CESI Catalytica Energy Sys (MM)

Catalytica Energy Systems Xonon Cool Combustion System Demonstrating NOx Emissions Well Below Its 3 ppm Guarantee In Commercial Gas Turbine Applications GILBERT, Ariz. and MOUNTAIN VIEW, Calif., Feb. 17 /PRNewswire-FirstCall/ -- - Catalytica Energy Systems, Inc. , the world's first and only company to commercialize a catalytic combustion system for stationary gas turbine applications, is now realizing another industry first and setting new standards in commercial ultra-low emissions performance through pollution prevention rather than cleanup. As an integral part of Kawasaki's 1.4 MW GPB15X cogeneration system, Catalytica Energy Systems' breakthrough Xonon Cool Combustion(TM) system is consistently demonstrating nitrogen oxides (NOx) emissions well below its 3 parts per million (ppm) guarantee in commercial operation. "The emissions performance of our Kawasaki gas turbine equipped with Xonon has more than lived up to its 3 ppm NOx guarantee since entering service in November 2002," said Mary Lavin, Energy Resource Specialist at Sonoma Developmental Center. "Not only are we recording NOx emissions at around 1.5 ppm or less on a regular basis, we've even noted emissions under 1 ppm on a number of occasions. What's more, we're achieving ultra-low NOx emissions without a downstream cleanup system, eliminating the use of toxic chemicals and enabling us to more fully meet our environmental objectives." Xonon's impressive emissions performance was first demonstrated on a 1.4 MW Kawasaki gas turbine while operating on the commercial electricity grid as part of a field demonstration at Silicon Valley Power, a municipal utility in Santa Clara, California. This site has since accumulated more than 18,000 hours of reliable operation with NOx emissions consistently recorded well below 3 ppm. Catalytica Energy System's Xonon Cool Combustion system is now demonstrating these same ultra-low emissions levels in its first commercial installations at two independent sites in California. Both of these sites are operating Xonon-equipped Kawasaki GPB15X gensets to supplement their heat and power requirements. "While we've seen NOx emissions consistently well below 3 ppm in our field demonstrations, we're excited and gratified to see our technology achieving these same ultra-low levels in commercial operation," said Mike Murry, president and CEO of Catalytica Energy Systems. "Xonon's performance in its first two commercial applications reinforces what we've validated in the field and provides additional credibility for our product in the marketplace. Furthermore, we continue to refine our proprietary catalyst technology platform to further enhance our product line and believe that future generation products could yield near-zero NOx emissions." TheCompany's Xonon Cool Combustion system is also demonstrating the same levels of ultra-low emissions at both base-load and part-load conditions as low as 70%. This wide operating range is economically appealing for distributed generation applications, offering plant operators the option to reduce their power output during periods of minimal demand and realize significant fuel savings while still maintaining compliance with air permits. Alternative NOx control solutions can result in higher emissions levels when operated at part-load. Xonon Cool Combustion is the most advanced, commercially available on-engine solution for ultra-low NOx emissions. The Xonon system uses a catalyst instead of a flame in the combustion process, enabling combustion at temperatures below the threshold at which NOx forms. The pollution prevention approach offered by Xonon is a significant advance in gas turbine innovation, enabling plant operators to meet increasingly stringent emissions regulations in a more cost-effective and environmentally friendly manner than downstream cleanup systems. Catalytica Energy Systems' Xonon Cool Combustion system was commercialized in partnership with Kawasaki Gas Turbines-Americas, and is available today on Kawasaki's GPB15X generator package, which features a 1.4 MW M1A-13X gas turbine equipped with Xonon. Hiro Matsumura, president of Kawasaki Gas Turbines-Americas, said, "We view Xonon as a valuable addition to our product line and are proud to be the providers of the first commercially available power generation package to include this state of the art pollution prevention technology. Our Xonon-equipped gas turbines have been extremely well-received by customers with applications in emissions-sensitive areas, which cannot tolerate the associated risk, size or expense of downstream cleanup systems. As the first gas turbine manufacturer in the world to offer Xonon-equipped gas turbines, we believe we're in a strong position to address our customers' combined power and emissions requirements in the distributed generation marketplace." Catalytica Energy Systems designs, develops, manufactures and services advanced products for the energy and transportation industries with a focus on cost-effective solutions for reducing nitrogen oxides (NOx) emissions from combustion-related applications. Our proprietary technologies include the application of catalysts to combustion systems and next-generation fuel processors to offer innovative NOx solutions that mitigate the environmental impact of power generation and transportation systems. We are marketing our first commercial product, Xonon Cool Combustion(TM), a pollution prevention technology that enables natural gas-fired turbines to achieve a significant reduction in certain air pollutants to ultra-low levels. Xonon(R) reduces the formation of NOx, a primary contributor to smog, through a proprietary catalytic combustion process. We are also pursuing adaptation of our core Xonon technology to develop and commercialize NOx reduction solutions for mobile, off-road and stationary diesel engine applications. These systems are being designed for incorporation in both new engines and retrofits of existing diesel engines. Additional technology development efforts related to fuelprocessing systems for fuel cells used in automotive applications are also actively underway. Find Catalytica Energy Systems on the Worldwide Web at http://www.catalyticaenergy.com/. This news release contains forward-looking statements regarding the ability of Catalytica Energy Systems' Xonon Cool Combustion system to continue to perform in commercial operation with ultra-low NOx emissions well below 3 ppm; the ability of Xonon to continue to demonstrate these same emissions levels at part-load conditions as low as 70% and to offer improved economics to the end-user as a result of this feature while maintaining compliance with air permits; the ability of future Catalytica Energy Systems' products to yield near-zero NOx emissions; and the market demand for Xonon-equipped gas turbines for distributed generation applications in emissions-sensitive areas. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those expressed in the forward-looking statements. These risks and uncertainties include, among others: the fact that there may be unanticipated technical, commercial or other factors that could arise relating to the application of Xonon to Kawasaki's GPB15X generator package and the operation of Xonon-equipped Kawasaki gas turbines; possible fluctuations in economic conditions affecting the markets for Catalytica Energy Systems' products; the risk that a market may not develop or be maintained for Catalytica Energy Systems' products; changes in the environmental requirements for ultra-low NOx emissions; that continued refinements to Catalytica Energy Systems' technology platform may not yield a nero-zero emissions product; and that results may differ from those stated and the other risks set forth in the Catalytica Energy Systems' Annual Report on Form 10-K for the fiscal year ended December 31, 2002 filed with the Securities and Exchange Commission on March 31, 2003. Catalytica Energy Systems undertakes no obligation to update any forward-looking statements to reflect new information, events, or circumstances occurring after the date of this release. NOTE: Xonon and Xonon Cool Combustion are registered trademarks of Catalytica Energy Systems, Inc., Gilbert, AZ, USA CONTACT: Megan Meloni, Investor Relations of Catalytica Energy Systems, Inc., +1-650-940-6253. DATASOURCE: Catalytica Energy Systems, Inc. CONTACT: Megan Meloni, Investor Relations of Catalytica Energy Systems, Inc., +1-650-940-6253 Web site: http://www.catalyticaenergy.com/

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