From: lorna.brennan@enron.com
To: chuck.wilkinson@enron.com, ld.stephens@enron.com, janet.bowers@enron.com, john.dushinske@enron.com, tim.johanson@enron.com, frank.oldenhuis@enron.com, bob.burleson@enron.com, rockey.storie@enron.com, penny.mccarran@enron.com, stephen.herber@enron.com, mike.ullom@enron.com, bill.mangels@enron.com, steve.weller@enron.com, michael.stage@enron.com, jeffery.fawcett@enron.com, lorraine.lindberg@enron.com, kevin.hyatt@enron.com, christine.stokes@enron.com, tk.lohman@enron.com, michelle.lokay@enron.com, lindy.donoho@enron.com, steven.harris@enron.com, john.goodpasture@enron.com, michael.ratner@enron.com, sebastian.corbacho@enron.com, yuan.tian@enron.com
Date: 2000-12-08 09:17:00+00:00
Subject: The Financial Community Starting to Rally?

Distributed Power: The Next Big Investment?
 
With today's electricity demand expanding beyond the reach of available 
supply, and nationwide electric deregulation efforts providing inconsistent 
results, distributed power just may be the next big thing, according to Bear 
Stearns analyst Robert Winters. 

With technology-laden, electricity-hungry companies popping up every time you 
turn around, and blackouts and brownouts occurring more frequently as large 
power grids are becoming less reliable, the analyst points towards 
distributed energy services as a possible solution, and maybe the "next big 
investment opportunity for the coming decade." In Winters' 250 page report, 
"Distributed Energy Services-The World's Power and Transportation Industries: 
Set for a Revolution-Part 2," he examines technologies and companies within 
the distributed energy services sector that might be able to take advantage 
of the current situation. 

"Thanks to major technological advances and energy deregulation, a wave of 
new investment in the power industry has just begun. We believe that this 
coming era in the power industry could resemble the wave of investments which 
flooded into the telecommunications industry following the breakup of AT&T in 
the early 1980's," said Winters. 

"Companies and municipalities need to find ways to ensure the availability of 
high quality, reliable power," added Winters. According to his research, 
microturbines are the best positioned of the "new" technologies that would be 
able to have an immediate impact on electric generation. 

He based his recommendation on the fact that microturbines are small, quiet, 
efficient and very versatile. "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," the analyst said. "Microturbines can also be used 
in remote locations, including developing countries, that do not have access 
to electricity." Another attractive feature of microturbines is their fuel 
requirements. The units often use natural gas, but can also use several other 
fuels as well. 

In the study, the analyst also examined fuel cells, flywheel technology, and 
existing reciprocating engines technologies such as diesel engines and 
Stirling engines, which he noted are enjoying a comeback. 

In addition to the report, Winters initiated coverage on two distributed 
energy companies. He labeled Active Power, a company that is pioneering 
flywheel technology, as a "buy" and Capstone Turbine Corp., a leading 
manufacturer of microturbines, as "attractive." The companies are in addition 
to two fuel cell companies he currently follows. Ballard Power is currently a 
buy, and Plug Power is rated neutral. 


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