Good morning, everyone. My name is Charlie MacPherson, and I'm head of corporate communications at Tetra Tech, and we are thrilled to see so many of you in the audience today, as well as those who are joining us via webcast for Tetra Tech's inaugural Investor Day. Before we get started, I have a few housekeeping items. First, please silence your cell phones. You don't want to be that person. Next, we have two Q&A sessions today with a short break in the middle of the presentations. After the program, we're going to host a networking lunch down the hall, and we invite all of you to join us. And finally, I'd like everyone to review our Safe Harbor Statements. I'm not going to read it out loud, but please familiarize yourselves with them. And with that, let's do get started.
It is my pleasure to introduce Dan Batrack, Tetra Tech Chairman and CEO. Dan?
Thank you, Charlie, and good morning and welcome to our, as Charlie just indicated, our inaugural Investor Day, first one ever. We're really excited, not only myself, to present our 2030 plan, or Tetra Tech in 2030, and we brought with us today, and I can do a brief overview of them in a few moments, our global practice leaders for each of the areas. I love talking about Tetra Tech. I like going into these details, but the individuals that actually run these, not only from a technical standpoint but from a profit and loss standpoint, the actual business centers are actually with us today, s,o I'm excited about havng them here and for you to listen to them directly. You know, it's a great day for us to have our inaugural Investor Day. There's lots of reasons why we wanted to have this meeting at this time.
Among them are, just so happens, the PFAS, or New Emerging Contaminant Regulations, came out. It came out right about the time that we announced we'd be having this meeting, so, if you believe in coincidences, there you go. You'll hear both from what the impacts to our business are and how we think these are a step change in our business, both in the watershed basis under the CERCLA regulations that were passed and drinking water treatment that you're going to hear regarding the MCLs, or the Drinking Water Standards. Another reason for us to have this meeting today was it's been just over a year ago since the very first day that a company called RPS joined us. It was the largest acquisition we've done. It was just about 5,000 people.
They're fully operationally integrated, and while we're not going to spend much time talking about RPS in and of itself, we are going to talk about what it's given us in a geographic reach to actually service and access more markets, and it really has made a big difference for the company. And last, and while it's the smallest but maybe in some ways the most exciting, we are going to present some details of our recurring revenue, which is actually software packages and applications that we're now providing to our clients. We've actually had every one of our client sets (U.S. federal, U.S. state, and local) our commercial and international clients actually subscribe, and we do have limited licenses under subscription to all of our client sets, so you'll hear about a couple of our flagship programs today that we have out there. In programs, I mean software applications.
So, let me start with the presentation today. I will start with a summary of the final slide that you're going to see today, and it's actually one that's summarized toward the end of the presentations, which is Tetra Tech in 2030, our financial numbers. I assume that if we can give this some context right out of the gate, it'll help you understand where we're headed. So, in 2030, we expect the company's revenues to double from where they are today. Now, this is the $5 billion that we have listed for 2024, sort of a midpoint of a range that we've provided for total revenue for the company. We expect that we're going to grow that to twice the size it is from today by 2030.
If you take a look at the number for net revenue, it's also about double, but I think what's noteworthy here is our earnings, or EBITDA. We expect to nearly triple. That's going to be driven by higher levels of margin, obviously going from where we currently are, around 13%, up to 17% that you see here. If you are a fan of net service revenue, that actually equates to a number well over 20%. If you want to make a comparison, we've done that math for you, and Steve Burdick, our CFO, will talk about that as we go forward. These are the numbers you're going to see as we add up today, and that will correspond to the growth rates in our different markets that we expect Tetra Tech to be and what our strategic plan will accomplish between now and 2030.
Well, one question I get quite a bit is, you know, Tetra Tech, you're pretty nichy. I always found that interesting because growing up, really my entire career at Tetra Tech, I never thought of us being constrained or being a niche company. But the niches, if you call them that, water, environment, and sustainable infrastructure, are what Tetra Tech is. We are a pure play in these markets, and you're going to hear more about that today from the practitioners that lead these practices. Some of the things I'll note: are they big enough to sustain Tetra Tech growing to these levels? More than enough. These markets are large. They're geographically expansive. They're global. And most importantly, they're growing. And why are they growing? Well, they're growing because of regulatory requirements, and you're going to hear about that today. They're grown by economic drivers.
There's actually economic benefit in doing a lot of the work that we perform on a day-to-day basis at Tetra Tech. And while I know it comes and goes, there's actually a global support politically for the environment, for combating climate change, for clean water and sustainable and resilient buildings. And so, these have large drivers. They're global, and they have political winds that are actually building to becoming bigger tailwinds for the company than ever before. I do want to make one note here. So, it's a large market. Well, we expect it to be well over $3 trillion by 2030, and you can see it's essentially $2 trillion now. You're going to see some references during the day today. When we say market, this means the total dollars that are being spent in this area, which includes implementation and construction.
So, if you want to take a look at the words that we use, addressable market, and you'll see these on many slides, that's actually the work that we would perform as Tetra Tech, and that's at the upfront design, planning, research, and front-end evaluation. And we see that market typically as 10%-20% of this. So, the $3 trillion would be somewhere between $300 billion-$600 billion would be the addressable market for ourselves. So, as you go through these slides and you see market versus addressable market, that's the difference between the two terms. The presentations you're going to see today from Tetra Tech are actually going to be in alignment with this water cycle. Now, I do present quarterly.
If you follow Tetra Tech on a quarterly basis or annually, I speak about Tetra Tech's revenues by our segments: our government services group, our commercial and international group, GSG and CIG. I also present the financials by end client, so U.S. federal government, state and local, commercial and international, and this is different. Let me explain just for a moment why you're going to see it different. This is how we actually go to market with our clients, and this is where we contract the work. This is actually how our clients see the work. This is how we compete for the work, and these are the technical professionals that we brought today.
So, if you added up each of these, from research and development, watershed, water treatment, and coastal, and you add the adjacent renewable energy and high-performance buildings, you would come up with $5 billion, and this is our revenue in 2024 that we expect. So, you will see every one of these dollars in every one of these areas represented today in the presentations. Now, there's no doubt, if you see this market that's trillions of dollars and you do meet with these end clients, folks that are new to the market would think, "We should move into that market." And we've had more, I'll call, wannabes or people emulating this, but I will say Tetra Tech, and I'd like to spend just a moment, is quite different to this market. These are not markets that we're just moving into.
These are not our areas that we're hoping to break into or learn about. In fact, this really goes back to the heritage of the company. Nearly 60 years ago, when the company was founded, it was founded on doing technical research and development only. Tetra Tech was really a think tank. We're headquartered in the suburb of Los Angeles, Pasadena, California. The RAND Corporation, which is a think tank for the government, does policy and political items. Many refer to the company in its early days as a technical RAND Corporation, where it was really just research and development, and what's continued all the way today, and I'm going to be pleased to introduce Kelly Knee, who will talk about the research and development work that we're doing today, all funded by our clients. High-end consulting?
Look, there's a lot of folks that have what they call Centers of Excellence, which is code for low-cost engineering offshore. Tetra Tech is not involved in that work. Nearly two-thirds of the revenues that we generate as a company are at the very front end or at the consulting and advisory aspect of the business. It makes it less competition on price or no competition on price, technical qualifications, and we're highly differentiated in the market. And if anything, over the next years, between now and 2030, we're going to increase that percentage of 65% to even a higher level. And the one thing that I would say continues to differentiate Tetra Tech is the work that comes out of research and development actually builds and creates intellectual property, IP, patents, technologies, applications that we own. The clients pay for it.
They get first use of it, but we actually own the IP in nearly every instance. You'll hear more about these 200 IP-protected applications that we have. When you hire a Tetra Tech engineer, you get those 200 applications that $hundreds of millions have been spent on, making us different than anyone else in the marketplace. I think one of the more en vogue topics these days is what's your digital strategy? I did have an analyst told me one time, "Don't talk about digital strategy. What that means is you use AutoCAD, which is electronic drafting a system, and that's it." I actually want to spend just a moment sharing with you our digital strategy. It really is three-part, or it's a three-legged portion. The first is our back office.
Tetra Tech, I feel very confident, has the best back office systems of any consulting and advisory firm in the industry by far. We're on a system that is an ERP that allows every entity in the company, every individual, to see the status of their project financially, technically with respect to deliverables, and schedule real-time, anywhere, anytime, with full disclosure. Now, Steve and I, CFO, have access to this, but it's not the most valuable tool for us. It's the most valuable tool for our project managers' technical staff. We're pretty far up the maturity process on this. It has contributed to our margin. We don't spend almost any time working on the administrative items in the back, sort of in the back rooms. It's taken by our TetraLinx system.
We do think that there's additional margin to be had through the systems as we're implementing AI, and so we do have different chatbots, so now we can just verbally inquire, "What's the status of my project, and what's it predicted to be next Friday?" It will do it. We think there's still additional margin that we can get out of the first leg of our digital strategy. Second portion is Tetra Tech Delta. If you followed our investor calls, you would have heard a bit about this over the years. These are the tools that we use internally to actually make us more efficient. I would say in the past several years, this has contributed mostly to the annual increase in our margins. We've been increasing the margins between 50 and 100 basis points a year, largely due to the Tetra Tech Delta.
These are tools that make us more efficient, complete the work quicker, and make a difference when you hire a Tetra Tech engineer or scientist. But the newest, and you can see the little bullseye there that we're really just getting off the ground, is a recurring revenue. We've been using our tools so often and doing it side by side with our clients that it's actually evolved to a point where clients have asked, "Can we just run it on our own?" And we struggled with that for the last two, three years, and we've actually come out, and as I'd mentioned at the outset, we actually have our clients paying subscriptions for this, and you'll hear some more details on our flagship programs, software programs, in a moment. These are our flagship programs.
You're going to hear some about OceansMap and FusionMap, our two largest programs that we have deployed in the marketplace. In the past, as a government contractor, a lot of work that we do for research and development is cost-plus, so it really goes back to the beginning of the company. Time of materials, we spend an hour, we get paid for an hour, and fixed price, which we enjoy, we'll take that assignment, by the way, a consulting and design assignment on a fixed price basis brings us more margin, but the recurring revenue is going to add a new tool to the contracting mechanisms that we have with our clients and should make a big difference. Now, we're not going to get from today, 2024, to 2030 in just one big leap. We actually are going to evolve the company.
Today, high-end consulting, you can see there on the left, we're going to move to additional work that will move to high-end analytics with detection limits required that approach zero, or in the case of PFAS, 4 parts per trillion. The evaluation on data analytics will become ever more important. We'll certainly begin, and we have already begun, with AI augmentation and, of course, reoccurring revenue that you'll hear about. These are our presenters today, but I'll just take you to the right side of the screen. We will take a break in about an hour, and each of these individuals will be introduced by their preceding presenter. With that, I would actually like to introduce our first presenter of the morning regarding research and development, Kelly Knee, if you'd come up. She's been with the company 20 years.
She started as an intern, and she is the co-creator of the OceansMap software program that we've deployed into the marketplace. So, Kelly.
Thank you, Dan, for that very kind introduction, and good morning, everyone. It's my pleasure to be here today talking to you about the work that Tetra Tech does in the water research and development space. Research and development is the foundation of Tetra Tech's success in the water market. Dan already spoke to us about the size of the market in general. I'm going to focus for a few minutes on a couple of key water challenges that the world is facing. Billions of people lack access to clean water. Water scarcity is becoming ever more prevalent as the frequency and duration of droughts is set to increase by 30% in the next generation. Millions of buildings are at risk to climate change-related flooding, and the human health impacts of emerging contaminants are still being understood.
There's always a new challenge to address, and addressing these challenges requires significant investment in both research and development and applying successful solutions at scale. Achieving sustainable development goals for clean water and sanitation for the world's population will require $1 trillion in annual investment. Addressing climate change impacts worldwide will require $500 billion in annual investment. The U.S. is already investing $5 billion in emerging contaminants like PFAS. New regulations around these ubiquitous, forever chemicals will drive additional investment in that space, and both Leslie and Jared will talk to you more about PFAS a little bit later this morning. The size of these investments is daunting, but the return on them is positive. Every dollar invested pays dividends in offsetting the impacts. That's why research and development in this space is so important. 21st-century water challenges require 21st-century solutions.
