00:00:00 Intro
Welcome to the Power Bytes Podcast, brought to you by Caterpillar Electric Power with your host Ryan Karlin. Each month we deliver the latest insights, trends, and cutting-edge tools to keep you ahead in the dynamic energy industry. Whether you're streamlining operations, embracing new technologies, or want to stay informed, Power Bytes is your go-to source. Join us as we explore innovation, shaping the future, and the resources you need to succeed. Welcome to Power Bytes, where energy meets innovation.

00:00:29 Ryan Karlin
Hello listeners, and welcome back to another episode of the Power Bytes Podcast. I'm your host, Ryan Carlin, and I'm thrilled to be with you all today. In today's episode, we're going to do something a little bit different. We're going to take a step back and discuss the state of the power industry, some of the challenges we're hearing from people within the industry, and how utilities and end users of power are tackling these challenges and finding solutions. To have this discussion, I invited a very special guest, my boss, Brandon Lynn. He's Cat® Electric Power’s Global Director of Business Development. Thanks for joining us, Brandon.

00:01:03 Brandon Lynn
Thanks for having me. I think you're special too, Ryan.

00:01:06 Ryan Karlin
That makes me feel so great. So, Brandon, I know you very well, but maybe our listeners do not, so I want to give you a chance to have you tell the listeners a little bit about your background and what our team focuses on here at Caterpillar.

00:01:23 Brandon Lynn
Thanks, Ryan. Super excited to be here. I’ve been in Electric Power for five years, but I have had a variety of different roles. I was at one point responsible for the western US and Canada for all the business, including some of the regional data center accounts. I've been in our digital and connectivity group, where we were doing things like AI and insights and condition monitoring and really helping customers lower their total cost of ownership, and most recently I took this role as the global business Development Director. It’s really focused on the stuff that runs: helping our customers when they've got an energy challenge that they can't meet. It’s a new organization full of fun challenges, just like the energy landscape is having today.

00:02:11 Ryan Karlin
I've been in the industry for about 10 years now, and you've been in or around the industry for longer than that. And I think one thing that sticks out to me when I reflect back is how different the industry is today, whereas maybe when I joined in 2015. There's a lot of different reasons for that, but when we get into it, today, everyone talks about reliability, sustainability, total cost of ownership. But what in your mind and what are you hearing is really driving this change in the power landscape?

00:02:38 Brandon Lynn
Yeah, that's interesting. I just think it's the sheer volume of energy that's needed. If you go back and look at where the market was, the amount of power that was needed five or ten years ago when you started, it's changed drastically. Obviously, everyone knows about the data center market and everything that's going on there. Hopefully, everyone's familiar with AI and how that's driving power demand, too, but that's not the only thing that's happening. You've got other industries that are electrifying, whether it's mine sites or construction; you've got EV's in the market as well. You kind of have this culmination of every industry electrifying at the same point and you have the need to find solutions for customers that need power that maybe can't get it quite yet.

00:03:25 Ryan Karlin
It's a very interesting situation. Again, I remember when I started, I was at a previous firm working on these large power plants — you know, multi 100 MW power plants and all that stuff – and those power plants are still very important to the grid. But a lot of the projects we're hearing now are totally different, maybe more what we call distributed generation, and we'll get into that in a little bit. But just the type of supply and demand is totally different. On the supply side you have more renewables on the grid and a different mix of technology, and on the demand side you have data centers and electrification growth and industrialization — all these things are kind of having different pulls to this power demand that we're seeing. So to build upon this theme of growth and demand, do you think this is something that has been an underlying current that's coming to the top now, or is this something that is brand new and we're just having to face pretty rapidly?

00:04:19 Brandon Lynn
I think it's interesting you brought up renewables and different kinds of energy that are going on and that you brought up microgrids, too, and said we’d get into that later. But honestly, we could get into it now, because it's all connected. If you think about all of the challenges that are going on, we all want a cleaner world, right? We want better air to breathe for our kids in future generations. But at the end of the day, we also need reliable power. So if you take a holistic view of the energy market and don't look at it so linear, there's a solution for all of the problems, and it's using everything we have to offer. It includes energy storage to help with peak shaving and load management. It includes reciprocating generator sets. It includes that distributed generation that you talked about, because the more renewables on the grid, the less reliable it is. The wind doesn't always blow, and the sun doesn't always shine, but if you pair it with reciprocating generation to help peak shave, or with Battery Energy Storage, you can still have a cleaner energy solution at the end of the day.

I think that's what I'm most excited about, is that instead of looking at it so linear, we have the ability to understand the customers’ energy challenges and pull together complete solutions that solves them.

00:05:37 Ryan Karlin
One thing that drives me crazy is when I look at the news and people want to say one technology is going to win the day and win it all. I think people say that because they want to say five years from now that they were right. But I personally don't think that they're going to be right, because, as you talked about, it's going to take a mix of everything to get to where we need to get to.

