Schneider’s big bet on smart energy

Schneider Electric has built its multi-billion dollar business on ensuring that efficiency underpins all human activity. As Asia – its biggest region – undergoes urbanisation and economic growth, the smart use of energy will become even more important.

Asia – especially South Asia and developing countries in the region – is set to grow at the fastest rate compared to any other part in the world, according to the World Bank. As the region undergoes rapid urbanization, French power management giant Schneider Electric is eyeing three major areas with the biggest business potential: namely, energy efficiency, automation and digitization.

In the past few decades, the region has progressed “leaps and bounds” and is now in fact Schneider’s biggest source of revenue and headcount, said chairman and CEO Jean-Pascal Tricoire in a recent interview.

The Paris-based multinational that specialises in power management and automation systems has been in Singapore for 40 years, having set up its first office in the city-state in 1975. In Asia, it has been here a bit longer.

In 2014, 28 per cent of the 24.9 billion euros Schneider made in revenue worldwide was from Asia; 34 per cent of its total global staff of 167,000 is also based in the region.

“In a decade, the region has turned from a marginal part of our business to become the top region from a business point of view,” Tricoire said. “It has become very important for us.”

Driving this growth are three main engines: smart and green urbanization, industrial automation and digitization, he said.

“Those elements are very closely linked,” he said. “You can do smart manufacturing if you’ve got good digital infrastructure. And you can do smart and green cities if you digitise everything. This is what the Internet of Things (IoT) is enabling.”

By 2018, more than half of Asia Pacific’s population is expected to live in urban areas, making it the biggest challenge facing the region’s governments and cities, according to a new report by UN Economic and Social Commission for Asia and the Pacific (UNESCAP) and the UN Human Settlements Programme (UN-Habitat).

The report, ‘The State of Asian and Pacific Cities 2015’, released on October 19 noted that between 1980 and 2010, Asia Pacific’s cities doubled to two billion people and will house 3.2 billion by 2050. In China and India alone, the number of people living in cities is expected to grow by 696 million.

Meeting this urbanization challenge will require technology, Tricoire said. This means making buildings greener, delivering services more cheaply and improving energy efficiency: priorities that are aligned with Schneider’s vision as a company, he added.

Drivers of urban growth

In Singapore, the focus on smart cities – using technology to deliver better and more affordable public services–as well as energy efficiency is a huge opportunity, Tricoire said.

For instance, software downloaded on smart devices can switch appliances and lights on and off automatically when they sense the presence of people.

These machines, appliances, devices and software form the ecosystem of the Internet of Things –where software and hardware speak to each other through the Internet – can make urban systems more efficient, Tricoire said. These include water, transportation systems, gas, electrical networks – which is a huge part of energy consumption.

“So we want to apply our technology to make Singapore a more efficient city from that point of view,” he explained.

To take this a step further, the electrical systems of buildings – as well as data centres that host the smart infrastructure – can be connected to smart grids, which can detect power usage in a neighbourhood, district or city and redirect the power to where it is needed the most from areas where it is not used.

Automation has also been driving Schneider’s growth. For instance, the company has been helping factories in the region – from China to Indonesia – automate their operations because labour costs have been creeping up.

In India, for instance, Schneider has been working with a manufacturer of cement – an industry known for being a notorious greenhouse gas emitter and polluter – to run more efficiently, Tricoire said.

As it uses wind energy to some of its factories, the cement maker finds it extremely useful to know when windmills located far away are the most active. That is when the company produces more cement. Schneider’s software – connecting to the power grid – tells the factories’ operators when to crank up production.

“When you do that, you get new levels of productivity,” Tricoire said. “This is slowly happening across the region.”

The need therefore to connect machines, devices and people to the Internet in this new IoT economy will continue to drive the company’s growth, he said.

New Singapore HQ as launchpad for Asian expansion

To build on this growth and take advantage of the opportunities in the region, Schneider will invest 65 million euros over the few years in Singapore, its new Asia headquarters.

This money will go towards setting up a software solutions center and a software regional hub, as well as a regional control tower for network logistics, analytics and transportation.

Schneider Electric has been present in Singapore since the 1970s, having set up as Telemecanique Far East Co and subsequently renamed to Schneider Electric in the 1990s. The company’s products, systems and solutions can be found in many of the city state’s largest buildings and infrastructure projects including the Singapore Sports Hub, the Esplanade, Changi Airport, and the Kranji Newater Plant.

The new software solutions center is targeted at the chemicals, food and beverage, mining and metals, oil and gas, transportation, water and waste water, and utilities sectors.

The idea is for the centre to showcase Schneider Electric’s industrial software products that help enhance productivity, improve safety and boost sustainable performance.

By 2018, Schneider expects the centre will employ more than 60 research scientists and engineers who will develop and deliver software solutions to solve the most critical operational issues.

Tricoire said that the company’s new East Asia Headquarters in Singapore – which has 1500 staff – will oversee the company’s operations in Southeast Asia, Korea, Taiwan and Mongolia, helping the company to drive innovation and make energy reliable, efficient, and sustainable across the region.

In addition, Schneider Electric’s logistics and network design team in Singapore will be expanded to handle regional activities for logistics and network design, data analytics and global transportation.

This so-called “control tower” will deepen its capabilities in Singapore to optimize the company’s supply chain within the region and beyond. This is “the team that plans all the flows of products, systems across all the factories we have in the world,” Tricoire explained.

Tricoire added that the company is so focused on efficiency because it believes it is the only way energy consumption can grow sustainably.

“By 2030, energy consumption would have grown by 35 per cent, at the same time, we need to decrease emissions by 35 per cent. So we need to improve efficiency of everything we do,” he said.

“There is only one way to do is – by technology.”

 

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