We have more data than ever at our fingertips, and integrating that data with research and development will unlock new potential. Investing in efficient, modern, and data-driven solutions will accelerate timelines and generate economic benefits. Globally, the water research and development market on its own is quite large. Dan's spoken to investors before about the opportunity with U.S. federal agencies, and in the water space, we're seeing research and development happen at both the agency and interagency levels. In 2023, the addressable market for the U.S. topped $12 billion, with significant portions of that investment coming from interagency programs like the United States Global Change Research Program. It's worth noting that that $12 billion does not include any Department of Defense investment in water research and development. Large investments are also happening in the international government sector and from industry.
We're seeing a huge amount of investments in climate, natural resources, and environmental R&D from programs like Horizon Europe. On the private sector side, the offshore energy industry is investing heavily in ocean technology. Some companies have even launched their own innovation incubators. We're also seeing investment in carbon capture and sequestration, topping $6 billion, and global consumer goods companies dependent on water for their products are investing millions of dollars in clean water initiatives. Tetra Tech is well-positioned to grow in the water research and development space. We have deep expertise in modeling, and we've been leading in that space for decades. We're driving that expertise forward by intertwining it with innovations like digital twins, artificial intelligence, and cloud computing. On the U.S. federal side, we're already working with NOAA, the EPA, the National Science Foundation, and the Department of Defense.
Abroad, we're working with the Canadian Multi-Partner Research Initiative on water quality issues, and in Australia, we're working with the Australian Defence Force and the Australian Institute of Marine Science. We've also partnered with industry for decades, and we're actively working with the energy industry on technology solutions for offshore wind, on characterizing the environmental impacts of the growing carbon dioxide market, and in advancing how we understand, plan for, and mitigate marine pollution issues like oil spills through both advanced scientific research and integration of new technologies like artificial intelligence. Research and development is not a new space for us. As Dan mentioned earlier, we've been doing this since Tetra Tech was founded. It's in our DNA. We understand the foundational issues, and we have thousands of thought leaders bringing their expertise to the table.
We've not only generated significant revenue through our research and development, our applications and approaches have been written into numerous guidance documents, including EPA's definitive guidance on integrating water quality modeling with watershed management, NOAA's guidance on integrating spill modeling with natural resources damage assessment for oil spills, and modern bioretention manuals that focus on both improved performance and longevity of potential solutions. Our involvement in writing guidance documents has increased our revenue across the water cycle by orders of magnitude as we implement our own research and development. And research and development at Tetra Tech is not just science. It's also our groundbreaking technological innovations and software solutions.
We've operationalized hundreds of products, and they have provided the foundation for new approaches in how we respond to and characterize a risk from oil spills, in improving search and rescue outcomes by automating delivery of environmental data, and in the first-ever approach for assessing real-time flood impacts using artificial intelligence. Now I'm going to talk to you about one of my favorite subjects, which is the integration of the ocean and data. As Dan mentioned, I've been involved in the development of OceansMap since its inception. OceansMap is Tetra Tech's data ecosystem. It integrates environmental data and forecasts with advanced decision support tools. Our ability to intertwine science and technology into products like OceansMap unlocks our potential in new places like the New Blue Economy.
Globally, the size of the Blue Economy, which focuses on sustainable use of our oceans to generate economic benefits, is over $1 trillion, and it's on track to double in size by 2030. It encompasses everything from renewable energy to tourism to sustainable food sources to coastal resilience. The New Blue Economy is the knowledge-based economy that underpins the Blue Economy. It is the commercialization of derived data products and related tools enabled by improvements in the collection, analysis, and dissemination of ocean and coastal data. The New Blue Economy itself is predicted to grow to more than $10 billion in the next several years. The R&D that we perform and the development of OceansMap derived data products and decision support tools is all part of this New Blue Economy.
Ocean's Map, which unlocks the power of data by translating it into insights and allowing our users to make informed decisions, is already being used across the world to support renewable energy, emergency response, and marine recreation. We have just recently scaled up its use to support oil spill response by integrating it with our 24/7 emergency response services. It's also poised to support new markets in the New Blue Economy, including maritime transport, fisheries, and climate services. Collectively, these markets employ millions of people, and many of those people would benefit from use of Tetra Tech's software products. With a total addressable user market of tens, if not hundreds of thousands of users, and an average software entry price of $20,000, you can get to $1 billion in software revenue pretty quickly. Now I want to give you a little flavor of the future.
We've already talked about the complexity of the 21st-century water challenges. These challenges overlap in space and in time. Physical stressors, biological stressors, and chemical stressors all have discrete impacts on human health, ecosystems, and economic drivers. Simultaneous occurrence adds complexity and makes it difficult to understand the cumulative impacts of these stressors. Those of us in the water research and development market have only just scratched the surface on how to understand the interaction of these stressors and how they exacerbate impacts. In the marine world, we know that water quality issues like harmful algal blooms negatively impact marine environments. We also know that climate change stressors like thermal extremes, low dissolved oxygen, and low pH negatively impact the same ecosystems.
With $ billions of economic value wrapped up in marine tourism, recreation, and fisheries, we need to better understand the potential future impacts of co-stressors on marine water quality. Tetra Tech's R&D focuses on both science and innovation and gives us a unique perspective, puts bespoke tools and data at our fingertips. With products like FusionMap, we're driving forward the integration of artificial intelligence into our workflows. With R&D funding, we're leading the way in leveraging cloud computing to improve environmental forecasts, and we're also creating new cloud-native approaches for sharing environmental data and information. And with funding from NOAA and the National Science Foundation, we've created a research workspace that enables science by collaboratively managing scientific projects through the entire data lifecycle. We know that our leadership in research and development pays off.
Dan already mentioned we have $250 million in annual research and development revenue, and that's led to $5 billion in revenue across the water cycle. Our work in R&D, which is profitable in and of itself, leads to orders of magnitude more revenue in site investigation, planning and assessment, remediation, and software applications. Our own history shows that research and development gives us a competitive advantage to win work many times larger than the original research project because we've not only generated the ideas, we have the resources in terms of clients and staff and people to implement those solutions at scale. We expect research and development to continue to be a profitable business for us and grow 5%-10% over the next few years, but the real contribution is in the competitive advantage that it gives us across the water market.
The socioeconomic benefits of responsible management of water resources are enormous. Something like 75% of jobs worldwide are highly dependent on water. When you're in a market that's this all-encompassing, there's always a new challenge to solve, whether you're driving forward clean water and sanitation for the world's population, supporting the development of renewable energy and carbon capture markets, or engaging to solve PFAS issues. Our innovators and thought leaders are continuously looking for ways to improve our approaches to complex problems. This drives development of technology and allows us to engage with our clients around new ideas and innovations and push forward the development of software to support effective and efficient solutions.
Tetra Tech already has a substantial presence in water research and development, but given the ever-increasing challenges of this market, we see a clear path to increasing R&D revenue, which in turn will underpin revenue growth at much larger scales across the water cycle. Now it is my pleasure to introduce Dr. Leslie Shoemaker, Tetra Tech's Chief Innovation and Sustainability Officer. Leslie earned her PhD at the University of Maryland and was recently inducted into the National Academy of Engineering. Her technical focus is on the intersection of water quality modeling and watershed management, and I'm so excited to have her with us here today to talk about watersheds and coastal systems.
Hello everyone, and thank you very much, Kelly, for a great introduction. I'm really pleased to be here today to talk about the business of watersheds and coastal areas. I think Kelly laid out really nicely how research and development is a catalyst for what we do, but ultimately what's interesting is why our clients actually pay to do that type of work, and what are the drivers that actually create the budgets that we work on. So, I'll start off with a little bit of a framing. I'm actually going to get to talk about 60% of our business, which is driven by watershed and coastal work. And we're global. We're working on these issues all across the world. But when you think about watersheds, we're working on lakes, rivers, estuaries, bayous, bogs, and all the different water bodies that are adjacent to everywhere we live and work.
But the drivers for that type of work, for what we do, are not the nice-to-have. They're the need-to-have. It's regulatory. So, there's a framework of regulatory drivers across all the markets that we work in that actually frame the implementation and the requirements that are associated with doing that type of work. And I'll talk more about some of the different regulatory drivers in our different markets as I go. On the other side of this slide is our coastal work, so, coastal areas that interface between land and water, where all the action is, where sea level rise occurs, where storms and catastrophic events can occur. It also happens to be where there are the largest economic drivers. Think about our coastal areas.
That's where our ports and harbors are, our wastewater treatment plants, and all of the infrastructure that's very expensive that's exposed to these coastal areas, as well as a large portion of our populations that live in urban centers in coastal areas. So we see both that one as an economic driver. The economy, or the cost of repair, or the cost of disasters, and the cost of maintenance, and the cost of adaptation will actually drive the work that we do within those areas. So if we break it down, if I look at the watershed market, and as Dan mentioned, here we're going to talk more about the addressable market. When we think about what Tetra Tech does, there's about $110 billion of addressable market across three key geographies, and these are sort of the major drivers for our watershed work.
In the United States, the watershed market is really driven by the Clean Water Act. It started in 1972, and there is a network of regulatory push down from the federal level all the way down to the state level and local level, as well as a whole host of case law that shapes the regulatory environment that drives our business and creates the addressable market in the United States. If you look at the United Kingdom, smaller in size but significant in that it's actually a slightly different framework in how they manage water quality and watershed management due to the privatization of water and sewer programs in the United Kingdom, the drivers and the system for implementation is slightly different. It's focused on performance indicators that are economic and are linked to the performance of the privatized water companies.
That creates a slightly different framework, but the objective is the same. They're looking to actually change and improve and upgrade their water systems for the beneficial use or the water quality of the systems that are there. Finally, in Australia, which I find a particularly interesting market because of its unique geography and its unique biology, biodiversity is the main driver within that area. And it's actually created a biobanking or a biodiversity-related economy associated with protecting and actually monetizing the protection of the various biodiverse regions within the country. Very interesting area. I'm going to give you one example of one of the large watersheds. In the United States, we have about 78 major watershed systems in the United States, and we've worked on all of them all across coast to coast.
But the Great Lakes is an excellent example that brings together many of the different features that are at play within our watersheds. It's large. It's 84% of the surface water in North America is housed within the Great Lakes. It's also the home of some of the early drivers of water quality and regulatory programs in the U.S. Love Canal was located in the Great Lakes watershed. And so, a whole host of work has actually come, and $ billions have been invested in the cleanup of legacy contaminants within the basin. But there are new problems. There are algal blooms, water quality, invasive species, and other issues that are all coming to bear within the Great Lakes watershed.
There's a commitment now to actually clean up the remaining areas of concern, as they're called, which is contaminant sediments in the rivers and sediments within the Great Lakes by 2030. That work can cost as much as $100 million per mile to clean up contaminated sediments. These are big dollar programs that still need to be completed and implemented. And we actually worked on the Fox River program, which was a cleanup of over $1 billion to restore just one section of river within the Great Lakes watershed. So, these are big areas. We are seeing additional investment. Actually, the IIJA included $1 billion of additional investment into the Great Lakes watershed, and we were just recently awarded a new contract by the U.S. EPA, which is almost $500 million in contract capacity for Great Lakes-related cleanup services.
In the United Kingdom, we have a whole new initiative to accelerate or advance the treatment of receiving water quality within that area. They've increased their annual investment of funds. We have a new program, AMP 8, which is a five-year cycle, which has now doubled in size to $96 billion of spend over five years. This is pretty unprecedented in our industry to see that level of increase in funding for specific programs related to watershed protection and water quality. The other thing that's interesting is that the United Kingdom is actually beginning, and just at the very beginning, of addressing some of the profound water quality problems that we've actually been addressing in the United States for more than 20 years. Sewer overflows, which are also called combined sewer overflows, are their number one issue.
They have hundreds of thousands of discharges within the United Kingdom that actually release bacteria into streams, and they've said, "We're going to take this issue head-on now and increase our funding." This is an excellent opportunity for us to bring the science, technology, approaches, and even some of the various regulatory and organizational frameworks that we've used for that type of cleanup from the U.S. and bring it to the United Kingdom. We were just recently awarded a new contract with United Utilities, a $125 million program that will take us over five years. It's directly aligned with watershed management, beneficial use, all of the water quality issues that I just mentioned, and one of the things that we're really looking forward to working on. One of the other aspects is they're actually very interested in advancing the science and using new approaches and new technology.
