George Sakellaris: Yes, actually, we are working on several of them, and it’s going to be a great, great market, no question about it. And we have several that we are working on. And actually, as you probably know, we have several bases, the United States government, where we have what we call the enhanced use leases, and we have some of the major data center people or companies that they would like to team up with us and execute on them. As you probably everybody knows, it’s a huge market and with AI and so on, the energy needs and the resiliency that they will need on the energy, it’s a perfect fit for what we have been doing basically for the federal government on every base right now has resiliency. That’s why they have battery storage, combined heat and power, solar, and then of course, the microgrid [ph] associated with it.
So each data center basically has the same needs. And I think you hit the nail on the head. It’s a market that we want to focus and expand further than what we have been doing so far.
Doran Hole: I would just add back to the comments that we made about being selective in our business development. We’ve got a real stronghold in the federal government market when it comes to winning those enhanced used leases. We’re going to take advantage of that as our way to really enter this market. We’re not going to go shotgun blast, try to capture every data center in the world. We’re going to be smart about where we’re going and pick the profitable projects and projects where our expertise is strong. And in addition to that, ensuring that we’ve got a real comfortable view of our counterparty, the developer have the creditworthiness, who’s on the other side of these contracts because we are cognizant of the fact that there are a lot of players in this space and a lot of new ones in this space and we’re being smart and selective about it. Great, great growth opportunity, yes.
Leanne Hayden: Right. Okay. Yes, that all makes sense. And just tangentially to that, do you have any interest in nuclear power?
Doran Hole: We haven’t moved into any of the implementation phase of that. I think within the same group that kind of looks after the federal government and some of our large projects. We do occasionally get involved with NREL and others on certain pilot projects and things. And I think we’ve got our eyes on a few ideas, but nothing major to talk about yet, not yet.
Leanne Hayden: Got it. Got it. Thanks so much. I’ll jump back in queue.
George Sakellaris: Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Pavel Molchanov of Raymond James Associates. Your line is now open.
Pavel Molchanov: Thanks for taking the question. It’s been a year since you acquired Enerqos in Italy. Can we get an update on the European opportunity and how that business is tracking?
George Sakellaris: Actually, they are doing excellent, much better than we get forecasted. It’s a great group and I think with our help its growing and I don’t know if you know, but we have teamed up with a great, great contractor of the solar projects in Greece and it was very small. And right now, I think we have over 1 gigawatt potential of solar projects are going to be building together. The market is very good. Don’t be surprised that we might have some more tuck-in acquisitions in Europe. The market over there is exploding, but on the other hand, we got to be careful how we go about it. And – but the Enerqos acquisition has worked out excellent for us. Actually, the Board of Directors are one of the people that probably gave me hardest time to buy that company. He said he loves Italy now.
Doran Hole: Yes. Pavel, we – I think the joint venture methodology with the solar EPC is really, really good leverage for us. We’re able to leverage off that organization, not just in Greece, the company is based in Greece, but we’re also building projects in Italy and the UK through that joint venture. And that’s a very good way for us to add incremental business and help them grow and in fact help Enerqos grow because we’re building projects in their home turf. So it’s a pretty exciting jurisdiction, to be honest. I think the UK is continuing to grow and continue to show strength. So we’ll be continuing to invest our time there.
Pavel Molchanov: Let me follow-up by asking about situation with Section 45Z. I know a lot of RNG developers have been surprised that the treasury has not unveiled the carbon intensity kind of calculation yet. What is your understanding of when that’s going to come out?
Doran Hole: Well, look, given the state of play in Washington currently, I think that the – irrespective of what you might hear from Washington, I think they’re being very careful about what they decide to put out in terms of guidance because you’re really inching up to that Congressional Review Act date. And I think that we’ve got to be quite careful about trying to estimate timing. So I think that it’s because these projects are critically important to the administration, I don’t think that means the guidance isn’t coming. The guidance is going to come. However, given where we are with the CRA, my suspicion is you’re getting second and third and fourth looks at the regs before they go out. They’re going to be very thoughtful about them because I think the last thing they want to do is have – the same thing happen with this as what happened with the renewable natural gas when they had to kind of turn around and reverse course on one of the provisions with the cleaning and conditioning equipment, if you remember.
So that’s kind of my thoughts.
Pavel Molchanov: Thanks very much.
Doran Hole: Thank you, Pavel.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Ben Kallo of Baird. Your line is now open.
Ben Kallo: Hey guys, congrats on the quarter.
George Sakellaris: Thank you.
Ben Kallo: Just quickly – just the approach to the RNG credits RINs, I know in the past you guys maybe hedged some or sold forward some, and just your approach now, then I have a follow-up.
Doran Hole: So with respect to the RINs side of things, we’ve been pretty happy with where those have been trading and the levels. As you know, it’s an [indiscernible] liquid, kind of over the counter market. But we’ve been relatively steady with going into the market and hedging a lot of our rent exposure for 2024. We’re – at this point, we’re over 70% hedged for 2024. So I think we’re feeling good about where those prices have been. We obviously always try to keep a little bit in our back pocket for production, but nevertheless, we’re kind of continuing to watch that market. I think we – so we feel good about that. The ITC on renewable natural gas, we’re still waiting for the guidance to come out to really affirm where that’s going to come through for 2024 projects that we’re placing in service. And the truth of the matter is, we’ve been underwriting those projects without it, and we’re continuing to underwrite our project.
Ben Kallo: I don’t want to put the cart before the horse, but just as we think about kind of 2025, 2026 and what you’ve established with the recurring revenue, any kind of color on how you think, because it was kind of lumpy in 2022 and 2023, but how we should think about going forward?
Doran Hole: We continue to invest in the asset portfolio, right? I mean, there’s not a fundamental change in the way we’re thinking about the RNG off-take, with the exception of the fact that we’re seeing prices in the non-transportation market go up. So we’re starting to look really closely. We’ve kind of come close to hitting a couple of those contracts that might be longer-term, certainly not related to the transportation market. And I think that we probably will see that increase as we bring more of these projects online for the next couple of years. The rest of the business, we’re – when we look at the growth rates for 2024 over 2023 and beyond, I think that we’re still feeling like it’s a steady growth. We’ve got the CAGR chart in our supplemental slides, 10% revenue, 20% on the EBITDA, and we think that that’s likely to be the direction that we go.
Ben Kallo: Good stuff. And just going back to the data center question, technologies that you guys would use, is it batteries or fuel cells or what are you guys…
Doran Hole: I would say we’re going to continue to take an agnostic approach. Of course, we’re going to be focusing on the carbon reducing technologies, right? So renewable generation, battery storage, the microgrid, et cetera. That’s going to be the key focus.
George Sakellaris: And some fuel cells here, yes.
Doran Hole: Yes. Fuel cells are not off the table, right? And backup power is important, so we’re going to have to think about what the customer is looking for, to be honest.
Ben Kallo: All right. Thank you, guys. I appreciate it.
Doran Hole: Thanks.
George Sakellaris: Thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from the line of Luke Tilkens of Piper Sandler. Your line is now open.
Luke Tilkens: Hey, thanks for taking the question. Most of ours have been answered. So just one for me. Looks like you brought on about 10 megawatts of projects in the quarter. Can you talk about your confidence on the 200 megawatts for the year? Thanks.
