Power blackouts shed light on Capstone Turbine's turnaround.

Two years after a huge blackout left dozens of East Coast cities darkened, Capstone Turbine Corp. is finding opportunities.

The Chatsworth-based manufacturer just got its fuel-efficient, low-emissions electrical generators approved by the borough of Manhattan's Department of Buildings to be installed without permits--the latest of many government incentives making New York Capstone's biggest growth area.

The decision by the agency was driven by the city's desire to expand the amount of power available to users from off-grid sources, given the problems with the region's power network.

"Building power plants to meet near-term energy demand, it's just not practical. It will take seven to 10 years, while demand continues to grow," said Chief Executive John Tucker.

The agency's move is the latest bit of good news for Capstone, which stumbled badly for years after going public in 2000. While California's energy crisis sent stock skyrocketing to more than $90 a share, as commercial users sought sources of electricity off the grid, sales did not match the expectations amid various regulatory hurdles, quality control problems and the later resolution of the crisis.

Shares tumbled to under a dollar by 2003 as sales nearly evaporated, but they have picked up again amid concerns that the nation's power supply is under strain and as Capstone has worked hard to increase the reliability of its units.

This year, the company expects to sell twice as many generators as the last fiscal year ended March 31, when it lost $6.9 million on revenues of $17 million. Last year, it sold units capable of generating 16.5 megawatts, the equivalent of 275 60-kilowatt generators. The company is also projecting it will be profitable within the year, causing Wall Street and speculators to take notice. The stock is up 200 percent in the past two months, closing at $2.70 on Aug. 3.

"When Tucker came in he really stripped the company down to bare essentials," said Walter Nasdeo, an analyst at alternative energy research firm Ardour Capital Investments LLC in New York. "He reduced the product distributor network, and put in more in-house sales and distribution people who are microturbine experts."

Capstone's primary products are the size of a refrigerator, generate 30 kilowatts or 60 kilowatts, and can be quickly installed atop an office building or hotel without heavy machinery. They run on gasified fuel, enabling them to run on just about any combustible fuel: waste methane from trash or manure, methanol, ethanol, diesel or natural gas.

Nasdeo cautioned that the company had a ways to go before it is a solid investment.