Simply stated, this remains a great investment opportunity that will drive attractive returns and fundamentally alter the growth trajectory and long-term prospects for our business and we continue to believe that we will not require the sale of any equity to achieve this. Our confidence in reaching these target investment returns are not just hypothetical. Earlier today, we announced a strategic milestone with the signing of our first ever granular activated carbon contract. The contract accounts for approximately five million pounds of annual GAC production or approximately 20% of our targeted initial name plate capacity. The contract price is attractive and represents a multiple of our average PAC pricing. This is a tremendous achievement and provides third-party validation of our strategy and expanded solutions offering.
The signing of our first GAC contract amplifies our confidence in both our broader granular activated carbon strategy and our specific product potential. The contract also further de-risked the strategic expansion of our Red River plan. We remain in active discussions with additional customers regarding our remaining GAC capacity. Based on those discussions, we are confident in our ability to enter into additional contracts for the facility’s full 25 million pound capacity ahead of final commissioning later this year and look forward to providing further updates in the near-term. Let’s now turn to a discussion of exciting and even transformational regulatory news that has been released since we last spoke with you on our fourth quarter earnings call in March.
As many of you are likely aware, on April 10th, the EPA issued a landmark decision to implement the first ever national legally enforceable drinking water regulations on PFAS or forever chemicals. The regulation significantly lowers permissible levels of these types of chemicals in the U.S. drinking water by over 90% from prior EPA guidance. These changes mark a pivotal moment in ongoing and increasing efforts to safeguard public health and preserve environmental integrity. At Arq, we recognize this as a monumental opportunity. The new standards set by the EPA are expected to drive even stronger near and long-term demand for effective remediation products, particularly granular activated carbon as demand escalates due to these stricter regulations, Arq is strategically well positioned, not just to participate, but to lead the market with a our unique GAC products and innovative solutions.
We articulated our enthusiasm following the announcement, emphasizing that this regulatory shift paves the way for stronger demand for our products and contributes to a cleaner future with materially higher quality water in our communities. We estimate that the EPAs new benchmarks will catalyze a three to five times increase in GAC demand over the coming five-years within the water market alone. We believe the current water sector demand is roughly 170 million pounds. At the conservative end of our estimates, this equates to total water sector demand of an excess of 500 million pounds of annual demand versus the current 170 million pounds. Clearly, this increase in demand is well in excess of current and anticipated supply. As outlined on Slide 9 of our latest investor presentation, historical market data circa 2021, 2022 estimates a GAC supply deficit of between approximately 50 million pounds and 115 million pounds between 2025 and 2029.
Importantly, this data does not factor in the significant increases in demand driven by the EPAs recently announced regulations. We estimate that normal market growth when combined with municipalities seeking to comply with the new EPA regulations in advance of the 2029 deadline will potentially result in 370 million pounds of excess demand versus current supply. With this supply and demand backdrop, we believe prices could continue to materially improve versus our business plan estimates and even the pricing reflected in our inaugural supply contract. We believe the regulatory landscape for PFAS continues to dramatically change, not just nationally, but globally. The level and intensity of discussions and focus on the topic is palpable, and we are proud to be at the center of this critical global initiative.
We anticipate similar regulations to those recently announced by the EPA will be adopted in other markets around the world. This will further expand our addressable market and opportunities for growth. We remain dedicated to our mission of enabling customers to meet these evolving regulations through our innovative technologies. As I noted earlier, the ongoing construction of our new 25 million pound GAC facility is progressing on schedule for commissioning in the fourth quarter of this year. This expansion will significantly enhance our production capacity and fortify our supply chain, ensuring we meet both current and future demands. While we remain keenly focused on developing Phase 1 of our strategic growth project at Red River, we are actively assessing the viability of a second 25 million pound at Red River.
This remains in the planning stages, but importantly, we have already secured all necessary permits to quickly execute on a Red River Phase 2 project. We believe the combination of market ready product, existing site location, and necessary permits in place puts us several years ahead of any potential competition, which will undoubtedly be attracted to the market, should demand and pricing and improve as we expect. With that, I will hand it over to Stacia to discuss the latest financials in greater detail.
Stacia Hansen: Thanks, Bob, and thanks everybody for joining us today. We delivered strong financial results during the first quarter with revenue growing 4% year-over-year, driven largely by enhanced contract terms, including 16% growth in average selling price and positive changes in product mix partially offset by a 6% decline in volumes. Our gross margin in the quarter was approximately 37% more than double the 17% reported in prior year period. As a result, in the first quarter, we achieved the fourth consecutive quarter of double digit year-over-year percentage growth in ASP and also reduced our net loss over the prior year period. Adjusted EBITDA loss improved year-over-year to $1.1 million compared to an adjusted EBITDA loss of $7.7 million in the prior year.