It's going to take reciprocating generator sets. It's going to take renewables. It's going to take batteries. It's going to take all of that to get to where we need to get to. And I think the last three or four years have really emphasized that point. If we take a step back five years ago, we talked about a “tri-stool” power around reliability, affordability and sustainability. All are still very important in today's stage, but I think the last couple of years, between weather events and other global situations, has put reliability at the forefront of that “stool” that we're talking about. How are you seeing businesses and utilities navigating this balance and this shift towards reliability?

00:06:40 Brandon Lynn
Man, well, that sounds like a lead-in for the distributed generation that we were talking about earlier, because that's one of the benefits of distributed generation—that if you put power near the energy consumer, you get reliability, and you don't need this huge centralized dispatchable plant hundreds of miles away that has a huge capacity that may not need it. We're wasting energy. But if you take that large, centralized dispatch, if you take the renewables and put some distributed generation near where there's going to be some peaks, then you might increase efficiency and still have super reliable power.

00:07:20 Ryan Karlin
I think within that answer there's a lot of positive points in distributed generation. With the old grid model of having a centralized large power plant and a lot of miles of distribution and transmission, that's capital cost to build that out. That's time to build that out. That’s risk from weather events, cyber security, whatever is associated—the bigger your system is and the more stretched out it is, the more potential there is to have something go wrong with that reliability, isn't there? So those all seem like great points that we're starting to hear around distributing generation. Any other thoughts?

00:08:00 Brandon Lynn
Yeah. I mean, what if your energy consumption moves? You put in all this infrastructure to take care of this huge new energy demand, and then what if that moves somewhere else? Now, you've got all this sunk cost and wasted investment, when, if you had done distributed generation or you had done mobile power or something else that you can move with the power needs, it doesn't all just sit stationary.

00:08:35 Ryan Karlin
Yeah. And this is also something that both utilities and users of power companies or industrial sites have an interest in, because for utilities, distributed generation is resiliency for the communities they serve. For industrial sites, it’s assurances or reliability that they're going to have the power when they need it to run their operations. Can you maybe kind of expand upon what you're hearing from the industry as far as how utilities and customers are thinking about distributed generation?

00:09:05 Brandon Lynn
Yeah, I mean, I love utilities because they've got a really great mindset for this and it kind of dovetails into what we just talked about. We don't need to go add another 200 megawatts of central leak dispatch power. They want to serve their customers, but if they want to serve their customers in a lowest cost per kW basis, they could put some power out where it’s needed and not have miles or hundreds of miles of infrastructure. They can provide that reliability at a lower cost per kW for their customer. I think it's really important. I love that a lot of utilities are looking at it that way: smaller, more dispatchable facilities.

00:09:48 Ryan Karlin
One area that I think we've touched on slightly, but I want to dive into maybe a little bit more is why is distributed generation such a big deal? We talked about maybe some of the benefits and the change from the centralized model to more of a distributed grid. Why do you think it's such a big deal, and maybe speak to other areas that you think people don't talk about enough where it can be impactful?

00:10:14 Brandon Lynn
I think one of the biggest reasons that you're seeing so much about this in the news right now is that utilities are working really hard to figure out how they're going to meet the next 5 or 10 years of capital and infrastructure needs. You've got original equipment manufacturers like Caterpillar and others who are trying to figure out how we can either, in the interim, help support a customer or, in the long term, support a customer where they need it. Then, if you take all that demand and look to where it's going, oftentimes it's going in areas of the country where there's been historically low energy usage because there's cheap real estate and access to other pieces of infrastructure. And so that's where distribution generation can come in and at least help quickly get off the ground, maybe in an interim basis or a longer term, if that's the plan that everybody works out together.

00:11:08 Ryan Karlin
You said something, and you didn't mean it, but you did it great—you set me up for my next question, which is: If the grid catches up to this power demand and the supply gets there through distributed generation, what are we going to do with distributed generation assets? Do you see a world where they stay and continue to contribute, or do you see where they can pivot to different parts of the grid? What is kind of your view on it?

00:11:31 Brandon Lynn
I think it depends on where it’s at from a geography standpoint, because there are areas of North America, specifically the US and eastern Canada, where there's a lot of financial and economic benefit for end use customers to still contribute to the overall need. Take a customer in the Northeast. Let's say they have a power plant. They run it for three years, then the utility comes online, and they provide really great power. Why wouldn't you use it? But there may be more demand coming on, so they've got economic opportunities where if they run 100 hours a year, 300 hours a year, 500 hours a year, they can support overall grid stability. But they can also get a rebate or a check or lower their overall energy costs while contributing to the whole human need for power.

00:12:26 Ryan Karlin
It’s giving a lot more people, whether residential or industrial, the opportunity to participate in the grid—opportunity to, like you talked about, have on-site generation (what we call distributed generation) and have participation in the grid to help stabilize it. It's requiring people to have a sense of what's going on in the power industry. I say requiring, but it's almost an opportunity to make things more reliable. To make things more economical for them and their operations. Definitely a changing landscape. I think the next five years are going to show a lot more change and we'll see where we're at in five years.

