Coal, Outage Management, Renewable Energy

Capstone Turbine awarded $6.2 million deal to install microturbines in Southern California

November 19, 2001 — The Governing Board of California’s South Coast Air Quality Management District (www.aqmd.gov) approved $6.2 million to purchase and install 30- and 60-kilowatt microturbines and associated equipment from Capstone Turbine Corp. (www.microturbine.com) (Nasdaq:CPST).

The action taken by the SCAQMD provides a $3.7 million firm purchase order for Capstone microturbines to be shipped in 2001 Q4 and 2002 Q1, $1.65 million approval for installation and related equipment costs, with the remaining $850,000 available for future microturbine purchases.

The announcement follows a separate agreement in April in which the SCAQMD approved $1.74 million to purchase Capstone MicroTurbine™ power systems and installation services.

The SCAQMD intends to distribute these California-made low-emission energy systems throughout Southern California. This clean-air technology program, made possible by SCAQMD’s Priority Reserve Fund, will displace older diesel generators and other polluting sources, improving the California environment. The use of Capstone MicroTurbines is intended to allow public facilities to reduce demand on the power grid during peak times, have a backup source of power in case of outage and realize cost savings in the process.

The Priority Reserve Fund was created by the SCAQMD earlier this year to allow new and expanding power plants to purchase particulate offset credits. Funds generated are to be used to reduce particulate emissions in the region.

Capstone MicroTurbines and other clean energy systems were discussed at the Clean Air Technologies conference in Anaheim Nov. 5 and 6, the SCAQMD’s first-ever international conference for public policy makers, industry representatives and other participants active in solving air pollution problems. Capstone MicroTurbines were also debuted at the SCAQMD-General Motors “Community Clean Air Partnership” event at a GM dealership in San Fernando on Nov. 4.

Norman Chambers, Capstone’s chief operating officer, said, “We are delighted to be working so closely with the world leader in air- quality management on projects that help alleviate energy concerns and provide cleaner air for all here in Southern California. This extraordinary endorsement brings increased awareness and validates the benefits of our innovative products. It is our goal to establish similar relationships with other world- organizations and businesses in order to bring a new age of clean, efficient, secure and reliable power production to our nation and to nations around the world.”

The SCAQMD will target a number of applications with the microturbines, ranging from replacement of diesel backup generators and inefficient boiler systems at schools, hospitals and other facilities to the use of renewable landfill “waste” gases as a fuel source for microturbines.

“Biogas applications of Capstone MicroTurbines deliver a strong value proposition to municipalities while turning a source of pollution into a source of clean power,” said Mike Tingus, Capstone vice president of U.S. Sales and Business Development.

Tingus was instrumental in establishing the agreements with the SCAQMD. “Today, the 50 Capstone MicroTurbines that have been installed at Lopez Canyon Landfill will reduce emissions of nitrogen oxides in northern Los Angeles County by more than 10,000 pounds annually. Governor Gray Davis has praised a similar installation of 10 Capstone MicroTurbines in Burbank.”

About Capstone Turbine

Capstone Turbine Corp. (www.microturbine.com) is a producer of low-emission microturbine systems. In 1998, Capstone was the first to offer commercial power products utilizing microturbine technology, the result of more than 10 years of focused research. For information on the landfill installation noted above, see: www.microturbine.com/lfg

For more information about the Governing Board of California’s South Coast Air Quality Management District, visit http://www.aqmd.gov.