Would you now call Schneider Electric an energy company?
Absolutely, I see Schneider as an energy company. It’s become what its all about. Everyone knows about energy efficiency now, everyone has bought into the need for it. You see some of the surveys from organisations like the CBI which have things like 88% of all CEOs are convinced that sustainability is a key strategic part of your business. 95% believe that energy security and pricing is their biggest issue, so it’s there.
Does it translate into action?
It is happening but its not yet where it needs to be. We’ve been through our kit and made sure that they are highly efficient so that’s all there. It’s had to morph into how can we enable energy efficiency, how can we make it mainstream.
What we call ourselves is the energy management specialist. The conversations that I have with customers are so different than they were 10 years ago, they talk about operating expenses rather than cap-ex, what does this mean for the lifecycle of the equipment, sustainability and they talk about finance.
With the energy bill, the CRC and so on in the UK, the best thing that we can do is energy efficiency. They get it (CEOs) now. Look I know it’s going to cost more to do this, but it’s the right thing to do. And when we look at this in five years it’s going to save but at the moment we are going to have to spend some money.
Do you get involved in the financing of projects?
More and more now the discussion is about finance for cap-ex projects, can we lease stuff. We do energy performance contracting, we’ve been doing that for some time. But this has been aided by the purchase of companies such as M&C Energy. We’ve been dealing with the NHS hospitals and universities doing energy performance contracting. So we come along and do a full audit and out of that we can say what the potential savings are. Then we will commit to that formally and then we will bring finance, it’s not our own finance, there are many people now talking about the green dollar or the green pound so there is money available now. So we find ourselves in a position where we are like the broker and we make it happen.
We take the contract, the hospital for instance, pays nothing on day one, however, they get this energy reduction. In the best cases we can get 30% and we have to do some major refurbishment such as boilers, heat exchangers and CHP. We don’t make CHP, so we will procure it and we will run the project and manage it, put it in and so effectively what the building or hospital does is pays for the kit or the lease or whatever arrangement and this comes out of the savings. If the savings don’t come up to the commitment then we pay the difference so that they are never out of pocket. Then after the agreed period of time the kit is theirs.
Are you involved much in onsite renewable energy?
If they want to put solar on the roof, for instance, and this is starting to happen more and more. It’s more expensive and so the payback is longer. I was talking to the CEO of Honda in Swindon and 25% of their energy comes from solar and this is a manufacturing plant. They started by doing rooftop solar and then in the adjoining land they have created a solar farm. They haven’t blown their own trumpet about this they just do it. Solar is now reaching grid parity so it’s a good option.
Is it a problem that a large multinational equipment manufacturer has bought a consultancy that should be offering independent advice?
I can see that there would be a question mark but in the end its got to be shown to be able to deliver. In energy performance contracting we have skin in the game and would recommend the best solutions that we could. We wouldn’t just recommend Schneider kit.
M&C Energy offer advice on demand side advice solutions would they recommend Schneider kit?
They have no constraints to day that tell them to do that and you have to keep that. It’s important to keep the position that you are a credible consultant and that you will bring forward the best offer.
Why does a very successful equipment manufacturer want to get so far into consultancy particularly on the supply side which is not traditionally an area for Schneider Electric?
[It has purchased energy procurement consultancies Sumit Energy in 2011 and subsequently M&C Energy]
Primarily it helps me when I go to a CEO of a large enterprise and generally the discussions that I want to have these days are about energy and it helps me if I can go with a basket of offers that answers as many questions that the customer has as possible.
We supply customers such as United Utilities, for example, with a lot of equipment but it’s not very exciting for me to discuss this with the Director. Its not that interesting to that guy, it’s equipment, he gets really interested and wants to talk to me if it fails badly but it’s not strategic. But I can go along now ask what’s your energy strategy, what’s your plan for 5 years, for 10 years out. It comes back to what the customers want from us.
So was this the aim of buying consultancies so that the coversation culd be held higher within a organisation?
It was strategic by Schneider in that they wanted to be having conversations with organisations at several levels. Yes we will talk about the equipment because it is extremely important and we understand about the criticality of power and so on.
We found that the higher up in an organisation the person we spoke to the more that they wanted us to provide. These days an energy director, he wants more. The strategy really became one of being able to provide the total package. We can put it all together.
What do you use to put it all together?
We connect everything together with ethernet IP right through the organisation. Come up into operations from the shopfloor. Mid-level management then enterprise level – which is Resource Advisor (which came from Sumit and M&C). There is plenty of data available for the CEO, CFO but what are you doing with it? We can provide all of this data down here [at shopfloor level] and quantify it it in units of carbon and so on. It gives you one version of the truth in real-time, it’s not a report compiled from different sources in an excel spreadsheet. The data that you get a enterprise level is the real data from down the shopfloor.
You’ve got all this data but how is it leveraged it effectively?
We use it for control and supervision and operations but how do we use it too for making decisions about what we are going to do in 5 years time? How do we use it to really tell us we’re doing the right things from an energy efficiency point of view. Rather than relying on an excel spreadsheet that may have an error in it.
Free flow of data allows the users to configure and run itself. You have to keep up with legislation change and so on and the sustainability people from M&C will help a company while the tool is there to simplify and to have have everyone looking at the same data and to be able to make decision based on this.
Does the board level need this level of granularity?
At board level they care about the information and to know that savings are actually occurring at the shopfloor level with ecostruxure and then struxureware you are dealing with the same information and integrating third party stuff as well. Integration with web based solutions has made it a lot easier, interoperability is not an issue now. Integration is no longer a 6 months task but 2 weeks.