Reliablepowerwhenandwhereyouneedit.Cleanandsimple.

Management Presentation June 2016

Safe Harbor Statement This presentation contains “forward-looking statements” regarding future events or financial performance of the Company, within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

These statements relate to, among other things: the competitive advantages of Capstone products over competitors; the size of market verticals and potential market capture amounts; potential applications in industries within market verticals; the plan for EBITDA breakeven; the growth of distributor sales personnel; increased accessory sales; the competitiveness, advantages, and cost-effectiveness of the C1000 Signature Series; the growth of the CHP, energy-efficiency, and renewables markets; market segment growth trends; projected FY2017 sales pipelines; worldwide business expansion, including in Latin America, Africa, Australia, and the Middle East, and rebuilding sales in Russia; growth in the number of projects financed by the Capstone Energy Finance JV and expected project closings; FPP contract sales, and extended warranty sales; C1000 performance improvement; the growth of aftermarket service and the effects of aftermarket sales on gross margins; and benefits from Capstone’s cost reduction initiatives. Forward-looking statements may be identified by words such as “expects," "objective," "intend," "targeted," "plan" and similar phrases.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties described in Capstone's Form 10-K, Form 10-Q and other recent filings with the Securities and Exchange Commission that may cause Capstone's actual results to be materially different from any future results expressed or implied in such statements. Because of the risks and uncertainties, Capstone cautions you not to place undue reliance on these statements, which speak only as of today. We undertake no obligation, and specifically disclaim any obligation, to release any revision to any forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events.

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•  Founded 1988 − Commercial launch in 1998

•  Public Corporation 2000 (NASDAQ: CPST)

•  World leader in Microturbines

•  Headquartered in Chatsworth, California with two manufacturing plants

•  Over 95 distribution partners and 787 dedicated distributor employees

•  More than 8,800 units shipped worldwide

•  Over 50,000,000 operating hours

•  Installations in 73 countries worldwide

•  Not heavily dependent on government subsidies

•  Tremendous business leverage

Who is Capstone Turbine?

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What is a Microturbine?

CHP/TYPE

EFFICIENCY

ELECTRIC TOTAL

Hot Water 33.0% 85.0%

Steam 33.0% 60.0-95.0%

Chilled Water 33.0% 85.0%

Rotor Group

Air Foil

Power Out

Heat Out

Air In

Fuel In

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Competitive Advantages

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Global Market Verticals

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Energy Efficiency

42%

Oil and Gas 52%

Energy Efficiency

55%

Oil and Gas 37% FY15 FY16

Product Revenue 9 Months ended December 31, 2015

Product Revenue 9 Months ended December 31, 2014

Positive Vertical Market Shift

New focus on growing the energy efficiency market – Leverage new C1000S product

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$10.2

$28.3 $31.6

$17.7 $12.6

$17.0

$24.1 $21.0

$31.3

$43.9

$61.6

$81.9

$109.4

$127.6 $133.1

$115.5

$-

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

FY2000 (a)

FY2001 (a)

FY2002 (a)

FY2003 (a)

FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

EBITDA Breakeven April 2016

EBITDA Breakeven April 2015

EBITDA Breakeven April 2017

Current CEO Leadership

Cost Reduction – Revenue Growth Plan

(a) Adjusted to conform to current fiscal year periods.

Organizational Cost Reduction and EBITDA Breakeven Plan: Renew growth from 100 new sales professionals, launch of the new C1000 Signature Series product, new finance entity,

focus on the growth in energy efficiency business and expansion in Latin America, Africa, Middle East and Australia.

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Capstone Strategic Plan

Three-Pronged Capstone Business Profitability Plan

1)  Reduce EBITDA Breakeven from $160M annually at a 25% GM to $100M annually at a 25% GM by reducing operating expenses by 35%

2)  Develop New Product & Service Revenue Growth

3)  New Capstone Finance Business to capture lost orders

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1) Reduce Breakeven Level

Reduce EBITDA Breakeven from $160M annually at a 25% GM to $100M annually at a 25% GM by reducing operating expenses by 35%.

