From being the "terminator" of China's power distribution "knife switch" era back then, to becoming today's "energy efficiency management expert," under the impetus of the low-carbon trend, Schneider Electric has now clearly set its sights on the highly sought-after smart grid market in China.
In 2010, Schneider Electric relocated its Asia-Pacific headquarters to Beijing. In 2009, it appointed Zhu Hai as its first historically local president. Looking back, this decision was made too late; if given another chance, it would have shifted its business center to China even earlier. It’s not just Schneider Electric that is tilting various resources toward the Chinese market. As early as 2006, ABB moved its global robotics business headquarters from Detroit to Shanghai.
What both ABB and Schneider Electric see is the upcoming full-scale development of China's smart grid construction. The intelligent upgrade and transformation of China's traditional power grid will drive the rise of a trillion-yuan-level industry. Moreover, central state-owned enterprises like State Grid Corporation are also trying their hands at constructing smart grids. Clearly, as a global energy efficiency management expert, Schneider Electric regards this as a strategic focus and is accelerating its layout for the smart grid in China.
On May 21, 2009, State Grid Corporation first disclosed its smart grid development plan, deciding to mainly focus on six key links—power generation, transmission, transformation, distribution, consumption, dispatching—as well as communication information platforms, covering all areas of traditional power systems. With the increasingly clear roadmap for China's smart grid development, the construction of smart grids will give birth to a huge industrial "cake." Among many involved industries, the business opportunities in grid technology alone could exceed trillions of yuan. The Chinese government publicly committed in late 2009 to reduce carbon emissions per unit of GDP by 40% to 45% by 2020. This goal triggered strict power cuts and restrictions during the closing phase of the "Eleventh Five-Year Plan," demonstrating the unwavering determination of China's decision-making level towards this objective. In the newly commenced "Twelfth Five-Year Plan," smart grids will enter a comprehensive construction phase, with an estimated investment of 4 trillion yuan by 2020. However, in the Chinese market, Schneider Electric must not only face competition from other multinational companies but also significant challenges from Chinese enterprises with cost and resource advantages when vying for relevant orders.
Regarding this tempting large cake, Yang Junqian, Chief Expert of Schneider Electric (China) in Smart Grids, Electric Vehicles, and New Energy, openly expressed his "appetite": "The intelligent core of smart grids lies in how to establish a strong distribution network. Schneider Electric will leverage its technical advantages and advanced experience in power distribution and energy efficiency management to become a valuable consultant and provider of solutions for China's smart grid construction."
In fact, two years ago, Schneider Electric had already established a global research department dedicated to analyzing and studying smart grids, and specifically set up a position for Chief Expert in Smart Grids, Electric Vehicles, and New Energy in China. Schneider Electric believes that future smart grids need to solve the issue of distributed power generation access, optimize energy management to ensure the efficient use of the grid, and ensure ubiquitous communication and intelligence. At present, China needs to strengthen its investment in distribution networks. The core of smart grids is to establish a reliable, safe, efficient, and green environmental protection distribution network, but the energy consumption in China's current power transmission and distribution process remains relatively high.
After re-examining its own advantages and existing industrial layout, with rich product lines and numerous solutions, Schneider Electric has locked its focus on power distribution and power management.
"From Schneider Electric's perspective, within the broad scope of smart grids, the first area we can work on is new energy power generation, including wind energy and solar energy. The second area is the center, creating a flexible, stable, and reliable smart distribution network to achieve distribution network automation. The third area is smart residences and smart homes. The fourth area is actually smart users, including large buildings, large data centers, and large factories, focusing on maximizing their energy efficiency and reliability while ensuring consistent interaction with the grid. The fifth area, which is distribution networks and users, involves rapid response and management. These five business areas represent Schneider Electric's direction and core in smart grids," explained Yang Junqian.
