Ameresco, Inc. (AMRC) Earnings Call Transcript & Summary

Thank you very much. Thank you, everyone. And welcome to our first of many to come, I hope, Investor Day. I know many of you, you were disappointed because we had to postpone the first one due to the COVID situation, but we were more disappointed than anybody else because we wanted to meet with you and tell you our story, where we are and where we are going. So at the beginning, I just want to introduce our Chief Financial Officer, Doran Hole, he will go through the agenda today, and then I will come back and talk a little bit about Ameresco, where we are and, hopefully, where we are going. And it's a great opportunity when you take the time and meet the great management team that we have in this company, a tremendous, tremendous bench strength. You will see about 11 individuals, of which 10, they manage the P&L responsibilities. So thank you very much for coming. And Doran?

Thank you George. Welcome, everyone. It's great to see everybody here. I know I've met many of you before, sometimes at conferences, otherwise, on telephone calls. And I'm really glad that we can do this live. Thanks, George, for the introduction. You know me as the CFO. And of course, my first step is to throw up the safe harbor statement. I'm going to try to do the least amount of talking today because as George mentioned, we've got a lot of really, really deep bench leadership talent in the room that's going to be going through the agenda today. And hoping that you can walk away from here with a really, really good understanding of our business and where we're going and why we're going there. So following the -- this little welcome. We're going to have George spent some time, with Leila, talking about the market opportunity, talking about the company and where we are. We're going to have a short break around 3:45. And then we're going to invite a couple of our clients here. First of all, we've got sustainability rep from Bank of America, who's going to talk about the C&I work we've been doing there. That's a very, very good design build customer of ours. We've done a lot of work on solar installations for them. Secondly, we have a customer from the federal government, from GSA, who's also going to talk about some of the comprehensive projects that they look at and where Ameresco fits into the story. And then as we get into the heart of the afternoon, I think the important parts of the session, we're going to see a number of our folks come up and talk about new markets, new business models and new opportunities for the company to grow. And I think that, that's going to be a really exciting segment that I'm hoping will resonate with you all as you look at the broad landscape of sort of Cleantech and Cleantech integration. We'll also touch on, Leila and I, some ESG metrics that we're chasing for ourselves as well as our customers. And then I'll spend a few minutes just talking about the [indiscernible] project. Everyone's thinking about it. I wanted to give you an idea of where we are, what we're thinking about there, how that is coming together. And then lastly, we'll hand it over to George to talk a little bit about our future financial goals. And then we'll open it up for a larger Q&A. Notably, after that larger Q&A, we will be having about an hour-long cocktail reception in the next room. All of the executives that are speaking here and some of the others that are here along for the day are also going to be in there, and we really invite you to go and interact with them one-on-one basis to get to know the deep bench that we have. Speaking of that deep bench, here they are. So in addition to myself and George, we have business unit leaders up and down the organization, finance, capital markets, legal, technical, they're all here. So we want you to be able to see them. We want you to be able to interact with them. And we're very much looking forward to a great day here. With that, I'm going to turn the mic back over to George. I'll let him run through...

Thank you very much, Doran. And again, good afternoon, everyone. Some of you know me way, way back. When we started this business, I said Ameresco, we want to be the number one in our space. I'm delighted to tell you today that you will see now with the marketing studies that they are out there, Ameresco was indeed the leader in this space. The other thing that I wanted to point out to you is who is really Ameresco and what differentiates us from the rest of the group. Ameresco, we are the leading Cleantech integrator and developer, owner and operator of renewable assets. And we develop those assets either for ourselves, our own balance sheet, or for our customers. But the greatest, greater strength of Ameresco, this is what you're going to hear today, what you see, is our people. We have tremendous, tremendous bench strength, not only our senior management team, but in the second and third tier teams. I've been in this industry for over 50 years, one of the things I focus a lot, building the organization behind in order to execute what you have undertaken. And I'm proud to say that we have executed. And they demonstrated this very well the last couple of years. This group has a culture, not only to be entrepreneurial, not only to have the passion for this particular business that we are in, but more importantly, the resiliency. The resilience in the last couple of years, we managed the company. Coming on the other side, much better shape than we were when we got into it. So to me, I'm forever indebted to the people that we have in the company because they stepped up and they executed very, very well. The other thing that Ameresco has that differentiates us again from many competitors, is a great franchise. We have over 60 offices across North America and 3 in U.K., and we will expand more in Europe. So we have a great franchise because this business in order to execute, you have to be local. Otherwise, if Boeing is going to hire you, you better have some people in Seattle in order to execute that particular contract. And then the rest of it, the numbers speak for themselves. We have implemented $11 billion of project. Over [ 99 point percent ], we have on budget and on time. That's why when you see big projects like the South California Edison, don't get paranoid. We have executed before, and we will execute again. The other thing that is great about Ameresco, and that's why we came on the other side of this COVID-19 better than when we got into it, great visibility. Even right now, we have $5 billion of backlog, $2 billion of which, of those billions, they come from recurring revenue base. Half of it comes from the O&M. The other half comes from the assets that we own and operate. And then the other $3 billion comes from projects that we have on the backlog. So it's very, very great. We say you have great backlog, great visibility. And then what differentiates us in the marketplace from the competition and why we're winning more projects than other people? We can spend the time basically to broaden the capabilities of the company to address various needs of that particular customer. And that's what you see here, each and every time we step up to the plate, we want to deliver the best value for our particular customer. And what is that value? It's not always price. A customer might be looking for a comprehensive and advanced technology portfolio. Otherwise, he might be looking for resiliency, battery storage, microgrids, smart sensors and so on. And over the years, we've built the capability to deliver that. So that helps us a lot. Maybe the best technical expertise, many companies -- let's say, the Biomass project that we built in Savannah River for the Department of Energy. We were selected because we were the only contractor making the presentation that could take the project from the development to the implementation. In other words, we did the engineering, we did the construction management and so on. Many other companies, they had a subcontractor to do that particular work. So at the end, when we would -- the starting up operations, the contracting officer for the DOE, he said, "George, would you like to know why you won the job?" I said, "Yes". He said, "Well everybody else, they had different -- another engineer, and so on. You guys, you were fully integrated." We said if anything goes wrong, we look at George. The other guys will point the finger this way. So that's a great value proposition for us. And that's why we win in many, many projects. And then the other thing that has helped us a lot that has tremendous, tremendous traction in the marketplace, we're technology agnostic, we are supplier agnostic. By the way, supply -- we may supply electricity, okay? So we approach the solution from the customers' perspective. What does it make sense for that particular customer, that particular [indiscernible], that particular utility as we go right now. And we have the expertise across the board, so we can do that. And then what's happening today, the customers are looking more than just an implement on, let's say, of an energy-saving solution. They're looking for sustainability partner. And we have developed the software to establish a baseline where they are right now on the carbon footprint, and then we can develop, finance and implement the plan to get them to whatever carbon reduction they need. And we have done something like the Arizona State University, with one of the universities, right now they wanted to achieve carbon neutral by 2035, and we won that particular job. So that's helping us a lot in our drive. And then, of course, flexible financing. Many of you know that we have the energy savings performance contracts. And that's basically -- it's a third-party financing. And we guarantee that the savings will be there, and they pay for the debt so the customer gets what I would call budget neutral or sometimes positive cash flow, but they upgrade their facilities, they reduce the carbon footprint and so on. Lately, you will have heard energy as a service. It's not different. The only difference is that we get paid over time rather than [ 100% ] complete. And what does that mean is that many times, that can go off-balance sheet financing for the customer or it might be design built where the customer pays us [ 100% ] complete or any hybrid solution of all the above. And we are flexible enough to say, "That's great." And lastly, but not least, because we have a great footprint across North America, we can address [ national ] accounts and -- because we are in the U.K. right now and expanding in Europe, it will be international accounts as well. Ameresco, if you look at our business, basically, we have 3 complementary lines of business. One is the projects, and you're going to hear a lot about the projects from Nicole Bulgarino, and how that market has expanded. But the project is a great business because it gives us great cash flow. In addition to that, and remember what I said earlier, investing in assets can be a capital [indiscernible] business. So you have to generate that cash flow somewhere else. In addition to that, though, we have the operational maintenance -- come in about 1/3 of the contracts that we have on the project, we get some kind of an operational maintenance contract. And that's where you say we have $1.1 billion of operational maintenance contracted backlog. And some of those contracts, they're as long as 25 years. So it's a great, great recurring revenue baseline. Then, of course, we have the assets. In many customers we have done work for them like take, for example, Newton School System. We did all their schools for the energy efficiency. Then they wanted to have renewables, they wanted solar. Guess who won that particular contract? We did because we had a relationship, and we have the capability on executing for that particular one. And then Mike will talk a lot about -- and then Jon Mancini, much more about the essence. But they give us a great, great recurring revenue baseline. Well, what's driving our business? I think we talked -- you have the old driver, basically is for savings. And then you get infrastructure upgrade. And then, of course, you get a better comfort level. That was the traditional one. Now we're beginning [indiscernible] help. I don't know where you're going to start. I have 6 here. But I think yesterday, we heard the seventh one. Right now, the SEC will require climate change reporting. So decarbonization is becoming a catalyst. Many customers, they are looking how to reduce their carbon footprint and we can help them. ESG, the same thing applies. Policy and incentives, again, it's a trend, and we're taking great benefit from it. And then, of course, the resiliency because of climate change and because the more solar renewables you get, the more wind, the more PV, ultimately, weather takes both of them out. The utilities are looking for backup. So battery storage is a key down the road, it will be more other effective mechanism. So again, it has become a new business line for us. It's helping a lot. And then grid stability. I mean the Southern California Edison project, it's a great, great example of the grid stability. And we were playing a lot what I call on the customer side of the mirror. You're going to see us playing quite a bit on the other side of the mirror as well. Well, the market is expanding. We talked about it a lot. And then all the people that you will hear, they will talk quite a bit. But how we're going to accelerate our growth, primarily advanced the 3 categories. Advanced technologies, whether it's energy efficiency, whether it's renewable energy, and you can read the bullets yourselves. But each and every one of them is contributing tremendously, and you will hear much more about it. Geographic expansion and mergers and acquisitions. Like I said before, we have done over 20 acquisitions primarily to establish the franchise across North America because we wanted to be local and acquire the talent. And we did that, and we did that very well. So don't be surprised that where will we -- like Southeast part of the United States or Europe, but you will see us do some acquisitions in those particular markets, because we are growing and we have the capability. And the other thing, we have the reputation. Each and every time that we get evaluated by the federal government or customers, we scored #1 on execution, #1 on technical capabilities, and #1 on customer satisfaction. And that's where you're going to be at the end of the day. I'm paranoid about customer satisfaction. I keep telling our people each and every time, "I want to exceed those customer expectations." And that has paid off a lot. We have made mistakes. I said I don't care, go back, fix it until -- and [ Bob ] can talk about a couple of examples where we ended up winning the customer over, and now we have done 7, 8 more projects with that particular customer. So we will expand that. We'll capitalize on our reputation. And then, of course, we'll always be doing infrastructure upgrades. But now that infrastructure, we have new ones like the electric vehicle charger stations. Each and every project that we are doing right now for the colleges, universities, military bases, bus terminals and so on, they want electric vehicle charging stations. And guess what? We will install for them. And then, of course, the smart cities, we talked about that. Many of you, you have heard about the Chicago Streetlight project, but we're getting to be one of the #1 competitors in that particular market, smart cities, smart colleges, smart universities and so on. And then the other one, the utility modernization. And reliability and stability, you see us play that -- a little bit on that. So basically, that's what we are. We have, I think, a great, great opportunity for -- in front of us, but also great capabilities that the company has. The other thing that we did because too many things, too many strategies, too many technologies and so on, rather than we have what I call -- used to call adhoc, strategic planning for the company. We wanted to institutionalize that. So we asked Nicole Bulgarino to lead the group of other strategic assets in the company to -- every year to come up with a particular strategies and then we have a common marketing or value proposition for the particular customer, go ahead. And then associated with that, we wanted to pick the one of the brightest, smartest people in the company this year, Jim Bishop, who is going to be our Chief Technology Officer. And some of the very creative projects that you have seen with Nicole's group, he is the primary instigator behind all those. So with that, I will turn it over to Leila to tell you why we're number one.

Okay. And I have 1 minute to do it. Let's see here. Okay. Great. So many of you I've met before, some of you I haven't, just to give a quick intro. My name is Leila Dillon, I head up the Marketing and Communications here at Ameresco. So what is my job? It's to track where we are, where our competitors are and what is our total addressable market. One of the -- actually 2 key things that you're going to hear today throughout all of the sessions are the following: The first is that we're accelerating our position as a leading Cleantech integrator. And you're going to hear throughout the day how we're doing that and why we feel uniquely capable to continue to do that. The second thing you're going to hear about is how we're expanding our addressable market. And that's through a number of investments in people, in technologies and solutions that we've made over the years that enable us to have a much larger addressable market, not necessarily this year, but next year, the year after and the year after that. So how do we go about that? First of all, we used an outside market research firm called Guidehouse. They're an analyst firm, and they're excellent at really covering the energy services space. So we worked with Guidehouse in the beginning of the last few years, so that they can come back to us with a really objective understanding of who are competitors are and how we match up to them in the marketplace. What I like most about this slide, if you start over here, is that we certainly are leading the market. If you look at the 2020 data that Guidehouse produced, we have a good piece of the pie, the leading market share at 8.9%. But we're a few tenths of a decimal point away from our competitors. If you fast forward just 1 year, what you see is that we've gained in market share. We're now at 11% -- almost 11.5% of the market, and now we're a couple of percentage points away from our competitors. So I really love to see how we're pulling away, and we're really owning more and more of this market. Now this is just the ESCO market. This is the $9 billion ESCO market. If we jump forward here, you're going to see our total addressable market. So while $9 billion was the ESCO market, we're now looking at a total addressable market going from $80 billion up to $109 billion or $110 billion. How is that possible? Well, over the last few years, Ameresco has made a number of investments, as I said, in people and in solutions. So today, you're going to hear a lot more about our Smart Building Solutions and what we're doing there. You're going to hear about EV charging infrastructure and that capability that we've brought in-house. You're going to hear a lot about Mike's RNG plants and the pipeline associated with those plants. You're going to hear about our utility work that we're doing and why that's added a big chunk to our total addressable market, and so much more. What you don't see up here and I've captured this, is a whole another category that I couldn't even fit on the screen, and that's hydrogen. So you're going to hear from Mike a little bit later on the expertise we've developed in-house. And what that capability of blowing this chart even off of this chart, actually. Blowing these numbers off of this chart. So with that, I'd like to hand it over to Nicole Bulgarino. For those of you that haven't met Nicole, let me give you a little bit of a background on Nicole. I think most people know about her here. Nicole has led our Federal Solutions Group. Obviously, she's Executive Vice President and GM of the Federal Solutions Group. She also, as George said before, heads up our Corporate Strategy Group, and has launched that this year. Prior to that, she also last year launched our Center of Excellence, which is all around training the rest of the company on all of the advanced technology solutions. Nicole and her team are responsible for some of the company's marquee projects. I know you've heard of them before, Parris Island, for instance, Petaluma, you're going to hear about today and even some of the market's favorite project, the floating solar at Fort Bragg. Nicole has certainly pushed the envelope in so many of the things that she's done for the company, and now she's going to dig in on our strategy and also our projects work.

