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CPST: The Microgrid Opportunitity and Drivers

IN FOCUS: CAPSTONE TURBINE CORP. AND THE MICROGRID OPPORTUNITIES AND DRIVERS 

The alphaDIRECT Insight

Capstone’s distribution network has been developing microgrid projects for many years, and the Company continues to invest to expand and compete in the market. In our opinion, some of the main advantages with microgrids are that they are compact, quiet and easy to install in multiples allowing for redundancy with less overall kWs. Capstone’s units have been operating as microgrids even before the term became popular, since they have the ability to operate either connected to a conventional power grid or through its “Stand Alone/Island” mode. Capstone is currently focused on educating communities as well as project developers about the many benefits with microturbines and Capstone’s inverter technology in order to capture new market opportunities. We believe that the growing interest in microgrids creates additional markets for Capstone’s long-term rental fleet, which should help the company improve its margins and reach its goal of a 10 MW rental fleet by early next year.

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Shawn Severson: First, I would like to thank you, Jim, for taking the time to speak with alphaDIRECT today. Last time we spoke to Jeff Foster, Capstone’s Senior Vice President of Customer Service and Product Development, as we discussed recent developments within Capstone’s aftermarket service business. Today we will focus on microgrids and how this sector is impacting Capstone. According to GlobalData, the global market for microgrids was about $15 billion in 2017 with approximately $4.6 billion in the U.S. However, the worldwide microgrid market is estimated to be valued at $30 billion by 2022, with a compound annual growth rate (CAGR) of 15% between 2018 and 2022, led by the American region. For investors new to this sector, can you explain what a microgrid is and what are their advantages to that of conventional grid power?

Jim Crouse: Absolutely, Shawn. A microgrid is a localized group of energy generation resources that typically operates while connected to the utility grid, but can also operate disconnected from the grid, and continue to operate in “island mode” for either economic benefits or resiliency reasons.

Shawn Severson: Can you explain what energy resiliency is and what the advantages of microgrids are to that of conventional grid power?

Jim Crouse: Energy resilience is about ensuring a business has a reliable, constant supply of energy – both electrical and thermal energy. Some of the primary advantages of microgrids are that they can be designed to withstand power surges, natural disasters, bad weather, accidents, and equipment failure. Improved reliability, greater sustainability, and lower costs are also driving the transformation of isolated microgrids, such as island grids.

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