Thanks to California's worsening energy crisis, a small company in Chatsworth could see a tremendous windfall.

Capstone Turbine Corp. builds microturbine power systems, essentially versatile, mini power generators, which can make individual businesses less dependent on California's unpredictable power grid.

In fact, the company launched an ad campaign this week to make commercial power users, whether they are nursing homes, hotels or factories, aware of the alternative that Capstone products provide.

"We are getting a lot of inquiries right now," said Ake Almgren, president and chief executive of Capstone. "It started in the fall, when prices in San Diego went up dramatically and, for example, light manufacturing businesses were showing an increased interest, and it has been continuing ever since."

Capstone microturbines are roughly the height of a person and can produce between 30 and 60 kilowatts of electricity. They can be powered by diesel fuel, natural gas, or even so-called "sour" gases, such as methane from landfills and sewage plants. They cost between $30,000 and $55,000 apiece, according to Almgren. Furthermore, they are very clean sources of power, designed to meet the strictest environmental guidelines.

A battery of microturbines can provide enough juice to power a small hospital, but Almgren sees his product primarily as a way for commercial users to diversify their options and as a complement to the existing electricity network.

Of all the alternative energy generation technologies currently under development, microturbines are the best positioned to make an immediate impact on the current energy crisis, according to Robert Winters, an analyst with Bear, Stearns & Co.

"Microturbines are incredibly flexible," said Winters in a release. "They can be used as a main power source, a back-up power source, or as an alternative when there is a spike in traditional energy prices."

Capstone has already lined up an impressive list of customers, including BP Amoco Plc, which last month announced that it uses a Capstone microturbine at the "world's most environment-friendly gas station" in Madrid. Also last month, Illinois-based Invensys Building Systems Inc., a major manufacturer of building heating and ventilation systems, announced that it has ordered 100 microturbines from Capstone in a distribution agreement.

"That's a very significant deal for (Capstone) because Invensys is specifically targeting the California market with their products," said Marko Pencak, an analyst with Credit Suisse First Boston. "That puts (Capstone) in a very good position to benefit from the current crisis, because they are one of the few companies producing alternative power systems that actually has commercially available products at this point."

Among Capstone's other clients are the municipalities of Atlanta, Los Angeles, and Tempe, Ariz., which use the microturbines on their fleets of hybrid electric buses. L.A. has four such buses, which run on natural gas and electricity generated by the microturbine, in service currently. The buses emit only 4 percent of the exhaust of a traditional diesel-powered bus.

Capstone was founded in 1988, and the company started commercial production of its microturbines in 1998.

The company attracted some very high-profile investors, including Ben Rosen, former chairman of Compaq Computer Corp., and Paul Allen's Vulcan Ventures, prior to its IPO at the end of June of last year.

As the California energy crisis reached a new level of intensity last week, investors were lapping up shares of Capstone and other alternative energy technology developers. On Jan. 18, Capstone's shares closed at $38.63, up 18.6 percent for the day.

Analysts cautioned, however, that this might be a speculative bubble caused by opportunistic investors, and it could burst as soon as such companies release their earning figures.

While Capstone does not expect to release its fourth-quarter and year-end results for another week or two, for the third quarter ended Sept. 30, it posted a net loss of $8.1 million (11 cents per share), compared to a net loss of $6.3 million ($4.85 per share) for the like quarter one year prior. Revenues were $6.2 million, vs. $800,000 one year earlier.

"We're still a young company, but last year we moved into a new facility in Chatsworth with the capacity to build as many as 15,000 units per year," said Almgren. "We may not reach that capacity this year, but it will be 2003 before any new power plants come online in California and there will be lots of opportunities for growth for us."

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