Thank you, Leila, for setting that high bar of an introduction. And good afternoon, it's really an honor to be able to share with you our strategic vision on how we see creating opportunity, and leveraging these mini market dynamics and drivers to accelerate growth in our projects of O&M business. So for us, and looking at these drivers and George mentioned a few of them already, drivers for the need for resiliency, the drivers for that deferred maintenance backlog that's driving requirements for modernization of infrastructure. And certainly, for all of us, the urgency with the global call for accelerated climate action and decarbonization. So for us, aligning those drivers with our expertise and with our experiences, allows us to be well positioned to continue being a leader in developing and bringing these clean -- comprehensive clean technology solutions to our customers. Solutions that have meaningful impact to them by bringing in -- responding to their urgent needs for infrastructure, but also being able to provide a long-term solution to address their sustainability goals. So what does this really mean? And how do we see this in our project business? And why we see such an opportunity for transformative growth on this? I want to step back a little bit and talk about the evolution of our project business and how we've been able to, as a company, adapt and integrate these changes in technology, the advancement of this technology, but also bringing in the right resources as we have been developing these to align with that changing technology and making sure we have the right people on our team, but most importantly, to maintain our nimbleness. So this is really what distinguishes us from our competitors. It's being able to be nimble to develop solutions around customer drivers, customer needs, rather than trying to develop a solution around a particular technology or even for a certain type of product. George mentioned our differentiator as being technology agnostic. Being independent, again, drives that nimbleness. So just looking at this, and I thought this would be a great way to kind of build up, and this is going back for some -- our 10, 20 years ago in some of our project -- earlier projects. When we used to get developed projects, we would look at doing stand-alone measures. So what this means is we might have a project that does simple lighting replacements or maybe we go in and we do a one-for-one replacement on a chiller. And we would gain some efficiency because they're usually 20, 30 years old, and there's a newer technology out there. But what it didn't do, it was just stand-alone on each one of these. And this provided energy savings, but what happened in the past 10 years, maybe even longer now, we saw a great advancement in smart controls. So this really changed how we could look at projects. And what this did was then integrate these solutions together. So we now have the ability to be able to take the lighting project and to take the heating and ventilation upgrades and really tailor them to the occupancy of the building and be able to then rightsize the actual central plant systems like the boiler and the chiller. So by having that smart controls element in there, it really pushed the envelope to a new concept called Deep Energy Retrofit. So instead of going in and maybe having a 5% or 10% energy savings, we now sell numbers greater than 30% even at 60% in some of our key -- some of our projects that we did for GSA. So this really changed the way of how we looked at projects. But what also allowed for us to start bundling on-site generation in. And so -- and what happened with this is we can now afford to bundle into this scope of work on-site generation. We started installing solar on rooftop, solar in parking lots, geothermal systems, even looking at doing cogeneration where some of our customers had the thermal load. So again, what -- from our perspective, our scope increased. We are now just not looking at the building scope, but also for the scope of the energy supply. This also created a new opportunity because we are bringing in these new technologies, this new solar system, this more complex integrated systems in the building, the need for customers to have an ongoing operation and maintenance service. So in most of our projects now, not only are we doing a project solution, but we're also providing usually a 20-year service contract that maintains -- operates and maintains these systems for them, providing the performance assurance, providing the savings reality each year. So this has given us a whole new way to look at our project business and what it can do is produce the reoccurring revenue on the operations and maintenance side. So this is great. And customers are now realizing energy savings, emission reductions, but new drivers occur, and we see the need for resiliency. The last 2 or 3 years, we all experienced the need for flexibility in how we live, how we work. And so this kind of drives us into our next stage of this, where we're looking at how we can have -- deploy fast-reacting new systems like battery energy storage systems, like microgrid, so that we can truly be interactive in what we're doing inside the building with our asset management as well. So this created another opportunity for us and then also extends and connects us from what we're doing in the building from what we're doing into the supply side. And that's the distribution system. So now our scope is increasing to tackle challenges with the electrical distribution systems or steam line systems, going in there and having ability to replace or add replace substations or connect it with that while we're doing some of these other measures. So again, growing our smart approach. But what's really exciting now for all of us and where we are now is how -- or -- how -- what we're able to do with this data. So now what we have in technology is the ability to bring in all of this data and analytics and the power of what those analytics can do. So bringing in the data from building management systems. Bringing in data from our plant central plant data systems, our solar system, and then also bringing in utility metering from the different building levels. Putting this into one central energy platform and then tying that with also utility inputs and how the utilities that are supplying this energy are interacting and also weather creates a whole new way of looking at energy and creates a true smart infrastructure solution. So this data and analytics then allows us to do true asset optimization -- allows us to seamlessly control when solar will be deployed or storage, we're using our battery stores to be able to sign the best time of use for that storage in conjunction with the solar to maximize that output to the load of the customer. It enables us to do fast load shedding and buildings, taking off noncritical loads and a building to be able to react and respond to a peak rate from the utilities charging this. And what's also even more exciting is this brings us back into the maintenance space because now we have this intelligence, this AI capability to really do predictive maintenance by recognizing patterns and equipments and then having an actionable feedback to be able to respond to this, again, creates this true energy at its best. So for us, we're really excited about this opportunity and we can use this as a blueprint for several different customer sets, taking this approach, whether it be for a college campus or for our military customers or even for an enterprise of our health care facilities. This is something that can be applied and have significant results on decarbonization, on sustainability, on reliability and resiliency. So what does this really mean for us in Ameresco, -- what are we doing? So as part of our corporate strategy team, what we are trying to do is make sure that we're continuously going and looking at new technologies and advanced in technology because this is what we've been doing. -- not just in what's coming -- but -- I'm sorry, on the distributed generation level, but also back in the building level, continuing to follow best new technologies in air quality. There's new products coming out all the time now to be able to provide higher quality indoor air ventilation strategies, looking at smart controls even, I mean where you can sense almost about anything right now, but being able to capture that in the most meaningful way. And also looking at even like water conservation. I mean we typically, I did mention this in the first one, do simple faucet aerators and bathrooms, but now being able to actually look at the advancement in that technology and how we treat water and how we reuse water is an important part in the solution as well. And then on our distributed generation side, continuing to look at the advancement in the battery storage market. We're all excited to watch this market grow and come out with more solutions for a longer time duration of storage and again, provides energy transformation of opportunities with that. And then getting into the EV infrastructure. This also opens up a whole new place for us in our solutions to now take vehicle emissions and vehicle and do you look at opportunities to create part of the whole energy demand management for our customers. And certainly in the on-site generation, and this is probably one of the ones I know Michael will talk about this, too, is just the need for firm clean energy. Solar is great and wins great, but it's also intermittent even with battery solutions, but having firm renewable energy on-site using biofuels, using hydrogen -- is an area that we will be watching that we're hiring resources for to make sure that we're ahead of this and ready to be able to do it with our customer. The other approach that we've done very well at the company and we are continuing to do is making sure we're identifying the right opportunities to try these new technologies. George mentioned one earlier and about our Savannah River plant. Well, that stems from doing a very small $3 million project about 20 years ago, for the National Renewable Energy Laboratory. It was just a demonstration of being able to use force residue in a heating boiler, that project gives us the experience. It gave us the resume to at least start to be able to do other ones and led to us winning our large project, marquee project for the Department of Energy at Savannah River. That project turned into a 20-megawatt generation project using all forest residue. And this is our 11th year of operation on that. So again, looking for those opportunities. Same thing on battery technology. We were able to do a project for the Portsmith Naval Shipyard where we were able to demonstrate battery and microgrid concept on a smaller scale. -- but then that launched our resume and our experience and our credibility and talent to be able to do it in several other federal projects and even gave us the resonate to help compete on our large Southern Edison project that [ Britta and Doron ] will talk about later. So these are the things that's part of our strategy group to make sure that we're doing that. Another technology too is just starting with small street lighting project in the Northwest. Having that knowledge, again, working with the different vendors. -- becoming lessons learned that we have there on a smaller scale was able to give us the capability needed to win the big city of Chicago Street Lighting project. So these are all important parts of our strategy, monitoring the advancements in technology, bringing on the right opportunities, but then bringing on the right team to be able to have it at a corporate level that can help all of us in our business segments. -- stay up, stay trained on this. And George mentioned Jim, who's been here forever with me, too. So having Jim evaluate these technologies with our group, but also we've already made a new hire this year someone that's an expert in EV infrastructure. We hired a person last year that has hydrogen experience. So having these resources that can be used throughout the corporation and provide the training and materials again, sets us up well and set us to be able to do this comprehensive smart energy approach. And last -- latest one that we've also been hiring is our cybersecurity because looking at this you see this fast collection of data that's coming through and a lot of very secure data. And so it has to have the need now for the cybersecurity play. So that's another part of our strategy is making sure that we're setting up not just at the project level, but at the company level to be able to meet the stringent cybersecurity requirements that our customers have, but also that we have as being that developer. So this is our approach. And again, blueprint that can be provided across our different customer segments. So to really make this real, I thought we could walk through one of our most recent projects because this ties in nicely the information that I just delivered into one project that we just kicked -- or did the groundbreaking for back in January. And this is for a project that we did for the U.S. Coast Guard at Petaluma, California. And this one great thing about this project is this is the fourth project we've done in the Coast Guard. So they haven't chosen anybody else but us 4 times in a row, which is always good to know. But why we won this project? This is -- thinking about the customer driver and with how we developed a solution for this. This is a customer that's in Northern California facing frequent rolling black outages, blackouts, losing power for safety shutdowns because of all the different events in Northern -- in California. And so they wanted a resiliency solution. They are the first line of response for this community from the fire department side, so losing power for them is just not acceptable to them or to the community. So we came in with a solution that first built upon their efficiency, their energy efficiency, because, again, the best way for resiliency and for emission reduction is the cleanest technology of all, which is energy efficiency, reducing their load. So continue to do that, and we're able to put in lighting, some more lighting, some more additional building controls. But then we were able to match this with a new asset here. And so we put in about 5 -- or putting in it about 5 megawatts of solar. We're putting in another -- a little close to 3 megawatts of battery. But this will enable the Coast Guard to have green energy for their entire load throughout the year, but also gives them that resiliency so that if they do and when they do lose power, not if, when they do lose power, they're able to shift to this microgrid that will allow their use -- enable the battery to let their solar power run them and then at night time, it goes to the battery. So this is game-changing for the Coast Guard because, again, it allows them to have continuity of operations. But it's also a great project because it shows how we bring in our skill set. This project also included an innovative financing structure where we were able to do an energy as a service agreement within the project contract. And why is this important? Because this one, we will actually own the solar system and the battery and the microgrid over the 20-year period. And this we were able to leverage the investment tax credit, leverage other utility incentives. And that brings value to the project. So in this particular case, this allowed the Coast Guard to add EV infrastructure into the project solution. It allowed them to also do replacing some aging transformers that are critical in their reliability solution, in their electrical distribution system. So again, addresses the customer, expands our scope of work, aligns all, and it really demonstrates our ability as a company to have a great project solution. It brings in our O&M business and also our experience and expertise in the asset business. So this project should go online in late 2023 and set to be carbon neutral in 2024. So -- with that, I just wanted to end the last bucket of our strategy, and that's the policy because this is also really exciting right now to see another alignment in this time right now in the industry. And having -- we're actively engaged with legislators and advocacy groups to make sure that we're utilizing policy and federal funding to further accelerate this clean energy transformation. We're particularly excited about how this federal funding that's in the current infrastructure bill to stimulate the R&D needed for technologies like hydrogen to be able to fund and bring money into our projects for much-needed transmission line upgrade, then for other EV structure and this drive for electrification. So -- that's just another way we think this could further accelerate our growth in this already exciting time. And certainly, mentioning just from our recent executive order [ 1 4 0 5 7 ] on -- this allows -- gives us a driver to encourage agencies and government agencies to use performance contracting, which allowed a lot great comprehensive scope that we just showed. And to be able to really use that as a mechanism to get to clean energy solutions to get to decarbonization. So this -- again, we're excited about this. There's a lot of information to digest in the past 15 minutes, but we'll pause here and answer any questions at this time.

Thank you, Nicole. And if anyone has a question, just please raise your hand. We have a few folks with mics around the room. Any questions from the audience?

Nicole, when you're trying to get a contract like this one, who are the competitors? Who's losing?

Well, so this particular project is against our federal competitors. And -- who's losing -- everyone's losing, but us. I mean, we won so that's an easy answer. Yes. No, I think -- again, I think for us, what helped us win this project opposed to some of our competitors, like some of the controlled companies or some of maybe the utility companies is, again, the technology agnostic differentiator because we were able to come in and actually provide a solution to them that wasn't set to what they were trying to offer. So the Coast Guard, this customer, particularly very much value that. So I think that's one point. So without naming the list of the competitors. But in our space, I think there's 2 differentiators, that independence, but also just our deep bench of expertise most of our competitors that we see don't have, that -- they have to bring in outside people to this. And being able to go to the table immediately and be able to talk to our customers directly goes a long way, especially when you're -- they're trusting you to be able to do something like this, that they're depending their operations on for 20 years, that goes a long way.

I'm not asking you to respond to this, but I understand your score is the highest at DOE for performance contracting, right? And the score is a very large part of how the customers, both in DoD and the rest of the federal government, evaluate competitiveness. Instead of responding to the fact that you're the highest, can you maybe discuss a little bit about what goes into the scoring process? And why Ameresco scores so highly versus others like our friends at Johnson Controls, it's screwed up on the sodium contract and things like that. I mean, why do you score so well?

So I think that's an easy answer. And that's because our -- you're referring to our major IDIQ. That's our contract umbrella to -- that opens up the world of performance contracting in the federal space. But one of the reasons that we are is just past performance. So being able to have projects that encompass all these technologies and have the deepest impact goes a long way with -- when we're being evaluated for these large IDIQs. And being able to have success in meeting our savings and our flexibility in that when something does go wrong and there is an issue, we respond right away and we make that replacement so that there's not this long shortfall in savings. So the reputation and the resume of experience, I think, are 2 of the biggest things that drove those scores.

Looking at the numbers, historically, for infrastructure investment, $550 billion over 5 years in new spending. Is that totally -- is that part of the investment totally addressable by your products and services? How is that related to your $80 billion of addressable market in that kind of a context? And if I do the simple math, if it is totally addressable, that means it's going to be -- it's going to double your addressable market, more than double, I just wonder, I mean, these are big numbers. We just wondering how much is your [indiscernible].

