Trends in the Energy Transition

Caterpillar is more than just the machines you see paving roads or working at construction sites. Some of our most significant work often goes unseen by the public – powering hospitals, supplying temporary power needs after natural disasters, and using renewable natural gas to provide clean energy and heat to power greenhouses that grow food for our communities.

Did You Know?

For nearly 100 years, Caterpillar has been investing in power generation solutions. In 1925, our engineers began developing engines for our tractors and quickly realized we could use these engines in power systems to make even more progress possible. Since then, we’ve continually developed cleaner and increasingly efficient power solutions for customers worldwide. Today, we help customers combine various power products and services to generate reliable and sustainable power for their operations.

I’ve been in the electric power business my whole life. My dad worked at a utility company, so I grew up around energy and power. After studying electrical engineering in college, I joined Caterpillar, where I’ve spent my entire professional career. I’ve had the privilege of holding many different roles – from engineering to sales and marketing – and even ran a manufacturing facility. Today, I lead a global team focused on serving customers with equipment and services to solve electric power challenges – ones that look quite different than they did in 1925. The new energy landscape is complex and rapidly changing. Fundamentals like increased demand, variability in supply, and expanding environmental, social and governance (ESG) goals drive change and experimentation at an unprecedented pace. With Caterpillar’s deep expertise in electric power equipment and services, we’re working alongside our customers to help them keep energy costs low, meet their ESG goals and ensure reliable and resilient power – all at the same time.

To meet our customer's needs, it's important to understand what megatrends are changing the fundamentals around energy and power. This blog is the first in a series called "Perspectives on the Energy Transition from Caterpillar," where my colleagues and I will highlight different elements of the evolving energy landscape.

Electrification: Studies say electricity demands will likely increase substantially in our lifetime. The U.S. Energy Information Administration estimates that energy demand will increase by 50% by 2050. And we’re experiencing a fundamental switch where cars, homes and even our Cat® machines use electric power in ways they traditionally have not. This is driving change from the point of consumption, back through distribution and through to the utility grid. More and more, we rely on electric power for our daily life.

Decarbonization: Caterpillar, like many of our customers, is setting important ESG goals. However, many lower-carbon solutions rely on renewable energy sources such as solar energy and wind, which are more variable than the power sources they replace. This leaves a state of transition around renewables' increasing role in the energy mix and how to integrate them more effectively. We're working with our customers to identify the right solutions to help them meet their carbon-related objectives, lower energy costs, and ensure power reliability and resiliency.

Decentralization: In the past, large, centralized utility plants connected by distribution and transmission lines made up most of the electric grid. Due to aging infrastructure and the rapid growth and change we are seeing around electric supply and demand, distributed generation and energy microgrids located at the point of consumption are becoming more prominent. While we consider this a positive trend, it drives complexity. That’s why we’re working with our customers to simplify these new sources of energy while maintaining low energy costs. We are also helping customers better utilize traditional standby power assets, by upgrading them to support the grid and provide peak power when costs are high. Tom Smith, director of energy development, will share more on this great opportunity in a couple of weeks.

Digitalization: This energy trend will have broad effects going forward. At Caterpillar, we leverage data and advanced analytics from more than 1.2 million connected assets to help our customers improve safety, minimize unplanned downtime, maximize productivity, and even monetize assets through participation in energy markets. Digitalization increases our ability to optimize the efficient use of energy in ways that couldn't have been done in the past.

It’s an exciting time to be in the electric power industry. As the energy transition continues, we’ll continue to help customers solve increasingly complex power generation challenges, ultimately building a better, more sustainable world. To learn more about Caterpillar’s sustainable power solutions visit: https://www.cat.com/sustainablepower.