So, we have an opportunity to leapfrog some of the approaches that have been used in the past and bring some of our both modeling tools and real-time control solutions to United Utilities and the other utilities within the region. So, as Dan mentioned, and Kelly also, PFAS is the new kid on the block. It's the new program that's been announced. PFAS is really a host of different chemicals, and we've been watching it, of course, very carefully over the years, but a few things happened in April, the two announcements in April that really created a step change in the way that PFAS will be regulated in the United States. The first step was the designation of a Maximum Contaminant Level for six PFAS constituents for drinking water.
Jared Kinsella , who follows me, will talk a bit more about how this is going to affect the water utility industry across the United States. But what was remarkable about it was it, for the first time, created a number, a specific level of treatment, which is, in the water industry, exactly what you need to know what to plan for. Until there's a number and there's a date, you don't know what you're going to treat for, and it's actually very almost dangerous to do too much analysis before you actually know what you're analyzing for. So, that setting of the number was a big step, and it was the first time since 1996 that a new constituent had been added to the drinking water list. Very big event. 9 days later, PFAS was also designated under the CERCLA program, which is more commonly called the Superfund program.
Designating it as a hazardous waste initiates a whole set of different analyses and actions which are brand new in this environment. Now, before I talk about that a little more, think about the fact that PFAS, as EPA talks about it, is actually an agency-wide implementation. So, they're actually seeking to eradicate PFAS and its related constituents from the environment. That goes all the way from the original sourcing of who uses it and how it's used in various products, all the way through to the management of it, the management of it in the drinking water, the management of it in the receiving waters, all the way to disposal and waste management. So, you have this full life cycle of how it's going to get caught or captured by various regulatory environments. This is not the first time we've seen this playbook.
If you look back to what was done for mercury and lead, historically, this is very much the same type of playbook. We would expect to see, and in fact, EPA has already indicated it will be covered under RCRA, which is another set of hazardous waste-related regulations. Ultimately, I expect that we'll see it in water quality standards, which will actually protect our fish and natural resources in open water streams and create a whole other set of regulatory drivers to manage it. So we actually see that as extending into management and analysis, investigation, modeling, and tools that will ultimately drive us to a whole set of work that will drive us all the way into 2030 and beyond. So just spend a moment on our coastal resources. I talked about them being at the interface of water and environment and along the coastal areas.
We see an opportunity here for us to use everything that we do from the early investigations all the way through adaptation. We help our clients with investigation. We help them with analysis. We help them with the design of nature-based solutions at the interface of coastlines, and we work on the implementation of the various adaptation actions that are needed, including infrastructure design and hard engineering where appropriate in order to protect our coastlines and to protect the economies associated with them. We also work on the natural disasters and the episodic events that occur, not just associated with sea level rise but also associated with the catastrophic hurricanes and other events.
These actually include everything from the management of the response, the turning back on or the assessment of damages at critical facilities like water treatment plants, all the way through to the recovery and the access of funding for the many hundreds of municipalities that may be affected by various events. And finally, I'd like to cover a bit more on some of our watershed and coastal recurring revenue. I've been working in the modeling field for well over 30 years, and I would say I've been living something related to Moore's Law for a long time, which is faster and smarter computers working quicker and analyzing questions rapidly. When we look at what's happening now, it's a complete step change or game changer in how we can analyze problems and answer questions. So, our newest application is called FusionMap.
It actually integrates satellite imagery real-time with artificial intelligence to rapidly answer problems and actually answer them in a different way than ever before. Right now, we're actually using it, and I have one brief example where we're using it to analyze questions related to avoiding hazards in the real time. Think about if you have thousands of miles of rail track, and I need to see where there is a potential for a derailment. If I can avoid the derailment, it will save $10-$20 million in order to avoid that derailment and benefit the rail system safety record. We actually are using it. This is a retrospective.
We did a test of the ability of our system to detect them in advance, which was successful, and we're now deploying it across 20,000 miles of track, doing a solution that never would have been possible without the access to satellite data and artificial intelligence integrated within our FusionMap platform. We're now applying FusionMap not only into the rail industry but across the client sectors that we work in. We believe that at a price point of about $2,000 per user and a user base that could expand to well over 500,000, that we could actually be contributing up to $500 million to our bottom line by 2030.
With that, I would like to summarize by saying we're looking to double our revenues by building on this combination of regulatory, economic drivers, emerging contaminants, and ultimately coastal protection and other areas across our watershed and coastal business. I'd like now to turn it over to Jared Kinslow, who is our lead and design lead for advanced water treatment across Tetra Tech and has been working since he was an intern for over 25 years with Tetra Tech. Thank you, Jared.
Okay. Thank you for that introduction. Start off by saying welcome and good morning to you all, and I'm going to go out on a limb and guess that probably most of us didn't think about our clean water when we were taking showers or making coffee this morning, right?
We didn't think about where it came from, all that was entailed in getting that water to us so that we could use it and then quickly move on with our days. But that's an area where we spend a concerted amount of time and attention thinking about that here at Tetra Tech, especially in my role here. And it's probably fair to say that clean water is an essential part of our everyday lives. So today, we'll talk a little bit more about how PFAS is addressing the challenges that utilities and water suppliers are facing. But there's a number of challenges that are currently on the plate, if you will, that utilities are looking at addressing in their systems. And some of those are shown here.
We have things like drought, climate change impacts on water supplies, obviously high demands for water, especially in areas that are experiencing rapid growth population. And of course, as Leslie and Kelly both mentioned, there are water stressors, things in the environment that are causing water quality to be impacted. Sometimes that's happening in our existing supplies. And then sometimes, due to the need for additional water supply, we're going out and seeking water supplies that have not conventionally been used and treated because we need an alternate water supply to meet those growth demands. So, at the heart of a lot of those challenges is the advanced water treatment topic that we're going to be talking about this morning. And of course, we see this as a pretty large market globally, about $300 billion. We see the addressable market for Tetra Tech at about $60 billion a year.
That equates to revenues that you heard Dan mention earlier, currently around $1 billion a year. One thing to talk about with regulations, obviously the hot topic of the day, as Leslie mentioned already, was PFAS. We're seeing this as a pretty sizable market specifically for water suppliers. If you look at the drivers for advanced treatment over the last several decades, it's really been improvements in our laboratory analysis methods. Back in the 1990s and the 1980s, we were looking at parts per million, analyzing something that was one part out of a million in the water. As we move forward to the 2000s, that became parts per billion, 1,000 times smaller, right? Now we're talking about monitoring things on a parts per trillion level. To put that in plain terms, that's the equivalent to one second in 32,000 years.
A pretty small number that we're trying to analyze. But the new rules for PFAS, as you can see here on the screen, we're looking at 4 parts per trillion. It's a very small number. In fact, when EPA passed this rule, some kind of estimated that, well, basically, that's as small as we can measure accurately right now with current lab methods. This regulation is really pushing the science on the laboratory detection capabilities that we currently have. But it's also going to push the science on how we respond in terms of addressing our water supplies and how we incorporate treatment and utilize treatment to continue to provide safe supplies for our clients and customers. One of the unique things about PFAS treatment is it's highly soluble in water. In fact, it's almost, in some sense, the perfect contaminant.
It easily dissolves into water, and then once it's in that water, it can move from groundwater supplies to surface water supplies or vice versa. So, as you've already heard the term, it's ubiquitous in our environment. In fact, we've been finding PFAS in human blood serum for many decades. So, we come into contact with these chemicals through consumer products, not just the water we drink. But that is what makes this a particularly challenging constituent to remove from our water supplies. Now, EPA has estimated that 7%-10% of drinking water utilities will need to address this contaminant that's just passed as an MCL. And so, while we think that that is a sizable amount of utilities that will be involved in that, we also think that that could just be the tip of the iceberg.
The reason we say that is the sampling that was done to identify PFAS as a hazard was done almost 10 years ago. At that time, we were sampling for something around 40 parts per trillion. Putting that in context with the rule that just passed, that's 5-10 times higher concentration that we were sampling for in the minimum sample resolution, if you will, than what the current treatment rule that just got passed is going to require. In addition to that, really, the sampling that was done 10 years ago was only the larger systems, greater than 10,000 population. There were some small and medium-sized utilities that were required to sample. They randomly selected about 800 small and medium utilities to do that same sampling.
The current sampling that's underway under UCMR 5, which is the Unregulated Contaminant Monitoring Rule, is now going to look at all utilities with greater than 3,300 population. So we're sampling now more utilities than we sampled 10 years ago, and we're also sampling at 10 times lower concentrations than we were 10 years ago. Because of that, we believe that there could be profound results in terms of a much tighter net that's catching the PFAS that is existing in our drinking water supplies. In addition to that, just to make it even better, the sampling that was done 10 years ago was for 6 different PFAS chemicals. The current sampling that's taking place is 29 different PFAS chemicals. Now, there are tens of thousands of PFAS chemicals in existence. But as you can see, the trend is we're looking for more chemicals.
We're looking in more places, and we're also looking for much smaller quantities than have ever been sampled before. So Tetra Tech stands pretty proud in this field because we have, number one, in our rankings for the last 20 years in running in water treatment and desalination. So we are well positioned to take this opportunity and address our experience in the field with our clients. Part of the interesting thing about water treatment is that there's no two water quality sources that are exactly the same. Because of that, we see that these four steps are going to be essential to every utility that has to address this problem. There is no magic bullet, and there is no shortcutting this process. So as you can see here, it starts with technical evaluations followed by alternatives analysis and then a technology selection.
Typically, that's done through some type of small-scale testing, whether it be bench or pilot-scale testing. And then only after all of those efforts are done can you actually proceed into implementing a treatment system and a design to address that contaminant. So, one of our benefits within Tetra Tech is we are very strong in the field, especially in the early upfront stages of this work, as you've already heard Dan mention in his presentation. So, we've been doing a number of work and projects for our federal and DoD clients, specifically in the stage one arena. And that work has been going on for many years, well in advance of EPA announcing this Maximum Contaminant Level.
So that puts us in a unique position to already be ahead of the curve in terms of how to implement, how to do this monitoring work, and advise our clients of how to address their issues. When it comes to stages 2 and 3 and 4, we've also got examples that I'll go into in just a minute that show you specific projects that we are already engaged in to address the PFAS concerns that are the topic of the day. So, one project I'd like to highlight for you is some work that we're doing for the city of Dayton, Ohio. This system is looking at PFAS contamination within over 60 of their drinking water wells, groundwater wells. This is one of 2 large facilities that supply the entire city of Dayton, but those 2 facilities are somewhat redundant to each other.
It's a 96 million-gallon-a-day supply that we're talking about here, so a fairly large amount of water serving about 430,000 population. The work we've done to date has been doing technical evaluations, including desktop studies, including technical paper evaluations to look at 19 different treatment technologies for PFAS and shortlist those down to a number of technologies that can be tested at pilot scale. That's what is currently underway. We're currently doing benchtop testing of three different technologies that were shortlisted to address their long-term needs for PFAS compliance. Another group of projects I'd like to highlight for you this morning is our work for the Orange County Water District in California. Orange County Water District was early in the implementation of PFAS treatment, and a lot of that came out of their 2019 California proposed health limits for PFAS in drinking water.
As a result of those actions, which were kind of ahead of these federal recent MCLs that have just been passed, Orange County identified over 100 different wells that were being utilized by their retailers. Orange County partners with several different water suppliers or retailers, as they call them, within their service area. As you can see here, there was over 15 that were impacted by that effort. Tetra Tech's work in this area involved implementation of fast-track designs of PFAS treatment systems. Some of the systems that were placed into service were done as early as 2021. That allows us to be well ahead of the curve when it comes to PFAS treatment systems that are implemented. Now, as you can see here, we're talking about 40 wells that have already been put back into service by Orange County Water District.
Over half of those wells were associated with Tetra Tech projects. Most notably, the Yorba Linda Water District has a 25 million gallon a day ion exchange PFAS system that was designed by Tetra Tech as a fast-track design. And that system is currently the largest ion exchange PFAS treatment system here in the U.S. The total project capacity of treatment that has been installed through Tetra Tech projects for Orange County Water District has been over 50 million gallons a day of clean drinking water that is currently being produced. So looking ahead to 2030, we anticipate 10%-15% growth on an annual basis to meet the increasing needs of our clients in this water market, specifically enhanced by PFAS. That will bring us to $2 billion in revenue by 2030, as you've already heard this morning.
