A lot of Internet companies like to boast that they're powering the economy. Capstone Turbine Corp. dreams of someday making that claim--literally.
The Woodland Hills firm spent 10 years developing a microturbine that's about the size of a refrigerator and generates 30 kilowatts of electricity, enough to power a Laundromat or a fast-food restaurant. Capstone has sold at least 673 of its microturbines since they went on sale in December 1998.
Though a relatively untested technology, the energy industry has high hopes for microturbines. Like glorified windmills, they spin tens of thousands of times a minute, driving generators that convert mechanical energy into electricity while producing few pollutants.
Small businesses aren't Capstone's only target market. Larger companies can use the Capstone MicroTurbine to generate some of their own power, especially during hot summer afternoons when electricity from the grid is most expensive. Oil drillers can use them to burn the methane gas that is released with oil and convert it into usable energy. The microturbines can be installed in electric buses and vans to keep their batteries charged. Companies also could use the devices to provide backup power in the event of a blackout.
But Capstone needs to generate some cash before its microturbines can generate more power. It has raised more than $260 million from venture capitalists, including Microsoft Corp. co-founders Bill Gates and Paul Allen and Compaq Computer Corp. Chairman Ben Rosen, who serves on Capstone's board. But after racking up cumulative losses of more than $144 million, the company is looking for some help from the stock market. Earlier this spring, Capstone filed to raise as much as $115 million in an initial public offering.
Capstone is aiming for the so-called micropower market, which includes devices that generate less than 250 kilowatts of power and are generally deployed at the point of consumption, such as an office building.
Producing power on site is more efficient than transmitting it over the grid. Transmission alone accounts for 20% to 30% of the cost of electricity, and some power is lost as it travels along transmission wires, said Angelina Galiteva, executive director of strategic planning for the Los Angeles Department of Water and Power.
Capstone was the first company to make a microturbine commercially available, but it's no longer the only supplier. Industrial and engineering giants Honeywell International Inc., Ingersoll-Rand Co., Siemens Corp., Hitachi and ABB are also in the microturbine business, as are a few small players.