[indiscernible] And I think for us, watching how they're setting up these new programs, and making sure we're doing what we need to do to advocate how this money can be spent in real project opportunities, at not just the federal level, but also at the state level. I mean, we're meeting the state energy offices drive and bring that money into solutions that will have the most impact in this. So as far as how that integrates into our addressable market, I think there is certainly some overlap because there would have been other avenues of money that might have come into that play. But this is why we think this is another way to accelerate our growth. It's because this has potential to even drive these projects and bring in money outside of our typical savings model. And being able to bundle that additional funding with the savings because leverages, I mean, you're already leveraging the sunk cost of developing a project and so you can just make it a bigger project for our clients that has the bigger impact.

Does the previous expansion of the market size already incorporate this $550 billion?

No. No, because that was done before this past. So...

Before the [indiscernible], right?.

Before the [indiscernible]...

Thank you for questions. We're going to move on to the next presentation to stay on schedule and there will be other opportunities for questions along the way.

Thank you. And now I'm excited to introduce Mike Bakas, my counterpart and partner who heads up our biogas asset and has kind of been the pioneer in this green gas space. So look forward.

Thanks, Nicole. Okay. I'm going to take a little trip down memory lane to give you some more color as to how and why we got into energy asset development. About 22, plus or minus, years ago that I was at home during the weekend and my phone rang. Picked up the call and it was George. So about 3 weeks prior to that, George has made a decision to step down from running an organization and he had founded and had ran it for a number of years in the energy services industry. And George said to me, he goes -- after a few niceties, he said, "Hey, look, I think I'm starting to annoy Kathy." Kathy being his wife. He just told me, "I need to go get a job, so let's all get together and let's talk about some things I've been thinking about." So shortly thereafter, a few of us got together as a small pub outside Boston. And for the rest of the night, fueled by a few bottles of wine, George sketched out on cocktail napkins his vision which would ultimately become Ameresco. And his concept was, "Hey, look, I'm going to take some capital, and I want to go out and I want to buy a few platforms." So we were just a few people with nothing. We need the licenses, we need the talent, let's bring that in-house. We'll create an energy services business that will create a tremendous amount of cash flow. But from that cash flow, we're going to take and reinvest into the company by investing in energy assets that we will own and operate for its life. And George had 3 real main purposes for that or reasons behind it. One, it was differentiated, it gave a customer options. At the time, many customers, and it's relevant today, are faced with tremendous capital spend on infrastructure improvements, boilers, chillers, cogen plants. And they, in some cases, a, don't have the capital; or b, they have it, but they don't want to invest in a noncore business and want to invest in their core competency. And in many cases, they want to transfer risk on their balance sheet of an operating asset like to a third party, like Ameresco. So in his mind, this was a big differentiator because no one at the time was doing this. It's truly energy as a service before that got coined. The second reason was it was recurring revenue. George thought that was valuable. He said, "Hey, look, can you imagine if in a number of years, at some point, we can get off the treadmill a little bit, and 30%, maybe 40%, maybe 50% of our EBITDA where it come from is these recurring streams. And if you look back in 2021, we actually hit 65%. Now knowing George, he's probably increased the bar a little bit more. That's what he tends to do, but we won't give him any ideas. The third is a very important one, it's extremely relevant today and that was control the asset. George felt over time as advanced technology improved if we owned these assets, we can continually actually generate additional output with less input by improving the efficiencies. But more importantly, by controlling the asset, as new opportunities evolve, and he felt that the energy industry was ready to be turned on its head, that there's going to be a lot of other opportunities that those assets could be mindful of that we haven't even budgeted in the pro forma models. And I'll show you not only have been doing that, this is just accretive uptick on our return. Not only have we been doing this, but coming down the road through the, I think, through the EPA, we'll see some changes in our addressable market, which will expand. And we'll be able to tap those operating assets that we've been owned and operating since we started the company to extract additional value. So as you see in the chart here, we started early on developing assets as simple as peaking plants and wholesale power generation to district thermal plants, moving on to cogeneration, renewable natural gas plants, solar, battery storage. And last month, you heard we announced our first hydrogen pilot. So you'll continue to see these advanced technologies progress as the time line moves along. But I think the most important takeaway for you folks today on the asset side is that we are truly an organic growth story, both historically and moving forward. Look, it's really easy to take a blank checkbook and go and buy a bunch of assets but that's not a long-term sustainable business plan. Our history shows that we've grown organically, and we will continue doing that. We will have selective acquisitions, but ultimately, the growth will come from organic. The 2 of the great catalysts in our organization on the asset side, were obviously green gas and solar. Jon Mancini is going to be up here at the next session and he'll talk a little bit about the solar. I'm going to spend the next few minutes really focused on the green fuels. So we have 4 RNG plants in operation. We took our first one commercial in 2010. So we've got to be operating -- while we've been operating biogas plants for 22 years, we've been operating the RNG plants for the last 12. So we're not new to the industry. More importantly, on the last earnings call, you heard George mention that we have 3 years visibility with 17 plants in various stages of permitting and construction. In addition to that, we have probably another 2 or 3 years beyond that are on early-stage development projects. They're in the pipeline. They have more progression to go before we want to add that to our backlog. But that gives us about 5 or 6 years of visibility on the pipeline for the asset side. But to support this effort, historically, if you look back, we've got a great foundation of technical talent. We kept growing that to support this kind of growth, to get to a point where we can bring 5 to 6 new RNG plants mechanically complete each year. In 2021, we doubled the size of our engineering construction talent. And we didn't just do it with bodies. We did it with people that have been in the industry for years, specifically permitting and building, and engineering renewable natural gas plants, so that we could hit the ground running. We also added to the sales staff, the development team, the finance team and the legal team. And all this ultimately culminates into that growth model I was talking about, builds a great foundation. You'll see, I think George mentioned that we have a number of plants to be coming online over the next few years. In 2022, this year, we expect to bring a 22-megawatt equivalents online or mechanical, I should say. Just keep in mind when we're at -- the time from mechanical to the time you actually start seeing revenue is typically 3 to 6 months. So those assets probably won't be showing revenue until next year. Look, I mentioned in 2010, we took the San Antonio project commercial. That was our first RNG plant. But we weren't sending it to the transportation segment, we were actually transporting it through the interstate pipeline to Southern California where we were injecting into a cogeneration plant owned by a municipal light department who was producing green electricity and green thermal. That went on for quite some time until the RFS program started to develop. And then we, like others, started moving more of our gas to the transportation sector. What I would suggest to you today is that in the long term, the real growth story is going to be the nontransportation sector. That is 440x the size of the current addressable market for RNG. And what I love about it is that Ameresco has been fully entrenched in that market since we started the company. We worked with universities, health care, the municipal market, C&I customers. Those will be the buyers of the RNG, of the green hydrogen, they'll be using carbon sequestration. And our team has been doing it from the get-go and they've been doing it with no upfront capital through energy savings performance contracts. We're able to help customers reduce their consumption, save energy and yield positive cash flow. Our focus is net zero, and these things will add to that benefit for the clients. Look, the market trends are obvious. The sustainability train has left the station, and it's picking up a lot of steam, and it's not going to slow up anytime soon. As George mentioned on Tuesday, we even saw the SEC proposed some rules regarding public companies now need to report the risk of carbon on their balance sheet. I think that's a given. But what you heard from Nicole is that on the projects business, we've seen an incredible uptick on integrated microgrids for resiliency purposes. But through resiliency, it is defined typically as the ability to withstand a multi-day outage. And as what she mentioned is to be able to provide that kind of resiliency is unlikely to come from intermittent resources such as solar and wind, even with battery storage attached. You're going to need baseload dispatchable fuel. Period. To do that, you're likely going to use natural gas because that is really the one form that's out there that people are using for that kind of a baseload fuel. But now we have a conundrum. We've got customers, our customers, that they want the resiliency, but they also have sustainability objectives. And the 2 are kind of opposing each other. That's where, again, our addressable market for green gas is going to explode because, again, RNG and green hydrogen are all baseload dispatchable fuel sources that will provide the multi-day resiliency that our customers are looking for. Other growth drivers, a lot of activity at the state and municipal level with the PUCs. You heard about California, just implemented the first thermal RPS in the country. So 12% of all the gas going through the pipes in California is going to have to be RNG. All the utilities are putting out RFPs now to decarbonize their pipes with RNG. I just had another one issued to us yesterday by UGI, which is public. So that kind of activity level continues to drive the market. We've got public and private companies trying to meet their ESG goals. You put all this together, and it actually presents an incredible amount of new opportunities for Ameresco beyond business as usual. First and foremost, we're going to be able to expand our green fuels business that is based with landfill gas and wastewater treatment biogas and slowly transitioning into the nontransportation sector. We're going to start developing a dairy and swine project to ultimately provide to the transportation sector. We are already evaluating carbon capture technology. We've got actually pathways refined to the commercial markets for the carbon. Hydrogen, we announced our first pilot in February. And it's interesting. I'll talk a little bit about it in the next session, but you keep hearing about electrolysis, of course, which is expensive. And we'll be able to actually use some of our assets for electrolysis. But 95% of hydrogen produced in the U.S. today is through SMR. It's essentially using high temp steam through -- in a catalyst to change -- to break down the CH4 molecule to create hydrogen. And we'll be able to do that with some of our existing assets where there's opportunity for organic diversion because of legislation like SB 1383, and obviously an interest from communities and stakeholders because we really need that to make organic diversion work. We'll selectively develop some projects. But going back to my original statement at the beginning, we're going to leverage our existing assets to extract additional revenues that were unbudgeted and not accounted for in our models. We'll take our green power plant assets. Look, we're Godly optimistic that the Biden EPA will shortly approve additional pathways, possibly for e-RINs, possibly for hydrogen. If that happens, again, our addressable market expands and blows up. Ameresco will leverage our power plant assets to potentially provide additional revenue resources for e-RINs and we'll leverage our RNG assets as potential feedstock to create green hydrogen. Our competitive advantages are simple. Going back to what Nicole had mentioned about the projects business. We have a proven track record. Look, we're not a roll-up of a multiple -- a number of different companies where this is the same team that has been doing -- they did the first project back in 2000, and we've continued to grow that team and add the resources. As a side note, one of our first biogas plants was a BMW project and through energy-as-a-service. That is now in its 20th year of successful operation. We have a deep bench. Look, you're only as good as your people. And I think the industry would agree and support us stating that our development and technical talent is some of the best in the space. But the most important one is the position we enjoy in the market. I mentioned that in the nontransportation sector is the future growth opportunity of this marketplace and Ameresco has been entrenched in that space since we started the company. We're helping customers address their carbon footprint and get to net zero. And whether it's RNG or green hydrogen or carbon sequestration or anything else that comes up, those are additional measures that we will bring to the bear for the customers' benefit and incorporate on in these 15- and 20-year agreements we already have. So I leave you with the simple message that when you think about energy asset development in Ameresco, we have historically been, and we'll continue to be growing organically, which I think is a very successful business plan. I think at this point now, we're going to transition to our panel on renewable -- on our assets.

Good afternoon, everybody. It's good to see a lot of familiar faces out here. My name is Mark Chiplock, Senior Vice President and Chief Accounting Officer, I've been with the company about 8 years. I'm responsible for the company's global accounting operations, taxes, FP&A and SEC reporting. I think you're really going to enjoy this next discussion. We're going to focus on the company's investment strategy related to its energy assets business. We're going to talk about how the company makes its investment decisions for various asset classes. We're going to talk about how we compete and win in different asset markets. And we're going to talk about how we'll continue to grow our asset portfolio, both organically and through some opportunistic M&A. We've got a great panel assembled. And I'll just do some quick introductions. Got a chance to hear from Mike Bakas. Mike is an incredible member of the team. He goes back to the beginning of the company in 2000. Clearly, a giant in the green fuels space. And so we're just lucky to have him here. Many of you know Josh Baribeau. Josh is the Vice President of Finance. And many of you probably know him from various investor events or other corporate communications. But Josh also plays a big role in project finance, M&A for the company as well as strategy around corporate finance and capital allocation. And then Jon Mancini, who is our Senior Vice President of Solar Development, a relatively new addition to the team, right, Jon? About 2020? Yes. So Jon's team is responsible for originating distributed and greenfield solar projects for the company, primarily in the Northeast and Mid-Atlantic region.

So I'm just going to start with some questions for the panel. We're going to go through that, and then we'll open it up to Q&A towards the end. Mike, we're going to start with you. I'm going to pick up on something that from your last presentation. As the sustainability market continues to evolve, how do you think the nontransportation sector customers are going to evaluate these alternative fuels?

It's a great question. And I think you got to go back a little historically. So when we first got into the biogas business, a lot of our customers were really looking, what's my premium of green versus brown? We saw that in the solar business, too, what is it on $1 per kilowatt-hour basis. And what's changed for us is that it's the whole idea of the carbon footprint and the carbon risk on the balance sheet. So now let's just take a typical university that says, all right, I got 100,000 tons of CO2 on my balance sheet. What's the optimum way and the lowest cost to get it to zero? And so people are starting to evaluate technologies on a $1 per ton CO2 reduced. And that's where green fuels has a big advantage. Look, RNG ultimately replaces one-for-one methane in the natural gas, which is 25 to 30x more potent in CO2, reference gas for global warming. When you look at cost of RNG on a per ton reduced basis, it's anywhere from $55 to $300 per ton. When you compare it to other things like electrification, electrification is $550 to $800 per ton. And it's not to suggest that electrification isn't part of the carbon neutrality puzzle, we believe that actually there's going to be a lot of different things that will be part of the portfolio mix to get from -- to get to net 0.

Great. Thanks, Mike. Jon, I'm going to come to you. Solar is clearly a competitive industry. Can you talk about what Ameresco -- what differentiates ourselves in the solar space?

Yes. Thanks, Mark. I would say that one of the biggest differentiators for us that gives us a strategic advantage is our history. We're not just a solar company. We're also an energy services company So a lot of our competitors are solar companies, that's what they do. But here at Ameresco, we can offer multitude of solutions for our customer base, whether it's behind the meter, in front of the meter, carports, pairing with batteries. So we do have a lot of different advantages to be able to attribute to the solar space. And then one of our other biggest advantages is our vertical integration. Not only we'll be originating sites for greenfield development, but we're also designing the sites in-house. We're also constructing the projects with our in-house construction team. And then lastly, and one of the more important aspects of this is our O&M group. We're able to efficiently operate our projects to squeeze out as much profitability as we possibly can and minimize any downtime. So it gives us a great advantage in the marketplace.

That's great. So you mentioned that we're vertically integrated. I mean does that have a direct impact on profitability?

It does, yes. Yes, it does. It gives us -- every little bit helps in this market.

Great. Thanks, Jon. Josh, I'm going to come to you, and I want to continue on the profitability point. As someone tasked with making capital allocation decisions. How do you think about profitability? And importantly, how should our investors think about that?