For many years, Schneider Electric's traditional strengths have been in power distribution and power consumption. In renewable energy power generation, smart distribution networks, smart residences, efficient enterprises, demand response, and power management, Schneider Electric holds leading advantages globally. In the field of renewable energy power generation, Schneider Electric provides comprehensive solutions in the solar power industry, including main DC cables, combiner boxes, inverters, monitoring systems, energy analysis, and grid-connected substations. "This will provide good reference for the construction of China's smart grid," said Yang Junqian.
At the Schneider Electric Solutions Summit held last year, Zhu Hai, President of Schneider Electric China, also mentioned that as an important participant and promoter in the energy-saving sector, Schneider Electric can help customers achieve a 30% energy-saving target through innovative integrated solutions.
Currently, Schneider Electric's complete set of solutions represents the "killer锏" for multinational companies like Schneider Electric to compete with local enterprises.
Tapping into Solar Energy
In reality, Schneider Electric entered the photovoltaic power generation market quite early. In August 2008, Schneider Electric acquired Xantrex, one of the top three global manufacturers of solar and wind energy inverters. Through this acquisition, it gained the ability to offer comprehensive system solutions to solar power companies, ranging from main DC cables, combiner boxes, secondary flow cables, energy conversion transformers to monitoring systems, energy analysis systems, medium voltage cables, and grid-connected substations. Its photovoltaic inverter has accordingly become a core part of Schneider Electric's renewable energy industry solution, and this is also an important direction for its development now and in the future. In 2009, Schneider Electric specially split out its photovoltaic business in China, establishing an independent business department to provide complete solutions except for solar panels, including distribution systems, grid monitoring systems, security systems, etc., demonstrating its importance to this business and its rapid development.
"We have been able to develop rapidly mainly due to riding the favorable policy winds supporting the industry's development and our own efforts to move fast," explained Wang Guowei, Director of Solutions Business at Schneider Electric's Distribution and Energy Division. "In recent years, we have put great effort into providing overall solutions, and now Schneider Electric's teams around the world are very mature."
Schneider Electric started its photovoltaic applications in Europe. Currently, it operates this business in more than 100 countries. Last year, Schneider Electric achieved excellent results in the Italian, German, and French markets. "For us, entering the photovoltaic industry simply means adding a new business line to our existing departments. Our existing sales channels, market influence, and after-sales service guarantees all give us a competitive advantage in the market," said Wang Guowei.
With the dramatic reduction in photovoltaic power generation costs and the maturation of technology, Schneider Electric has established four solar system solution centers globally, located in Spain, France, Italy, and China, providing professional engineering design, project implementation, installation guidance, and operational consulting services to each country's solar industry.
"Our photovoltaic business growth has been very fast, with rapid absolute growth in product sales and even faster growth in solutions," introduced Wang Guowei. As a global leading supplier of photovoltaic power generation system solutions, Schneider Electric's successful cases in the solar field have spread worldwide, with a cumulative construction of over 1000 megawatts of solar projects, including the largest solar photovoltaic power station in Asia, Huaneng Group's Shilin 100MW PV grid-connected demonstration power station, Datang Qingtongxia 10MW PV power station, CGN Tibet high-altitude PV power station, as well as Italy's Hopi 43MW PV power station and France's Aquitaine 74MW PV power station.
Since 2008, Schneider Electric has ventured into China's photovoltaic power generation market. Currently, among the four cooperative projects in China, two projects of 66MW and 100MW have been successfully completed. Especially in the project cooperation with China Guangdong Nuclear Power Group, 75% of the inverters used are Schneider Electric products. Therefore, Schneider Electric has high expectations for the booming development of China's photovoltaic market and has invested substantial human and material resources to support the development of the Chinese market. This is also why Schneider Electric set its Asia-Pacific headquarters in Beijing.
Outstanding Performance in the Chinese Market
The importance of the Asia-Pacific market, especially the Chinese market, is crucial for Schneider Electric. Since establishing its first joint venture factory in 1987, over 23 years, with 22 factories, 6 logistics centers, and 2 R&D centers, the Chinese market has grown to be Schneider Electric's second-largest market globally.
