“Distributed energy resources (DERs), placed near the customer, is going to become a mega-trend in power production,” says François-Xavier Saury, EAME CIS business development manager at Caterpillar Electric Power.
At Caterpillar Electric Power’s recent event at its Malaga Demonstration & Learning Center (MDLC) in Spain, Saury elaborated on the need for “more planning and analysis” to expand DERs to meet rising power demand.
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“The reality is, in terms of grid capacity and electricity demand, we are in trouble,” he says, pointing to April’s Iberian Peninsula blackout and other incidents across Europe.
“Demand for electricity from European grids has increased every year for decades, thanks to more appliances, electric vehicles and other draws.”
“The recent Spanish blackouts were not new, as we’ve had incidents in Germany, but it was a little more severe,” he adds, speaking during a Cat Electric Power event at the company’s MDLC in mid-May.
The risks of current grids
Speaking at the event, Rich Osborne, vice president & general manager at Caterpillar, pointed out that “our facility here, in southern Spain, was completely unaffected by the recent power issues across Spain and Portugal”.
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By GlobalDataThe protection was offered by localised power sources, Osborne explains: “We have reliable backup power situated at the plant, including diesel power generators, solar panels and battery storage, so the blackout was actually a good exercise in preparation.”
There are three growing risks with current power grids, argues Saury, particularly as renewables become more prominent, namely “blackouts, disruption of power supply but not a complete shutdown and financial penalties in the form of negative prices”.
In mid-May, Spain’s energy minister, Sara Aagesen, revealed that the loss of power generation at the country’s Granada substation, followed by failures at Badajoz and Seville, prompted the blackout. The initial incidents – which caused a loss of 2.2GW of electricity generation capacity – triggered a series of grid disconnections.
However, the precise cause of the incident remains unknown. According to Reuters reporting immediately following the incident, critics have questioned whether the shift towards renewables and away from nuclear and fossil fuels may have contributed to the outage by reducing “grid inertia”, the kinetic energy stored in rotating components of generators and other spinning equipment.
“More renewables will mean more periods of high power and more negative prices, with generators paid to deliver power to the grid. In fact, negative price periods are becoming more common across Europe,” Saury adds.
According to recent research from the International Energy Agency (IEA), negative prices often signal a “lack of flexibility in the system due to technical, regulatory or contractual reasons, particularly during times of low electricity demand and abundant generation”.
IEA data confirmed that the number of hours with a negative wholesale electricity price has been increasing in Europe since 2022, with Finland leading the way with the highest number of negatively priced hours in 2024, at 8% of the time (some 700 hours).
Data centre dilemma
“The kind of energy and electricity demand we have now was simply unimaginable 30 years ago, when most of the networks we have now were being planned and implemented – nobody saw the power needs of European data centres, for example,” says Saury.
He confirms that “distributed and decentralised power production is a critical in solving many of these power issues”.
Osborne says that Caterpillar’s goal is to put the power “closer to the load centre, offering more resilience and consistency for operation”.
“Remote power for data centres was just meant to be a backup to grid services, but now remote power is a ‘bridge to grid’,” adds Osborne.
“Bridging solutions are more expensive than longer-term solutions,” notes Michele Trebbi, energy systems engineer at Caterpillar Electric Power. “That’s not done on purpose, but there are several factors that add to the costs of a temporary solution. What our company tries to do is find a longer-term answer, while working on a bridging solution.”
According to Osborne, Caterpillar’s data centre solutions “are normally run off a diesel engine, but natural gas operations are becoming more common.
“But our diesel gensets can use diesel with a mix of biofuels, although supply issues for biofuels are still quite common.”
He adds that the Caterpillar control system allows for an ‘agnostic’ power input, “taking and using energy from a variety of sources, all of which can help cover the needs of a user in an emergency”.
Flexible fuels for reliable and low-carbon power
“For many our customers, fuel flexibility is a big issue, even though many of our generators are diesel based,” says Raphael Timms, regional sales manager of Caterpillar Electric Power.
Diesel generators tend to have good fuel efficiency, are reliable, can handle large power loads and offer a cost-effective solution for backup power, often being favoured in industrial settings where continuous operation is crucial. However, their environmental impact and level of emissions can be high.
Thus, argues Timms, it makes “sense to use biomass fuels, considered a renewable energy source made from organic materials, when they are available”.
Saury adds that “hydrogen is also an interesting topic, but we need to figure out how to use it more efficiently, as it can act as a great fuel source and energy storage medium. But so far we couldn’t find a suitable location to run a large hydrogen genset in Europe, as the sites we looked at weren’t ready, the infrastructure wasn’t there”.
Research from late 2024 released by GlobalData, Power Technology’s parent company, revealed the global hydrogen market is experiencing rapid growth, fuelled by increasing demand for sustainable energy solutions, supportive government policies and advancements in hydrogen technology.
Start-ups are addressing critical challenges such as hydrogen production efficiency, storage, distribution, and application in industrial and mobility sectors, said GlobalData.
Providing customers with reliable and low-carbon power is a priority for the company, the Caterpillar officials conclude.
“Our power solutions aim to let our customers carry on running their business and not worry about where the power is coming from,” Trebbi concludes, and even though “electricity grids are not really prepared for the future, but we don’t see them as our enemy. We seem them more as partners.”
