Latest news with #energy demand
Yahoo
12-07-2025
- Business
- Yahoo
At its centennial, Caterpillar finds its growth is now led by powering data centers
As the storied construction giant celebrates its centennial in 2025, Caterpillar's growth has evolved to fit the economic zeitgeist—now much of its new business is focused on powering the data center boom. In fact, 2024 was the first year the 'energy and transportation' segment of Caterpillar (ranked No. 64 in the Fortune 500) easily outpaced the tried-and-true 'construction industries' business. Energy and transportation accounted for $28.9 billion in annual revenues versus $25.5 billion for construction. 'It's the biggest and fastest growing part of Caterpillar. The growth is really driven by energy demand,' said Jason Kaiser, Caterpillar group president for energy and transportation, noting that most people think about construction—or even hard hats and boots—when they think about Caterpillar. 'Power generation, which is where data centers fall, has been the main part of that growth,' Kaiser told Fortune. 'We're focused on investing to take advantage of that as a company.' The energy part of the business first began to consistently outpace construction in the fourth quarter of 2023, coinciding with both burgeoning data center demand and increasing equipment needs for electrifying oil and gas production activities. Driven in part by the AI revolution, after years of flat power usage, Caterpillar sees U.S. electricity demand growing by 25% from 2023 to 2035—or 60% from 2023 to 2050—and demand from the rest of the world is rising, too, according to data from the International Energy Agency. Data centers need both primary power generation and backup power. It's no coincidence that Caterpillar manufactures the equipment for both. That's why Caterpillar has been increasing its manufacturing capacity, especially for gas-fired turbines at its California facilities. Caterpillar's engine manufacturing capacity for data centers is increasing 125% from 2023, Kaiser said. Caterpillar, which sees its stock trading near all-time highs and a market cap just below $200 billion, is providing the turbines for a data center's on-site primary power, generator sets for backup power, and microgrids that can combine fossil-fuel-based power with solar, battery storage, and more. 'Data centers are getting really big,' Kaiser said. 'It might be 125 megawatts [of power demand]. That's 100,000 homes worth of electricity. Each of our gen [generator] sets for backup is two to four megawatts. You can do the math and see the really large lineup of backup power that's there. 'In the case where a data center doesn't have a utility feed, we can bring industrial gas turbines in, mobilize them into a power plant that provides 24/7 power for them on-site, and be the primary power until they do get the utility there.' The most popular on-site turbines now for data centers are a 38-megawatt, gas-fired turbines that Kaiser deemed a 'really good fit' for the AI construction boom. One of the biggest industry concerns in the race to build data centers is the long queue to acquire gas-fired turbines for power. Caterpillar is trying to get ahead of the problems. 'The supply chain has been tough. A lot of the investment is in that capacity,' Kaiser said. 'Some of it's our own factory and our own machines, but some of it's in the supply chain to help our suppliers invest and make sure that we've got the supply chain ready to do that.' As such, Caterpillar is working closely with its hyperscaler clients on long-term planning, he said. 'It helps address the question about visibility into the queue. We have multiyear views of their demand. We plan with them on a weekly or monthly basis and work to stay really close to them to ensure that we meet their needs over years. It's what gives us confidence to make that level of investment in capacity as well.' Power generation makes up one-third—and growing—of Caterpillar's energy and transportation segment. The oil and gas business is the next biggest component at 29%. The rest is focused on industrial engines and marine and rail transportation—from marine vessel engines to railcars. But the oil and gas segment pairs closely with power. Most of the oil and gas growth is through natural gas production for both data center power and for liquefied natural gas exports. Caterpillar provides equipment from powering oil and gas drills to the gas compression that helps transport the products to power plants. The oil and gas sector has demanded more equipment to save money and reduce emissions by switching to more electric power and less diesel-fired generation. 'We have that participation through the value stream,' Kaiser said, 'from drilling the well to burning it to make electricity on the other end after it's moved through the system.' This story was originally featured on
