Flush with cash from an IPO early in the summer, aCalifornia-based micro-turbine pioneer yet to record a profit, ishoping to keep up with increasing demand and move into the blackfinancially by the end of next year, spurred along at leastpartially by this summer’s electricity supply and price problems.

In the short-term, it is seeking to expand growing off-gridmarkets in transportation and oil/gas field power production.

Capstone Turbine Corp., Chatsworth, CA, Thursday completedconsolidation of a half-dozen production locations scattered aroundSouthern California into a single, 40,000-square-foot productionfacility and headquarters about 30 miles from downtown LA. Seven ofits 30 kW micro-turbines help supplement power from the localutility, the City of Los Angeles Department of Water and Power(LADWP).

“This gives us a much bigger, concentrated area in which toincrease our manufacturing capacity to 20,000 units annually,” saidKeith Field, a Chatsworth-based spokesperson for Capstone.

LA’s political and energy leaders turned out at ceremoniesmarking the official opening of the new facilities Thursday inwhich the LADWP’s 74-year-old General Manager, S. David Freeman,noted that although he has been a long-time alternative energyadvocate, he never thought he would be alive when distributedgeneration became a commercial reality.

He noted that Capstone has been the “beneficiary of thepremature, halting and not-yet-successful efforts withderegulation. The price of electricity as a scarcity is such thatthe old order is sputtering and making room for technology todaythat we previously saw as decades away.”

After almost two decades of development for transportation andother applications, Capstone has the first commercially available30 kW electricity producing turbines that it claims can operate oneight different gaseous and liquid fuels — natural gas being themost common. A 60 kW unit is set to be introduced to the marketlater this year, according to Capstone officials.

While the company has found niche markets in the resourcerecovery (oil/gas field and biomass applications) and hybridelectric bus areas, longer term the prospect of cogeneration,supplements to grid power, power quality and standby generationapplication on or off of the transmission grid is where Capstone isbetting its future lies, and initially the bulk of that will be inAsian and European markets.

A combination of environmental and economic advantages are beingheavily promoted by the company in selling to distributors, energycompanies and utilities in Japan and elsewhere outside of NorthAmerica.

Capstone has about $200 million in cash to advance its strategy:$150 million for a June 28 IPO in which its stock was offered at$16, closed in the $40 range and has been selling recently between$85 and $95/share. Another $50 million in cash was on the company’sbalance sheet earlier this summer.

Ultimately, distributed generation needs changes in regulatoryrules that make it uneconomic to apply the technology, and Capstoneofficials said the company will be among the leaders in state,regional and national coalition efforts.

But the company’s sales growth over the next 12 to 15 months isbased more on other applications of the micro-turbines, and itexpects to maintain gross margins in the 40% range, according toCFO Jeff Watts. Single units retail for about $25,000 and there arediscounts for large orders by distributors and others.

The high first cost is offset by its virtual “maintenance-free”operating history, Field said. For bus operators, for example,repairs and maintenance on more traditional diesel and gasolinemodels is traditionally a major expense.

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