CPST has a very marketable product; they have a good image as well as market presence. They are arguably positioned to capture a significant share of the distributed power market, but there is some competition and there are areas where other OEMs can compete with CPST.

The 30kW unit costs $35,000, which is equivalent to a cost of $1,167 per kW of installed capacity. The industry average for installed capacity is around $1,000 for small generation units (less than 50MW) and around $800 for large generation units (greater than 50MW). The installed cost for small reciprocating generation units is around $900. So, CPST is a little expensive versus the competition with regard to the cost of installing one of their units, but economy of scale hasn't set in yet for them.

Also, the CPST micro turbine has a heat exchange rate of around 13,000 BTU per kWh of power. Reciprocating engines are a little more efficient around 11,500 BTU per kWh. The heat exchange rate is basically how much fuel it takes to make one kWh of power; the larger the number, the less efficient the engine. Where the micro turbine makes up ground is in the maintenance and operation as well as the reliability versus the reciprocating engines. The micro turbine can run for thousands of hours maintenance free. It has its own internal compression to deliver the fuel and it's quieter than the reciprocating engine.

IMHO, the real test will be the management of CPST. What will be the response time from when an end-user calls CPST and asks for their product? How informed will that response be, who will install it, how much time will that take to install, and then who will maintain the unit once it's in place. If CPST can answer these questions in a clear and concise manner, they will be a great company.

They have set up alliances with companies like Hanover Compression to deliver their units into various markets, now they have to deliver on their service and quality. So far, they have proven they can run with the big dogs. At $27.50, CPST is great buy-just look at their cash on-hand and compare it to their share price.

ODK-out