More Power Moves For Cummins

Diesel Progress North American Edition, August, 2001 by Mike Brezonick

Newage subsidiary enters strategic partnership with AvK; Capstone, Westport agreements address emissions concerns

In an effort to continue the expansion of its power generation related businesses, Cummins Power Generation and its subsidiaries have made several significant moves over the last several months. The most recent of these was the strategic partnership between CPG's Newage International division and AvK/SEG of Germany.

As a result of the partnership, announced in late May, Newage becomes the largest shareholder of AvK/SEG with a 50 percent equity share. The Newage/AvK/SEG companies will be operated as a single group led by Steve Zeller, who will serve as chairman and managing director. Zeller currently heads Newage, based in Stamford, U.K.

The Newage and AvK/SEG partnership is expected to have annual sales of approximately $340 million in 2001, and employ 2700 people worldwide. Newage and AvK/SEG will operate under three business units serving power generation, power quality, and power protection sectors.

The Newage/AvK/SEG group provides a wide range of products and services to the power generation industry, according to Jack Edwards, president of Cummins Power Generation, who cited the combined generator line that spans a range from 0.5 kVA to 30,000 kVA. "The product offerings of the two companies are largely complementary," Edwards noted. "Newage is the market leader in four-pole generators up to 2000 kVA, while AvK's strengths are in multi-pole products of higher outputs up to 30 MW.

"SEG brings into the group several technically advanced products, including power electronic and control systems for wind turbines; rotary uninterruptible power supply (UPS) and power conditioning systems; protection relays utilizing intelligent electronic devices (IEDs); genset controls and AVRs; and current and voltage transformers. SEG's Power Station business also supplies complete turnkey power stations up to 150 MW and controls, switchgear, and monitoring/management systems for power stations.

"From a Cummins Power Generation perspective, the Newage/AvK/SEG alliance brings several significant benefits," Edwards added. "The alliance creates a leading supplier of products and services to the broader power generation industry. The group expects significant growth opportunities from the sale of AvK/SEG products through both the Newage and Cummins distribution channels, particularly in North America and the Asia/Pacific region.

"Cummins, for example, expects to offer the rotaly UPS system to expand its own range of power solutions, integrated with our own gen-sets, through Cummins distribution system. In addition, there are a number of synergies between the activities of Newage/AvK/SEG and other parts of the Cummins Power Generation group. Cummins has its own outstanding capability in power electronics, electronic controls and smaller switch- gear, and we can become even more successfull by leveraging these synergies'

The Newage-AvK deal is just the latest in a series of moves Cummins has made concerning power generation over the past several months. In April, the company announced a three-year agreement to distribute Capstone-powered microturbine systems through the Cummins Power Generation business unit. Just prior to that announcement came the news that Cummins and Westport had formed a joint venture that is focused in part on power generation.

The Capstone agreement was in large measure an effort to "meet a broader spectrum of customer needs," according to Edwards. "The future holds a significant place for all low emissions solutions in power generation, and the Capstone arrangement is one of Cummins' specific responses to this challenge.

"We think microturbines will be a very interesting niche opportunity for the next few years and the greater the volumes, the more the costs per kW can gradually become competitive with other micropower alternatives."

According to the terms of the agreement, Cummins will incorporate Capstone's 30 and/or 60 kW microturbine systems into a new Cummins line of turbine-powered generator systems. These Cummins products will have a "Powered by Capstone MicroTurbine" nameplate and be sold worldwide, with the exclusion ofJapan and Mexico. The products are scheduled for commercial availability later this year.

"Diesel gen-sets have great acceptance in standby markets, while the microturbine can be an excellent solution for instal-lations that require clean, quiet power with solid costs and can operate many hours per year' said Edwards. 'Cummins and Capstone recognized that we complement each other and our roducts don't compete with each other. Cummins has a first-class power generation distribution system with global reach, and this complements the product offering from Capstone."

Edwards called the Westport joint venture "a natural extension of Cummins Power Generation's gas business strategy, and is yet another part of our ongoing low- to medium-emissions strategy.

"Westport has helped Cummins develop some exciting new natural gas products for power generation that will be targeted at peaking markets," Edwards added. "The technology offers the potential of a lower cost solution to low emissions and for sets requiring long hour operation in the above 300 kW range and it will help customers avoid the spikes in electricity costs that are becoming more common during peak hours of operation."