Prior to EPA's announcement, the water market was already seeing high demands for advanced water treatment. With the potential for additional systems that could detect PFAS and the current sampling that's underway under UCMR 5, we see that net tightening even further and bringing about even more need for PFAS treatment and advanced treatment moving forward. Tetra Tech will continue to be a leader in the water treatment and desalination market as we leverage our proven track record in delivering projects that are state of the art by Leading With Science. And we believe that advanced treatment will carry us well into the future to meet our goals in 2030. So, I thank you for your valuable time and attention. And I'd like to hand back the podium to Dan Batrack for Q&A. Thank you, sir.
What I'd like to do is open the forum up to questions and see if we can provide answers to them from the last hour, from the first three speakers, and certainly anything that I could add to it. We'd like to go for a 15-minute Q&A session here, at which point we'll take a break, everyone a break, and then we'd reconvene at 25 after. But if I could ask our morning speakers to join me. All right. Our first question of the day is from Mr. Andy Whitman.
Thanks. We do mics. We're not.
We do have mics.
It's coming your way. There you go.
Thanks. Andy Whitman from Baird. So obviously, the PFAS opportunity is a significant opportunity for Tetra Tech. I was just wondering a little bit if you could just kind of frame this in terms of the competitive environment. It's a newly regulated contaminant. Can you talk about the different technologies that are being used to detect it? Is there just the lab testing? Is that what it is? And then to remediate it, I'm sure there's several different ways to get after that. Can you talk about what Tetra Tech's offering is on the design remediation side and how that might compare to others? Is there a standard yet? And maybe kind of what your view of the competitive market share could be for Tetra Tech, recognizing that this is all very new. So if you could talk about that, that'd be helpful.
Well, of course, our expert on treatment technologies, I'll turn it to Jared in a moment. But one thing I want to make really clear here is with the passing of the drinking water standard, which puts the requirement to treat in five years, so five years and a day from April 10th, it should be up and running. But it's interesting. I've received more questions on field investigations using new technologies to get to 4 parts per trillion. On the investigative side, we don't believe there is any mobile detection limit at that level. So, it's going to require actually physical collection, taking back to certified laboratories that have the controls that will detect at that level. But what's interesting is I've been on a number of panels, and all the questions are about treatment technology X, Y, Z, something else that's being contemplated.
None of that is going to proceed until you determine where it's present, what its concentration is, what its extent is, what the movement in the hydrology is. It was all stage one of what Jared had talked about, which is absolutely at the center point of Tetra Tech. In fact, until you have that data, the application of any of these other technologies, I don't want to say is irrelevant because it may become relevant at a point that the water is extracted and treated, but it's far down the business part of the line that's going to be used. So, I will say that regardless of the technologies to be used, they're a few years out. So going from a treatment standard today to we're going to put it in tomorrow, we're talking several years before that would actually happen.
With respect to what's being used today, its applications and others that look promising, Jared?
Yeah, I guess the best commentary I can provide about the treatment technologies, there are many well-established technologies that have been used in water treatment for many decades that can be used to treat PFAS. What's unknown, though, is that the technologies that are currently employed, like that California project I mentioned, we're talking about an MCL or a standard set by California that was 12 parts per trillion. Well, EPA is looking at 4 parts per trillion. So even though they've already incorporated treatment, what's not clear is what's going to be the performance of that technology long term. And just to use an example, many of those projects used ion exchange. It's a once-through ion exchange resin that once you've depleted its ability to adsorb PFAS, you have to replace it.
So that replacement frequency and the cost associated with that replacement frequency are unknown at 4 parts per trillion, right? And so that's just to give you an idea of the challenges. But there also are a number of new technologies that are being evaluated that might be promising. None of them are providing treatment at large scale. So, the one concern is that you can find a great technology that does a great job. Most of our municipal clients are going to say, "Okay, show me 10 installations where this has been used for 10 years." They're not really wanting to take on risk. And that's going to be difficult to navigate for them because those new technologies just aren't going to have that installation base that they can point to as evidence that this is a good investment.
I had one quick follow-up on all of this. I just look at this timeline for implementation, and I love the chart, 2025, 2026, 2027, what Tetra Tech is going to be doing during that time. It seems really compressed to me when I look at it. I would just be curious in terms of Tetra Tech's view on the ability for these targets to be achieved or if you believe there's effectively going to have to be an extension. And then maybe to help your clients get there, what Tetra Tech can do to really leverage your capabilities, like how repeatable are these designs that you can replicate them? That's half of the market that you're trying to address. What can Tetra Tech do to scale up your efforts in addressing that? Then I'm done. Thanks.
Well, part of that's policy. I like Leslie's comment. The good takeaway is we've seen this played before. There is a date of five years. It'll be April of 2029. The number of utilities that are going to have to meet this deadline, I'm not a defeatist. We think we can do anything, but that's not going to happen. That's just not going to happen. What's going to happen is when you do get to that point, we saw this with many other contaminants that have been regulated over the years. First, there's going to be legal challenges as to whether it's feasible, other economic items. There's going to be a request for extensions because of economic viability. Do they actually have the funds? They're going to then be given grants that may be forgiven or not and loan programs.
So, there's going to be a whole host of items that will come out requesting or mandating extensions. Now, whether or not the government comes out and puts an extension in, what we've seen is if you want it done by 2032, tell them it's due by 2029. So, it's a very normal process. It's not unusual. But you have to put a chalkmark on the wall by which you are going to try to achieve. So, they're going to move forward with this. There's monitoring requirements. If you want to see if they'll make the treatment requirements by 2029, see if you make the monitoring requirements in the 3-year requirement. And that is going to be incredibly challenging. So, you won't have to wait till the final play to determine if this is going to be implemented.
There'll be plenty of markers along the way to see what's going to happen. And as far as leverage goes, I think some of the software programs, an item we've been talking about at Tetra Tech for years is our digital water program, which is actually automating and putting in place remote monitoring and remote operation of the plants. We'll be able to take that type of approach that we've replicated for certain types of systems. So, if it's a desalination system, we have two or three architectures that can be put in place and actually be applied to all desalination, whether it's brackish water or seawater. If it's a regular biological treatment, we have other digital water platforms that can be used across the board where we can replicate this with scale. We'll do the same thing with PFAS.
Now, of course, that'll be something new that's developed in the case of the current, what I'd call, standard technologies, ion exchange resin. The other is granular activated carbon or GAC. For the most part, it's one and done. You use it, it gets fully absorbed and take it off to the landfill. You'll watch that change and develop. There'll be others. And then we'll develop platforms that can be applied to the 150,000 utilities that are out there, water utilities. And it's quite often that a water utility can have a dozen, and for the bigger utilities, many more individual plants that represent one water delivery system. So, if you do the math, 150,000 water utilities times a dozen actual individual plants, it's a big market that's going to require scale because you can't develop that number of unique different plants.
Tetra Tech, I think, will be one of the forefront leaders in developing the standards that will get applied at scale across the entire marketplace. If you'd ask what is that, well, we've had just over 30 days since we now know a number and the dates. That'll be developing over the next few years. Yes.
Hi. On one of the charts, you did have a point about cybersecurity for all the water utilities. I'd be interested to know what specifically you're doing there or how you're trying to work on that. Thank you.
Cybersecurity was one of our very first areas that established our digital water program. Maybe we can have Jared actually speak about the specifics of that.
Yeah. So, cybersecurity, Tetra Tech's been involved in a number of recent acquisitions with firms that are specialized in that area, that practice, including specifically integrators. So, a lot of the cybersecurity issues that we see at a water utility scale are at the physical plants, dealing with the equipment that they have and its vulnerability potentially to being hacked or accessed from outside parties. A lot of recent EPA actions have caused utilities to now plan for and to prepare for responses to cybersecurity events. And I think that's one thing that we've led with our acquisition strategy is acquiring automators, not automators, integrators that handle all the plant automation, all the programming of the systems that run the plants, and how that would interface with cybersecurity and firewall measures.
In terms of size or market or potential, it just seems like you can have clean water, but if it gets hacked, the distribution is irrelevant.
Yeah. Just like the numbers you saw and you heard Dan speaking to, the cybersecurity is just as big as the advanced treatment market, maybe even perhaps bigger because, as you just alluded to, there are assets outside of the plant in terms of distribution infrastructure, storage and repump facilities that have to handle that water and push it out. So yes, those facilities go out into the systems and live amongst all your homes and all your businesses out in the world. So, it's a large-scale market.
Yeah, just I want to comment. It's a baseline requirement. It came out as an executive order. All utilities had to evaluate for vulnerability. So you can go in, a small dollar, and do a vulnerability assessment, which we've done. We do a lot of the programming of what they call SCADA electronic systems with respect to penetration, whether or not they can get through the firewalls or the other systems. Some have asked, "What do you do, Tetra Tech? There's other firms that are super advanced in cybersecurity, and all they are is software plays. How do you play in that?
We're the domain experts." So, if you get through the firewall and somebody, and this is a real story in Florida, had breached a system, they turned up one of the disinfectants super high, it would actually cause a lot of problems in the drinking water standard, and a super operator found it and turned it back down and rectified it. Our approach and position is great that there was a super operator who was there and fixed it. But our approach is you don't need a super operator.
If you put in the AI systems with respect to the parameters, it may have been turned up, but the final cybersecurity links are if it's outside certain parameters for these disinfectants or any other chemical additive, whether or not it's removing something such a bacteria could grow because it's not being chlorinated or whatever the disinfectant may be, it would automatically shut it back down. So you don't need an operator. We know the chemical parameters and the actual water quality systems that need to be in place to protect the delivery systems. And that's what we bring to it is the domain expertise. We also bring the programming and the SCADA and the other hardware capabilities. But what does it actually mean, and how can you actually correct it? That's what we do.
Hi. Good morning. John Vinson, RBC. Thanks for the presentation. Just on the digital water front, the software side, is there a lot of marketing or client education that goes into it? It sounds like most of the early adopters have been clients that helped you develop the software. Is it really a question of you're selling to clients that are already asking for it? Are you going to need to scale up your marketing efforts on this front? It seems like there's a huge TAM of potential users. Do you presumably need to grow outside of your existing clients? And then also, are there any retention numbers you can share about sort of existing clients that have adopted the software already?
We have a very simple go-to-market approach. Since Dr. Shoemaker is actually one of the individuals at the point, maybe I can actually have her share how we're actually going to market and how we see this evolving to grow in the marketplace.
I think you're right. The first wave for us, or step one, is to work in tandem with our clients. That's often these clients that are actually innovators and leaders in their own right. So, they're great partners for us. Our second phase is actually to identify specific anchor clients that actually scale up the use of our software and also become advocates or evangelists, so to speak, for the software products themselves. Then the third phase, which we have not yet embarked on, would actually be a much more direct go-to-market sales strategy where we actually target users that are outside of our client base and actually leverage our reputation and the software development and what we're doing. We're currently working across our client base. We've actually turned our internal Tetra Tech people into evangelists for our software.
So we're actually selling into our Australian, Canadian, United Kingdom, and U.S. markets simultaneously across a whole suite of clients. And we also have a few thousand subscriptions across both what Kelly and myself talked about as well as others. But we're seeing that actually rapidly scaling as we start to penetrate these individual market sectors and their specific use cases and user bases. And it's particularly interesting to see us moving from Kelly and I are both consultants. We work with clients. Now we're actually looking at them as users, which is 10x or 100x times the number of individual clients that we have.
At this moment, we're about 15 minutes after, 16 minutes after. I'd like to invite you all to take a break for the next 10 minutes. We will reconvene at 25 minutes after the hour. We'll have plenty of time for more questions at the end of the next session, which we won't have any time constraints. If I can give you a few moments to take a break, I'll see you back here in about 10 minutes. Thank you.
Good morning. Good morning.
Thank you.
If you could.
How are you?
Well, thank you very much for being prompt this morning. We're very anxious to get to our next presenters and, of course, to get to an open, more lengthy question-and-answer session here at the conclusion of our presentations. While you've heard presentations this morning from our water cycle individuals, two areas I had identified on the water cycle that are closely aligned are the environmental work that's associated with our renewable energy practice and with our high-performance buildings practice, which is focused on decarbonization. Our next speaker will actually be Erin Toike. It'll be my pleasure to introduce her. She's been in the renewable energy field for just over 20 years, long before it was in vogue and before it was even discussed.