The National
10-07-2025
- Business
- The National
Opec raises 2050 energy demand outlook amid expansion of global economies
Opec has raised its forecast for world energy demand for the medium and long term as global economies expand and population growth boosts requirements for oil. Overall energy demand in the long term is expected to increase by 23 per cent to reach 378 million barrels of oil equivalent per day by 2050, the supergroup of oil producers said on Thursday in its World Oil Outlook 2050 report. In the medium term, global oil demand is projected to increase by 9 per cent to reach 113.3 million barrels per day by 2030, from 103.7 million bpd in 2024, while in the long term, it is forecast to surge by 18.5 per cent to reach 123 million bpd by 2050, Opec said. This will be driven by 'expanding economic growth, rising populations, increasing urbanisation, new energy-intensive industries like artificial intelligence, and the need to bring energy to the billions without it', Haitham Al Ghais, secretary general of Opec, said. The global population is expected to reach 9.7 billion by 2050, from 8.2 billion in 2024, with the working age population set to increase by 800 million over the same period to reach about 6.1 billion. The global urbanisation rate is also expected to rise to 68 per cent from 58 per cent during the period, resulting in about 1.9 billion people moving to cities by 2050, Opec said. The world economy, meanwhile, is set to more than double in size to $358 trillion in 2050, with global average income expected to rise during the period, according to Opec. India, Africa and Middle East to lead demand growth Countries outside the Organisation for Economic Co-operation and Development (OECD), including India, Africa and Middle East states, are projected to lead the oil demand growth for both medium and long-term forecast periods. The non-OECD oil demand during the long term is projected to increase by almost 28 million bpd, while OECD oil demand is set to witness a decline of 8.5 million bpd. Combined demand in India, rest of Asia, the Middle East and Africa is set to increase by 22.4 million bpd between 2024 and 2050, with India alone adding 8.2 million bpd, the report said. China's oil demand is projected to increase by less than 2 million bpd over the same period. Road transport and petrochemicals to play key role Road transport, petrochemicals and aviation are expected to play a key role in boosting demand for oil. The transportation sector accounted for more than 57 per cent of global oil demand in 2024 and is projected to retain this share over the entire forecast period. A significant demand increase of 4.7 million bpd is also projected in the petrochemicals sector. 'Oil underpins the global economy and is central to our daily lives,' Mr Al Ghais said. 'There is no peak oil demand on the horizon.' Opec+ countries have been boosting production since April in anticipation of higher demand after curtaining production for several years. The group will boost production by 548,000 bpd for August, it said last week, after increasing output by 411,000 bpd for each of May, June and July. The group also approved an increase of 138,000 bpd in April. "You can see that even with the increases for several months, we haven't seen a major build-up in inventories, which means the market needed those barrels," Suhail Al Mazrouei, UAE's Minister of Energy and Infrastructure, said in Vienna on Wednesday. "What we want is stability and you cannot be short-sighted just by looking at the price. We need the price to be right for investments to happen," he said, adding that countries with big oil reserves were still not investing enough. Boosting investments in oil sector Mr Al Ghais also underscored the importance of boosting investments in the oil sector, with investment requirements of 18.2 trillion till 2050. 'It is vital that these investments are made for consumers and producers everywhere, as well as for the effective functioning of the global economy at large,' Mr Al Ghais said. Oil markets remained volatile this year amid US President Donald Trump's tariff plans and the Israel-Iran conflict. Crude prices started the year strongly. The closing price of Brent, the benchmark for two-thirds of the world's oil, peaked at more than $82 a barrel on January 15, while West Texas Intermediate, the gauge that tracks US crude, hit almost $79 per barrel on that day. However, demand concerns, a slowing global economy and less-than-stellar growth in China, the world's biggest crude importer, have weighed on crude prices this year. Mr Trump's push to impose hefty tariffs on trade partners has been the biggest driver of declining oil prices.
