How Schneider Electric is Tackling the Smart Grid

Power gear company Schneider Electric (s SU) is fond of saying that 70 percent of the world’s electrons flow through its equipment. But what has it been doing to make those electrons flow more intelligently?

Like fellow smart grid giants such as Siemens (s SI), General Electric (s GE) and ABB, Schneider has a multi-faceted approach, largely based on its strength in low and medium-voltage equipment and its industrial and commercial energy management systems. In particular, managing energy in buildings and connecting them back up to the smart grid looms large in its plans.

Schneider operates in more than 100 countries and reported revenues of €8.57 billion ($11.2 billion) in the first half of 2010, double those of the same period last year. It provides products and services in data centers, industrial facilities, commercial buildings, and in the grid itself. It also has a host of familiar brands — industrial automation from APC , inverters from Xantrex, circuit breakers from Square D, and most recently, the transmission and distribution business units it acquired from French power giant Areva.

So what’s on Schneider’s mind when it comes to the smart grid? Here are some takeaways with recent conversations with company executives, along with a host of projects and partnerships that help define Schneider’s vision:

1) The Smart Grid Needs Smart Buildings. First of all, it’s important to focus on the fact that Schneider is busy building a smart grid from the building on up. Illustrative of the work is Schneider’s partnership with IBM (s IBM), aimed at linking buildings from individual sensors and controls all the way up to the enterprise.

“Schneider and IBM think you can’t have a smart grid without smart buildings,” is how Chris Davis, vice president of global strategic alliances for Schneider’s buildings business, put it to me. The two have already started one project at Rhode Island’s Bryant University, where they’re linking the school’s Schneider APC-based data center control platform with Schneider’s Andover Controls “Continuum” brand building management system — an example of the advantages of having a huge base of installed equipment ready to be integrated.

A similar strategy is being applied with Schneider’s EcostruXure offering for building energy efficiency, which ties Schneider’s gear and engineering expertise with a variety of services, from “EnergyLite” programs to cut building power use by 10 percent with minimal investment, all the way up to full-scale, multi-million dollar energy services contracts that aim for 30 percent or better efficiency gains. In New York City, Schneider’s TAC energy controls system helped the McGraw-Hill Building at Rockefeller Center cut its energy bill by 60,000 kilowatts, saving $12,500 per month.

2) Upward Integration is King. While EcostruXure helps clients get at the gamut of building energy efficiency options, it’s also meant to be a platform to integrate with IT systems such as Web Services and others, Davis said. Part of that is tied up in Schneider’s partnership with IBM, as well as its partnership with Cisco (s CSCO). Schneider is the only building management giant that’s been officially named a partner with Cisco’s Building Mediator platform and EnergyWise protocol for tying different building management systems together and linking them to utilities via Internet protocol (IP).

Moving upward along the grid, Schneider is working on tying the distribution grid and substation controls from its Areva acquisition into Schneider’s systems for managing buildings, as well as electric vehicle charging systems and distributed power generation such as solar panels, said Scott Henneberry, vice president of smart grid strategy. While Schneider doesn’t make smart meters, it does integrate its own building submetering systems and can cross-integrate with smart meters from others.

Unfortunately, one of Schneider’s showcase smart meter-smart building projects planned with building trade group BOMA Chicago has been put on hold since it failed to win a $93 million stimulus grant last year. Partner utility Commonwealth Edison is looking for alternate ways to pay for it — but given that ComEd is facing a court challenge to funding for another smart meter-demand response project, that might take some time.

3) “Demand Response 2.0” is the Future. Schneider has been involved in the BOMA Chicago project, showing off what James Anderson, vice president of Schneider’s energy and smart grid business, calls “Demand Response 2.0.” That term — invented by Schneider, Anderson maintained, but widely used throughout the industry — implies a flexible, integrated and optimized end-user environment that can call on distributed generation like generators and solar panels, energy storage like batteries and ice-making air conditioners, and a building-wide management system that can turn down power to maximize profits.

Schneider is already doing demand response “1.0” and “1.5” type projects, Anderson said. Those include helping NASA’s Jet Propulsion Laboratory in Pasadena, Calif. time the use of its electricity-gobbling wind tunnels to avoid utility peak power charges, Henneberry noted. In July, Schneider formed a partnership with PowerSecure to tap that company’s hospital auxiliary power supplies for demand response.

But moving to demand response 2.0 requires some key steps, Anderson says. First, it requires “near real-time” responses, rather than those that come from day-ahead or hour-ahead power markets. Second, it requires interfacing with the real-time wholesale energy markets. Third, it requires “talking to and through building management systems down to the device level” to do what Anderson calls “load shaping.” That constant tweaking of power systems — not just in reaction to changing power prices and markets, but in anticipation of them — is hard to manage.

Schneider’s recent commercial alliance agreement with startup Verisae provides an interesting model. Verisae manages power sensor and control systems for commercial clients including grocery stores, both to cut carbon and save energy. Schneider is working on what Anderson called “experiments” in reading Schneider submeters in buildings, taking price signals from utilities, and eventually giving building managers a way to automate various responses. However, most building owners are as yet reluctant to hand over complete control to an automated system.

4) Don’t Forget the Smart Grid Risks. Schneider’s Henneberry emphasized that the smart grid is as much about risk as it is about opportunities, both for utilities and their customers. As variable power pricing becomes more prevalent, and utilities face more pressing needs to optimize renewable sources of energy like wind and solar power, customers that fail to act can lose money, he warned.

“If they’re proactive, they can save money. If they don’t pay attention, it can cost them money,” he said. One example he gave is demand response, which is in the midst of moving from a model where most customers never have to curtail power to one where all are jostling to bid on-site power generation and load reduction onto competitive markets. “Unless you really understand power systems well, there could be some significant risks,” he said.

Henneberry, who helps manage the company’s global smart grid business, also noted that smart grid means different things around the world. While North American and European utilities may be trying to squeeze more efficiency out of well-running systems, utilities in developing nations first want technology to halt “commercial losses — that’s a nice way to say theft,” he said. Some utilities in India lose up to a third of their power to theft, he noted.

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Image courtesy of Schneider Electric.