Capstone Turbine Corporation (NASDAQ:CPST) announced Thursday that a large automotive manufacturing facility in Mexico, which uses a fleet of the company’s clean-energy microturbines, has signed a new Factory Protection Plan (FPP) long-term service contract for 2 megawatts (MW).
In a statement, the company said its microturbines were commissioned in April 2015 and are installed at the facility for electronic components and lighting systems. The systems will be used for peak shaving and power-generation only, at this time.
The customer employs more than 3,000 people with six production plants and takes pride in being at the forefront of major trends in the automotive industry that include the environment, safety and comfort, Capstone said.
The 5-year FPP provides complete service coverage, including scheduled and unscheduled maintenance.
In adding the 2 MWs, DTC Ecoenergia, a top Capstone distributor for Mexico, has increased its fleet coverage under FPP to a record 18.2 MW.
The growth of Capstone’s global long-term FPP service contract business is critical as it provides recurring revenues and higher margins. Growth of this industry-leading service business along with the Capstone factory long-term rental fleet program are critical initiatives as Capstone looks to migrate towards an energy-as-a-service business model, which the company believes is an exceptional fit because of the inherent reliability and longevity of the air-bearing equipped microturbine energy systems.
“DTC continues to do an outstanding job by adding new customers and converting existing time and material (T&M) customers over to the Capstone industry-leading long-term service contracts within their growing fleet,” said Jeff Foster, Capstone’s senior vice president of customer service and product development.
“Our highly profitable aftermarket service sector, driven by the recently updated FPP product, is a key element of our near-term positive Adjusted EBITDA plan and for Capstone’s long-term profitability.”
Capstone’s innovative FPP is a comprehensive maintenance program designed to give financial peace of mind to microturbine customers by providing product life-cycle costs at a fixed rate for both scheduled and unscheduled maintenance for the life of the microturbine system.
Additionally, the recently updated FPP protects microturbine customers from potentially dramatic future increases in life-cycle costs associated with changes in replacement spare parts pricing, commodity price increases, import tariffs, and interest rate changes.
“Our entire aftermarket business, including long-term FPP service contracts, as well as new long-term microturbine rentals and T&M spare parts and service support, continues to grow. This latest contract win adds to the validation of the strengthening market adoption of our first-class aftermarket services,” said CEO Darren Jamison.
“The 2 MW CHP installation, now with its new 5-year FPP, is expected to benefit both Capstone and the end-use customer jointly over the life of the project, making it truly a long-term win-win energy partnership.”
Capstone, based in Van Nuys, California, offers a product line-up of microturbines that can produce anywhere from 30 kilowatts to 10 megawatts of power, operating on a variety of gaseous or liquid fuels. To date, Capstone has shipped over 9,000 units to 73 countries
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