Sure. So there's not one key metric that defines profitability for us and how we allocate our capital. Any capital project that we invest in, whether it's an energy asset or even of some sort, that can produce pretty strong EBITDA. But we also make sure that all of our investments generate strong net income by the time we factor in the depreciation of the asset as well as the interest expense. So we certainly take a look at the P&L metrics, but we also take a very hard look at the cash metrics, cash-on-cash return, simple payback, the internal rate of return always has to be above our cost of capital. And when we're choosing to invest our scarce resource, this internally generated equity, we always direct it towards the projects with the highest returns from those cash perspectives.

How about operating leverage? I know that's a metric that we tend to focus and talk about quite a bit. Can you talk a little bit about how you think about operating leverage. I mean, obviously, we want to generate more gross profit dollars and generate them faster than we're growing our OpEx. And maybe you can just talk about that a little bit.

Sure. So I think the best way to answer that, first and foremost, we're a customer-focused company. We have the opportunity and the option to invest our own equity in projects or if the customer wants to own that project, we can perform that as a design build for them. And how we're able to do this is we've got all the same people, the same teams implementing these projects, such that if the customer does want to own that, we don't have to hire new staff. We don't have to invest in more overhead, et cetera. So we can implement these projects on behalf of the customer and all of those gross profit dollars, even though they might be at a lower gross profit margin, they flow straight down to operating income and then a large portion of that into net income.

Thanks, Josh. Mike, I'm going to come back to you, and this is again something that came out of your presentation previously. You touched on the hydrogen pilot. Can you talk about how you think Ameresco is positioned to take advantage of the hydrogen opportunity?

Yes. I think you saw from Leila's chart that this is going to be -- the market is going to be pretty robust. And I think what we're going to try to do is focus on where our strengths are. And where we have our strength is essentially is in the assets that we have in developing on the biomethane side. So we're going to try to leverage our assets to our advantage, and [indiscernible] is a great example, right? So we have an RNG operating asset in Phoenix. We're developing one now in L.A. The I-10 corridor connects Phoenix to L.A. And that's really where the long-haul heavy-duty vehicle sector is rich for us. And that's the best market for hydrogen. So what we intend to do is ultimately connect it to [ bookends ] and create hydrogen fueling stations, again, using SMR with our renewable natural gas as the feedstock to create that hydrogen along that whole corridor. And I think those type of projects will bode well for us because we'll have a competitive advantage versus just greenfield development in hydrogen against folks that are maybe looking for more utility scale.

Would you be able to tell how big of an opportunity it could be for Ameresco?

Well, I think there's no ceiling. We don't put a ceiling on it for us. I think the opportunity is tremendous across the entire space. At the end of the day, this industry is going to require baseload dispatchable fuel, whether it's for transportation, aviation, end-use devices, and that's where I think that's a sweet spot for Ameresco.

Thanks, Mike. I'm going to come back to you, Jon. Batteries, can you talk a little bit about batteries? Where is that market headed? And what do you think our strengths are in that market?

Yes. It's -- the battery side of the equation has started to come into focus for us. We have started to pair battery storage with our solar projects in certain markets where it makes sense. And that's given us a great advantage to be able to maximize the profitability on those projects by playing in ancillary market streams. We're also looking at pairing battery storage with some of our customer base behind the meter, where there is high demand charges. We're also looking at working with utilities and helping along resiliency and being able to help some of the smaller utilities manage some of the demands around their customer base. So we feel that it's a very exciting opportunity right now. We're just getting into it, and we think it's going to be a strong market for us.

That's great. And I'm going to ask you the same question, can you tell about how big that opportunity could be for Ameresco?

To Mike's point, I think it's limitless. But at the same time right now in the certain markets we're looking at and working in, we're estimating right now it's about 25 gigawatt hour market for us in the small markets that we're looking at right now.

Wow. Super. Okay. Thanks, Jon. Mike, I'm going to come back to you. So we continue to see many developers who's looking -- who are looking to secure third-party monies, who are interested in investing at the project level. Can you talk a little bit about how that impacts Ameresco's competitiveness in the market?

I think it makes us very competitive. Look, when third-party equity, first of all, the transaction costs is raised, it's not cheap. It's not inexpensive investment dollars. The fact that Ameresco itself generates its own equity is tremendous. It allows us to begin the development immediately. You don't have to wait for capital to start getting into development. It allows us to be selective on how we structure deals. Look, when George started the company with his own capital, part of the reason was he didn't want to do -- he wanted to be able to do long-term solutions for the company and growth and not be beholden of someone that is dictating how we grow as the company for the long term. It's the same thing with the asset business. You want to be able to structure a particular deal one way and you might structure it differently another. We might want to go more fixed on our offtake and less fixed on another. And as you can appreciate, in the fixed space, for especially green fuels, right now, the discount factor is huge. So why do that? I also think that you're able to -- over the life of the asset, you're able to make strategic decisions that a third-party equity investment might not want to do because it might not necessarily be in their best interest, but it's in the best interest of Ameresco as a whole. Josh, you have talked about this at length and bantered back and forth because you're always trying to optimize the best way to finance these projects. And what do you think?

Yes. I think you hit the nail on the head. There's probably 2 key reasons or 2 key benefits not having to source significant external equity. One is the restrictions they place on you. It's -- I think even private equity tends to be short-term focused, where we tend to be very long-term focused. And when we control the asset and we can make decisions based on the long-term value and the various multiple value streams that can come out of that asset, things that we haven't even really thought about yet. That gives us an advantage that we don't have to just meet short-term metrics. And the other part is time to money. It's extremely difficult to raise equity. I know a couple of deals were printed recently. But I can assure you, those are pretty challenging to get done both on the private side and the public side. So time to money, time to investment decisions. Folks in this room, you're basically looking at our investment committee. You'll bring a deal, Doran and I will look at it, then it goes to George, and then we're done. There's no bureaucracy. There's no sort of external partners that control the timing and the flows of the equity.

I think it's also a competitive advantage in that we found, we early on, some of our business partners were concerned over, all right, you guys are here, you do a deal, are you still going to be sitting across the table for me in 3 years? And I mentioned the BMW project, right? I signed the contract. I'm still here. I'm sitting across the table, we're renewing the contract. Customers like that. They don't want someone to come in and potentially be gone in 3 years. They want that long-term marriage. And I think it gives us a competitive advantage.

That's great. Thanks, guys. Josh, I'm going to wrap this up with you. You lead our M&A efforts. Can you talk a little bit about how the company thinks about and approaches acquisitions?

Sure. Exactly the same as I described a couple of minutes ago. It's -- we have a scarce amount of capital and we allocate that scarce capital to the highest returning investments. We want to make sure it's always accretive from both an EBITDA, but more importantly, net income perspective. And then we also look at the cash-on-cash returns. But Ameresco, as George had mentioned, Ameresco has been very acquisitive over its 22 years. We were founded 2000, we wrapped up a bunch of companies as utilities. We're divesting them in some other strategic businesses around the country and even internationally. So we always make sure there's a strategic fit as well as a financial fit. And we're very disciplined just as much as we are on the asset side with the M&A side, it has to be a good fit for us.

And I know you guys are always busy on the M&A side. Do you have a specific target for M&A growth?

We don't. And that's, I think, one of the advantages, as you saw in Leila's presentation, Mike talked about it, you'll see some other market sizes a little bit later. Our addressable markets are growing pretty significantly. We're gaining share within those markets. We don't need to bolt on other businesses just for the sake of growth. Now when we see something that's interesting for us and the valuation makes sense, we'll certainly take that down. But we don't have to acquire companies to grow. So it is very opportunistic, so...

Sure. How about Europe? So a lot of the M&A the company has done in the past has been towards geographic expansion, what if anything, are we doing in Europe?

Yes, Europe is a very interesting market. I think they've been way ahead of us in terms of energy consciousness in the price of energy. And obviously, the tragic events out in Eastern Europe are, I think, just even heightening people's focus on energy resiliency, energy security, et cetera. So we're definitely keeping our eyes open for that in that market. And what's interesting is that we don't have to acquire a business that's already #1 in its space. That tends to be where you have a lot of -- where the valuation might not make sense for our own metrics. So we have the opportunity to even take on maybe smaller businesses and transform them with our culture, with our infrastructure and our resources to turn those into a stepping stone or a platform within potentially a new geography. A great example you might hear about it a little bit later from Britta. We acquired a small energy consultancy in the U.K. 5, 7 years ago, and under her leadership, it's now the #3 energy services company in all of the U.K. So we were able to take that small business as that stepping stone and turn it into something really impressive.

Great. Thanks, guys. That was a lot of great information. Eric, I think you said we are going to open up to some Q&A.

Thanks, Mark, for that fascinating panel. We have time for just a couple of questions, then we're going to roll into a break after that. But let's take our first question over here.

Nice job, Josh. I guess if I could just ask a little bit of a prickly question here. A lot of what you've talked about, if I looked at it from a few months ago, I would say, has been -- is excellent, but the world changed in February 24. And a lot of what's being discussed is what's more important, 440 parts per million of carbon versus a 500 megaton warhead. And so you're seeing -- we have experienced a historic low of defense spending as a percent of GDP. Literally, it's 4.5%. And so as that goes up, there's a risk in terms of where does the money come from. And if we look over the past 10 years, we've increased. Debt is 4x the rate of GDP, which has allowed us to tap into -- I think of it as like a bigger straw going into the terrasphere to bring out more natural resources. So I guess one of the questions that I have is I don't see nuclear anywhere in terms of -- and would think that particularly on the project business, that would be an area of potential expanding. And I've heard a lot of green hydrogen, that's an 80% round-trip energy tax in terms of the production. So I'm curious how you're thinking about the relative value of these different technologies is there's probably going to be more focused on in a tighter inflationary environment. So I know it's not sort of rah-rah, but I'd like to kind of hear the -- how you might respond to...

Sure. I'll start. And maybe, Mike -- certainly, anyone else's opinion too. So I think just maybe first and foremost, most of what we do doesn't require any government funding at all. I know Nicole concluded her presentation with some additions to our total addressable markets and maybe some catalyst to spending, but the core markets that we operate in, and this is what George was trying to drive home, are driven by energy savings. And it can be as simple as turning these lights off, right? That saves energy or replacing old lights, old infrastructure with new infrastructure. Very little, if any, of our projects business comes from any government funding whatsoever. So whatever happens to the government funding side, if dollars are shifted to defense spending or something else, customers are still going to be able to save money and upgrade their aging infrastructure based on the things that we do. Mike, do you want to talk and maybe give some new...

Yes. Well, I want to jump on what you just said, and I'll talk about the green fuels for a minute. If you go back historically into the efficiency market when times got tough, our business got better. People are looking to cut costs, we help them do that by reducing their consumption levels. So our business -- I want never wanted to use the word inflation-proof or it's resilient, but it really is. I mean, people are looking for us to help them reduce their operating costs. As far as the green fuels business, it was President Bush who actually really jump started the RFS and it was all about security supply. It wasn't about actually green fuel. His position was, look, we should be using every drop of domestic fuel we have before we have to go out outside the U.S. And that's the beauty about what we're doing is everything is sourced locally. And in the process of doing it, we're helping the local emissions, the local economy, we're investing in these assets, which puts a lot of people to work and not just for the construction, but the operations side. So I think as far as the hydrogen, look, we're not going to get over our skis. But like green gas, we're getting into it. We're valuing technologies. And over time, when there's visibility like solar and battery storage, we will see costs come down for execution. You just need to have visibility.

Great. We have time for one more question.

Gentlemen, just curious on the battery side, you mentioned -- this is sort of a 2-part question. One is, can you talk about the types of battery technology that you're looking at and are using? And two, how does the battery storage impact the size of a potential solar plant?

On the solar sizing, what we're doing in markets where it makes the most sense is we're oversizing the DC and then we're putting in batteries that are able to take that extra generation and then deploy it in [indiscernible]. So that's one of the ways that we're doing, pairing the solar with the storage. As far as the technology, we're using just lithium-ion and basically some of the known names that we -- that are in the marketplace, that's who we're buying our batteries from.

Great. Thank you, everyone. We're going to take a quick 10-minute break right now, but be back in 10 minutes because we're going to kick off with our great group of customers who will be speaking to us. [Break]

Okay. We're back, everybody. Thanks so much. That was a quick break, but we still have a lot to get through. So we're going to move forward here. I'm delighted we have 2 customers that are going to be speaking today. Both of these customers have been with us for a long, long time, and we both are really excited to have them with us. They were not able to join us in person, but they are here virtually, so you will be able to see them. So the first one up I would like to introduce is Lisa Shpritz. Lisa is an Environmental Operations Executive. She's with Bank of America. We have been fortunate enough to work with Bank of America now for over 3 years. We have a number of different solar sites with Bank of America across the Northeast, Arizona and Texas. Lisa is the SVP of the Global Environmental Group, and this group is responsible for the bank's global environmental sustainability strategy. So without further ado, I'm going to welcome Lisa.

