4.1. SR 10-06-1997 - Laserfiche WebLink

Home Browse Search

LOS ANGELES BUSINESS JOURNAL WEEK OF OCTOBER 28 - NOVEMBER 3, 1996 Generating power without much fuss Capstone touts turbine as perfect source of energy BENJAMIN MARK COLE - Senior Reporter If best-laid plans don't go astray, tiny turbine power plants produced by Capstone Turbine Corp. soon will be humming away in the nation's office buildings and factories. And after that, maybe they'll be in the world's motor vehicles - a production target market of 50 million units a year and rising. For jaded observers of the high-tech ven- ture capital scene, the plans of Tarzana- based Capstone Turbines' may at first blush seem to be wishful fantasy. But Capstone has induced big-name financiers to cough up tens of millions of dollars, including Paul Allen, co-founder of Seattle-based Microsoft Corp., and Ben Rosen, chairman and founder of Compaq Computer Corp. Capstone turbines are small (165 pounds, and about the size of a beer keg), but can deliver enough electricity to air- condition a 7-Eleven on a hot day. They require no scheduled maintenance and run on clean-burning natural gas or other fuels. That's all well and good in theory. But the challenge is to put theory into practice - to mass produce the machines using readily available materials and to sell them at an affordable price. Enter Paul Craig, the affable, 57-year- old president and chief executive, who was brought to the company two years ago for his past wizardry in converting wild ideas into commercial production. It was Craig who delivered break- throughs in the production of automobile turbochargers for his former employer, AlliedSignal's Garrett automotive division in Torrance. "My background is in manufacturing high-speed turbochargers (for automobiles) in volumes of 1 million to 2 million a year," says Craig. "I intend to ramp up production here." The trick in making this new technology commercial, Craig explains, is to use off- the-shelf manufacturing techniques. "We are designing for high-volume pro- Efficient fuel: Capstone CEO Paul Craig looks to make turbine power ubiquitous. duction, using commodity (non-exotic) materials, and manufacturing processes that have been proven," he said. Capstone currently has just 70 employ- ees, mostly engineers, ensconced in a makeshift 23,000-square-foot plant in Tarzana. The company was founded in 1988 by former Allied Signal executives, and for several years survived with the help of research grants from motor giant Ford Motor Co. and the federal government. By 1994, Capstone managers and finan- cial backers felt they had a good idea, but needed production smarts to bring it to market - resulting in the hiring of Craig. So far, not a single turbine has been placed into commercial use, although 24 have been put into various sites for testing. Two turbines whir and whine outside Capstone's headquarters, helping power the plant. Capstone's short-run goals are to install the relatively low-priced turbines into office buildings, grocery stores and facto- ties. And there is much to suggest that it will find a market. Right now, big power companies are grappling with the challenge of deregula- tion and competition at a time of relatively slow growth in electric demands. Plans for huge power plants have been shelved because of high costs, but new cus- tomers still need power. Existing plants, and transmission lines, are in some areas slowly becoming overwhelmed. "It's not a time to commit to huge pro- jects,'' says Jim Reilly, manager of research and technology applications for Southern California Edison, a unit of Rosemead- based Edison International Inc., which has purchased five Capstone turbines for testing. "But we can install hundreds of these little guys (turbines) for not much capital expense." Cheap - that's one of Capstone Turbine' s advantages. The 2,200-megawatt San Onofre nuclear power plant, for example, cost Southern California Edison $4.3 billion to build, almost $2,000 per watt. And 2,400 workers toil to keep it run- Capstone Turbine Corp. Headquarters: Tarzana Founded: 1988 Top Executive: President and CEO Paul Craig Major Investors: Vulcan Ventures (Paul Allen group), Canaan Partners, Rho Management Inc., Sevin Rosen Funds, Fletcher Challenge Ltd. Employees: 70. Telephone: (818) 774-9600.