Her first renewable energy projects were in the wind area and one of the most persistent windy areas in the country, the Columbia Gorge between Oregon and Washington, and actually did some of the groundbreaking environmental assessment and placement work on those very first environmental programs that took place anywhere in the country. She runs our global renewable energy practice. She's as familiar with what's going on in Australia, the U.K., as she does in her home court, which is right here in the United States. With that, Erin, I'd like to have you introduce the topic to our group.
Put this down. Thanks, Dan. It's a real pleasure to be with all of you here today to talk about Tetra Tech's renewable energy outlook and strategy. The renewables' future is here. We're very excited to talk with you today about our outlook in the global renewable energy market. We're talking with you today about the next five years. This energy transition is really a global endeavor. Our focus today in this market is set to position us for several decades to come. We're focused on our key geographies in North America, the United Kingdom, and Europe, and parts of Asia-Pacific like Australia, New Zealand, and South Korea, where we have significant delivery resources and capabilities. In 2023, these geographies represented a $250 billion renewable energy market. Significant spend is projected over the next five years. What's driving this demand?
We are entering a new era of demand for electricity. This isn't something we've had to address, especially in the U.S., for the last couple of decades. But the manufacturing renaissance, EVs, data centers, and all-over building electrification and systems electrification require more power. In some regions, we expect electricity for data centers alone to double by 2030. Renewable energy is slated to meet this demand as well as replace aging fossil fuel resources. Energy security and global agreements like the Paris Agreement and corresponding COP28 commitments to triple renewable energy are driving some governments to set targets, mandates, and incentives for renewable energy. In addition, there are several economic drivers. In many regions, onshore wind and solar are simply cheaper than their fossil fuel alternatives. In addition, corporations and utilities are responding to investor goals and consumer demand for decarbonization. We especially see this in the tech sector.
Our core consulting services are focused on planning, permitting, engineering and design, environmental assessment, compliance, data collection, and analytics. We leverage software and digital tools to enhance growth and drive margin. We see our addressable market at about 10% of the total spend. The markets identified here, that spend is based on 2023 spending. In North America, we're focused here in the United States, where the Inflation Reduction Act is driving significant renewable energy development. It has a 10-year minimum lifespan. In 2023 alone, we saw renewables make up 80% of new power brought online. That was over 30 GW. There's a pipeline of development in 2024 of over 170 GW. We see continued growth, especially focused in solar, wind, and emerging technologies, as well as our more mature Canadian hydro market.
You've heard Dan talk this morning and on other investor calls about our acquisition of RPS and how it really expanded our markets into the U.K., Europe, and especially Australia. We immediately became a global player in offshore wind through this acquisition. The U.K. and Europe are accelerating development of renewable energy due to energy security issues given the war in Ukraine. Multiple government targets and auctions are underway, as well as more offshore wind auctions that will drive growth. We'll continue to focus on expanding on our offshore wind practice in the U.K. with strategic expansion in parts of Europe, as well as continue our strong solar and storage practice in those markets. In Asia-Pacific, specifically Australia, offshore wind is in its infancy. Yet it has some of the world's best offshore wind resources.
Just a couple of weeks ago, the government there announced six offshore wind licenses and six pre-feasibility licenses. We're already supporting several of these projects and are well positioned to add more. This work will be combined, again, with our onshore solar and storage practices. Now I'd like to talk with you a little bit about where we are today. With $250 million in revenue, Tetra Tech is working across all renewable energy technologies. Our clients have taken us to new geographies as markets have evolved by region around the globe, where resources and feasibility may vary. We've been a leader in hydro and onshore wind for the past decade. And I've leveraged this leadership position to go with our clients to new technologies. In addition, we serve a diverse set of clients with investment potential: developers, independent power producers, utilities, financial institutions, traditionally oil and gas clients, and governments.
So, we can touch projects from a variety of angles at different stages. Our place in this market also positions us well for recruiting top talent and recruits who have a desire to work on renewable energy. We see the most significant growth going forward in solar, wind, and emerging technologies like battery energy storage. I'm going to talk now about one of the focus areas. I could have probably taken a much easier route this morning and talked with you about all the growth potential with solar. There's a very clear path for historic growth already being paved. But instead, I want to go ahead and address some of the challenges and headlines you've probably been hearing about, especially here in New York, head-on with offshore wind. There's no doubt 2023 was a turbulent year for offshore wind.
We had a once-in-a-generation macroinflationary cycle combined with coming off of a global pandemic with all the supply chain issues that that brought, as well as a war in the Ukraine with soaring energy costs there. These are all really unique circumstances. So, in 2024, the industry is certainly at an inflection point. We've continued to see some canceled projects here in the U.S. However, the reality is the services Tetra Tech provides are critical path services assessing and addressing very project-specific impacts. They are essential to the development process. In some cases, they are performed before a developer even has the rights or a lease to the sites. Projects simply cannot move forward without completion of these tasks.
Recently in New York, you may have heard about three projects where their power agreements were not finalized because GE is no longer going to make the 18-megawatt turbine that they were contemplating. This doesn't mean these projects are going away. In fact, it means they're going to have to redesign them and rework them. That's exactly the kind of work that results in more revenue for Tetra Tech. The schedule may move to the right a bit. It doesn't change the fact that this is a growing market. In the United States, we're seeing states issue additional solicitations. We're seeing some of those projects that were formally canceled get new power purchase agreements. In the U.K., they've raised the bid price ceilings to accommodate for energy cost increases. Several European countries will be issuing new auctions this year.
In addition to our front-end services, we stay with our clients all the way through construction and operations, providing data management, acquisition, compliance. We use critical software tools like OceansMap, which you heard about from Kelly earlier, not only to add value to our clients through the whole lifecycle, but to drive margin for us. We're better positioned than any other firm to capture the global growth we see in this market. We've permitted some of the largest projects in the world, oftentimes with our clients taking us with them to be the very first in those geographies. We anticipate our global clients continuing to take us with them as they expand around the globe. I'll dive a little bit deeper into the market here in the U.S. As of April of this year, last month, we have 200 megawatts of operational offshore wind with about 5 gigawatts under construction.
The federal government has approved eight projects, which is equal to about 10 gigawatts of capacity. That's enough to power four million homes along the East Coast. We've worked on almost all of those projects. Leading market forecasts say 40 gigawatts will be built by 2035, with the potential to scale to over 100 gigawatts by 2050. This is being driven by the Inflation Reduction Act, as well as state commitments and mandates for decarbonization. According to the Department of Energy, state commitments are about 115 gigawatts of clean energy, with 46 gigawatts of that being mandated. Offshore wind is essential for Atlantic states to meet these goals. To begin with, the resources near high-population areas with the increasing demand we talked about earlier. In addition, many states lack onshore resources that are feasible at scale. It's tough to do utility-scale solar in many of these states.
The onshore wind resource is lacking. For those states with solar, like New York, offshore wind is a very good counterpart to the production profiles of solar. If these states stay committed to their clean energy goals with resources from their state, they simply don't have many other options at scale. Two weeks ago, I had the opportunity to hear Department of the Interior Secretary Haaland release a four-year federal auction lease schedule, with four additional auctions happening this year. This schedule, combined with the state commitments as well as the IRA, provide a clear roadmap for development in the U.S. Our strategy is simple. We intend to combine our East Coast leadership and, frankly, our global leadership with our resources on the West Coast and in the Southeast to follow our clients to these new geographies. We've already seen our strategy working in California.
We're already supporting several of the lease winners on those 5 projects with stakeholder engagement, survey planning, and early permitting activities. In fact, we helped one of our clients be the first to have vessels in the water surveying on these inaugural projects. We'll continue to use our East Coast leadership and experience as development expands coast to coast. In summary, we project strong expansion in this market due to the many drivers we've talked about today. As Dan mentioned, I've been working in renewable energy longer than most. And this is the first time, the last, I would say, year to 2 where I've actually seen a really legitimately long-term path to a strong market.
We'll continue to capitalize on our global incentives, develop global renewable energy accounts using our resources around the world, utilize data management and software, which we've talked a lot about this morning, innovate, and have geographic expansion. I'm just really excited to be at Tetra Tech and seeing this market grow. Really appreciate you all coming this morning. With that, I want to hand it over to my colleague Joseph Fong. He's going to talk with you in more detail about one of these drivers that I talked about, building high-performance buildings and building decarbonization. Joseph's been with Tetra Tech for over 15 years. He's led buildings and sustainability teams at Tetra Tech for the last 10 and also serves as our global high-performance building lead. Thank you very much.
Good morning. Thank you, Erin. I'm excited to be here today to share with you the exciting work that Tetra Tech is doing at the nexus of buildings and environment. Currently, 10% of Tetra Tech's business is in buildings. Buildings are the largest contributor to greenhouse gas emissions, nearly 40% according to the United Nations. That is why our clients are focused on decarbonizing buildings. It has the largest contributor to fighting climate change. The sectors we are in are large and growing. The addressable market for the three sectors we are focused on exceeds $18 billion annually. For high-tech and manufacturing buildings, this $5 billion addressable market is driven by growth in our semiconductor and data center clients due to the rise of AI computing and higher demand for energy and water.
For non-government buildings, this $8 billion per year addressable market is driven by clients like our education and healthcare clients who are striving for more resilient buildings to minimize any downtime in their operations. For government buildings, this $5 billion per year addressable market is driven by federal legislation, executive orders, and federal funding such as IIJA and IRA, which has earmarked over $50 billion for building decarbonization efforts. Tetra Tech is the leader in building decarbonization. We are ranked number 1 by ENR for green government offices. We are a thought leader in decarbonization, writing the codes and standards for government entities like the state of California, the EPA. We're developing innovative decarbonization plans for over 200 million sq ft, working with large-scale cities, campuses, and installations.
So, while decarbonization may be top of mind for many of our clients now, and you're seeing it in the market drivers and the funding opportunities, Tetra Tech has been at the forefront of this effort for over a decade. This type of experience is actually what positions Tetra Tech to be working on a number of first-of-its-kind projects. In fact, we have over 100 net-zero buildings either in design or completed. Some of these first-of-its-kind experiences include the 400 Westlake Building in Seattle, which is the largest Living Future Institute Energy Petal-certified building in the world, or the NTT Raging Wire Data Center, which is the first seismic base-isolated data center in Silicon Valley. In fact, this building that we're all sitting in here right now in Times Square, Tetra Tech worked on this building 25 years ago.
It was actually widely regarded as the first green skyscraper in the entire U.S. in integrating photovoltaic panels and fuel cells for efficient energy innovation. That's the innovation that Tetra Tech brings to our clients. I'll be sharing over the next few slides greater detail on our plans towards 2030 in our three key markets. For our high-tech and manufacturing building sector, we see a $5 billion per year addressable market. With our market-leading position in energy and water, as you heard from my colleagues Erin and Leslie earlier, our energy and water experts are working in tandem with our building experts. Our focus is on the high-margin building types of fabrication facilities and data centers. Tetra Tech's revenue in this sector is tracking towards $100 million this year. We anticipate a 20% annualized growth rate, working towards a $300 million revenue target by 2030.
For fabrication and manufacturing facilities, most of which is actually for our semiconductor clients, our clients are preparing for the deployment of the CHIPS $52 billion funding, which is just in the early stages of award from the Department of Commerce. These manufacturers have also committed over $200 billion of spend over the next 10 years. For our mission-critical data center clients, we are expecting a $500 billion spend by 2027, as growing adoption of AI computing chips requiring high loads of power is driving a race towards liquid cooling. Tetra Tech has been investing in liquid cooling design solutions, including liquid immersion cooling to direct-to-chip cooling. In fact, earlier this year, Tetra Tech hosted an industry forum with over 400 data center professionals, including our clients from NVIDIA and Sabey D ata Centers, to collaborate on liquid cooling design solutions.
This thought leadership is positioning Tetra Tech to be at the front-end advisory services with these data center clients. We will see continued growth, not just with the planning and design of new data centers, but also the opportunity to assess, upgrade, and retrofit the existing 10,000 global data centers to make sure that they are evolving to support the next generation of AI chips. For our non-government building sector, we see an $8 billion per year addressable market. Tetra Tech's revenue in the non-government building sector is tracking towards $300 million this year. We anticipate a 15% annualized growth rate towards a $700 million revenue target by 2030.
In this market, Tetra Tech works with our clients, especially in the education and healthcare sector, to support our clients with the full lifecycle of their projects, from assessment of their projects to net-zero and sustainable design of their buildings to optimization of their assets. Global spend for just healthcare and education buildings is projected to exceed $1 trillion by 2028. Some of our work includes in the education space. We are working with our education clients in developing decarbonization solutions for over 50 university campuses, leading to future design work.
