Capstone Turbine Subsidiary Formed to Serve Electricity Needs of California Businesses.

Business Editors

CHATSWORTH, Calif.--(BUSINESS WIRE)--Feb. 20, 2001

Capstone Turbine Corp. (www.microturbine.com) (Nasdaq:CPST) has formed a wholly owned subsidiary, Capstone California, to directly serve the electricity needs of California businesses.

"The energy crisis gripping California provides a unique opportunity to establish distributed generation as an immediate, viable and significant new source of electricity that doesn't require a compromise on the environmental side," said Capstone California's newly appointed president, Mike Tingus. "The Capstone MicroTurbine is among the world's cleanest fossil-fueled power generation technologies.

"Beyond the environmental benefits, the Capstone MicroTurbine allows businesses to control their cost and supply of electricity while reducing the load on California's overtaxed grid system," said Tingus.

Capstone California intends to make available turnkey microturbine-based energy solutions to business and public facilities throughout California. Unlike today's backup generators that are generally limited to 200 hours or less of operation a year, Capstone MicroTurbines can be operated around the clock, every day of the year.

"The Capstone MicroTurbine completely changes the model of onsite power generation. It provides end-users with reliable, quality power and protects them from the price volatility and uncertainty of grid-supplied power," Tingus said.

Tingus noted that Capstone California already has several proposals out to interested California businesses and facilities. He also mentioned that Capstone California has been working closely with the California electric utilities and other energy service providers to build alliances with electric engineers and electric contractors.

Speaking on the formation of Capstone California, Capstone Turbine Corp. President & Chief Executive Officer Dr. Ake Almgren said: "Capstone California is an extension of our strong California connection. Since our founding in 1988, Capstone's design philosophy has been to beat California's current and future emission standards.

"Much of our core technology has its roots in the Southern California aerospace and automotive industries. We produce all of our systems right here in Los Angeles County and source most parts and subassemblies from California suppliers.

"An investment in onsite Capstone power production is an investment in California's economy. Capstone MicroTurbines hold the promise to be a significant part of the solution to the California energy crisis," Almgren said.

"Continuing this California tradition, we are very pleased to have Mike Tingus accept our offer to become president of Capstone California. Mike has been a leader in the California commercial real estate market for more than a decade. He also has served in the City of Calabasas Planning Commission for the past six years and has been chairman of the commission for the last two years.

"Mike's background and the high caliber of his team will make Capstone California a true solution provider to California businesses and energy service providers," Almgren said.

With headquarters in the Los Angeles suburb of Woodland Hills, Capstone California plans to open offices in the San Francisco Bay Area, San Jose, Sacramento, Orange County and San Diego.

About Capstone Turbine

Capstone Turbine -- winner of Financial Times Energy's (www.ftenergy.com) 2000 Global Energy Award for Most Innovative Commercial Technology -- is a leading producer of low-emission microturbine systems. In 1998, Capstone was the first to offer commercial power products utilizing microturbine technology, the result of more than 10 years of focused research.

Worldwide, more than 1,000 commercial production Capstone MicroTurbine systems serve, among others, the following applications:

-- Hybrid electric vehicles (HEVs): onboard generation

-- Resource recovery: converting oilfield and biomass waste gases into
electricity

-- Micro-cogeneration: combined heat/power/chilling solutions

-- The 9s market: power quality and reliability

This news release contains "forward-looking statements," as that term is used in the federal securities laws, about Capstone's business, including statements regarding leadership in technology and/or product production and regarding Capstone California's plans to open new offices in California. Readers can find many of these statements by looking for words such as "believes," "expects," "anticipates," "estimates" or similar expressions. 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. These risks and uncertainties include those risks, uncertainties, marketplace competitors and risk factors identified, among other places, under "Risk Factors" in Capstone's registration statement on Form S-1, SEC File No. 333-48524. Capstone cautions readers not to place undue reliance on these statements, which speak only as of the date of this release. Capstone undertakes no 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.

Note to Editors: Information on FT Energy Award noted above is at: www.microturbine.com/whatsnew/pressrelease.asp?article=56 High-resolution photos available at: www.microturbine.com/whatsnew