Capstone Turbine Expects New Cogeneration Promotion by KeySpan Energy to Lead to Additional Sales of Capstone MicroTurbines.

CHATSWORTH, Calif. -- KeySpan, the Nation's Fifth Largest Gas Utility, Offers Incentive Program to Commercial and Industrial Customers Through On-Site Cogeneration Initiative Using Capstone MicroTurbines

Capstone Turbine Corporation(R) (www.microturbine.com) (Nasdaq:CPST) stated today that KeySpan Energy Delivery has developed with Capstone a marketing promotional mailer for the sale, installation and factory direct service of Capstone MicroTurbine(R) on-site power generation products. "This has the strong possibility to lead to significant additional sales of Capstone MicroTurbines," said John R. Tucker, Capstone's Chief Executive Officer. KeySpan Energy Delivery is a subsidiary company of KeySpan Corporation (NYSE:KSE), which is the fifth largest distributor of natural gas in the United States and the largest in the Northeast, operating regulated gas utilities in New York, Massachusetts, and New Hampshire that serve 2.6 million customers.

The KeySpan promotional materials quote Mr. Mike DeFazio, Vice President of Operations for Alpha Plastics in Brooklyn, New York, a KeySpan customer who is benefiting from the advantages of Capstone MicroTurbines, as saying, "Prior to purchasing the Capstone MicroTurbines we were strictly buying electricity off the grid. The folks at Capstone were fantastic and their response time was excellent. The unit is compact, about the size of a large refrigerator, and we're generating about 40% of our electricity from it at present with plans to generate 100%. Our energy cost savings are already in the 30 to 35% range and the equipment requires minimum maintenance. There's also the added benefit of avoiding power interruptions which can be costly to a manufacturing operation."

KeySpan Energy Delivery recently mailed the KeySpan-Capstone sales incentive materials to commercial and industrial natural gas customers in portions of Brooklyn, Queens, Staten Island and Long Island. The informational brochure states that KeySpan will provide a "free, no-obligation feasibility study illustrating how natural-gas powered Capstone MicroTurbine distributed generation can lower the customer's energy costs and improve their bottom line."

In the KeySpan-Capstone promotion, KeySpan Energy Delivery is highlighting Capstone MicroTurbine products, which are available in a variety of configurations, that allow the customers to utilize exhaust heat from the turbines for heating, cooling, or a combination of heating and cooling, in addition to electricity generation. Capstone will provide factory direct service contracts for the microturbine installations, which will be sold and serviced by Capstone New York.

KeySpan Energy Delivery has mailed the informational brochure featuring the Capstone MicroTurbine equipment, headlined "Guaranteed Energy Cost Savings," to its commercial and industrial gas customers in the target market area. An electronic copy of the brochure is available on the Capstone website home page at www.microturbine.com.

Mr. Tucker commented, "We are excited about this sales opportunity, and what it can do for both companies. We are delighted the nation's fifth largest natural gas utility has selected Capstone to deliver the benefits of on-site cogeneration to its customers. Our current order backlog of 17.1 megawatts of generating capacity as of July 7, 2005, is greater than our total sales for the prior fiscal year, which ended March 31, 2005. And over two megawatts of this backlog, as we announced June 14, is already scheduled for installation within the KeySpan natural gas distribution area. This existing backlog of orders does not include any of the additional anticipated sales orders from our New York office as a result of this recently announced KeySpan-Capstone joint marketing/sales program." Mr. Tucker further noted, "This sales effort is another major step forward for Capstone in expanding our presence in the marketplace, increasing our traction, and gaining increased customer acceptance."

About Capstone Turbine

Capstone Turbine Corporation (Nasdaq:CPST) is the world's leading producer of low-emission microturbine systems. In 1998, Capstone was the first to offer commercial energy products utilizing microturbine technology, the result of more than ten years of focused research. Capstone Turbine has shipped more than 3,000 Capstone MicroTurbine systems to customers worldwide. These award-winning systems have logged more than 9.25 million operating runtime hours of documented operation. An ISO 9001:2000 certified company, Capstone Turbine is headquartered in the Los Angeles area with sales and/or service centers in New York, Milan and Tokyo.

"Capstone Turbine Corporation" and "Capstone MicroTurbine" are registered trademarks of Capstone Turbine Corporation. All other trademarks mentioned are the property of their respective owners.

This press release contains "forward-looking statements," as that term is used in the federal securities laws, about Capstone's business, with regard to, among other items, expectations of increased sales resulting from the KeySpan Energy Delivery promotion. Forward-looking statements may be identified by words such as "believe," "expects," "objective," "intend," "targeted," "plan," "on track" and similar phrases. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause Capstone's actual results to be materially different from any future results expressed or implied in such statements. Many of these risks and uncertainties are described in our periodic filings with the Securities and Exchange Commission. Capstone cautions readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Capstone undertakes no obligation, and specifically disclaims any obligation, to release any revisions to any forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Editors: An electronic copy of the KeySpan mailer and cover letter is at: http://www.microturbine.com/documents/keyspanmailer.pdf.