In the healthcare space, we are working with one of the U.S.'s largest health plans, Kaiser Permanente, on their full lifecycle of their projects, from infrastructure planning of their medical centers to net-zero designs of their medical office buildings, one of the first in the country, to currently working on upgrading building systems to over 100 of the facilities on the West Coast to ensure that their buildings continue to remain safe for their patients. Many of our non-government clients also have expansive real estate portfolios who are looking to optimize performance. Tetra Tech supports clients like Amazon and Microsoft to ensure that their buildings are operating efficiently.
Additionally, as evident over the last few years, as corporate companies evolve their real estate strategy, whether that was downsizing to adapt to a remote and hybrid work environment or what we're actually seeing now, these clients looking to accommodate and expand to accommodate their AI-focused workforce. Tetra Tech is their trusted advisor for these projects and their real estate portfolios. For government and defense agencies, we see a $5 billion per year addressable market to support our clients to transform their buildings to net-zero emissions. Tetra Tech's revenue in the non-government building sector is tracking towards $100 million this year. We anticipate a 10% annualized growth rate, working towards a $175 million target by 2030.
Three weeks ago, on April 24th, the U.S. Department of Energy announced the Clean Energy for New Federal Buildings and Major Renovations Rule in response to Congress's mandate to cut emissions from federal buildings. This rule requires federal agencies to phase out fossil usage by achieving a 90% reduction through 2029 and completely removing all on-site fossil fuel usage starting in 2030. Similar targets exist in other jurisdictions where we are a market leader in this space, including in Australia, where all government buildings are required to be all electric starting in 2026 and in the United Kingdom, which is aiming to reduce all direct emissions by 50% starting in 2032. Our focus will be to leverage Tetra Tech's existing $25 billion contract capacity with government clients to support this transformation of federal buildings, including the over 300,000 existing U.S. federal buildings we have here.
This work is taking place already through our contracts with the U.S. Army Corps of Engineers Energy, Resilience, and Conservation Program. Our first task order challenged us to increase resiliency at the Yakima Training Center in Washington. Our second area of focus is to support our defense agencies through the to prioritize facility resiliency initiatives in the current U.S. Army Climate Action Strategy, which is a stated plan of reducing greenhouse gas emissions by 50% by 2030. These initiatives estimate at over $6 billion will be a priority across all 130 U.S. Army installations. These initiatives include implementing installation-wide building control systems by 2028 and installing microgrids at over 50 installations budgeted at over $5 billion. Tetra Tech is well-positioned for this work, given our years of experience managing DoD assets. In fact, work has already started in this area as well.
Tetra Tech supported Fort Drum right here in New York on their path to 100% energy independence. Lastly, our third area of focus in government buildings is for our state and local clients. As you heard from my colleagues earlier, we've been delivering water and energy work for many of our state, local, and utility clients. We have an awesome opportunity to leverage that and also support these clients with their buildings work. These clients are waiting for the deployment of IIJA and IRA funds, including the $27 billion Greenhouse Gas Reduction Fund, which is going to be slated out for disbursement as grants later this year to support these projects. At the moment, Tetra Tech is currently working with the city of Los Angeles on their 12-year work plan to decarbonize their 1,200 existing buildings to be carbon neutral by 2035.
As we see demand in these sectors drive our revenue growth, we also have opportunities to expand our margins through a number of proprietary purpose-built tools we've developed. Technologies like FusionMap, AI Here, and our decarbonization planning tools allow us to provide higher-end consulting services at a greater efficiency, essentially one hour of labor resulting in up to two hours of revenue. An example, the engine that drives our decarbonization planning is a significant amount of data we have collected over the last decade working on high-performance buildings. This data, including cost, schedule, building type categorization, performance data, allows us to build real-time models so that our building owners and stakeholders can quickly assess, budget, and model different scenarios for their ideal outcomes.
With our decarbonization planning tools and data, we are now able to provide this value in a fraction of the time, given the work that we've put in to not just collecting the data but organizing the data. We see additional scaling and optimization of this technology using AI to support the categorization of this data. So, there are additional opportunities for margin expansions in the future. We anticipate this mix of higher-end consulting services and value being created with software efficiencies to increase our margins more than 50 basis points each year through 2030. I have personally been involved in the buildings and sustainable space for nearly two decades. There hasn't been a more exciting time for our buildings practice than right now. We have an existential challenge in front of us with reducing our greenhouse gas emissions.
Tetra Tech is well-positioned with our market-leading position, experience, and technology to grow our market share and increase our shareholder returns. Our steps to success over the next few years include continuing to deliver first-of-its-kind decarbonization strategies and solutions, capitalize on market drivers like the onshoring of manufacturing and the increased demand for the next generation of data centers, and expanding margins with proprietary tools supported by AI. This will drive our current $500 million buildings business towards a 12%-17% annualized growth rate to exceed $1 billion by 2030. For our current investors, I hope you continue on this ride with us. For our prospective investors, I hope you join us. And now, I'd like to introduce you to Preston Hopson, our global leader of human capital, to talk about our workforce of tomorrow. Thank you.
Good morning. Whenever I meet someone new and they ask what Tetra Tech does, I always give the same answer. I say that Tetra Tech is saving the world, that usually elicits laughter. And maybe it's a little bit of an exaggeration. But as you've seen this morning, we've got 28,000 of the most technically talented people in the world working on complex, challenging problems, improving the lives of people worldwide. Maybe we're not saving the world single-handedly yet. But as you saw in our most recent sustainability report, we are in the process of, by the year 2030, positively impacting the lives of 1 billion people around the world. We're making a meaningful difference in the world.
So, our priority in dealing with our workforce is making sure that they have the tools, the technology, the support, and the resources to not only do their jobs well, but to build a career here in the process. That starts with our culture, which fosters a sense of innovation and entrepreneurial spirit. You heard from Dan this morning that our roots, the roots of this company, are in research and development. You heard Kelly say that research and development is in our DNA. Clients come to us year after year to do research and development because that's who we are. It's what we do. We host an annual incubator event that brings together 1,000 employees to compete to not only brainstorm and create, but to bring to life the most complex, innovative, AI-enabled solutions for our clients. We don't stop with those big ideas.
We then transform them into tangible patents and other proprietary IP tools that we register, maintain, and protect. You see here that you don't have to just take my word for it. If you look at the quote on the screen from one of our participants, a finalist in the most recent competition, she said, "Other companies talk about innovation. People live it and breathe it at Tetra Tech. They have oodles of it." Great technical term, but very, very true. We have oodles of it. And we also have oodles of resources and tools available to our employees to make sure that they are empowered and able to work more efficiently and more effectively. Dan mentioned this morning TetraLinx, which I like to refer to as our ERP on steroids, because it connects our people to their work and to their projects and to each other.
Using our cloud-based solutions, our employees are able to work anywhere and everywhere whenever they need to, be that from a client location, a project site, in one of our offices, or from the comfort of their own kitchen. All they need is a cell phone or a computer, and they can safely and securely access all of the systems and information that they need in order to do their jobs. It's available at their fingertips. And then you add in the Delta. Dan mentioned earlier today the Tetra Tech Delta, which is our suite of proprietary digital tools that truly have been a game-changer both for our clients and our work. At Tetra Tech, we know that we are only as good as our people. And in order for our people to be good, actually for them to be the best, we invest heavily in high-end development and training.
Through our hub, our comprehensive training hub that delivers in-person, virtual, on-demand, and collaborative training models, because we know that having a highly trained and skilled workforce leads to increased performance on projects. It allows us to increase cross-selling because we've got educated, expert individuals in-house, and we don't have to go outside for additional resources. That saves costs in the process. You see here on the screen, there's a quote from a recent attendee of one of our project management training programs who talked about the concepts that he learned, that expanded on concepts, and was a good introduction to what Tetra Tech systems can do for us.
I focus on the "for us" because we design our training to make sure that it benefits our employees and makes their jobs more efficient, more effective, and in the process provides better opportunities for outcomes for our clients all the way around. Speaking of that "us," Tetra Tech gets a lot of questions as a professional services firm about the war for talent, about challenges in recruiting and attracting the best and brightest talent. Certainly, we focus a lot on that. Recruiting is important to us. But I'm here to tell you, this is not an issue or a subject that keeps me up at night. Because once prospective candidates hear our story, they hear what we do, they hear about our clients, about our projects, about the people, they want to join us. They want to be a part of making a difference in the world.
And so that leads to a situation where the numbers speak for themselves: 70 applicants for every 1 job opening at Tetra Tech. Someone recently said to me, "Getting a job at Tetra Tech is statistically harder than getting into an Ivy League or top-tier university." Again, maybe a slight exaggeration. But what is not an exaggeration is the fact that we are the place of choice for experts from industry, from universities, from government. They want to join us. And again, you don't have to take my word for it. You can look at the words of a recent hire who joined us just in the last couple of months. She said, "I was drawn to Tetra Tech's commitment to improve communities worldwide and its leadership team whose values resonate closely with me." I have that same conversation with people on a very regular basis.
When individuals are considering joining us, they ask me often, "What brought you to Tetra Tech? Why are you still here?" That's what I talk about. I talk about the work. I talk about the doing good in the world. I talk about the people that we get to work with and their values and how they align with mine. I talk about the culture where we train and develop our people not just so that they're leading experts in their fields, but so that when leadership opportunities open up, we promote from within. We don't have to go externally. We have a company where if you have an interest in something, you can own and grow your piece of the business. Some of you may know that I wear a number of hats at Tetra Tech.
I'm responsible for the human capital function, but also for a couple of additional functions here. That didn't happen by chance. It didn't happen because anyone forced it on me. It happened because I was interested in certain areas, and I raised my hand. What I've learned firsthand is that when you do that here, you will be given the opportunity and the support to develop something and to run with it. When you have that kind of a place, it leads to a loyal employee base with high retention and low turnover, turnover well below industry averages. I like to remind our CFO, Steve Burdick, on a regular basis that that low turnover number translates into approximately $70 million a year in savings from training, onboarding, recruiting, and lost opportunity costs.
Because we know that, conservatively speaking, it costs $40,000-$50,000 to replace each position when an employee leaves. So, Steve, you can write me a thank-you note later. And when we talk about that low employee turnover, it's coupled with high employee satisfaction and engagement. Because I like to say that Tetra Tech is a place, and it's always our goal, and I think we've achieved it, it is a place where employees should be able to show up as their whole selves to do good work, where they can be developed and thrive and have the support of the full global company behind them. And I think we do that because we focus a lot on the employee experience. We focus, yes, on the work that we do, but we also focus on our culture of health and safety.
We have one of the lowest total recordable incident rates, or TRIR, in the industry. We focus on our employees' well-being, both their physical and their mental wellness. We focus on providing a comprehensive and competitive compensation package, benefits that are the ones that employees want and need for their lives both inside and outside of work. And what all that adds up to is that we have an employee base with an average tenure of over 12 years. If you look at our executive management team, that average tenure number jumps to over 29 years. Think about that for a second. Where do you see that kind of loyalty and commitment at companies today? But we have that here at Tetra Tech.
We also embody a culture and philosophy of pay for performance, where employees at all levels of the company are able to directly and meaningfully benefit from the company doing well. It's not limited just to the senior folks. Everybody benefits from the company doing well. And we're very, very proud of that. We also have, as you see here, over a third of our employees have chosen to become Tetra Tech shareholders. And that means something as well. So that's just a little bit about where we are today. So, what about that workforce of tomorrow? Well, we will continue to build on our solid foundation. We will continue to invest in tools and technology so that our employees are empowered to be more efficient and effective in their work.
We will continue to exploit our global footprint and provide access and networks so that employees in Texas can work with employees in the U.K., in Toronto, Canada, in South America, and in Sydney, Australia. We will also continue to focus on employee engagement and employee satisfaction. We'll do all these things because we know that they are the right thing to do. But what we also know is that the right thing leads to improved financial performance. As time goes on in the coming years, as we continue these investments in human capital, we know that the revenue per hour per employee will increase.
And since our CFO will be coming up next, I'll just take this as an opportunity to remind him that whoever said that support functions cannot add to the bottom line of the company never met Tetra Tech, because that is what we do. We all contribute here. And so, Steve, you can add that to your thank-you note for me. But in conclusion, I just want to say, you know, as I've sat in the audience this morning and listened to the various technical presentations, and I look at, you know, where we are right now as a company, I spent a lot of time talking to our people and obviously looking at the stock price. And it's clear, our present is bright.