Thank you so much. It's wonderful to be here with you virtually. And hopefully, we can all be together in person. And I'm very pleased to be here with Kevin as well. Ameresco is a great partner, and I was hoping I could share with you some thoughts about our sustainability journey and strategy. And then hopefully, after Kevin provides some remarks, we can have some time to do some questions. So I thought it might be -- for those of you who might not be familiar with Bank of America and the work that we do in terms of sustainability, I was going to do just a little bit of a review of some of the climate leadership and significant milestones in our journey that really have been a part of our path to getting to where we are here today. And I won't go through all of this, I promise you. I don't even know if -- in the room if you can really see all of the detail. But the takeaway here is really that we, in true earnest, started our sustainability work in 2003 when we became a founding member and signatory of what was then the Carbon Disclosure Project. And we came out as one of the first financial institutions to say that climate change is an issue that we need to address and that we have a responsibility to really tackle. And then we have -- you can see here through the years, we've done a lot of really significant work that we're really, really proud of, but we're not there yet. We -- I will note that we have worked really closely with U.S. [ GSA ], which is how I know Kevin. And so we have a commitment to green building, which is a very important part of our program. And then we started in 2007 with an environmental business commitment of $20 billion. And we thought it would take us 10 years to deploy $20 billion towards a low-carbon economy. And so that was right before the crash. And if you look at the trajectory, it's quite amazing. You don't even see the recession in this trajectory. And here we are today, fast forward many years, and we actually just last year announced a $1.5 trillion commitment by 2030. And $1 trillion of that is focused on environmental business, and the balance is social. So it's for all of the UN SCG, sustainable finance. It's a total of $1.5 trillion by 2030. And so to be having the kinds of conversations that we're having and to have the momentum we're having is incredible. And the work that we're doing is fantastic, but it's not even close to enough. So I'm going to tell you a little bit about the work that we are doing and ways that we're helping to hopefully show signal to the market and to really get the momentum going. But the message that I'm hopefully leaving with you here is urgency, one of urgency and that there's still much, much more to do. Having GSA also as part of the conversation is phenomenal because they're an incredible entity that buys a lot and has a huge impact. So hopefully, between the 2 of our companies, we're maybe helping to drive the conversation. So I'm going to go here and step back for a second and mention that overall, we have a net zero before 2050 goal. And we are working not only to address our own operations. So we've been working for a very long time, as you can see from the time line, to help address our impacts as a company. And that's where we work with Ameresco. That's where we work with a lot of our partners to really reduce our emissions. We have -- we're setting reduction targets. But then also, it's our responsibility to work with our clients. So we're helping our clients to transition as well to a low-carbon economy and to give them tools to be able to do so. All of this, we're utilizing the foundation of risk management and really assessing and managing climate-related risks. We now have a Chief Climate Risk Officer, which is fantastic. And her group is really leading the way. And it works really closely with our Chief Risk Officer. He's a direct report to our Chief Risk Officer. And what that means is we need to understand what risks climate change really presents to our business today and in the future. And it's being integrated into our risk framework in a way that, honestly, I never even thought would happen this quickly because I think for so long, environmental work was often thought of as cutesy and nice to have and fluffy. I would always say the fuzzy bunnies and rainbows that we were always trying to work to overcome, if you will. But now it's a conversation about risk. It's a conversation about resilience. It's a conversation about being a stronger business that can really weather the storm literally and figuratively. So when we look at this overarching climate strategy and when we're talking about getting to net zero before 2050, we have this approach that covers our entire business. And I think this is where, as a financial services company, we're really unique. We do have 3 buckets of environmental impacts and particularly greenhouse gas emissions from our operations. And that's what I was speaking about, our commitments to reduce our impacts from our buildings and our employees and our operations. Then we have supply chain and reducing those emissions. And then we have our finance emissions. And those are the ones that are a result from our client -- the money that we lend to our clients. You can see here in the middle, the green icons indicate those high-emitting sectors that we're really focused on first. In fact, this year, we're going to be releasing interim targets for some of the high-emitting sectors, including power and energy, that will address -- that will give us an opportunity and a pathway to reach net zero for those industries. And I think it's also significant that as we're doing all of this, we're really embedding it into the way that we do business. It's no longer, let's just do whatever we're going to do and then come behind and try to fix it. We're really starting from the beginning. When we sit down, we're working with our bankers to have conversations about the work that they do and how we can help reduce the greenhouse gas emissions and the environmental impacts from the start. There is one -- I know I have just a couple of minutes up, but there's one really significant achievement that happened in this year, just in February, that I wanted to let you all know about. We announced in February of 2022 a goal -- excuse me, February 11, 2022, a goal by 2030 to support the financing production and use of 1 billion gallons of sustainable aviation fuel by 2030. And so when we think about really sending a signal to the market and we think about those things that we as a company can do to really address our environmental impacts, sustainable aviation is one that we feel is really important. And aviation accounts currently for 2.5% to 3% of global greenhouse gas emissions. And 98 billion gallons of jet fuel were used globally in 2019. And so right now, there's only something like 70 million gallons available. We really need to increase the amount of available fuel, and we really need to work with partners. We're working with the State Department. We're working with a lot of our peers, and we're working with a lot of other companies and corporate users to really address the emissions from travel and from aviation. So we look forward to continuing to work with Ameresco and to continuing on this journey, and thank you for everything that you have done to help us reduce our emissions and being our partner in that. And so with that, I am going to pass it over to Kevin. And then I think we have time for questions after.

Thank you, Lisa. Let's see if I can advance these slides without going through all of your slides again.

So we're also pleased to have Kevin Kampschroer join us. Kevin has been the Chief Sustainability Officer for the GSA, one of the -- well, probably the largest commercial real estate owners across the United States. But also, Kevin has been there for over 40 years. So he's a seasoned veteran in this energy market and also in the sustainability play. Under his leadership, he created this deep energy retrofit program that we referenced earlier in the presentation. And I think they've completed 5 rounds of this type of program that it's encouraging deep energy retrofits throughout their buildings. And most recently, Kevin has been involved in leading the draft and the implementation of the Executive Order, the one that we talked about earlier as well, 14057 and working with the White House to coordinate this. So I'm very excited to have him speak to us and share his perspective on this market. Thanks, Kevin.

Thank you, Nicole. I appreciate the introduction. I'm trying to make the slides advance, and it was working for a minute. And I think -- there we go. A little bit of background about the General Services Administration. It was established in 1949 by President Truman. And since 1949, GSA has been the sole organization within the federal government with authority to buy energy utilities, in particular, but across the board. We share that role by delegation to the Department of Defense and a little bit to the Department of Energy for their internal operations. So as it stands right now, GSA buys about half the energy for the federal government, and the Defense Logistics Agency buys the other half for the federal government. We buy energy for some military bases and vice versa. So it's a very joint approach to the purchase of energy. And a piece of that, let's go forward here, is why we are buying the energy, which is for buildings. We have -- next slide. I think my connection dropped or something. It's just not going forward. We have roughly too many. I think that was me sort of getting impatient. So back one. So anyway, we have about just under 10,000 buildings. We house 1 million square feet of -- 1 million people and 320 million square feet, 360 million square feet of space. And in addition to that, we are in the marketplace for $75 billion worth of procurements of various kinds. And the last slide, I just want to mention deep energy retrofit since Nicole did that. We have -- first of all, the deep energy retrofit started with an idea. The idea was developed by us in conjunction with the Rocky Mountain Institute and with a little bit of help from their National Renewable Energy Laboratory. But mostly, the help came from charrette of 18 different firms, including Ameresco, multiple agencies, not so many. And what we are doing today in the federal government is a result of those charrettes of working together as a partner with you, with Ameresco and your colleagues in this field. So that is pretty much it from my prepared slides because I really am more comfortable sort of talking a little bit from notes. So what I did want to mention was that in 2020, right at the tail end of the Congress, they passed the Energy Policy Act of 2020, which required federal agencies to undertake energy savings performance contracts for any ECM, any energy conservation measure that they couldn't fund directly. And we have a requirement in statute to do an energy audit of every major building every 4 years and identify the energy conservation measures associated with that. So those are the energy conservation measures we're talking about here. Now what's the difficulty with that? Because I'm not going to leave you with a rosy view. I'm going to leave you with a couple of challenges because I think that will be more interesting. The challenge of that is that energy conservation measures are usually put together by people with blinders on who are looking at a building in its as is state and saying, "We can make this as is state better by improving this chiller or improving these lights or so on." It's very difficult to get people to think about, "Well, if we improve the envelope and we improve the windows, and those things don't pencil out very well at all, 40 years for envelope changes like that, we could actually reduce the chiller by 50%, which pencils out really, really fast and then combine all of those, too, into an integrated design." And I think that's the key thing is to integrate all of that and get people thinking in that regard. And the statute and the accounting on an ECM basis makes it difficult. So we're looking to Ameresco to come up with very creative solutions that will sort of combine these and say not only, but also. Not only can we do these ECMs, but we can do more or we can do fewer ECMs but come up with an even better event overall. Secondly, we have Executive Order 14008 and Executive Order 14057, whose titles I'm not even going to read because you can look them up. But basically, they set out some really, really tough challenges for the federal government, 100% carbon pollution-free electricity sector by 2035 for the federal government. So we're looking at, in all of our work that we're doing, how to get in electrification and decarbonization into our projects. So that may mean that a particular -- again, looking at one thing, it may mean replacing an existing boiler with actually a ground source heat pump or an air source heat pump or something else like that, which may not be the cheapest solution but will be the better life time -- life cycle approach. So we're looking at life cycle approach across the board, and we're looking for decarbonization no matter what, electrification. That friend of mine who has recently been appointed says, basically, the goal is to electrify everything that there is in a building. And there's a really great example of taking an all-electric building and make it go crazy efficient with a project. And I'm going to conclude my sort of opening remarks here by almost with a mention of the New Carrollton project that Nicole, in particular, was hugely involved in that it's the flagship deep energy retrofit project because it was more than 50% total energy reduction in more than one building. And it's been in place for 6 years and is performing better now after 6 years than it was 6 years ago. So it is the flagship project for GSA in energy savings performance contracts. I think it's the flagship, basically would be the flagship for anybody. It's just a great, great example with everything integrated, ground source heat pumps and using the existing water pond for multiple uses, incorporating solar, putting shades over the parking lot because even though it was slightly more expensive to build a structure, well, it did make the customer happy because they could park their cars in the shade. And in Washington, that really matters. And if you look at it from an overall energy standpoint, you're looking at going out into a car that's been heated in the sun during 8 hours of work to 190, 200 degrees internal temperature in the car. You open the door. You stand out. So you reach in. You turn on the car. And then you wait for the air conditioner to work before you could even get in. So all of that energy savings just because -- and by the way, from something that produces energy. So it's that cumulative effect that really makes the difference. And the last challenge that I lay out is that the federal government, in particular, and I would imagine corporate clients as well, sometimes the real question is, "I have a fixed budget, and I have a possibility of doing a lot more than the fixed budget. How do I extend that fixed budget through the energy savings performance contract method, through private capital, through this cooperation with the private sector?" And that becomes more and more important as we go forward with the President's infrastructure plans for the country. So thank you for having me, and let's have some questions.

Lisa is moving. [ Sean ] is not moving.

I hear you, Kevin. I can't hear anyone else.

I think it's just you and me, kid. I didn't get any hand signals from [ Sean ] saying, the audio has gone dead.

Maybe I can check.

Yes. I can't hear [ Sean ]. Can you? Yes, he's talking.

You mentioned that. So if you could -- they can't hear?

We can hear now.

Now we can.

Can you hear me?

Yes.

I can hear me. Are we good now? Hello?

We can hear you.

Okay. Okay. Got the thumbs up. So Kevin, this question was for you. And it was, as you're analyzing and vetting a lot of companies to work on your buildings, could you speak to how Ameresco compares to other firms in terms of their technical expertise and this edge that you're looking to provide in your projects with more advanced energy conservation measures and more integration of new technology?

Sure. As you know, federal procurements, in particular, are competitively bid. And I'm a little limited to -- on what I can say about Ameresco relative to the entire field, except for a few things. Number one, what I'll do is I'll talk about the things we're looking for. And just remember that Ameresco is not the only company that can provide them a breadth of technical expertise that goes across the energy sector and the building sector. So we're looking for grid integration. I was listening to the previous panel. They were talking about battery technology. Definitely, I have a pet project that I think is ideal for a pocket nuclear reactor. But I don't think that the public is ready for that yet. So I'll just say that's probably the part of this presentation that should be like -- let's cancel that at the end. But it's looking at all the different technologies. And I think that's one of the things that Ameresco does particularly well. Integrated design, we're looking for people who can do that. There are other companies who can do it. The fact that Ameresco has our signal project in the New Carrollton federal building and several other buildings that they've done gives us -- gives them certainly a head up, although there are other companies who are pretty good, too. I mean, there's that company that I won't mention out loud who did the work in the Empire State Building, but everybody knows about it. So you guys can joke with yourselves about that. The other thing that we're looking for that we find with Ameresco is the idea that time is money. So speed to decision, sticking with decisions that have been made and follow-through on project management, those are really crucial because we did a little calculation and found that in the 6 months that we were spending in what I would call excess procurement time, just dithering over small details, those 6 months actually cost us in energy savings 20% of what was the potential because, again, time is money and upfront before you get to the decision, before you get to the deal. And the last thing that I'd say that we're looking for in a company is one that comes up with ideas in a collaborative environment. So we prefer to have the company in the room, helping us make decisions, recognizing that together, we fail or together, we succeed. And I think Ameresco recognizes that and has been extremely good to work with in that regard.

Thank you very much. We have time for one last question.

Julien Dumoulin-Smith also with Bank of America, as it turns out. And Kevin, admittedly, I've got a question for you, if you can. If I can just kind of framing the opportunity here. First, obviously, energy prices are clearly elevated nationally. I just want to -- curious on how you're framing the opportunity here and how much larger it's become and how much more pressing it's become from your perspective. You can kind of sort of tailor it around, especially the various sites nationally, like there is obviously a pie. How much quicker are you going towards that pie as well as if you can articulate what the size of that pie that's eligible for procurement in kind of the medium term is?

I think that there is a lot of -- I think the pie is growing in agencies other than GSA that have not done a lot of this work to date, more than in GSA. The pie is growing in GSA, but it's growing at a relatively steady state because we're systematically working through the building. And a countervailing factor is the fact that the pandemic has taught us that we don't need as much office space as we used to have. So there's going to be a shrinking of total office space needed at the same time that the office space that remains will be more intensively used. So the challenge here, and I didn't throw this one out on the table before, is how do we do energy savings at the same time that maybe we want to use the building more intensively? How do we do energy savings in a building where we want to double the population in the building from what it was before? And the answer is we can do that because when you double the population in the building, we have a couple of studies that show a twofold increase in population results and about a 4% increase in energy consumption. It's a huge disparity between how many people you put in the building. And if you think about it, the lights are on all the time anyway. The air conditioning is pretty much on all the time anyway. You save a little bit in heating in the winter, and you cost a little bit more in air conditioning in the summer. So basically, the only thing that really changes when more people move in the building is machines, cell phones, computers and so on that consume electricity. And then servers are getting more and more efficient. We're moving a lot to that to the cloud. So that's working to ameliorate that. So increased density and -- but yes, I would say that the pie is growing but not probably as fast as you would like and certainly not as fast as I would like.

Great. Thank you very much. And thank you so much, Lisa and Kevin, for your participation in this event. We really appreciate hearing the customer experience during this for our investors and our analysts. And with that, we'll move on to our new markets and new models panel.

Thank you.

Okay. Thanks so much. What -- wonderful to hear from 2 fantastic customers. Okay. Now we have the new markets and models. You've heard a lot about new markets that we're addressing as well as new business models, Energy as a Service, the new old business model actually. So we're really excited for this session. We have an all-star lineup here, 3 people you have not heard from yet. So let me introduce them for you. First off, Bob Georgeoff. Bob Georgeoff is an Executive Vice President. Bob, do you want to stand? No. Bob runs our South business unit.

Now look what happened.

Sorry, don't drop anything. He runs our South business unit. He's been growing that unit. He's been with us now for 11 years. He came to Ameresco by way of acquisition, and he's still here having so much fun. He does both projects and assets and has really grown a tremendous team. You're going to hear from Bob today on one of the new markets that we've been focused on. His team has been very successful in the C&I market. And so I'm excited to talk about that. Next up, Britta MacIntosh. Britta is the Senior Vice President of our Western and our London operations. Britta has been with Ameresco now for 6 years. She started out running our U.K. business and has since come back and taken over our Western business as well. So she spans the globe essentially and is quite busy and have some very exciting things to share today regarding utilities and also European expansion. And then Lou, we're saving the best for last year, Lou Maltezos. Lou is an Executive Vice President with Ameresco. He runs our central business unit as well as our Canadian operations. Lou has been with Ameresco, can I say it?