•  Consolidation of Executive Team saves $2.2M annually – flattens organization

•  Voluntary forfeiture of Executive unvested stock options saves approximately $0.7M over a weighted average period of approximately 2.3 years

•  Voluntary suspension of Executive Bonus Program saves up to $1.0M annually

•  Suspension of annual merit increase saves approximately $0.6M annually

•  R&D expense cuts after delay of C250/C370 program and successful Signature Series launch saves approximately $5.5M annually

•  Sales & Marketing spending reduction and expense shift to distribution partners saves approximately $4.5M annually

•  Customer and field service department reductions save approximately $3.3M annually

•  New LEAN manufacturing, key component outsourcing and shop floor consolidation to reduce manufacturing expenses saves approximately $3.4M annually

•  Linearity of product build plan lowers overtime expense and increases inventory turns 10

Develop New Product & Service Revenue Growth

•  Enhance top selling C1000 product line with better performance, integrated ICHP for

CHP market

•  Increased accessory sales with new heat recovery module (HRM) for C1000S series

•  Improved market vertical diversification with more focus on CHP and Renewables

•  Improved geographic diversification with a heavier focus on growing the business in Mexico, South America, Africa, Eastern Europe, Middle East and Australia

•  Rebuild Russian business by continuing to support BPC and adding additional distributors in Russia and Commonwealth of Independent States (CIS)

•  Work with global distribution channel to add 100 new sales professionals and improve our key performance indicators (KPIs)

•  Continued growth from Service Business with improved Factory Protection Plan (FPP) program and new extended Warranty product

•  Sell new Signature Series upgrade kits for non Signature Series products

2) New Sources of Revenue

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New C1000 Signature Series

•  Relocated Engine Exhaust Stack

•  12 Year Marine Grade Paint

•  Higher Inlet Fuel Temperature

•  New System Control Platform

•  1.0MW Electrical Output

•  1.5MW CHP Heat Recovery

•  Integrated Heat Recovery

•  Two Stage Air Filtration

•  Improved Enclosure Design

•  Lower System Noise Level

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Recent Order Momentum

May 31, 2016 “Capstone Receives Order to Upgrade Maffei Pasta Factory in Southeast Italy”

May 17, 2016 “Capstone Receives 1MW Order for District Heating Application in Northwest Italy”

May 10, 2016 “Capstone to Supply Propane-Fueled C800 Microturbine at Large Caribbean Hotel”

April 21, 2016 “Capstone Receives 1.5MW Multi-Unit Order from New Chinese Distributor”

April 11, 2016 “Capstone Secures 8MW of Orders for Multiple Projects in Indonesia and Malaysia”

April 8, 2016 “Capstone Secures Order for Associated Gas Project in Oman”

April 6, 2016 “Capstone Secures 1.2MW Order to Provide Power to an Oil Field Project in Libya”

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NORTH AMERICA

SOUTH AMERICA

EMEA ASIA TOTAL

Distributors

Distributor Employees

Distribution Locations

OEMs

33 8 36 18 95

203 124 313 147 787

42 41 28 47 158

3 0 5 1 9 Note: The above employee and location figures are based on data provided by distributors and have not been independently verified.

Plan is to add 100 new sales professionals into our existing global distribution channel in support of our new C1000 Signature Series product.

Maturing Channel to Market

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Asia&Australia$121.7

China$102.9

Europe&Russia$119.5

MEA$77.0

Mexico&Caribbean$158.9

South&CentralAmerica$197.4

US&Canada$388.7

Total FY17 Pipeline by Region ($ in Millions)

0 5

10 15 20 25 30 35 40

Mill

ions

($)

Pipeline Opportunities Q1 FY2017

FY17 Pipeline by Region

Source: Capstone distributors via Salesforce.com

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Aftermarket Service Growth

•  Contributing to overall gross margin

•  Record FPP contract backlog

•  8,800 unit install base provides scalability

•  C200/C1000 reliability improving

•  Lower product warranty expense

•  Improved reliability decreases FPP costs and increases customer satisfaction

•  New extended Warranty Product

Global Customer Footprint •  Supporting 95 Distributors/9 OEM partners in

73 countries

•  3 Capstone service centers globally

•  1,000+ units under FPP and growing

•  Establishing regional remanufacturing centers to lower logistical costs and service

•  Improved alignment with Sales and Aftermarket

C65 Turbine Nozzle

FPP Contract Backlog ($M)

$0 $10 $20 $30 $40 $50 $60 $70

$29.7 FY2011

$33.7 FY2012

$35.0 FY2013

$47.2 FY2014

$61.2 FY2015

$64.7 FY2016 *

*As of December 31, 2015

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•  New entity offers PPA agreements exclusively for projects that utilize Capstone’s proven microturbine technology to deliver low-cost, clean and reliable energy to a customer’s site or facility.

•  Operating projects can be sold or entity can accept additional third-party equity or debt to grow.

•  Near-term goal is to leverage up to $10M in third party equity with reasonably priced debt with “blue chip” U.S. customers.

•  Distributors lost $42M in FY16 and over $50M in FY15 due to lack of financing options.

•  $12.5M pipeline of well-qualified opportunities.

•  Rolled out program to U.S. based distribution channel with a positive response and have already submitted three project term sheets to prospective customers for their review and approval.