But as I look ahead to where we're going and what we are going to do, what I know for sure is that our workforce of the future will be brighter than ever. And I personally feel privileged and honored to be a small part of that journey. But even more than that, I'm excited. I'm excited because I get to work with all the people that you saw walking across this stage today. And these people are representative of our 28,000 people around the world. They are people that I like, people that I respect, people that I admire, people who are smarter beyond belief, and people who I've learned not to ask technical questions to if I don't want a two-hour conversation. But I'm excited to do this with them. And we're going to have a lot of fun along the way.
So with that, now that he's done writing my thank-you note, I will introduce a person who probably needs no introduction to this group, our Chief Financial Officer Extraordinaire, Steve Burdick.
I don't know if I can follow that, Preston. That was great. Preston's right. I want to thank Preston for really taking the time to share with you, you know, the talented, the world-class employees that we have. And, you know, I also know many of you out here that are here in person. I know there's a few people listening in virtually to this, and I want to thank you all for being here.
What I'm going to go through today is taking a look at our Vision 2030 and really taking a focus on what are the impacts in terms of increasing revenue, improving margins, continuing to generate cash flow beyond our net income, and our capital allocation strategy. You know, so first, just taking a quick step back, when we focus on the last 10 years and the fact that we've been able to outperform on our commitments to you all, we've been able to provide results that I think are world-class. This all came over the last 10 years from our strategic decision to really double down on the heritage of Tetra Tech. That is the strategic focus on the high-end consulting, the front-end work that we do that you've heard about today.
Upon that success and upon putting that strategy in place, we used our market-leading positions in water, environment, and infrastructure to expand into countries beyond just the U.S., so Canada, the U.K., Northern Ireland, Northern Europe, Australia. Along those same ways, as you've also heard about, is the integration of data analytics and recurring revenue that we've started to provide guidance on today, such that we're performing this work for over 100,000 projects, for over 20,000 clients in over 100 countries.
As you heard from Dan and our global leadership team today, in 2030, we expect these new aspirations to greatly impact the work that we do on water, environment, and sustainable infrastructure, such that we're focused on our clients by providing them forward-looking technical solutions, such that by doing that, by having an employee base that Preston talked about, we should have, by using our balance sheet, using our financial performance, to be able to provide not just what we've done in the past, which is providing a TSR or a total shareholder return of about 25% over the last 10 years, but to continue that shareholder return for all of you. So, one of the first areas that we want to take a look at is how do we see the revenue increasing based on everything that you've heard about today?
As Tetra Tech is a leader in many of the areas on water, environment, and infrastructure, we have a competitive advantage for sustaining that work that we do. We don't just want to do what we've always been doing. We want to extend that leadership beyond the last 10 years and really what it's going to take to serve our clients over the next, for this presentation, through 2030. Our core organic growth typically exceeds and has exceeded the GDP in any one annual year.
But beyond that, we want to be able to compound that annual growth by implementing the strategy that you heard about today in terms of focusing on water, where there's scarcity and supply issues, focus on the environment, where there's emerging contaminants, especially as it relates to PFAS that you also heard about earlier today, and then sustainable infrastructure regarding renewable energy buildings and the requirements for AI and data resources. By focusing on those areas, by really listening to our clients, providing the best technical advice, we believe that over the next couple of years, including adding acquisitions in those key focus areas, we should be able to grow our overall revenue by about 10%-15% on an annual basis. But just as important as growing our top-line revenue, we are also, as all of you know, very much focused on our margins.
When we look back over the last 10 years to today, we've increased our margins by about 50 basis points a year once you take out a lot of that noise. Today, and as you heard from Dan earlier, the midpoint of our guidance for 2024 is about a 13.4% EBITDA margin. Then on a net service revenue basis, that's about 16.5%. But looking forward, which is even more important, is that we want to improve on that goal. We want to be able to use technology as a focus. And as you heard today, data analytics, recurring revenue, and the fact that we believe that in the future, relative to our water, our environmental, and sustainability practices, one hour today, one hour work today equals about one hour revenue. In the future, one hour of work should excel and should be closer to about two times.
Also, the addressable markets that you heard about today are significant, and they're growing, and there's a need. In addition to those needs, these are areas where there's actual increased funding for those needs. This is across not just the focus areas that you heard about today, but also all across our GSG and CIG segments. In addition to the addressable markets, we're looking at how do we leverage our operations, and how do we get more out of what we do. As you heard from Preston earlier, our employee base is great, very much looking forward. So, that is a competitive advantage that we have today in terms of the types of contracting that we do. We're looking to do more fixed-price contract work because that carries higher margins and lower DSOs.
And as you heard about a little bit earlier today also, our ERP system in terms of being able to use our ERP system, manage our overhead cost, and create that leverage as we've been doing and as we will continue to do so. So, when you take the combination of all those revenue-based and cost-based initiatives, our goal is that we will hit an EBITDA margin on net service or on net revenue of about 17%, which is a little over 300 basis points from where we are today. Now, we can increase our revenue and increase the top line. We can do better from a pure net income standpoint or EBITDA. But just as important and what we are very much focused on is cash flow and how we use that cash flow for capital allocation.
Now, as you know, over our history, Tetra Tech has been very disciplined in how we use our cash. We actually have a couple of bankers here today that they like to give me more cash, and I make sure I use that accordingly. Such that over the last 20 years, and not many other firms in our industry can actually say this, but our cash flow from operations has actually exceeded net income every year for the last 2 decades. We are very adept to managing our cash flows based on increasing our margins, decreasing our DSO. Our DSO was about 90 days 10 years ago. Today, it's 55 days. I believe that we can reduce that by 2030 to actually 50 days from the current 55 days by continuing to do everything that we have been doing for the last 10 years, just doing it better.
So, from a standpoint of increasing our margins, improving our cash flows, generating that cash, we will have ample opportunity to allocate capital in a smart and effective way through organic growth, as we've always done, through contributions back to shareholders, through both dividends and stock buybacks, and then through M&A, where we want to supplement our organic growth in key strategic areas that fit what you saw today in terms of where we think there's going to be growth and where we need to supplement our own geographic presence, client presence, or technical presence. As I wrap up here today, several years ago, we set a strategic plan where we were refocused on really what Tetra Tech does well. And that's the front-end engineering, technical consulting. Along that way, we also committed, to many of you, that we would grow our revenue by 10%.
We would get to, and not just get to, but surpass an EBITDA margin of 13%. And we would take our DSO from what was 90 days before down to below 70. And so as I sit here today, we've actually surpassed all of those financial requirements or financial promises. And as Dan and I were preparing for this, we were talking, and I can recall over the last several years, every year, every quarter for several years, different analysts, different shareholders would needle Dan and say, "OK, Dan, when are you going to get to the 13%? You've been saying this for a couple of years." Then they turn to me and they say, "OK, Steve, when are you going to get to the DSO of 70 days? You've been at whatever for the longest time period.
When are you going to get there?" And my comment was always, "Look, this isn't you snap your fingers. It happens the next day. It's a long-term strategic goal that we put in place several years ago." And as I sit here today, we've actually done that. And what we're talking about today is what are we going to do in 2030? And there's lots of big numbers. There's increasing revenue, improving margins, better cash flow.
I would say that with the 28,000 employees that Preston talked about earlier today, the global leaders in the different areas that spoke today, who are both the technical leaders and have the business responsibility, the management team or the executive management team that some of us talked today and some are in the back of the room, with that team, I have no doubt that we're going to get to where we've set our goals in 2030. Those goals are going to come about from the funding from U.S. stimulus programs, PFAS programs, and the acceleration of that, both in the short term and the longer term. The renewable energy and building decarbonization has been ongoing and will continue to accelerate.
And then taking all of that and using our history, using what we do best to figure out how to use data analytics to provide better resources and better answers for our clients, and then ultimately moving some of those data analytics into software that becomes recurring revenue in the future. And so by putting this global strategy in place, investing in the right areas, doing the right things for our clients, we will see a revenue growth of about 10%-15% on an annual CAGR basis over the next couple of years, but even more so, see an EBITDA margin increase at a faster rate of 50 basis points or more.
And so, by doing the right things for our employees, doing the right things for our clients, we'll be able to provide shareholder returns to all of you, I hope, at a greater rate than what we've done in the past. So, with that, I would like to turn the podium back over to our esteemed leader, Dan Batrack, who will go through some closing and Q&A. Thank you, Steve, for running all the numbers together for us. I really want to conclude today's prepared remarks really where I started, which was the financial numbers. I hope we've spent enough time with you today from our practice leaders that we're in the right markets. These markets are big. They're super high priority. They're not discretionary in many instances. They have regulatory drivers. They have economic drivers. They're not limited to one geography. And they actually set very well for us.
We're not new to these markets. It's not something we have to migrate the company into. It's not something we have to reinvent the company into. This is, in fact, where we grew up and where we've spent the entire existence of the company practicing. I think that the experts have actually talked about it. We've got the right experts. They've been with the company a long time. We don't have to train them and get them introduced to who the organization is. We do have, as Preston outlined, a full new cadre of individuals that join us and keep that average tenure at the company. And one item I talked with Preston about is, just as a note, the average tenure overall for the company is, or the turnover is 9% per year. You saw that on his slide.
Something I'm particularly proud of, there is a little bit higher turnover in some of the new geographies that we work in, like Australia. If you can get $0.10 more in a year, you'll make a job change. In the United States, which is the biggest presence of our staff, the average turnover rate is about 6%. And most of that 6% actually occurs in the first 5 years. If you've been with Tetra Tech, and you've heard me say this on my investor calls, and I want to highlight it again, if you've been with the company more than 6 years, you finish your 5th year, the average turnover rate is between 1% and 2%.
So, the likelihood of you staying with Tetra Tech for the rest of your entire career is actually quite high if you get through that first five years as you sort out. So, we do have the stability, the commitment, and the right staffing to make these numbers happen as we go forward. And one thing I'll point out, if you saw, Steve had a range of numbers, both organic growth and acquisitive growth. These numbers here are not the high watermark on those. These are the midpoint of those numbers. So, if you just took the high watermark, these numbers are even greater than this. And I'm sure it's going to come up, or I think it's possible that it's going to come up, with respect to this general recurring revenue that I myself have spoken to, and we had a few of our speakers today talk to.
Let me answer one of the questions that might come up in advance. How much of this number or your target is actually relying on significant growth or contribution from the recurring revenue, or recurring revenue, let me be clear on that, from subscriptions? We do today about $20-$25 million a year. We've applied these types of growth rates to that number alone. So it does put, for our 2030 number, we've got a number that's about $40-$50 million, quite de minimis. We think the actual growth rates may be, in fact, an order of magnitude greater than that. And I'm looking forward to actually sharing with you all as we've made progress on that.
I think I've said in the past on our investor calls that once it gets to sufficient scale so that we can answer questions like, how often is it renewed? What's the average subscription rate? What's the rate of return? What's your profit margins on this? What we've seen so far, profit margins are about 50% on that number. It's still quite small. And even in this forecast that we have, it's still quite de minimis. So, the upside on progress on the recurring revenue does give an upside from what you've heard today. As we did for this morning, I'd like to have the afternoon, feels afternoon. I guess it's still morning. The second session speakers join me on stage, and I'd like to then open this up for questions, and we'll see if we have appropriate answers for you.
If I can have these last session speakers, but I'll also have this morning the first set of speakers on the side here so that I'd like to open it up to questions for all of our speakers, and really for any topic whatsoever that you'd see associated with the company. Thank you. As Aid indicated a moment ago, I do have our first session speakers available up here in front to address any of the questions that they spoke on this morning. With that, I'd like to open up the forum to any questions any of the attendees may have this morning. I think I'll start with Sam here first.
Hey, Sam Kusswurm with William Blair. Thanks for taking our questions and appreciate the presentation. Really enjoyed it. I guess to start here first, just kind of want to dig into the organic growth rates a little bit more. So, you have the range of 6%-10%. Can you just talk about the primary risks and drivers as you see them to kind of hitting both the low and high end of that? Is it just an acceleration in digital water, faster rebound, and renewable energy? What would it take to hit that 10%?
