HomeDecentralized EnergyCogeneration CHPCapstone chief confident company is well-placed for decarbonisation trend

Capstone chief confident company is well-placed for decarbonisation trend

The chairman and president of Capstone Turbine, the world’s leading low-emission microturbine systems, sees a lot of scope for optimism in the company’s future as the trend towards decarbonisation gathers pace.

Darren Jamison spoke to COSPP this week about why he believes Capstone continues to be ideally placed for growth. He also referred to the unique difficulty the company has in lobbying for attention to be given to its product and the reluctance to sell at this stage of its development.
Darren Jamison of Capstone speaks at POWER-GEN International
The microturbine technology produced by the California headquartered firm is becoming increasingly relevant as a source of clean energy and a way for businesses to both lower their operating costs and reduce emissions.

The company currently has 112 patents for such as recuperators and combustion cleaning free mix and is generally recognised as being unmatched in the area of air bearing technology.

“We look at distributed generation at a sub 5 MW level and are by far best in breed, have a technology that is flexible and reasonably priced compared to other technologies, and we don’t need heavy incentives to make the economics work in most environments,” says Jamison.

“Most importantly we are not an internal combustion engine, we’re one tenth the emissions of an internal combustion engine, with just one moving part. We use digital control and inverter technology deep in parallel with the grid and we are small and lightweight.”

“Customers don’t have to spend time changing oil and spark plugs and belts and hoses and all that comes with having a lot of parts. When it comes to energy distribution, customers want something that is as plug and play as possible and I think we fit that niche.”

20 -30 per cent growth rates have been recorded annually with the firm since 2006. Capstone has sold 8500 units in 73 countries and currently has a backlog identified projects of $1.5bn.

Recent global policy developments favouring technologies that can help towards decarbonisation have helped growth but it hasn’t been all plain sailing with one of the company’s major markets suffering a decline. Strength in a power generation capacity has helped to offset the fallout somewhat.

“Our biggest market historically has been oil and gas but that is now experiencing a slowdown. But our CHP and distributed generation business continues to grow throughout the world, whether the US, EU, Mexico, Latin America, Middle East or Africa. Even in Australia we have done more business in our current quarter than in all of last year.”

A greater emphasis by policy makers in getting the world’s cities and megacities to reduce emissions has worked out well for the company but they are innovating to build even greater efficiencies.

“We are continually making greater changes to our products to make them more CHP-friendly ” for example we are placing combine heat recovery on board so you don’t have to have heat recovery equipment off the unit. We work with absorption chiller and air conditioning manufacturers in that respect to deliver products that are smaller yet more effective.”

“Our total system efficiently involves around 85 -90 per cent capture of waste heat and we are doing more in terms of energy efficiency.”

Despite the apparent advantages of the offerings to hand, Capstone sometimes struggles to have its voice heard above the din of other technologies claiming to contribute to a cleaner energy world. They have, as Jamison seems to acknowledge, a victim of their own success.

Capstone is by far the biggest operator in the space it occupies and the prospect of a grand coalition collectively shouting the merits of the microturbine are currently remote.

“Patents are wonderful and blocking competition is a very positional business thing to do. We possess 80 per cent of market share being first to market 20 years ago. The negative thing about it is that when you try to compete with wind and solar, fuel cells and other exciting technologies we are one voice because we cut everyone else out of the market. We don’t have an industry voice to inform legislators or educate customers so we are smaller because of that.”

Jamison says he is glad for the company to compete in the battle to help cities reduce their carbon footprint but believes that technologies need to compete on a level playing field, something that is often not the case.

Rather than offering 10 per cent tax credits to favoured technologies he advocates the government resisting the temptation to pick winners and should instead move towards broad goals, allowing technologies to achieve those goals.

Capstone’s chief believes the scene will continue evolve positively as more efficiency legislation comes on stream and in Europe the portfolio of projects to its credit includes
breweries, wineries, industrial applications, wastewater treatment plants and hospitals.

There were 20- -65 projects in Germany alone in the last quarter and Jamison doesn’t see why that growth in demand for what they do should change any time soon.

“There shouldn’t be a hospital, hotel, or industrial building with a thermal or electrical load in an urban environment anywhere that isn’t using our product.”

“Natural gas prices are low worldwide. Utility rates are going up and a lot of governments are trying to reduce subsidies.”

“From the macro perspective by providing cheap input fuel ” offsetting very expensive power – and by providing heat to customers we can offset boiler and chiller load ” so that the economics work in more places around the world and are only getting better.

“If we educate architects and engineers as to what you can see happening in New York for example. Realto? (Real Estate Board of New York) property is one of our biggest customers. Every new property they build in NYC carries our technology ” instead of putting in a standard boiler and chiller you put in a microturbine on a hot water loop and make air conditioning or heat depending on the time of year.”

Jamison puts it in clearer terms.

“If you can make energy at 85 per cent efficiency cheaply at the hose while improving your carbon footprint why would you buy energy at 30 per cent from the utility who are going to raise your price? We’re making energy at lower emissions than utilities in most cases.”

With all that faith in the prospects of the offering has the management and board at Capstone ever been minded to sell while the going is good? It’s not something they are considering right now.

“We’ve had conversations with many companies coming in over the years from UTC to Samsung to many Asian companies ” we’ve looked at strategic relationships and partnerships bit would rather not sell the business at this point.

“We think that as microturbines become mainstream and CHP become standard tools of architects and engineers and as efficiency regulations continue to tighten around the world, we are in a good place.

“We meet the lowest emission standards currently in the world which is California without a catalytic converter on natural gas and diesel and other fuels.”

“We’re very unique and much further ahead of other technologies. Do we think we can be a $1bn company without being part of another organisation? ” No but the timing of doing that is yet to happen.