Todd Pruzan, HBR:
Welcome to the Quick Take. I’m Todd Pruzan, senior editor of research and special projects at Harvard Business Review. Today I’m with Philippe Delorme, executive vice president of energy management at Schneider Electric and a member of the group’s executive committee.
In 2020, Schneider Electric posted revenues of more than 25 billion euros, and Philippe’s division oversees around 75% of this total global business, delivering solutions supporting critical infrastructure, data centers, homes, buildings, electricity, transportation, and our energy systems. Philippe, thank you so much for joining us today.
Philippe Delorme, Schneider Electric:
Thanks for having me.
Todd Pruzan, HBR:
Philippe, Schneider Electric has been very vocal about being part of the solution to combat climate change. Could you share with our audience a few words about your company and why you’re obsessed with tackling the net-zero challenge?
Philippe Delorme, Schneider Electric:
Sure, happy to do so. Schneider Electric is the global specialist in energy management and automation, and we like to describe our mission as being the digital partner of our customers for efficiency and sustainability. Really, sustainability is a dimension that has been growing a lot in the past years because our customers are very focused on that dimension.
At Schneider, we were recognized in 2021 as the most sustainable company in the world by Corporate Knights—not by chance, by choice and by hard work. We’ve been working internally very hard to get to a carbon-neutrality trajectory by 2025 and to be full net zero on the entire supply chain by 2050.
We are also working, of course, with our customers. We are committed by 2025 to help our customers save and avoid 800 million tons of CO2, which is a huge figure. If you look at it, the total carbon emissions in the world are 34 to 35 gigatons, so 800 million tons is a lot of tons of CO2. And by the way, that’s great news because that means that today solutions do exist to really reduce carbon emissions.
Philippe, climate change is undoubtedly the defining issue of our time, but no one seems to have a definitive answer on what to do about it. You say that energy is the key. Can you tell us why you believe that to be the case?
Philippe Delorme, Schneider Electric:
It’s actually very simple. When you look at the whole of carbon emissions, 80% of the carbon emissions are coming either from the production or the consumption of energy out of an energy system today that’s been built on coal and oil and gas. We call it the age of fire, which is vastly inefficient. There is 60% waste in that system.
Now, we’ve seen with COVID that actually it’s possible to shed carbon emissions. In 2020, say because of COVID and some economic slowdown, the carbon emissions have been going down by 7%. But we see that as the economy is restarting, we are back to square one, and we erase the savings of 2020, which is not good news.
We all must rethink our relationship with energy to make it green and smart. Going green means more electrical and going smart means more digital. Out of a full energy system that we believe has gone in parallel to the industrial world through four evolutions that are pretty distinct, number one is really the start of the generation—the start of electricity, which was in the 18th century. Then the scale-up in the 19th century. Then phase three was when silicon got introduced, which actually started the digital transformation in industry and also started the renewable transformation initiative in the electric and energy world. And the last phase is what we call Electricity 4.0 where electric and digital are coming together to indeed build a full new energy and electrical world, which we think will put us in the trajectory of a net-zero world by 2050.
Todd Pruzan, HBR:
If Electricity 4.0 is our fastest route to net zero, what’s stopping us from achieving it, and what needs to be prioritized?
Philippe Delorme, Schneider Electric:
The people who are thinking about the new electric and the new energy world tend to think in the same way as the past 100 or 200 years ago, which is a very linear thing from supply to people consuming. Actually, we believe that we need to do the bare opposite, which is start from the point of consumption and reinvent the point of consumption. That means reinvent the homes, the building, the data center, the industry of the future because they represent, first, where the rubber meets the road and where things have to change.
And then impact the supply side. By doing that, we actually see, by changing behaviors and by applying technology to changing behaviors, a step-change efficiency that actually very, very few people are talking about.
Todd Pruzan, HBR:
Philippe, you say that the technology to deliver Electricity 4.0 is already available. Can you give us some examples and explain how they’re driving change?
Philippe Delorme, Schneider Electric:
As I said, if you start to think [about] the electric and the energy world from the demand side, first you want to look at all those objects on the demand side. It can be homes, building, data centers, industry, and so on, and really starting to build them to be more frugal on one side; second, energy autonomous.
Take a few examples. A building—you can build a building in a good old way, which is not fully paying attention to energy efficiency, to how much this building will be using, or trying to really make it work as if it would be very frugal. And then you move to electric loads, not gas-operated loads—the heat pump, for instance, when you put in place digital technologies so this building will shut down consumption when there is no one inside—which happens every night, basically—you can reach a step-change efficiency in the energy consumption. The last building we commissioned in Europe is using one-tenth of the energy of any other building around.
Because of this, then you put solar panels on the roof or renewable sources of energy, but solar panels seem to be working very well. And you start to have an autonomous building that actually across the year will have enough energy to feed the whole premises and actually sell back energy on day one and maybe consume energy on day two. You can do the same for your home.
You can apply that logic to data centers, and we have been able, for instance in Sweden, to build a carbon-negative data center—not carbon neutral, carbon-negative data centers—and on and on for industry infrastructure. Once you’ve done all that, you start to move from points of consumption [to] points of consumption but also production.
A bit on the model of the internet—you have to orchestrate a lot of very smart energy points that consume and produce. This is where, from the supply side—meaning from the grid sites—you need actually much less energy generation, and you need much more orchestration. And that’s where a digital layer on top of orchestration of all these points—like you have in the internet—Electricity 4.0 becomes the norm.
Suddenly you are thinking of your whole network in a very different way, in a much more digital way, a much more electric way, which is what we call Electricity 4.0. And it works, and it’s available today.
Todd Pruzan, HBR:
Philippe, what’s the one thing you would most like to see happening over the course of this coming decade?
Philippe Delorme, Schneider Electric:
I think in the COP26, it’s very clear. There is a 2050 goal of being carbon net zero in 2050, but the urgency is to drive a very different trajectory by 2030. We need to cut by two carbon emissions by 2030, and really what we advocate is to make sure that we use solutions that are available now. And we try to be very practical and deploy them at scale so the world gets to that first milestone—which is so, so important—of halving carbon emissions by 2030, and it’s possible.
Todd Pruzan, HBR:
Philippe, thanks so much for joining us for this interview today.
Philippe Delorme, Schneider Electric:
Thank you very much.
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