Well, it's interesting. We've actually been performing at the upper end of that. Some have actually noted that our organic growth rates have been a bit over 10%. One question that I've backed away from commitment is, is the new normal something greater than 10%? My comment is, two or three quarters of that type of performance doesn't make a long-term trend. And so, we have moderated it a bit. The one thing that we feel really fortunate, and I really haven't spent much of my career in this place, which is very broad performance across the company. It's not just the water work with water supply from cities and counties. It's not just the federal work that we're doing for the Department of Defense. It's not just the renewable energy that Aaron's spoken about.
No doubt our buildings' work has picked up and exceeded our expectation by a fair amount. Of course, people, the old metaphor, how many cylinders are you hitting on right now if you're an old internal combustion V8 engine? Even today, you won't hear me say we're hitting on all eight. I'm not going to say that because we're not. There are still areas that we can do better on. I think the federal funding has given some slowness, not because the U.S. federal government doesn't have the funds, not because they haven't made the commitment, but there's quite a bit of dysfunction with respect to getting things in place. And in fact, I think it was 6 continuing resolutions this year before they finally put the funding in place.
So, I think things could get to the high end of this or even higher if we get some of this actually ironed out with respect to us. It's not really a priority for us. Do they spend it with social programs or do they spend it with defense, if it's Democrat versus Republican? We work for all of these agencies. So, as long as the funding is being provided by the federal government or other clients, we should do quite well. So, I think we feel. I guess I would put it at your question: what puts us at the upper end? I would say a little less dysfunction. What would take us to the lower end? More dysfunction. And I would say, but other than that, the technical areas that we've been focusing on, very broad-based, have been contributing.
This puts us right in the middle of, I think, on a longer term, the 6%-10%. So sort of middle to upper single digits on an organic base seems quite reasonable for us.
Great. Appreciate it. Maybe the other side of that revenue growth equation then, for the M&A side, I know RPS integration's gone very well. You've got a very healthy balance sheet. Is there any, I guess, growth area that you outlined today where you see more opportunity from adding scale or adjacent capacities?
Well, RPS was a year ago, and we've said that our priority for the corporation is we want to add technology. We want to add automation. Now, how have we done on that? I guess it was last week we announced an acquisition of a water automation firm to join the company. We're not looking for size, although if it happens to come in larger scale, that is actually so much the better for us. But we're looking to be better. We're taking quality over quantity every time. And if you go back to RPS just a year ago, a year and a couple of months, that had both, both. It had both quality and quantity size at 5,000. Now, we did announce here just about a month ago a federal IT practice that joined high-margin data analytics with us, about 500 people. So it's a nice size.
This most recent acquisition that we just announced last Thursday, which is automation, is much smaller. You'd say, what's smaller? 20 people, 25 people. But it's not about the headcount. That's where technology that they're bringing to the company has a huge force multiplier that's joined the organization. So, we'll go from small, 25 people, to large, 5,000 if it actually adds quality. And we're looking for technology, so people that could actually bring additional AI that would expand and help this magnification of our revenue per employee, so if we can do that. We're looking at, by the way, what's one of our best drivers in the company for water? Items that we can replicate across 150,000 utilities. We're a small part of that now. When we get 100% of that, I'll be happy, Jared. But that's what we're looking. We're looking to bring automation.
We're looking to bring scale. We're looking to bring technology that will actually be a force multiplier to the staff we have in the company. So, that's what we're looking to acquire. And it does have to meet our financial hurdles. Steve and I are completely locked into our commitment that acquisitions will be accretive on a GAAP basis the first year of their joining the company. And for those of you on the accounting side, that is a very high standard. And I haven't heard one person, not one person, one company say that that's their goal even in years from the date of their acquisition. So, Tetra Tech is in a different league on acquisitions.
Hi. Good morning. Mike Dudas, Vertical Research. Thanks again for a wonderful morning for us all. In one of the slides that Steve was putting forth, you talked about commercial margins greater than government. Maybe you can talk a little bit more about that and the drivers. Does that imply that as we move forward over the next several years, there'll be faster growth in commercial versus government? And maybe you can break that down for us.
Well, we do believe in the longer term. I will say that margins are much more cyclical in our commercial business. We've seen in economic recessionary periods that the commercial markets are under more pressure. When there's a recession and there's difficulty in their financial positions, they can turn the switch off almost like a light switch. You can get pressure on reduced rates, reduced funding. We actually saw that during the pandemic, and you saw our commercial rates come below the government rates. Our government margins are actually quite stable. Actually, in some strange way, that they're sort of countercyclical, that when you have a difficult economic period, there's more stimulus dollars that are being put into the economy. We actually end up with more scale or higher utilization. You'll see our government rates margins actually go up.
And so, we're actually in that transition period. The economy's been quite strong recently. You've seen the bigger, I think with this last quarter, we had about 320 basis points year-over-year growth in our commercial international margins. And we were 70-90 basis points on our government side. So, you can see this catch-up in this intersection taking place. We see the markets being very strong as we're going forward. And that's why we see the commercial will surpass our government. I think structurally, it does have the ability to be higher in what I would call sort of a mid-part of the ups and downs. Commercial should be higher. But I will say, I used to think that on the government side, there was sort of a natural ceiling on what type of margins you could get from your government clients. It's cost-plus contracts.
They actually have calculations of overhead reimbursable rates. They have rate structures that you have to be within. But the addition of technology that we're adding and monetizing the software, I think it's actually beginning to break that ceiling. And so, we used to think that number was maybe in the 15%-ish. We've had quarters on the government side where we've been up at 17%-18%. And the people have asked me, did you increase all of your rates? No, we increased our utilization. We actually put more staff to work at DEEC. We had leverage on the workforce, and we can produce 17%-18%. But I think with the use of these different tools and monetizing them for our clients and bringing them value, we can actually sort of eliminate that sort of fuzzy 15%-ish and make that number much higher.
So hopefully, in the longer term, we'll put them on more of an even footing of their keeping up even with the commercial margins that we would realize today.
I appreciate that. My follow-up would be maybe Preston or the group. You said 20,000 employees as of today. What is the target to meet 2030? I know it's a mix of new and existing employees. That 1 hour to 2 revenue is a pretty interesting dynamic you've put forth. Maybe a little bit more explanation on that front to kind of get what type of utilization opportunities there are to get to those targets given the resource you have today. Thank you.
I'll let Preston talk about our hiring rate, and then I can talk a little bit about the one thing both Preston, actually, I think all of our staff came to me and said, particularly our investor relations group, if you're going to go 2:1, then we could double-size the revenue of the company and not even add one person. My comment to them was, that will be the incremental increase on the new employees we hire. Now, yes, it will also benefit some of the historical employees. But I don't see that we're going to take the 28,000 and immediately double it, or we would need no new employees. But I do think incrementally, as individuals join, they will enjoy this doubling of revenue. But with respect to hiring and items, Preston or Steve?
Sure. So, when it comes to hiring, we look at what are the needs of the business. We don't have targets per se that we want to grow by X percentage by 2030 because we know with the advent of technology and the tools that you heard about today, our employees are able to do a whole lot more today with less, or fewer employees are able to do more with technology. So, it really depends on the individual business needs. But as I said, when it comes to recruiting and talent acquisition, when we identify needs, we're able to fill them relatively quickly, which is helpful for us. So, we'll grow as we need to. We're, I think, at the moment hiring about 4,000 new employees a year. But again, we'll ramp up or ramp down as needed.
Yes, Andy? Microphone coming.
Thanks, Andy Whitman from Baird. I guess, Dan, thank you for the presentation. It helps clarify how the business has changed over the years. One of the things that's been an important part of your business for a long time is the USAID business. You've always said it's roughly about a third of your federal business. You've always talked about how you got aid. You've got your DOD work where you do a lot of environmental stuff, and you've done your civilian, which is clearly featured very well in this presentation today. So, I want to talk about how aid fits into the picture, just the growth outlook for that end market. And as the business has moved increasingly towards water and environment, does USAID still fit in the Tetra Tech portfolio? I know it's been so core. You guys have done very well in that business.
But I'm just wondering how you're thinking about the growth rate in that business and what more you can do for that customer and how it fits in this overall pie today?
Well, I'm glad you asked that question. We're incredibly proud of the work we do for international development at large and for the U.S. government. It happens to be USAID . We also were the, I'd say, the largest, what I would call, environmental infrastructure company for USAID . The other two agencies that we work for are Australian Aid and the United Kingdom Aid. So, the three of them make up our international development practice. It collectively represents close to 10% of all the revenues of the company. I think Steve was clarifying to me this morning, oh, Dan, sort of 8%-10% on a given quarter. So, let's say 10%. With respect to its nexus or how is it engaged in water, up until the last few years, it was mostly water.
So, work that we do for agriculture in developing countries, so how they can feed themselves, what do you need for agriculture besides seed and a good crop? You need water. The work that we would do is identification of water, treatment of water. We would actually do reservoirs. A huge amount of the work that we've done is regarding flood control on water. That's been some of the biggest. And of course, sanitation. A lot of work we do in Southeast Asia and Africa has been around sanitation, which is, by any other name, a treatment of discharge or wastewater. That's the work we've done. Of course, near and dear to my own personal heart, where I grew up, my first decade of my career at Tetra Tech was in the marine environment as an oceanographer.
Tetra Tech's some of the largest marine habitat coral reefs assessments and protection of fisheries in the world. I've highlighted on previous calls; we do the Coral Triangle Program for USAID . It's actually multilateral with USAID , Australian aid, and the Asian Development Bank regarding assessing and preserving the Coral Triangle, which is the collection of coral from Indonesia. It actually starts up in Malaysia, Indonesia, Solomon Islands, up to the Philippines. It's many, many times the size of the Great Barrier Reef if you just want to put it in relationship. That's our program. All of these are water programs. Now, USAID has asked us to help them in other areas such as renewable energy work. I will say an area that's been surprisingly big for us has actually been renewable energy and energy security for Ukraine.
So, if you've watched any of the developments there, some of the infrastructure's been targeted, such as water supply in Ukraine. So, what are we trying to do there? Provide them new supplies of water, energy that has been damaged. And we were in the process before the conflict began of converting their export of energy. Ukraine, before the conflict, was one of the largest energy exporters in all of Europe. And so, our job for USAID was to take it and to connect them to the West. So, the transmission systems would go to Western Europe. And in fact, we actually, I'm pleased to say, did accomplish that with Ukraine. And we continue to support them through USAID . So, I do see USAID continuing, both USAID and international aid, to be a part of the business.
It's about 10%, as I said, of the overall revenues. I think it's going to continue to grow. I think there are areas such as Ukraine, when the conflict stops, that they'll need rebuilding of things like environmental impairment, how much damage has been done, and how can you protect the citizens of the country? How can you reconstruct their water delivery and wastewater treatment systems for sanitation? How can you actually put renewable or secure energy in place? Those are all the things we can do. Of course, there is another conflict that is not resolved yet in Gaza. The amount of international aid that is projected to flow back into this when this process is over, when this conflict is done, is going to be enormous. You've heard early commitments from most of the Western countries that they're committed to fund this.
And who's in a better position than Tetra Tech, whether or not it comes from the U.K., whether it comes from the European Union or U.S.? Of course, USAID we're situating there. Now, if you want to take a negative stance and say that for some reason, I think the international development work is going to slow down, the globalization's going to stop, we're going to become much more insular, and money's not going to go into that, well, the reality is I should change that 17% margin of our target and make it higher because the international development work we do is about 30% lower margin than what we have in the rest of the business. We do that work at cost-plus. There's very little or no financial risk. I'm not going to say we're pure philanthropists with respect to this.
It's not all philanthropy because we can do well as a company while doing good for the world. But in the event that it actually does pull back, the margins of the company will go up. So, those are sort of the two ends. There's a lot of need. There's a lot of desire. It does line up with our water work. But we do actually sacrifice some margin for this work that we do. So those are sort of the two outlooks. But we're pretty positive on international development work globally. Any other questions? Well, if there's no other questions, we do have lunch just next door, a couple doors down. And I think it's probably the best time that you can spend is time interacting with our experts here.
If you want to ask about how things would impact your portfolio and investment in Tetra Tech, they'll have some insight. If you want to ask about impacts, environmental, water, or otherwise in your personal residence or neighborhoods, they'll have an answer for you or anything else between. I want to thank every one of you for coming today. I really appreciate your attendance and your support of the company. Please enjoy lunch with all of us. Thank you very much.