Capstone Green Energy Corporation’s exclusive distributor for Alaska, Artic Energy, has secured a new 12-month Energy-as-a-Service (EaaS) rental contract with a local oil and gas company headquartered in Anchorage. The oil exploration company has established a dominant acreage position on the resource-rich North Slope, home to the largest oil fields in North America, and is looking to reduce its environmental impact.
This contract signifies continued EaaS business expansion due to ongoing customer demand and demonstrates progress on the Company’s vision to create smarter energy for a cleaner future and builds on its track record of saving its customers an estimated $698 million in annual energy costs and reducing CO2 emissions by more than 1,115,100 in the past three years.
“Capstone is seeing strong customer demand across industries for its EaaS long-term rental services, which had 7 MW under contract in March 2021, 26 MW under contract in March 2022, and today contracts in excess of 35 MW, representing nearly 37% growth in one quarter alone,” said Darren Jamison, President and Chief Executive Officer of Capstone Green Energy. “Our EaaS business provides a lower cost and carbon footprint for on-site energy systems in energy-intense businesses like oil and gas, hospitality, commercial, industrial, cannabis, and bitcoin mining which meets multiple needs of existing and prospective customers,” added Mr. Jamison.
Capstone is focused on growing our EaaS business because it provides higher margins, more constant and predictable revenue streams, and allows for a more streamlined staffing model than a traditional industrial manufacturing company while helping customers manage capital costs and meet their environmental impact targets.
As part of this growth strategy, Capstone management has reduced operating costs and modified the operating model, all while continuing to expand its EaaS business. In order to keep up with demand, the company has turned to a “re-rent” strategy which allows the company to quickly accelerate the EaaS rental business model without using large amounts of new capital. A “re-rented” unit is taking an existing customer’s pre-owned microturbine unit that is not being utilized and deploying it into our growing EaaS customer base. By leveraging this unique re-rent strategy, we have created an additional revenue stream for both our Distributors and Capstone, all while continuing to save customers money on their energy needs. Of the 35 MW of contracts noted above, approximately 21 MW of contracts are being fulfilled by units from our internal rental fleet, and the remaining contracts will be fulfilled through re-rents.
“The re-rent model we have recently implemented allows us to continue the high growth rate of the EaaS business without the need for investing additional capital. The margin rates are lower on a re-rent basis than our traditional rental model, but we have the option to purchase the re-rented microturbine-based system in the future in most cases when the company has higher free cash flows,” concluded Mr. Jamison.
Capstone Green Energy (www.CapstoneGreenEnergy.com) is a leading provider of customized microgrid solutions and on-site energy technology systems focused on helping customers around the globe meet their environmental, energy savings, and resiliency goals. Capstone Green Energy focuses on four key business lines. Through its Energy as a Service (EaaS) business, it offers rental solutions utilizing its microturbine energy systems and battery storage systems, comprehensive Factory Protection Plan (FPP) service contracts that guarantee life-cycle costs, as well as aftermarket parts. Energy Conversion Products are driven by the Company’s industry-leading, highly efficient, low-emission, resilient microturbine energy systems offering scalable solutions in addition to a broad range of customer-tailored solutions, including hybrid energy systems and larger frame industrial turbines. The Energy Storage Products business line designs and installs microgrid storage systems creating customized solutions using a combination of battery technologies and monitoring software. Through Hydrogen Energy Solutions, Capstone Green Energy offers customers a variety of hydrogen products, including the Company’s microturbine energy systems.
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