On October 12, Schneider Electric gathered its clients, suppliers, and the media for an in-person event in Las Vegas. It should have been dubbed “Sustainability Conference,” as this was the clear message.
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Summary
On October 12, 2022, Schneider Electric gathered its clients, suppliers, and the media for a large in-person event in Las Vegas, Nevada called Innovation Summit. The conference should have been dubbed “Sustainability Conference,” as this was the clear, overarching message. Omdia summarizes our top takeaways from the event in this article.
Schneider Electric’s advice to businesses
In his keynote, Jean-Pascal Tricoire, Schneider’s CEO and chairperson, reiterated a story Omdia has heard from the company: sustainability is a journey that starts with realizing existing efficiencies in a company’s operations, digitalizing physical processes and data, electrifying, and then decarbonizing. Data is key for all these steps, as is clear from Tricoire’s step-by-step advice to enterprises:
- Place your data in one place. Schneider Electric wants to help enterprises collect their data, which is essential to the process, and place it in a singular repository that can empower decision-making for different stakeholder groups (from internal IT developers to operations teams to external partners).
- Build a digital twin of your enterprise. This will allow you to assess operations scenarios and simulate outcomes. Do not expect a crazy virtual reality (VR) experience here. An efficient digital twin can be data-based, as sometimes fewer graphics are more practical.
- Deploy cloud-based analytics and controls system. Schneider Electric naturally encourages you to use its EcoStruxure software stack to centralize data repositories and analysis. Yet, this advice is practical and can be applied to the offerings of other vendors.
Following the three steps above would enable continuous and maximized energy efficiency and sustainability.
A “once in a generation” level of government investment in the US
The US Inflation Reduction Act was a big discussion topic at the event. Schneider Electric called it a “once in a generation event” multiple times and even had one of President Joe Biden’s advisers on stage to break it down. The company expects this bill to boost the deployment of microgrids (from solar panels to wind farms to batteries) and is offering services that can help consumers and enterprises take advantage of the new subsidies. But do not expect the Inflation Reduction Act to have any impact during this year. There was a clear consensus that while the bill would have a significant impact, it will be spread over 10 years, and the earliest action will most likely kick off in 2023. Omdia’s analyst view is that it will take a few years before we start seeing the growth curve of the power equipment industry shift because of the incentives in the bill.
Schneider Electric is bullish on the smart electric grid and the role of “prosumers”
In many of the conversations at the conference, Schneider Electric advocated for the smart electric grid, where traffic flows bidirectionally. Omdia has discussed the topic of grid-interactive uninterruptible power supplies (UPS) within the data center industry at length. UPS can contribute by integrating renewable energy into the power equation, balancing energy supply and demand, lowering grid infrastructure investment, and even generating new revenue streams.
At the conference, Schneider Electric discussed a vision where every consumer is a “prosumer” (consumer of energy + producer of energy)—not just consuming but also contributing electricity to utility companies. It is important to note that bidirectional electricity flow is not available on many electric grids, and updating these will take time. A likely first step could include the evolution of monitoring and metering to enable consumers to opt in to take actions that help a utility at peak times, such as postponing electric vehicle (EV) charging until nighttime.
Schneider Electric discussed quite a few existing microgrid case studies where it enabled enterprises to become prosumers:
- Brookville Smart Energy Bus Depot, where 70 diesel-powered buses were swapped for electric ones, charged by a 6.5MW microgrid consisting of solar energy canopies and battery energy storage.
- Bimbo Bakeries deployed microgrids at six of its California bakeries because it wanted to decarbonize and add EV chargers for employees.
- An animal shelter in Montgomery Country, Maryland deployed rooftop and carport solar panels and backup generators to power its building and EV charging.
- A biotech company deployed a microgrid to solve for resilience at its California manufacturing site. It had experienced costly downtime losses due to utility power outages.
The common theme in these four use cases: they were all organized by Schneider Electric’s Energy as a service (EaaS) companies AlphaStruxure and GreenStruxure, and the solution was delivered as a service with no upfront investment. AlphaStruxure, a joint venture with Carlyle, designs, builds, owns, operates, and maintains custom-built energy infrastructure, including microgrids.
Companies enter into a long-term (20–25 year) EaaS agreement, defining stable energy prices over the term of the contract. This EaaS business model has huge potential, given the current state of global prices. EaaS based on renewable energy sources might be cheaper than the rate of the electric grid at times and more expensive at others. AlphaStruxure indicated that what it ultimately offers is price certainty and the ability to optimize your microgrid to the unique needs of your enterprise, be that greenhouse gas reduction, resilience, reliability, performance, cost, or capacity.
One of the requirements to engage with AlphaStruxure is that the enterprise is energy intensive with complex energy challenges (as a guide, using 5MW or more). However, the company indicated that enterprises with smaller current usage today could end up in that bracket when considering the growing need for EV chargers and supporting infrastructure or multiple facilities.
For projects that require less than 5MW, Schneider Electric set up a second joint venture called GreenStruxure. This EaaS company has a more off-the-shelf approach to microgrids with smaller, standardized solutions.
Bottom line: EaaS stole the show
In Omdia’s opinion, the new EaaS solution stole the show at Schneider Electric’s Innovation Summit. The no upfront cost and predictable long-term bills of this solution should be appealing to most companies, regardless of their size. It enables decarbonization while solving for resilience, futureproofing, and cost. It seems that awareness is a key reason that demand for this EaaS solution has not been higher.
Omdia was surprised to hear that AlphaStruxure has not seen interest from any data centers. We heard the argument that “5MW is too low for a data center,” but most communications service provider (CSP) data centers fall within that range, making them good targets. CSPs are also on a journey to operationalize more of their expenses, aligning their priorities with EaaS. Meanwhile, we are on the lookout for nuclear energy in the form of small modular reactors (SMRs) being offered as an energy source option with EaaS.
Appendix
Further reading
“Smart grid ready UPS for an even more sustainable data center” (August 2021)
Author
Vlad Galabov, Director, Cloud and Data Center Research