As expected, the Chinese market has also given Schneider Electric new surprises. As an emerging industry, in recent years, the development of new energy sources such as wind power and solar power has been rapid, with the introduction of new energy policies creating favorable external conditions for industrial development.
In November 2009, the digital computer monitoring system and ancillary equipment of the 100MW photovoltaic power station of Huaneng Group in Shilin, Yunnan, adopted Schneider Electric's products. This was Schneider Electric's first successful case in a large domestic photovoltaic power station. The success of this project laid a solid foundation for Schneider Electric's comprehensive cooperation with China's major power generation groups in the solar power generation industry.
In February 2010, Schneider Electric again won the Dunhuang 10MW PV power station and Qinghai Xitiexia 10MW PV power station projects participated in by CGNPC Solar Energy Development Co., Ltd., realizing the first high-altitude large-scale solar PV power station domestically and internationally.
Now, the Shilin, Dunhuang, and Xitiexia projects have all been smoothly commissioned. Just the Shilin project alone generates an average annual power output of 1182.85 million kilowatt-hours. Additionally, two high-altitude projects in Tibet were commissioned in May this year. Beyond Europe, including France, Italy, Czech Republic, and other countries, Schneider Electric will also commission multiple photovoltaic projects, including EPC and operation maintenance projects.
Currently, Schneider Electric's integrated complete solutions can serve the entire upstream and downstream new energy industry chain, from equipment manufacturers, power plants, construction companies, to end-users, and has successfully implemented electrical systems or turnkey EPC projects in photovoltaic power stations in multiple countries, with a cumulative installed capacity exceeding 800MW globally.
It is evident that in the photovoltaic industry, Schneider Electric has embarked on a new "gold rush" journey. Wang Guowei stated: "In the next step of our work, we will focus on setting up sales and service personnel in key provinces such as the central-western regions and Shandong Province, continue promoting overall solutions, and launch more schemes. Meanwhile, we are cooperating with domestic and international panel manufacturers or investors to bring photovoltaic power station businesses into China or take them abroad." For small customers who lack funds but wish to use Schneider Electric products, Schneider has specially introduced energy performance contracting and financial leasing mechanisms. Currently, Schneider Electric is using the energy performance contracting method to build a 3MW solar power system for an airport in a provincial capital city. The initial construction investment is provided by Schneider Electric, and the customer only needs to purchase the power generated by the power station at the initially agreed price and number of years.
In fact, in this new round of improving economic development quality, for basic industries such as electricity and energy, it signifies a new round of growth opportunities and intensifies competition. In the past few years, we have seen not only new listed companies like Shaanxi Drum Blower (Group) Co., Ltd. with sales reaching over 3 billion yuan, but also state-owned enterprises like Shanghai Electric Group dominating their respective fields, attempting to leverage their credit and channel advantages to seize market high ground. Of course, this industry is not short of innovative enterprises, with a large number of elites from new materials, automation, IT, finance, and other industries choosing to start their entrepreneurial journeys here.
As a foreign company, ABB's slogan is: "Creating a better world with power and efficiency." Throughout the development of new energy, ABB can provide a full range of products, playing a unique technical role. What Schneider Electric faces is, on one hand, speeding up the commissioning of its photovoltaic solar projects, while maintaining its market advantage in the wind energy sector. Currently, Schneider Electric has set up a specialized production base for wind turbine inverters domestically, aiming to comprehensively provide grid-connected wind turbine systems and enhance market competitiveness.
Yang Junqian believes that although China is currently in the initial stage of the wind energy market, wind energy will be the most potential renewable clean energy in China in the coming years. It is expected that after 2020, wind power will surpass nuclear power to become China's third-largest electricity source. As a global energy efficiency management expert, what Schneider Electric is most proud of is its 20+ years of rich experience in providing solutions and services in the wind energy industry, helping customers maximize the use of wind energy. "Schneider Electric's prominent advantage lies in its unique positioning and perfect energy efficiency management business structure, allowing us to fully utilize cross-departmental cooperation within the company to adapt to the market's demand for integrated solutions and accelerate our progress in the solutions and services domain," Yang Junqian confidently said.