Sure.

18 years, quite a long time, came also by way of acquisition and has had tremendous progress most recently building up sort of the new version of Energy as a Service as well as focused on integrating smart building solutions into our overall portfolio. So where shall I begin? Let's start with Bob and Lou. Quite some time you've been here since being acquired, and you're still here having fun. So Bob, can you talk for a few minutes about why that is? What keeps you here and what keeps you excited at Ameresco?

Yes. Sure. So by way of background, I've been in the industry almost 30 years, and half of that is approximately with this group here. As Leila mentioned, we joined the company August, it will be 11 years, and it's pretty special. But the answer, I think, is pretty simple. I like what I do. I like the way we go about our business, and I like the people we do it with. So I think as a management team, you got to see some of the folks on our management team, and I think we all excel in an environment where the mission is clear and leaders are allowed to lead. And George has created that environment for us since the beginning. I've been at a couple of other energy companies. I think it's unique. I think it's kind of special that we get to run a decentralized business model that is close to the customer and values the customer experience. And I think there are 3 intangible pillars that I think excite everybody on our team, and you've heard it over throughout maybe in a different format today, but it's talent, it's teamwork, and it is just an entrepreneurial environment that we have that I haven't seen in many companies this size with 1,200 people. So -- and I'm always amazed. Throughout the company, we are able to recruit people from the top academic institutions, military institutions, hiring -- Nicole just brought on a battery specialist who is recognized in the industry. So the fact that we can attract that kind of talent, and the collaboration here is pretty unique as far as what I've seen in other aspects in the industry. You heard from Mike Bakas. Mike, we've got 2 or 3 projects jointly we're pursuing in Arizona right now, which is where I call my home in Phoenix. Lou, we've got 2 or 3, and Nicole and I talk probably weekly just on business at large. So I think when you have that kind of environment, culture and a focus on a customer, which maybe I'll head on as we talk through some of the other C&I examples, it's easy to stay here 11 years, right?

Great. Great. Okay. How are you going to match that, Lou?

Yes. Well, I don't know that I can add much to what Bob said, but I do think I can underscore the point on the culture because George really has created an entrepreneurial environment. It's a word that's so overused that it almost means nothing when you hear it, but he means it when he says it. And we're all empowered on the executive team to make decisions to stretch the business model, to put ourselves out there, and we do the same with our teams. And I think that shows when we're in selling situations. When we were negotiating the procurement with the Northwestern University Energy as a Service partnership, we rolled our sleeves up and customized our approach to what they wanted and needed. And I think a lot of other people that they were dealing with were a little more stuck in their ways about the way the contract had to be structured. And that's why we became their partner. And that happens over and over again. So I think we really do have that kind of spirit here, and that's what makes it a fun place to work.

We work hard, but we have fun doing it.

Yes.

Right. Okay. Great. Lou, while you're up, we're going to keep you on the hot seat, okay? Energy as a Service, let's talk about that. What is this newfound, old found, we were doing it...

Right. Well, I have to point out, when Mike found out I was talking about it, he put it on his slide so he could take credit for it 10 minutes ago. But yes, Energy as a Service, quite simply, it's the idea of delivering our solutions under a service agreement framework rather than under a project delivery agreement. And what that means is if a customer pays for us to provide an outcome over time as opposed to deliver stuff upfront. What's nice about that, of course, is we've got a long-term relationship. We have the opportunity to invest in and own those assets instead of the customer owning it, and that creates some of the optionality that Mike talked about with his assets. There's going to be ways we can probably use those assets down the road that maybe we haven't thought about yet or that we can't do right now because of the current state of regulations. So it's an exciting way to grow our business and to do the things we've always done well but maybe in a different way.

It's the buzzword right now. But as you said, we were -- we had the framework of these kinds of agreements way back when in 2002 when -- shortly after the company was started. Can you talk a little bit about how that helped us with sort of the current contract structure and how that framework has been applied to some of your recent projects?

Yes. Sure. It's kind of like what Nicole said with her federal projects. One project leads to the next project, leads to the next project. So we're always learning and adapting. We did a project up in Canada with the John Paul II school district, which was the first carbon-neutral school by retrofit in all of Canada under an Energy as a Service agreement. That preceded this deal by 4 years, I suppose, in the pipeline. And a lot of the lessons learned with that, a lot of the lessons learned from Nicole on her projects, a lot of the lessons learned from Mike on his asset projects, all informed how we put together the Northwestern Energy as a Service project because it has all those elements. We own the assets. We operate the assets. We're making an investment. There's some central plan elements. There's some in-building retrofit elements. So it all kind of comes together into one piece.

Great. And how -- given that it's such a hot topic right now and there are a lot of procurements coming out around Energy as a Service, how do you differentiate Ameresco?

Yes. Well, I think it's the same story you've been hearing all day. We have 2 major points of differentiation, right? It's the depth and breadth of our technical capability. Whether the customer wants a microgrid, battery storage, central plant work, in-building efficiency work, renewable energy, we have all that capability. And then secondarily, we're structured in a way that we can move quickly. As Kevin mentioned, we don't waste time doing the procurement. Bob sits in the room. I sit in the room. Mike sits in the room, Nicole, Britta. We make decisions as we go in with the customer and get the contract quickly. And they like that because they're responsible for somebody on their stakeholders, and they need to show that they're making progress. So I think those are really our 2 big differentiators.

Great. Excellent. Thanks, Lou. We'll come back on that. Britta, you're up next.

Okay.

Are you ready?

I'm ready.

Okay. You have had quite some success most recently in the utility space. Would you care to share anything about that?

Yes. So some great success in the utility space. The utility space really has never been known for being super dynamic or exciting, but there are a lot of exciting things happening in the space right now. And I think that that's -- it's due for a couple of different reasons. There's a lot of technological advances that are happening in the industry right now, and you've heard about a lot of them already today. In the utility space and in particular parts of the country, the utilities are dealing with grid resiliency and capacity problems and challenges when that's due to aging infrastructure or weather events. And where I live in California, it's wildfires. That season is coming up in a couple of months. And then also, you have some really smart customers out there demanding more services from their local utility. And so the project that you're referencing, they're a large battery storage project at Southern California Edison, it's going to help SCE deal with a number of those challenges. They're going to be able to demonstrate a really large-scale implementation of battery energy storage for decent duration that they're going to be able to utilize to help serve their customer base far more reliably, especially in times of need and when they have challenging, like I said, weather events and so forth. It also allows them to play in the market and better serve and provide better product to their customers as their customers continue to grow, as their customers continue to electrify, as their customers continue to need the local electric utility more than they ever have before.

Great. Great. One of the things, Britta, you shared with me, and I think it's very much sort of a guiding principle for Ameresco, is how you started with Southern Cal Edison, where that first began and how that developed into something very different. Could you speak to that for a minute? And then I might actually toss that around to you, Bob and also Lou.

Sure. Yes. I mean, it started with a small project that started a relationship and the development of trust between parties. It also allowed us to understand how they contract projects. I'll tell you that contracting with a utility, one as large as SCE, is fairly complex, and it comes with its own challenges as well. But as we developed that relationship and got to know each other, they felt that they had a perfect opportunity to really take a leadership step out in the utility industry and implement this large-scale project. We were invited to bid on the project, along with a number of other folks. I think that we had a great opportunity to be successful in the project not only because of the relationship we had developed with the utility, but also because we have long-standing relationships that we develop with our suppliers. So coming up with 500-plus megawatts of batteries all in one place, all at one time is quite a challenge, and you really need to have those relationships with the vendors, with the suppliers so that you can actually accumulate that large capacity and be able to deliver it to the project. You also need to have established relationships with the people who are going to actually build the project for you, the civil contractors, the electrical and mechanical contractors. And having them be able to also step up and make commitments to be successful in the project allowed us to be able to bid on this project and then be successful. Lou just mentioned being able to deal with contract issues very quickly and very nimbly. Because we had already done a very small project and had gone through the contracting process with SCE, that also allowed us to go through the contracting process for this particular project a lot more quickly than if this had been the very first time we had seen a master agreement from the utility. So I think it allowed us as 2 partners to come to a successful conclusion and signed the contract in a much quicker time period when time is really of the essence on this project.

That's great. It's building trust and building that credibility. And sometimes it means starting with a very small project, which we're willing to do.

Absolutely.

Of course. And Bob, talk a little bit about that. As I think about it right now, I look at Salesforce every day, right?

I know.

I know you know I do. But I often see in your group, Phase 1, Phase 2, Phase 3, Phase 4, Phase 5 of the same customer account. So clearly, this is the way you're working as well.

We are. You talked a little bit at the onset of our focus on the corporates or C&I, commercial and industrial spaces. And I think it also threads into some of George's comments at the beginning of this, the focus on the customer. And I think we like to leave across the board, and this isn't unique to our region, I think everyone on the management team has this same approach to take care of the customer. But I want our customers to think that we are sophisticated enough to get anything done, financially stable enough to get anything done, but small enough to care. And that's how we're building these one-offs. Then go to the entrepreneurial spirit. 7 years ago, Mike and I, our teams teamed up on a large health care chain in California. And it started out with a beta project in Hawaii. And we kind of built the field of dreams. Like we put engineers and construction and dedicated resources and scaled contract docs. And that's how we get to the 1, 2, 3 and 4. That particular client that Mike and I are working on together, we've probably installed 55 different solar. We've done a microgrid battery storage on all of it. And we've taken that model. And we've replicated -- in our case, we've focused on a fair number of commercial and industrials, but we've replicated that enterprise account is what we call it, and we've incorporated it into the banking institution, the health care institution. And as an example, to your point about scalability and repeatability, which is what we're trying to do, we are in conversations or have active projects with 5 of the 10 largest banks. Of the 40 largest health care chains, we've got conversations or projects active with 20 of those, and that represents 2,100 different hospital facilities. So it's -- I think if we focus on the customer, we do the right things and we put standard contracts, negotiating partners, personalities together, that's where we're getting to scale.

Great. Lou, do you want to touch on that?

Yes. I would just maybe add, we see the same thing, of course, in my region. And when you talk about the multiphase accounts, one of the things that helps us with is in planning and staffing. Because you're all probably very familiar with our contracted backlog and our awarded backlog, there's also a lot of things that are earlier in the pipeline than that. And because of the amount of multiphase work we do with customers, it gives us a lot more confidence about where that work is going to ultimately come from and when it's going to develop. So it's really important to us on the business side to have that visibility.

Great. That's great. Okay. Switching topics a little bit. The tough thing is my screen is not working up here to see how much time we have, which is a real problem for everybody in this room because I definitely like to talk. But we will, we'll switch topics here, and I'll try to keep us on track as much as I can. Bob, I'm coming back to you. C&I, we have talked quite a bit about how we feel very excited about that market with some new pressing drivers. We can't be remiss in saying that we haven't been working with C&I over time. And of course, Mike would absolutely kill me if I didn't mention his project with BMW from way back when. All that being said, we do feel really excited about what's happening in the C&I market. You have had tremendous success with financial services as well as health care and a number of other verticals. Can you talk to that a little bit?

Sure. And I think the group that presented just before us, Lisa from BofA put the exclamation point on that, that there are some trends that give me confidence in the long-term viability of these markets. One is unfortunate, but climate change is real. And we're in a unique position to combat that, right? Two is we are seeing not only in the banking industries but decisions around ESG being made at a Board level being driven to initiatives in the field. That didn't use to happen. It used to be a discussion, and you're seeing people with sustainability titles getting more prevalence in that decision-making process. So I think the other part that just gives me optimism about the future is not everywhere in our 12-state territory or across different pockets do we have grid parity, but we're competitive with the utility with our green solutions. And I would tell you, 3 years ago, we had to convince our customers that renewable energy was a viable solution. Today, they don't need to be convinced. They just need to be convinced that we're the company to get them to their destination.

So you think this is a long-term play, something that we're going to see with the new drivers, ESG, et cetera?

Yes, I think, and George alluded to it. Monday, the SEC proposed a set of rules that will go through a 60-day hearing out process and commentary policy. But they're linking your risk, your climate risk against your business. And I think there's momentum. And I think Lisa said it, it's happening quicker. And I don't think it's a short-term thing based on what we're seeing and the kind of behavior from our customers.

Right. Yes, it was fantastic to see leases time line. I mean that does it.

Yes. right.

Yes. right. Britta, back to you, on utilities for a minute. Of course, being very excited about SCE and not -- is there, can you talk a little bit about how you're using that sort of as a blueprint as you think about all of the other utilities out there that are suffering the same sorts of challenges and problems and how you've already started to move towards this type of approach?

Yes. As you could probably imagine, there are a lot of other utilities watching SCE and watching this project, partly just because it's big and exciting to watch. But I think also because, as you mentioned, they also have a lot of these same issues that they're dealing with, within their customer base, within their particular geographic region. And this kind of project it's very scalable. It's scalable to meet a lot of different needs. And so we have this great opportunity to work together with other utility companies. Over the course of our history as a company, we've been working with utilities since day 1 when we used to implement demand-side management programs for utility companies. So we have this excellent base of existing relationships where we could be talking with those partners of ours about how we can support them, whether it is to build a project like we're doing for SCE, where SCE is going to own the asset and they're going to dispatch it the way that they want to use it or in cases where we are going to build the asset ourselves, own it and operate it on behalf of the utility and dispatch it according to what they need to meet their customers' demands. So we have this excellent opportunity to really work with the largest and the smallest utilities across the country with this kind of a project.

Well, everyone's going to be watching you. Just saying.

We really know that. Yes.

Okay. Lou, now suddenly, the clock is working and is telling you have to hurry. So shocker right?

2-minute warning.

Right, exactly. I have 2 big things that I still need to talk about. Lou, can you talk a little bit -- you championed the acquisition of the Smart Building Solutions Group and have done a tremendous job sort of implementing that and integrating that across the company. Can you tell us a little bit about why that was so exciting to you and what your future plans are there?

Sure. Well, I think Nicole had a great slide in her presentation that showed the different elements that went from the single ECM kind of project to sort of the smarter integrated smart building project. All that is built on the idea that we can collect data, we can manage data, we can infer things from the data, and we can act on the data. So the smart building group really has that burnings and expertise for how to acquire that data and pull it together, both physically in the field with sensors and smart meters, but also through the technology and the IT and the back office. So it was really important to have that in-house. And what we're trying to do, like we've done with a lot of other initiatives at Ameresco is we created a Center of Excellence out of the smart building solutions team. And we've created a new group that's company-wide with representative from all the different business units that get together once a month now to discuss best practices, the different types of value provisions that we can build on top of the smart building solutions capability and how to go to market with it. So as we did with solar from Bob's team, our battery storage from Nicole's team or the landfill gas worker land from Mike's team trying to take that expertise and then get it spread throughout the company.

