Capstone intensifies clean energy efforts in China

Capstone Turbine Corporation has signed up its second microturbine distributor in China, Shanghai Tech-Steel Petroleum & Natural Gas Technology Development Co., to further develop its customer base in the oil and gas sector.

Capstone Turbine Corporation has signed up its second microturbine distributor in China, Shanghai Tech-Steel Petroleum & Natural Gas Technology Development Co. (STS), to further develop its customer base in the oil and gas sector.

“Clean energy investments in both China and India will be enormous over the next 10 years, so now is the time for Capstone Turbine to intensify its efforts into these developing markets,” said Capstone president and chief executive officer Darren Jamison.

Founded in April, 2007, STS is a company dedicated to the oil & gas industry including coal-bed methane and coal mine methane.

“STS has a proven track record in working with the major players in oil and gas in China including China National Petroleum Company, Sinopec and China National Offshore Oil Company,” said Jim Crouse, executive vice president, sales & marketing. “STS has significant experience in the oil and gas sector in China and has developed numerous projects with Waukesha natural gas engines,” he said.

Presently China accounts for just 5% of Capstone’s sales, although with the establishment of a new office in Shanghai late last year and this latest distributor agreement, the company hopes to improve customer education on the use and economics of microturbines over more traditional heat and power generators.

The STS distributor agreement was finalised during the recent US Clean Energy Trade Mission to China, headed by US Assistant Secretary of Commerce David Bohigian. Talking to Blue Skies China during the trade mission, Crouse said the biggest challenge in China was getting out and explaining to end users and customers the benefits of microturbines, both environmentally and in terms of efficiency gains; and how best to apply the product.

“It’s a simple product,” he said, “but unless you train people on how to apply it, where it fits and where it doesn’t, it’s hard for them to figure out.” he said.

For example, many end users still think in terms of upfront investment costs rather than lifecycle costs. “Our lifecycle costs are very low because the microturbines use air bearings, so there’s no oil change, our service intervals are very long,” said Rouse (see the video at the end of this story for more on the air bearing).

“On a lifecycle basis we’re lower cost than most competing products, but our first costs are typically higher than the traditional gas reciprocating engine. So we’re training our distributors and sales people to sell lifecycle costs rather than first costs,” he said, adding that the microturbine competitiveness was most realised in parts of the world where labour costs were higher.

Low service intervals and high reliability make microturbines a good choice in certain oil and gas applications, said Rouse. For example, Capstone is working with Chinese multinational oil giant Sinopec to supply its microturbines to a natural gas pipeline between Bolivia and Brazil. The microturbines, used in valve control stations, can be dispatched by satellite communication, and offer “a high degree of redundancy and reliability for valve control and telemetry,” said Rouse.

Below: Simon Xu, Capstone’s Shanghai-based sales manager, Greater China, showing Capstone’s low-maintenance air bearing at the POWER-GEN Asia 2007 exhibition in Bangkok, Thailand.

About James Ockenden (225 Articles)
A writer covering international energy and power markets since 1996
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