Clean Reliable Power Today with No Upfront Cost

3) Capstone Energy Finance JV

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Pre-Announces Weak 4Q, But Strong Orders And Return Of BPC Are Encouraging

Hold – Price Target $1.50

Outperform – Price Target $3.25

Capstone Analyst Coverage

Capstone pre-announced weak 4Q results on continued headwinds from low oil prices, the USD and Russia. The company did see its largest order quarter in over a year with contributions from both combined heat & power (CHP) and oil & gas (O&G) applications, including the return of its Russian distributor BPC Engineering.

Buy – Price Target $4.00

Company remains focused on Balance Sheet management Capstone announced preliminary 4Q16 (March) revenue estimates of $19mn, worse than both Cowen and consensus estimates of $24mn and $22mn, respectively. Management stated that the expected poor top line performance is chiefly due to headwinds stemming from the energy market. Additionally, the company reported cash and cash equivalents, including restricted cash, of ~$17mn, vs $18.5mn at the end of 3Q15, and recovered $1.4mn of bad debt.

We hosted investor meetings with Capstone CEO, Darren Jamison, and CFO, Jayme Brooks, and a site tour of a microturbine installation at a NYC landmark hotel. The key question moving forward is whether the company will continue to see bookings momentum, and we would look to be constructive on the stock with confirmation of sustainable improvement. .

On April 4, 2016, CPST provided guidance for its fourth quarter that ended March 31, 2016. Topline revenues were estimated to be approximately $19M, compared to our estimate of $22M. We believe that this is attributable to continued headwinds from the energy sector and the delayed shipments to EMI in the Middle East. The company announced that it had recovered approximately $1.4 million in bad debt from its Russian distributor BPC.

Eric Stine April 5, 2016

Jeffrey Osborne April 4, 2016

Colin Rusch February 4, 2016

Craig Irwin May 6, 2016

Amit Dayal April 11, 2016

Capstone Turbine Pre-Announces Poor Q4 (March) Results

4Q16 Guidance Below Consensus; Lowering Estimates & Price Target

CPST: Management Meetings and Site Visit; Clearly Improving Trends

Perform – Price Target N/A

Neutral – Price Target $1.60

We are initiating coverage CPST delivered solid execution in F3Q16 as it continued to drive meaningful cost reductions in light of a persistently challenging oil and gas end market. The company deserves credit for controlling what it can on the cost front, and in particular, improved working capital management. To that end, it cleared a critical hurdle by generating much needed cash flow and sees more opportunities for additional liquidity by optimizing the balance sheet.

CPST: Making Significant Progress

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Capstone Investment Highlights

Large, Underpenetrated Vertical Markets and Geographies

Leading Manufacturer of Low Emission, Ultra Reliable, Highly Efficient, Electric/

Thermal Generators

•  Microturbines are scalable from 30kW to 30MW and can operate on a variety of gaseous or liquid fuels

•  Four major design features: advanced combustion technology, patented air-bearing technology, digital

power electronics, remote monitoring and advanced control capability

•  Optimized performance results in lower emissions, higher reliability and higher total system efficiency

•  Annual addressable market of approximately $15 billion; potential capture of $1.5 billion

•  Diversified across end markets and geographies – currently in 73 countries, over 8,800 units shipped

•  Favorable macro trends towards energy efficiency and stringent emission and fuel standards

•  95 distributors and 9 OEMs reaching 158 market locations throughout the world

•  Built from the ground up over the last 8 years, with the equivalent of 787 Capstone dedicated employees

•  As network continues to mature and grow, distributors become more productive and efficient

Growing Installed Base and Compelling Environmental and Value Proposition Enables Increased Market Penetration

•  Microturbines are more environmentally friendly and less costly than standard internal combustion engine

solutions and fuel cells without incentives

•  Growing installed base helps drive new customer adoption across verticals and geographies

•  Broad & scalable product range supporting a number of end markets and poised to penetrate new verticals

•  Market-leading service offering with 5 & 9 year contracts, provides recurring revenue

Future Revenue Growth, Continued Margin Expansion and Operating

Leverage Drive Path To Profitability

•  Projected revenue growth, steady margin improvements and operating leverage all support path to profitability

•  Newly enhanced C1000 Signature Series product will allow the Company to be more competitive and cost

effective in the CHP and CCHP spaces.

•  Capstone Energy Finance JV entity offers financial solutions to leverage top line growth

•  Two manufacturing plants operating on a single shift, 5 days a week, 35% capacity

Maturing Distribution Network Lays Foundation for Long-Term Growth

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NASDAQ: CPST

www.capstoneturbine.com