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Caterpillar, Honeywell bet against the grid in emerging economies

More than a billion people around the globe lack access to electricity. When it gets dark, many use kerosene lanterns or open fires to provide light and heat — dangerous options that can jeopardize health and shorten lives.

But new microgrid technologies that are disrupting utility industries in the developed world are also opening up the possibility of bringing electricity to the 19 percent of the world’s population without it. And with electricity, advocates say, come more resilient communities and economic drivers like computer use and industrial machinery.

Big industrial players also see a burgeoning business opportunity.  Worldwide energy demand will grow by a third during the next 20 years — and 90 percent of that growth will come from the developing world, according to the International Energy Agency.

Caterpillar Inc. this month launched a strategic alliance with First Solar to develop photovoltaic microgrids for remote the towns, mines, islands and industrial facilities in areas now without electricity.  First Solar will provide the design and the solar panels while Caterpillar provides component manufacturing and its vast distribution network. 

“Hybrid microgrids are following the same trends as the telecommunications industry," said Rick Rathe, general manager of microgrids within Caterpillar’s Electric Power Division. "In many developing countries, a large portion of the population never had access to a phone. Now, while there still is no large central telecommunications infrastructure even an electric utility, many people have mobile phones or even smart phones."

Moving into the realm of electricity, he adds that, "Hybrid microgrids are enabling the same thing to happen for electricity availability.

Shifting cost structures are central to the opportunity for Caterpillar and its competitors in the space, who are betting that de-centralized energy offers a more affordable path forward — assuming that power can be delivered reliably.

“Many people do not have access to electricity and the ability to install large, central plants with transmission and distribution is not practical for the foreseeable future in these areas,” he said. "Distributed hybrid microgrid kits makes reliable, affordable power a reality.”

Changing the model

Microgrids that pair solar panels with battery storage offer a low-cost, standalone tool for a remote village, farm or hospital to get electricity. These low-cost grids relying on the sun obviate the need for a village or farm or mine to hook up to large centralized utility grids — typically a costly venture out of reach for many.

Similarly, smart grid technologies can allow aging central utitliites in fast growing economies to better manage and meet demand without experiencing brown outs or churning out peak demand levels of green house gas emissions.

And Caterpillar is by no means alone in this realization. Several startups are leaping at this opportunity, including d.light and Off-Grid Electric.

There are also different permutations of this new power equation in play. Another energy incumbent, Honeywell, is announcing a new smart grid solution geared more toward urban environments.

Tata Power Delhi Distribution Limited — a large but sometimes-overburdened utility in India that 7 million people rely on — has commissioned Honeywell to link its utility grid to 160 buildings and facilities in Delhi with what Honeywell says it is the first ever automated demand response (ADR) project for commercial and industrial facilities in India. 

With the deployment, Honeywell promises that Tata will be able to manage load and better avoid brownouts and blackouts through data management. The ADR can signal these 160 customers to reduce demand at peak times.  

“Given the gap between the power required for homes and businesses in India, and what utilities can produce, many cities across the country face severe brownouts and blackouts," Honeywell said in a statement. "The demand for electricity in Delhi, for example, has almost doubled over the past decade.

The project will give TPDDL the ability to reduce approximately 11.5 megawatts of peak demand. However, if the same technology were deployed in all buildings in India, electricity consumption could drop an estimated 10.5 gigawatts, close to 7 percent of the peak energy currently required nationwide. 

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