Caterpillar Betting on Clean Energy to Drive Construction Growth

Jordanne Waldschmidt Headshot
Updated May 31, 2022
Illustration of Caterpillar machines supporting alternative power sources
Caterpillar

What will drive future growth in the construction industry? Caterpillar is placing its bets on the clean energy transition and increased global energy demand.

During Caterpillar's Investor Day event held May 17 in Grapevine, Texas, Chairman and CEO Jim Umpleby said the manufacturer is sitting in a sweet spot to help customers deliver on the $5 trillion in energy transition-related infrastructure investment over the next 20 years.

The event focused heavily on Caterpillar’s services, technology and sustainability and the opportunities for long-term growth in those areas.

Umpleby and the company leadership highlighted several factors driving investment and the increased need for equipment and services in the construction industry, resource industries and energy and transportation sectors, including:

  • The accelerated need for mined commodities, oil and natural gas
  • The construction equipment required to build new energy infrastructure
  • Enhancing the reliability of energy sourced through renewable power
  • Helping customers achieve carbon reduction goals

With that in mind, Caterpillar announced sustainability as a new strategic focus area, along with operational excellence, expanded offerings and services, to help customers build a better, more sustainable world. Part of that focus will include increased investments in research and development over the next five years to accelerate technology deployment.

"There are many different perspectives on how growing global energy demand will be met in the coming decades. Caterpillar is well positioned to benefit from the increasing global energy demand, regardless of the mix between renewables and traditional sources of energy,” Umpleby said.

“Our track record of achieving high margins gives us the flexibility to increase our technology investments in support of further gains in autonomy, alternative fuels, connectivity, digital and electrification.”

Caterpillar Technology R&D Investments ChartCaterpillarSustainable Power

At the core of Caterpillar’s sustainability transformation is power. Caterpillar’s energy and transportation group includes gas turbines, locomotives, engines and generators, as well as the company’s remanufacturing division. Currently, the division is working to integrate established power sources of today with advanced power sources for the future.

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“One of the immediate things we can do to help our customers lower their carbon footprint right now is to utilize low carbon intensity fuels,” said Energy & Transportation Group President Joe Creed. “Our existing lineup of products are capable of running on a wide array of fuel types including renewable fuels, biodiesels, hydrogen and hydrogen blends. At the same time, we’re developing new power technologies of the future focused on battery electric and hydrogen fuel cells.”

Caterpillar says it intends to create battery solutions designed to be scaled up or down to meet the power needs for a variety of machines and applications, from large mining trucks, down to building construction products and stationary power applications.

“We’ll have a proprietary battery management system to monitor batteries and a fully integrated battery-electric powertrain for each electrified machine,” says Creed. “Our expertise in distributed power generation with the electric power teams or turbines will also benefit us as we design our lineup of charging solutions and provide valuable services opportunities for us in the future as we help our customers with site infrastructure needs to support their electrified fleets.”

Due to the number of charge and discharge cycles that will occur in large high-power applications like mining, batteries will need to be replaced during the product lifecycle. Because of this, Cat is reimagining the services provided by its remanufacturing division to repurpose batteries for use in lower-power applications during their second life.

Between recent collaborations with Chevron, BNSF, Microsoft and Ballard, and equity investments and acquisitions in Carbon Point Solutions, SPM Oil & Gas and Tangent Energy Solutions, Creed says, Caterpillar is well-positioned to grow its services and advance its capabilities to help customers through the energy transition.  

Caterpillar electric product portfolioCaterpillarSupporting Contractors During Periods of High Demand

Forecasting strong growth in residential construction, traditional infrastructure construction and energy transition infrastructure between now and 2040, Tony Fassino, group president for the construction industries, said Caterpillar is focused on making its equipment easy to buy and own as contractors grow and maintain their fleets to meet demand.  

Several programs are currently offered to maximize machine uptime. Self Service Options (SSO) provide all parts necessary for customers who wish to repair their own equipment, while Prioritized Service Events (PSE) use data from connected machines to recommend preventative maintenance. For an additional monthly fee, equipment owners can add a Customer Value Agreement (CVA), giving them preferred access to genuine Cat parts, troubleshooting and diagnostics and equipment health management through Cat Inspect.

Fassino also cited the machine advancements and technology solutions available to help customers increase efficiency and productivity in the face of labor shortages, more challenging jobsites and skinnier margins.

Technology solutions include:

  • Cat Grade for automated grading
  • Cat Compact to measure compaction
  • Cat Payload to reduce load times
  • Cat Detect for increased visibility around the equipment
  • Cat Command to remotely operate equipment
  • Cat Equipment Management for individual asset performance tracking
  • Cat Productivity for real-time fleet usage and health data

For the past 30 years, the manufacturer has been making investments to improve machine efficiency, evolving from electric drives to hydraulic hybrids, and now, battery -powered machines. Fassino hinted that several zero-emissions machines would be on display at upcoming trade shows. (We're looking at you, bauma and ConExpo-Con/Agg.)

“Our machines help our customers lower CO2 emissions now, and we’re actively working to offer models that eliminate CO2 emissions completely in the future,” says Fassino. “Our advanced power teams are focused on our wheel loader and excavator product lines, looking at battery technologies, power inverters, as well as fuel cells powered by renewable hydrogen.”

Caterpillar construction equipment technology evolution chartCaterpillar

Aggregates and Mining on the Leading Edge

Mining commodities and aggregate demand are also expected to increase dramatically over the next 20 years, largely due to the energy transition and the materials required for electrification and basic infrastructure.

Denise Johnson, group president of resource industries, says this demand, along with aging equipment assets, will drive an influx of major rebuilds and new machine purchases. Due to the safety and productivity gains from autonomy, Johnson says, customers are increasingly purchasing autonomous solutions factory-installed on their equipment.

“One of the reasons the adoption of autonomy is increasing is because the economics are changing,” says Johnson. “Deployments have progressed to smaller and smaller mining sites. This year and next, we will be deploying sites with as few as 12 trucks. This provides the potential for a much larger customer base, and it even extends down into quarry and aggregate sites.”

Mining companies have also been some of the first adopters of electrified equipment, and Johnson used the event to unveil Caterpillar’s timeline for introducing battery-powered zero-emissions mining trucks.

Different from the company’s traditional product development approach, the trucks will be developed in an accelerated collaboration process with mining customers around the world, including Newmont, NMG, BHP, Rio Tinto and Teck. The company says it will initially introduce four zero-emissions truck models.

“We're working with these customers to place the trucks, the infrastructure and the technology on their sites to allow us to validate the extremes – long haul, haul roads, deep pits, high altitudes, extreme hot and cold conditions –  and hit the timelines for beginning production before 2030.”

By the end of 2022, Cat says, it will have electric mining truck prototypes running, with early learner models launching in 2024 to refine product requirements. In 2025, pilot units will be tested at customer mining sites, with full production intended to begin in 2027.

Caterpillar battery electric mining truck accelerated development strategy chartCaterpillar