00:13:04 Brandon Lynn
I'd encourage you all to ask that question. When you're talking to somebody, whether it's us or someone else about your energy needs, make sure you're understanding what you're going to do with that power. When you get a utility, or when you’re deciding what your long-term plan is, know we've got a lot of solutions. It's always part of our plan. We acquired a company called Tangent Energy Solutions a long time back that does a really great job of helping to monetize those assets. It's not wasted energy, it's not wasted iron, it's not wasted capital investment; it's a revenue stream for you in the long term.

00:13:40 Ryan Karlin
We focused a lot so far in this conversation on North America. What're your thoughts on the rest of the world and how distributed generation is or isn't playing a role?

00:13:48 Brandon Lynn
That's a really insightful question. At the end of the day, this is not a North American problem. We've got energy gaps and energy constraints all across the world. Some of our largest markets are not in North America, and the problems that we're trying to solve for those customers are different. If you think about some of the island nations in the Pacific, you need smaller power, but you need more of it. [There are] thousands of islands of people that need power. So if you just looked at this as a one-size-fits-all, you're not going to meet the customer’s needs, but if you start breaking this into different chunks of opportunities, spending time listening and understanding what they need, you can build a solution that I think will solve everybody's problems. Because I know personally, I'm really focused on helping everybody meet their energy needs, not just one company, one customer, one person, but the world.

00:14:49 Ryan Karlin
And what are some thoughts or considerations as someone’s exploring distributed generation that they should be thinking about? What should they be asking their energy advisor to help better understand what's the right strategy for them?

00:15:10 Brandon Lynn
I think everybody focuses so much on capital expenditure that they lose focus and sight of the real solution and the real problem. It doesn't matter what something costs to buy if it's extremely expensive to own. So when you're looking at, how am I going to build a power plant or distributed gen or something that's behind the meter or whatever buzzword you want to use—to market, segment and bucket this stuff, you need to be asking the question: What does it take to operate, what level of service or support am I going to get? Because some people, some companies, have really great products, and other people have really great services, but who's building that whole thing together? And if you factor capital expenditure with operating expenses to get to your total cost of ownership, I think that's where you'll see it really starts to separate people.

00:15:59 Ryan Karlin
Also, what can they realistically implement? We talk a lot about fuel. What is fuel availability at the site? Some of the conversation I feel like I'm having with people who are looking to get power is around fuel availability. What fuel do they have at the site and how is that going to change? What selection of technology can they do? What other factors do they need to consider that are going to dictate what solution is right and best for them?

00:16:27 Brandon Lynn
Well, that's great. I'm over here being super philosophical and typical. Ryan, he's like, hey, you know, I execute this today. I mean, you're not wrong. The first question a customer needs to figure out is if they've got access to fuel. Honestly, that's something that we lean into really hard, too. Fuel, land, air permitting, those are the things you got to worry about early on. The rest of it we can solve.

00:16:54 Ryan Karlin
When do they need power?

00:16:56 Brandon Lynn
Yeah. How quickly do you need it?

00:16:58 Ryan Karlin
To kind of bring this conversation full circle, we started the episode talking about how much the power industry has changed in the last five years. Brandon, I'm going to put you on the spot, and I want to get your opinion on what the next five years are maybe going to look like and what excites you about the next five years.

00:17:14 Brandon Lynn
That's awful presumptuous of you to assume that I'm going to be excited about the next five years. But no, all joking aside, what excites me the most is just the sheer opportunity. I just presented to some interns that joined Caterpillar for the summer a couple weeks ago, and I said, Electric Power at Caterpillar is the fastest growing, most fun, best culture division at Cat. Obviously, it sounds a little tongue-in-cheek. But I believe it. I love the group I work in. And I love that we're spending all this time with customers hearing about their energy challenges. We're investing in the future—in people, talent, money, whatever—we're really investing. So what I'm most excited about is just being a part of this great company and this great culture of Electric Power.

00:18:08 Ryan Karlin
Never have my holiday conversations been so intriguing for others. When I first joined and said I was in the power industry, it was, "Let's go get another drink,” or something like that. Now, everyone's seeing the need for power. They open up Wall Street Journal. They open up whatever news article where power is being talked about. I think that's pretty exciting that you and I and our team and all others in the industry, we're solving a real need. I definitely second what you're talking about around just being in a place where you can make it; you make an impact and solve critical problems.

With that, though, we're running out of time, so we're going to have to wrap up. It's been a great episode of the Power Bytes Podcast. I want to thank Brandon again for taking time out to have this conversation and talk about power and distributed generation. I enjoyed the conversation. Hopefully our listeners did as well.

00:18:43 Brandon Lynn
Yeah. Thanks for having me. This has been super great.

00:19:15 Ryan Karlin
Thanks again, listeners, for tuning in, and I look forward to talking to you all again soon.

00:19:19 Outro
Thanks for tuning in to the Power Bytes Podcast. If you enjoyed the show, head on over to cat.com and check out Electric Power for more exciting content. Let's power tomorrow together.