer relationships. We have customers for 20 years in the solar space, and we can also sell them our EBOS BESS solutions. Our innovative products set us apart from others, customizable products, and we are continually investing in new product roadmaps.
How do you plan to protect the market share that you're hoping to gain in the coming years within this industry?
We must continue to develop high-quality products that the customers can rely on.
You went over this a little bit, but are there any electrical end markets that these enclosures can be sold into?
I mentioned data centers, but also microgrids and any other renewable solutions where DC power distribution is required.
Can you talk just a little bit more about the go-to-market? How are you selling? Is it through volume contracts? Give us a little more detail there.
We sell through the EPCs, contractors, integrators, and battery OEMs. We seek specific projects that require DC power distribution, and some of those may include volume contracts.
Is your intention to focus on a few big names as part of that strategy, or do you prefer to cast a wider net?
We intend to cast a wider net and offer continuing education to more customers about our solutions.
How are you getting closer to the DC builders and hyperscalers given the market there and how little exposure you have to them today?
By providing continuing education to the design engineers, EPCs, contractors that serve this market. Also, most of our key EPC customers have data center divisions already.
Okay. Great. That was the last question we had and also the end of our webinar, so please reach out to us with any additional questions that you might have. Thank you for your time today. Thank you for joining our webinar.