|
December 14, 2001
Capstone Generates Interest in Microturbines
by William Baue
Capstone Turbine Corporation offers environment-friendly alternatives to electricity generation for
multiple applications.
SocialFunds.com --
On December 10, Capstone Turbine Corporation (ticker: CPST) announced a milestone for its
microturbine electrical generators: four units had been in operation around the clock for more than
two straight years. The firm’s stock price, however, has not performed so steadily. After a
June 2000 initial public offering at $16, the share price rose to just under $100 by the end of
August 2000, then fell throughout the past year to its $3.87 close yesterday.
 Capstone manufactures 30- and 60-kilowatt
microturbines, which are stand-alone electrical generators known for their low emissions.
Microturbine applications include converting oilfield, landfill and sewage waste gases into
electricity, backup power, premium power, and onboard power generation in hybrid electrical
vehicles (HEVs).
The volatility of Capstone’s stock has had as much, or more, to do
with investor fickleness as it has with the company’s financial prospects.
“The whole energy/technology sector has come in and out of favor,” said Eric
Prouty, a research analyst at the Boston-based investment banking firm Adams, Harkness & Hill,
Inc., in explanation of Capstone’s market performance. “Don’t forget this all
occurred during one of the worst bear markets of all times. Also, the company did miss some of its
numbers, some of the estimates.”
The market’s adoption curve of the
microturbine will determine Capstone’s long-term viability, according to Mr. Prouty.
“The real question is, will the microturbine get to the cost points, the reliability points,
etc…, where it can compete against diesel or gas engines,” said Mr. Prouty.
“People need to understand what the long-term o/m—operations and
maintenance—costs are on these products.”
Capstone’s demonstration of
microturbines’ long-term endurance will prove key to the company’s success. Its
longest-running model was installed at the Capstone research and development facility in December
1998. Since then, the 30-kW microturbine has been running almost continuously, except for minor
routine maintenance. It has logged over 25,000 operation hours, which translates to almost three
years.
“The performance of these units is very encouraging,” said Capstone
President and CEO Dr. Ake Almgren. “Capstone’s targeted design life is 40,000 hours
before major overhaul. The high endurance results of these units across a wide variety of
applications and geographies is further hard data supporting that we are well under way toward that
target.”
In November, Capstone unveiled their installation of 60-kW microturbines at
five General Motors dealerships in California. The microturbines will generate electricity onsite,
in conjunction with solar panels manufactured by BP. This setup promises to save money while also
reducing demand on the electrical grid and improving air quality.
Initial investor
enthusiasm for Capstone came at a time when electrical grids were maxed out. Electrical generation
with microturbines represented an attractive alternative. However, upon closer examination,
investors realized that it was premature to consider replacing grid electricity with onsite
electricity. The GM dealerships will thus serve as test cases for this experiment in alternative
electricity generation.
“I think there’s a place for the microturbine out
there,” says Mr. Prouty, predicting the stabilization and eventual growth of the microturbine
market and perhaps that of Capstone as well.
©
SRI World Group, Inc. All Rights Reserved.
Top
| 