I think that's great. And you're exactly right. That's something that we've done quite a bit at Ameresco. We started with the Center of Excellence around battery storage and got many people from us the different business units involved. Same is true with microgrids. Same is true now with the smart building solutions group, and it's just a great way for us to educate the whole company with some of the expertise that we've developed. Great. Excellent. Okay. Britta, back to you. Everybody wants to know about Europe. You took a small consultancy in a handful of years, turned it into one of the 3 largest energy services companies in the U.K. So how did you do that? And what are the plans -- if you can do that in a few years, what are the plans for the future of Europe?

Yes, it's been a real exciting journey in the U.K. You're right, Leila, we started with a very small energy consultancy firm. And the priority really was to build that capability -- that center of capability in London so it could perform all of the same services that our teams here in the United States performed so that we could originate design, develop, construction manage, operate and maintain, measure and verify savings. We do all of those things with our team in the U.K. as well. Then we focus really closely on entering the public sector marketplace, build a portfolio of projects and then be able -- then at that point in time, we were able to really look to expand to other parts of the European Union. It's given us an opportunity now to look at other countries. We are working with partners in Italy and in Greece. We're also looking at expanding into Northern Europe. I think there's some great opportunity there. The European Union and the U.K., they've been a little bit ahead of the United States in really making a very hard stance on climate change and then also putting the funding behind that to really drive action. And so we're seeing a fantastic opportunity to build on that. And then particularly in the marketplaces where we see entire cities, villages, communities looking to figure out how to decarbonize, how to move into a much more modern green economy and also provide green power resources to their communities of concern. So there is this excellent opportunity for us to continue to expand all through the European Union. I think it's going to be pretty exciting next couple of years.

Big growth potential.

Yes, I think there's really great growth potential there.

Okay. Great. Great. Well, we're blinking. We're blinking. I see it. But I want to close with 1 minute from each of you. The topic is new markets, new models. What makes you, Bob, most excited about the future?

Yes. So 3 weeks ago, I was in Austin, Texas, at Texas Energy Symposium, and there are a couple of takeaways. A couple of years ago, people were talking about microgrids, didn't really have any experience. They didn't have outages to the extent they've experienced them over the last 3 years. There is a major report there releasing publicly their desire to go to microgrids in late this summer, right? And it was kind of an invitation. And part of that was EV, part of every discussion was EV and they were real projects. And as an example, they -- it not only has an impact on the electrification of fleet, but the power requirements is going to be an opportunity with that too. So this particular airport said they were at 30-megawatt capacity. And if they took 10% of their 35,000 parking spaces, they'd have to double their capacity, and they're going to microgrids. So I think that's what's coming.

That's exciting. Very much. So Britta, how about you?

I think we're really in this sort of perfect storm of opportunity. We have amazing advancements in technology happening right now. We have really smart educated customers that have goals and are helping to drive us also to helping them implement those goals. And then we have, within Ameresco, the technical capability to do that deployment on behalf of our customers. And so whether it's in the battery storage market or whether it's in decarbonization or electric vehicles, I'm really excited about the fact that we can offer all of those services to customers so they can really take a comprehensive approach and make really measurable progress toward decarbonization.

And a single solution provider. Correct.

Absolutely.

Right. Okay. Lou?

Well, I think Energy as a Service and public private partnerships in the higher ed market are really exciting because I haven't really seen as much enthusiasm for other things as I've seen for that, in the customers. And I've seen a lot of talk in the industry about different fads before, but as I go around talk to the different chief financial officers and other executives in the higher education market, they're really excited about, and they want to hear more about it. And I'm also, of course, I'm really excited about the smart building solution space. And I think the combination of the smart building solutions, which gives us control and visibility and the Energy as a Service, which gives us ownership of assets, again, it's going to create some of that optionality that Mike talked about with his assets. And I think, we may not know yet exactly what that optionality is, but it's going to be valuable down the road.

Right. Great. Excellent. Well, clearly, there's a lot more to cover with these 3, no questions. So hopefully, you all stick around for a little bit and spend some time with them afterwards. But my understanding is that we are skipping this Q&A and that we're going to hold this Q&A until the end. And we're going to try to -- I'm getting the nod from Doran don't even think about going anywhere else. So thank you so much, very much to the all-star panel here. Good. All right. On to the next, right? Okay. ESG is the next session that we have here. And geez, for anyone that knows George and the beginning of Ameresco, you would know that ESG is really in our DNA and has been from day 1. It didn't necessarily have that term, that coined term. But when George started this business, his vision was to energize a sustainable world. And he has spent every day since then, working with customers across the U.S. and Canada and the U.K. on fulfilling that vision. So ESG is really just a part of who we are and who we always have been. That said, of course, over the last couple of years, we put together, I think, a very good framework for doing a better job really reaching across the company and pulling together our ESG resources to ensure that we're looking at it holistically, and we're leveraging the entire company's efforts to do well by doing good, another one of George's great lines that we've carried through over the years. And under Doran's leadership, we launched an ESG group of ambassadors and he's going to talk about the framework that we're putting in place and a lot of the details. But before we go there, I just want to take a minute to share with you a little bit of the highlights from our 2021 ESG report. And this group that has come together to work on our ESG efforts has put a tremendous amount of time into sort of looking at these holistically year-over-year and then also making sure that we're pulling it together in a consolidated report that we can share with all of you. So because we lugged some with us here, if anyone wants to take a look at our ESG report, we have a number of copies of them over there. But a couple of quick highlights that I want to point out, and then we'll move on. From 2021, we had a subgroup of ESG ambassadors that were focused strictly on the environmental impact and they did the very hard work. The hard work that so many of our customers do in rolling up their sleeves and understanding Ameresco's own carbon footprint. Now we are a company with 70 different offices. We have utility bills coming from all different locations. You name it and they really spent quite a bit of time understanding and deciphering what that looks like. A very good process for us to go through as so many of our customers are doing the same thing. That said, once they were able to do that, we came up with a 2040 net zero goal. And so I think we feel particularly proud that we went through that exercise ourselves and also figure out a way in which we're going to commit to a net zero strategy. Next, on the social side. This past year, we launched our first volunteerism group. And this group was really focused on pulling together the company's efforts and thinking about our communities and how could we do more for our communities. And in just the first year of this effort in place, we've logged over 1,000 hours of volunteering in our communities. So what did that look like? We built children's playhouses for veteran families that were in need. We stocked backpacks for children that needed it. We volunteered at organic community farms. We cleaned up rivers and beaches and parks, and we really dug in with all the communities that we're lucky enough to work and spend some time there volunteering. Next up, I just want to quickly call out on the governance side. You see some of those highlights, but a big focus for us in 2021, of course, cybersecurity and the health and safety of our employees. And so a tremendous amount of training and learning. My hat goes off to our IT team as well as our corporate safety team that spent a lot of hours training and ensuring that we're being careful and being thoughtful about everything that happens within our organization. So for me, thanks, Doran, for giving me a few minutes to talk about some of the things that make me very excited, but now I'll give you the mic. So I'll stop talking.

Thank you. Luckily, there's only one more slide to talk through. As Leila said, I'm looking at the clock. As Leila said, ESG is in our DNA, the 9 ambassadors. So you see the little laptop with everyone's pictures, mine included, that's actually expanded now to 11. The team has done an extraordinarily thorough job of putting in place the measurement methodologies for us to continue to measure our own footprint because that net zero goal for ourselves is important for us to be shown as a leader in this industry. We're not only doing this for our clients. The prior slide, through 2020, we had 60 million tons from client installed renewable energy and energy efficiency projects, right? Now we've included 2021 in that, we're up to 75 cumulative, from 2010. We need to demonstrate that we are doing the same for our own footprint. And so we used our own internal asset planner software. So that's out of our asset sustainability group. Some of you may have heard of it. It's a building monitoring and data collection system for asset planning. Their asset planner software. That's a Software as a Service business that we have was used to set up to collect all of this data that we need to measure our Scope 1, 2 and 3 emissions. And so we'll be using that going forward. Our footprint itself was actually right around 47,000 tons, I think, is where we're sitting and that made us very comfortable with setting that 2040 goal. In addition to the strong team, we do not have a dedicated resource internally as head of sustainability. This is a person who comes from a reporting framework background. So for the ESG reporting frameworks, even the ones that all of you knew about before the SEC started talking about its rules, we're going to be implementing, we're going through a materiality assessment now. And she is charged with picking apart the external reports when we get external ratings, figuring out where we need to focus, and then project managing every bit of our ESG effort. And we think it's a really great setup to have us seen as a leader going forward. Again, 2021, the focus, the innovation, action, integrity, integrity is critical. We will need to be able to talk about what we do and stand behind it and stand behind our goals. Speaking of our goals. So there are commitments I mean this is something that's in the ESG report. I did want to make sure that this made it into the presentation. So that's, that's our ESG speech. It just hit 0.

We're out of time.

Right on time. So...

I'm always out of time.

There we go. So now that we're getting closer to the end. I do want to spend a few minutes talking about SoCal Ed and the impact it's had on the company, what kind of -- where the project stands and then George will come up, and we'll close it out. The project update is this. So this was a very, very quick from proposal to award to contract the momentum was there. Britta can tell you, we were just already in the day-and-night work progressing on how this project was going to get done. So the pace of the project was set even before it was awarded and then further when it was contracted. So of course, the night that we found out we were awarded the contract, we immediately started working on the procurement. We immediately started working on figuring out who our best subcontractors were going to be. Britta and I and George and others on the executive team, were immediately figuring out how are we going to -- how are we going to use this company's operating leverage, to execute this project without increasing our overall OpEx base, find the best people inside the institution to help us come through and execute this project in the time frame that was outlined by the customer. And we put that together, immediately moved into the negotiation of all of the contracts and here we are. All of the POs for the major equipment, the batteries, the transformers, the inverters, the switch gear, that's all done. The major subcontracts. So our comprehensive engineering, the civil electrical, mechanical subcontracts, all completed. The manufacturing of the major product, that's all underway. And in fact, factory acceptance testing on a majority of the equipment that will be used in this project has already been completed. And with the site permits now in hand, we've mobilized on all 3 sites in preparation for the equipment deliveries, and we do expect the civil work on those sites to actually commence pretty much imminently. As we publicized a couple of weeks ago, we did expand our corporate credit facility. I mean, that was a big step for the company, really taking our corporate credit facility to a level where it's on the lev fin map. We brought in some new banks. We're really happy to have new parties to work with. We're now sitting at a senior secured credit facility of $495 million. That's something that we feel is quite comfortable for us to handle this project and the next one and the next one as well as investment in our assets, as you guys know, that we like to do. Now moving forward, of course, you can imagine that we are working daily, hourly, often overnight with our suppliers to ensure that we get timely delivery of the product on the sites. And with that kind of active management, we've built the buffers into the schedule to ensure that we can withstand and manage. We've been managing any issues on logistics or otherwise that are coming up. And we'll continue to manage those in a way that we expect to finish this project on schedule. So that's the update on the SCE project. Just to give you a quick schematic. The project on the left is one that we have installed, we own, we operate, that's one of our assets, the new market battery, 16-megawatt hours. So you can see where the batteries are. It looks like a little bit of a fast food restaurant parking lot, right? And then you look at the SoCal Ed one, well, a lot bigger, but it's sort of like maybe the big box store parking lot, right? You just have a lot more of these battery units. They're all going to be tied together into the inverter units and the transformers, but this just kind of gives you an idea. This is representative, of course, and not an actual sort of as the project goes on. I'm sure that photos will come through. One thing that I want to highlight here about the impact of a project like this on our business is that it produces cash flow much like the rest of our project business produces cash flow, right? That cash flow is going to be used to invest in energy assets and bring out more of the long-term recurring revenue streams that we have. So when you look at the EBITDA that it generates, we've got EBITDA goes into our development engine, and you've met some of those folks today already, and then follow that straight out to either renewable natural gas or solar or storage stand-alone assets that are going to be on our balance sheet. And when you generate sort of, call it, $1 of EBITDA or $1 of cash flow, through investment through nonrecourse debt through the development process and being kind of the organic developer of projects, that can pull out right here sort of probably $0.50 per year worth of recurring EBITDA in average life of, call it, 15, 20 years. So that's the important part of looking at this. I mean we know and we recognize that winning this contract is setting Ameresco up as a leader in the battery storage market, right? I mean we've been installing battery storage, and Nicole's been doing it for ages, behind the meter and working on microgrids and putting solar on storage projects. Now we get the utility scale, and with our financial flexibility, the future actually looks great for utility battery that we can install as a design build project like SoCal Ed or as an asset on our balance sheet. And that's what we're really excited about. So that's where we are with the SoCal Ed. I'm going to bring George up to talk about our financial goals. I'm going to hold on to this. I hope that did that. You talk.

Well, again, I want to thank everybody for being here. But most importantly, now you know why we rate #1 in execution, the team. Great job all. Thank you very, very much. Sometimes I have to pinch myself. I think I'm a very lucky man about the organization that we have at Ameresco, the people we have and the teams that we have. And not only these guys are here good individually, but they are great working together as a team. We have a lot of fun together. We play hard together. But again, congratulations, guys. Thank you very much. Great, great job. Where we go from here? I think you've heard a lot, and sometimes I have to pinch myself again. The market is developing much faster than probably what we can deliver, as you saw. And in the past, every -- the way we're planning for the company, we have a 5-year plan and then we developed goals for 3 years. In each and every one of the executives, we will measure them not only the annual individual goals but if they achieve the 3-year goal, rather than 5 years because it's very hard. And where we are in the last 3 years that came to past 2021, we had to achieve the $150 million EBITDA for the 3 years previous one. And then we will tell on The Street, we will grow the top line in the single -- high single-digit numbers between 7% to 10% and the EBITDA between 17% to 20%. And what did we do? Because we stole some market share from the competition, we grew the top line for about almost 14% to 15%. And the EBITDA around 19%. Where is my slide now? And then, of course, what we should be able to do a little bit better than that. That's right. I convinced them to do. But the market, though, is helping a lot. So we should be able to do a little bit better than what we did in the last 3 years. So the goal for the next 3 years now is they pretty much to double our EBITDA, and each one of these executives, they are measured, but how well they will do against that particular goal. The Board is incented according to that particular goal. So you've heard a lot. The market is expanding, our capabilities have expanded, and we've taken the market share from the competition. When we develop this plan, so you have an idea, we look at the backlog and we look at our capabilities. What can we do? And based on where we are, the assets that we have in development and Mike went through the RNG development of those assets and how they will evolve in the permitting stage or the construction stage and then John, which has a substantial amount of solar assets, again how they will develop. And we feel very comfortable that, we expect that 2,000 -- we will make that goal. And that's about it. I mean, it's great to have you guys all and I will open it to questions and answers.

So we've got some microphones around. So yes, first, go ahead, Joe.

