Voice of the Customer Can Help Companies Navigate Energy Transition

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The magnitude of the strategic changes roiling the electric power business--such as shifts in technology, fuels, regulation, legislation, finance, the workforce and customer expectations--makes it more challenging to chart a path to success. Can success come from picking one horse and riding it? If so, which one? It seems unlikely that all seven can be ridden at the same time.

Speaking last week at an electricity conference in Denver, Thomas Smith, power solutions director of energy development at Caterpillar Electric Power, a unit of Caterpillar Incorporated (NYSE:CAT) (Deerfield, Illinois), urged attendees to pick the horse marked "customer" and ride it.

Speaking at an event attended by hundreds of suppliers to the power and industrial segments, Smith specifically recommended listening to the "voice of the customer," which will help companies develop profitable new product and service offerings that position their customers for success.

For more coverage of the Experience POWER event, see the October 7, 2022, article - Conference: Energy Transition Moving Too Fast, and the October 10, 2022, article - Conference: Hydrogen Can Boost Decarbonization, Challenges Loom.

Following the "voice of the customer" has been a rallying cry for a number of electric utilities for a decade or more. Smith was a keynote speaker at the Experience POWER conference, sponsored by Access Intelligence LLC (Rockville, Maryland), which drew more than 800 attendees.

Smith began his address by reflecting on how technology has changed the world, including the energy business, since he began his career at Caterpillar 42 years ago: "Back in 1980, there were no cell phones, no internet, no microgrids, no email and virtually no renewable energy," he said. Speaking a week after Hurricane Ian made landfall in Florida, he quipped, "Even the hurricanes are different today--they're stronger and more destructive."

Despite all of the challenges of operating in today's turbulent electricity business, including technology and climate change, he said, "This is the most exciting time to be in the energy business in 140 years," a reference to POWER Magazine being published for 140 years.

Should anyone doubt that the energy and electricity businesses were going through dramatic change, Smith reviewed recent energy news headlines, including natural gas prices rising six-fold since the Russian invasion of Ukraine, California deciding to extend the life of the Diablo Canyon Nuclear Power Station and that state's mandate that all new vehicles sold in that state would be electric by 2035. He shared a quote from Elon Musk, the founder and leader of electric vehicle maker Tesla (NASDAQ:TSLA) (Austin, Texas), that "civilization will crumble without oil and gas in the short term." Smith asked rhetorically: "Who would have believed these headlines a year ago?"

"What customers are seeking is a trusted partner that can lead them through today's turbulence," he said October 3. "Customers--at least commercial and industrial customers--need alternatives to established fuel sources. They seek innovation and the ability to integrate today's solutions into their legacy equipment."

Smith said today's energy megatrends--including electrification, decentralization, decarbonization and digitalization--are leading companies in various segments, including Metals & Minerals, telecommunications, Electric Power and Oil & Gas Production, to seek trusted partners that provide reliability, simplicity, the ability to monetize assets and cybersecurity. Commercial and industrial customers are assessing potential solutions based on total cost of ownership (not merely first costs) and the degree to which these solutions can minimize customers carbon footprint.

He went on to detail Caterpillar's customer-oriented product and service innovations:

• Making established power systems more efficient and fuel flexible
• Coupling established power sources with new technologies, such as microgrids and hybrid and electric drives, and
• Replacing established power sources with emerging power sources such as battery energy storage and fuel cells.

He went on to detail some of the sustainability initiatives Caterpillar was providing to customers, including:

• Renewable liquid fuels
• Creating a zero-emission graphite mining site
• Deploying battery-powered mining trucks to mining giant BHP Group Ltd. (NYSE:BHP) (London, England)
• Producing a hydrogen-powered fuel cell for Microsoft Corporation (NASDAQ:MSFT) (Redmond, Washington)
• Collaborating with Chevron Corporation (NYSE:CVX) (San Ramon, California) to explore hydrogen as a prototype in locomotive engines, and
• Producing Caterpillar generators that can be 100% fueled by hydrogen.

By developing partnerships, products and services in response to the voice of the customer, Smith said Caterpillar today finds itself in various businesses that are somewhat removed from its traditional offerings. "Today, we're in the distributed energy business, the solar business and the energy-storage business, among others. Customer demand for backup power and peaking generation has become very big for us. This range of activity might surprise anyone who's known Caterpillar as a provider of backup generation, engines and heavy construction equipment."

Smith said heeding the voice of the customer was "one way to future-proof your business and your customers' assets." His recommendation that companies, particularly equipment suppliers, focus on the voice of the customer was seconded by other speakers at the Experience POWER event.

William McEvoy, global industry principal at technology consultants AVEVA Group Plc (Cambridge, England), said customers continue to want renewable energy, but they might be turned off by the cost of utilities' traditional approach of building a centralized renewable facility and whatever transmission and distribution lines might be needed to bring that power to customers. Customers can get the benefits of renewable energy without all of the traditional costs through community solar projects, he said, adding that community solar also is more cost beneficial than rooftop solar.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).