Okay. And I'll say who I am Joe Osha, Guggenheim Partners. Two totally unrelated questions. The first is that there's some reasonably beefy liquidated damages, language in that contract that you filed as part of the 10-K. And I guess I should have read the whole thing, but I'm wondering, is there any kind of force majeure or anything else in there that would, I know of course, you're not going to slip, but God forbid you do, is there any mechanism in there if your suppliers don't make deliveries for dodging that liquidated damages or you just kind of on the hook if you slip?

Sure, Joe. So let me talk in general terms about the way we approach projects and subcontracts, right? When we contract, we typically ensure that we've got comfortable force majeure provisions in our contracts with our customers. This is no different. In addition to that, of course, with our suppliers, especially the major suppliers and the value in this particular contract, we look to push down the provisions. You just referred to it as slowdowns in the contracting business. We were quite acute with the slowdowns as you might expect in this particular case in order to manage any situations where those LDs may kick in.

To rephrase that, maybe the liquidated damages applies, but the pain will not be years alone. Is that a good way of...

I think that's fair.

And then just a completely unrelated question. It's interesting, if you look at the asset business and putting your own balance sheet to work and your own tax appetite to work and so forth. I wonder, especially given your background is, do you think about engaging tax equity partners, maybe other people that might have tax appetite as part of how you capitalize these things?

We do in -- so I think on a regular basis, we have relationships with a few tax equity providers that we use on a fairly regular basis. We do in -- so I think on a regular basis, we have relationships with a few tax equity providers that we use on a fairly regular basis. The financing of the portfolio is relatively balanced, in terms of how much of the portfolio we take the investment tax credit ourselves and how much of the tax credits we pass on to third-party investors that provide us tax equity. We have deployed solar using probably, well, the 2 major types of tax equity sale-leaseback as well as partnership flip. Those are regular. And we've got good relationships, good solid lines set up to hit those as needed.

It's Eric Stine with Craig-Hallum. Just curious on the energy assets. I think everyone thinks about the growth there being just adding to the asset base. But clearly, you are looking to expand the capabilities of each project, the capability. So curious, I don't know if you're able to quantify, but from a high level, talk about how you could add, if you think about an average project, how you think you can expand that over time?

Expand the projects business?

The EBITDA contribution from each project.

Yes, go ahead, Mike.

Yes. From the assets you mean?

Yes.

Yes. Yes. Yes. So I'll just give you a real example. So Ameresco operates a tremendous portfolio mix of landfill gas fuel power plants. And right now, those sell to the market as [ Rex involved ]. But the reality is that it's highly probable to come May, we should expect to hear something from the EPA that will expand the addressable market for us without the addition of ERIMS. Right now, those ERIMS aren't anywhere in the model that have been because at the time they never existed. But with those existing assets, we could very well redirect some of that power to be able to monetize some of the ERIMS. Just one of many examples. I mean a great project I feel to talk about Lou and I did was a, again, it's the integration of the projects business and the asset business was Jefferson City, Missouri where there was a prison facility that Lou was doing efficiency work at. And we were developing, in the meantime, a power plant just selling electricity to the electric municipality. And that was how it was modeled. That was the original base that was built on. And then Lou came up with the idea of, hey, geez, what if we could deliver thermal from your plant to provide that as another revenue stream for us and a sale through the customer. That was nowhere in the model. And now that product delivers not only electricity to the municipal light department, that has retail steam sales of thermal to the prison. And that's the whole point, if you control the asset over time, especially as this market evolves, we will find additional ways to generate incremental revenue that we never thought about from the beginning.

Stephen Gengaro with Stifel. You talked about the growing addressable market, and you also, I think, started the presentation by showing your market share a bit. As the market evolves, and I imagine as the market evolves and the opportunity evolves, so do the amount of competitors in different areas, what do you think is key to maintaining your strong position and just continuing to gain share going forward? Is it technology? Is it execution? Is it -- how should we think about that as we go forward?

Yes. Execution has a lot to do with it but make sure we built the capabilities inside the company to be able to handle more projects. Otherwise, we have a dominant position right now. And that's why I say -- when I said we developed the 3-year and 5-year plan is adding additional resources in order to be able to deliver to maintain that percentage. But we think we can expand it because -- and Bob brought it up and Lou brought it up because this is our main line of business, and we have the passion of what we are doing, we are able to attract talent. One of the things that has impressed me, when I go around the company lately, meeting the young people that we have in the company right now, and they're driving this particular company. It's great. Because now we're going to universities, we have co-op programs with the university because you get -- we cannot steal people from Honeywell or Johnson Controls or whatever the case might be. We have to develop new talent. And John has done a great, great job since he came in with -- we have a couple of pictures. We turned them into a couple of the best developers in the solar business because they are driven. The young generation today, they are driven about sustainability, and that's what we are doing. So we are able to attract the talent, but it takes time to train them mentor them and get them to the point that they are very productive. But the other thing that's happening, because we are so well with the digital age, research and development that they do, and they pull the company in a different direction that someone like me, the old timers will take us. So basically, we have to expand our capabilities. Right now, we're working from between 75 to 100 people at any given point in time. That's where we are right now. And so we want to expand our workforce. And we want to -- the other thing to maintain the leadership position, we're going to drive the market. Our people have to go out there and approach those customers. And this is what Britta said, is a perfect storm. Now the customers are approaching us because they have -- just when Bob said it because they have sustainability goals, and -- but we have to be able to deliver. And it takes time to build the organization. But we feel very comfortable with where we are because this is our bread and butter business. And many of our competitors, who have note what I say, broaden their platform, broaden the capabilities to deliver across that space. And you heard Kevin talk about it a little bit. What they like about us, they say it's the only energy services company that they can address renewables as well as all the other aspects, but it took very investments. And I don't know if you recall, about 4 years ago, we said we're going to take $5 million to $10 million of OpEx to broaden our capabilities, and that's where we brought expertise in battery storage and microgrids. And then last year, Mike made the huge investment to expand his engineering capabilities and construction management on the green gas plants. So, great question.

Thanks. So Ben, over there, and then we'll go to the front with Noah.

So just to clarify, Doran, just you emphasized the SoCal as a battery project. And it felt like you might have been saying that something is off track or maybe I've just got that wrong or...

No, I don't believe I would describe anything as offtrack. Yes.

And then George, I think that some of my competitors have written about you being a key man risk and what happens after you retire or what you do next. You look younger than me. But so how do we address that?

Listen, I'm not going anywhere anytime soon because I feel great. I love what I'm doing and I love this business. And listen, I started this business 52 years ago, I built the first -- I was a start-up engineer in a 650-megawatt coal-fired power plant, right? Now I want to build 650 distributed energy resources, and about a couple of megawatts [ switch ] to build that. Look, I love what I'm doing. But on the other hand, if some -- and I'm not retiring. But if something were to happen to me, we have great, great backup team. And what -- why I look so good is because I run, and I challenge anyone from here to do a marathon with me, but this team is keeping me young, because I rely a lot on them, I delegate a lot and I have empowered them to run the company. But when it comes to the vision and where we go, where we do it, that's what I get involved. But I'm not retired. I'm incented here, by the way. They have the same 3-year goals, so...

Noah Kaye from Oppenheimer. George, I would not dare challenge you to a marathon, but I would dare to ask multipart question to your team. So first question would be for Mike and the second question would be for some of the project folks starting with the call. Mike in the landfill business, generally speaking, fugitive emissions aren't directly measured these days, right? The industry is working on that, but it's all estimated using EPA models. When you do a landfill gas project, how much of the potential gas are you actually recovering? What's the opportunity just on a brownfield basis to expand production at existing sites over time as some of that measurement gets better? And then for Nicole and the project team, we were heard on the last earnings call that there's an accelerating potential sales cycle. Just given all the demand drivers you talked about and now higher energy prices, we'd love to know what are some of the verticals that are really manifesting that for you where you're seeing the most incremental demand. And then what evidence can you give us that the sales cycle is actually accelerating?

That was a great question, and you must be from the landfill business. So we take the -- typically, we take the gas at a delivery point from the landfill owner. So typically, we aren't in the wellfield. But the reality is that at times there was opportunities to invest further into the wellfield to collect more gas. And that could be through technology, which is continually getting better at the wellhead as well as additional wells. And so we've done -- what we've done in many occasions is we'll actually run an analysis for landfill owner and we'll be willing to put the capital investment up because the return for us is so quick. It makes all the sense in the world. And we try to structure our agreements give us the ability for that if you would self-help provision so that we can go make that investment. So where there's opportunity to collect more gas because it's not just at the point of regulatory collection, we'll go ahead proactively and do it. Does that answer your question?

Yes.

I guess I would answer on the project side. I think just the urgency of the drivers that we've talked about so many times throughout the day, need for resiliency, compliance with ESG plans for our C&I customers is really shaping these opportunities to come out. The project that we talked about, the Coast Guard, we actually did that project developed it in 8 months, which is probably the fastest project I've ever seen go under contract for a federal customer, where we were selected in February of last year and got it under a contract in September. So again, driven by the customer who had that urgent need for resiliency solutions. So I think we'll see more and more of that and all of our customer sets for different reasons, again, whether for needed infrastructure improvements, resiliency or sustainability goals.

Yes. And if I may, the last couple of years because of COVID-19, you cannot use that as a measuring stick what's happening to our sales cycle. I think as we're coming out now, we come out. I think the next 12 months to 18 months, we will find out better. But what Bob pointed out though, was beginning to have better traction, the C&I moving that selling cycle, especially where we have national accounts and we do various facilities and Bob mentioned some names there, but that's where you will see the acceleration of the selling cycle. Yes.

[indiscernible] We have standard contracts. Sorry, when we go into these enterprise accounts, and we've got a number of them right now, we prenegotiated all the contracts, terms and conditions, pricing, sometimes open book. We have our -- in the cases where we have ownership, we're lining up our equity. So it's not like we're renegotiating everything. That's what gives us the scale and repeatability. It's the same. When we get -- Mike and I get on those calls with the hospital that I referred to in California, we're dealing with their treasurer, there's chemistry there. We're negotiating with it. This is not a new one over. So we're seeing some compression on the deal side there.

Yes. Well, that portion of the business is a smaller scale, so it doesn't impact the top line as much as you would like yet. But ultimately, it's going to become a driver because they have the sustainability goal. You heard it.

Great. Thanks for the questions, Noah. So we've got one over here.

Greg Wasikowski from Webber Research. You mentioned electrolysis a few times. Have you guys done any internal demonstration projects or work around production costs or logistics required for that? And if not, what would be the time line for you guys to look into that a little bit more seriously?

Go ahead, Mike.

Yes. I think the -- I think our first project out the gate will be SMR for a variety of reasons. One being is that, again, we're leveraging our existing assets. We do have -- we are looking at some technologies on the electrolysis side. But we're also trying to keep in mind, I think, opportunistically what's the best place for it. I mean you talk about the west, right? It's faced with a 3-year drought, and water is becoming a very scarce resource. And that's the basis of electrolysis. So where we do it, I think, will also play a role into the availability of water, where it's not as restrictive. But out the gate, I think it will be SMR for us first.

Other questions? We go live here.

Maybe just on the 2024 3-year goal, how should we think about kind of the target percentage coming from energy assets? Should that stay pretty consistent with where we are today? And looking at some of the new markets, how should we expect versus kind of the consistent growth of the markets versus some of the new markets you guys talked about? What -- how should we think about you guys penetrating some of those new markets as kind of core to that $300 million target would be helpful?

So I'll start...

I don't know if I -- what percentage comes from the assets?

Coming from the energy asset.

I'll just can answer and you can pitch in. Look, for the last year, we had 65% of the EBITDA coming from the assets. So I wouldn't be surprised that out of that $300 million probably would be 70% to 75% maybe, which I would feel great about it. And the other thing because you saw Mike's development of the assets and then John has even a more ambitious megawatt development over the next 3 years. So that will contribute a lot. And that's what makes me feel very comfortable that it's a very good target that we should be able to make it and the management team. Now as far as the top line, that's very hard to predict. That's why we don't forecast until the end of the year what we will do the next year on the top line. Because we have a project business, and maybe we will win another $700 million project. Then all the numbers, the top that you forecast, you'll be on it. So that's -- but on the other hand, we have a solid base, what we have in the contracted backlog right now to deliver that EBITDA. So [indiscernible].

I want just say one thing because you mentioned new technology says as far as hydrogen and carbon sequestration goals, our efforts goal, they aren't really going to scratch the surface on that 3 year ago.

Just a quick one. One of the questions we get from investors, so I figured I'd just ask you here, is you set the bar pretty high with this battery project and what it does to your 2022 numbers, right? And as we think about the pipeline of opportunities over the next 12 months, I mean, based on your guidance, it clearly, looks like you're confident in what you see. But how do you think about the bridge from '22 to '23 as far as order flow goes, and how you fill the gap from what we suspect will be a pretty strong EBITDA contribution from the battery project?

I will, yes, I'll start. So I think the answer is, we are focusing on the EBITDA, that $300 million is an EBITDA number. As we've talked about the revenue number, when you do design build projects at lower gross margin percentages. But with our operating leverage, that's gross margin dollars that can drop to the bottom line, right? So I don't think we are thinking in terms of communicating and talking about gaps or anything of that nature. We're thinking about that EBITDA trajectory, and we feel very comfortable about where that EBITDA trajectory is going to be in. And that's a combination of adding energy assets, project business that's going to come, project business that's already in our awarded backlog, already in our contracted backlog and the use of operating leverage in those future years with the new market opportunities that we're seeing.

Okay. And if I may add, I'm a long term -- I'm a stockholder, right? How do you create value for the company? It's the long term. What we do next year is not as important what we're going to do the year after, the value that we create. That's what we're building for. Everybody, the whole team is on focused building long-term value for the company and ultimately, the stockholders it as well.

You've had a pretty good [indiscernible].

We did. That's not to say that this year is over or next year is over, right, already. But this is -- we're a long term -- that's why we don't like to talk about quarters too much. And we like to talk about years and we like to talk about multi-years. So look, I want to thank everyone for coming. We're going to wrap up the Q&A here. As I said before, we've got a full hour of cocktails in the room here. We've got the entire management team. Everybody you see on the screen, except for Nina, unfortunately, who had to be remote today. but our general counsel is here -- questions there. We're looking forward to visiting with all of you, and we want to thank you again for coming. George, closing remarks?

Well, other than thanks again. Great to have you here, and I hope we do more -- we do it more often. We are excited. We thank you for your support, all the analysts. In addition to that, all the stockholders that they are here, we're thanking you for your support. We will not disappoint you. Thank you.

One last thing, sorry, housekeeping. We will be posting the slide deck here on the website later this evening. The press release was issued with some of the new information after the market closed today. Lastly, this webcast will be available for replay. That's probably going to go up an hour or 2 from now if you've got others that you want to go through and dig in, pick apart what we said. Thank you very much. Looking forward to seeing you next door here. Thanks.