Modern development is increasingly powered by electrification and digitization, both of which nowadays take on a more strategic nature – and this is what Schneider Electric is involved in.
The French global company made its mark 140 years ago in the steel industry and later refocused on automation and energy management. The two core businesses work in synergy, generating complete and integrated solutions by creating higher efficiency and generation capacity, connectivity, and reliable and renewable energy source for sustainability.
“The fact is that digitization is accelerating and that the world is becoming more electric, both of which are Schneider’s focused solutions that have become major factors behind the company’s higher performance,” says Chairman and CEO of Schneider Electric Jean-Pascal Tricoire, who has been leading the company since 2013. Schneider’s total revenue from energy management and automation in the first half of 2018 shows total growth of more than 7% over the same period last year to €12.3 million (about $14 million) – a large portion comes from low-voltage and industrial automation.
Asia-Pacific makes up about 30% of its global sales but large revenues are also generated by huge markets like China, India and East Asia, which in Schneider’s zoning scheme includes Southeast Asia, South Korea, Taiwan and Mongolia. According to Jean-Pascal, “Southeast Asia is the most booming market for Schneider. The need for electricity and digitization is very high and challenging, hence more potential for innovation. We are deeply rooted in those countries, and I see it as one of the company’s investment target growth areas.”
Southeast Asia, according to Jean-Pascal, is a very significant hub for Schneider, where they have large manufacturing base, research & development and logistic control center. Last September, Schneider just held its Innovation Summit in Singapore which is claimed to be the largest of its kind in East Asia. Over 1,500 stakeholders including Schneider’s customers, partners and suppliers, came to share their ideas on the digital economy and to witness Schneider launch its latest development of EcoStruxure Power, Building, Plant & Machine, and Asset Advisor.
Indeed, according to the International Energy Agency (IEA) in 2017, energy demand in Southeast Asia alone has increased by 60% in the past 15 years and is expected to continue until 2040. Electricity accounts the most in energy consumption following the region’s diverse and rapid economic development, which therefore has to be addressed with more efficient and renewable energy to secure future sustainability – a smarter way in electricity consumption.
For a huge market like Indonesia, opportunities accelerate for the move toward greater usage of smarter grid and renewables, while continuously focusing on power generation coverage. “Indonesia has been a very solid market for Schneider: it is among the top performing countries in the East Asia region for the past two years by generating one-third of Southeast Asia’s sales,” says Zone President of East Asia & Japan Tommy Leong.
For the past 45 years, Schneider has become the largest French employer in Indonesia with 4,500 workers. It operates five factories in Indonesia – three in Batam have been transformed into smart factories to support the country’s Industry 4.0 agenda.
“We believe Schneider has mastered the essential elements of electrical distribution and automation for quite some time. Many are also beginning to enter the same field, but we are very confident that we are well-ahead in the game,” states Xavier Denoly, Country President of Schneider Electric Indonesia.
Schneider’s profound technology launched in recent years is EcoStruxure, an open and interoperable system-architecture and platform designed differently for buildings, data centers, industry, and grids. Maximizing energy and operational efficiency, this IoT-enabled platform consists of three layers: connected products; edge control; and apps, analytics & services – facilitated with cloud and inbuilt cyber security. This new way of managing electricity costs less, allows faster return on investment, and changes the way of rethinking the eligible solution on electrification.
One example of Schneider’s client using EcoStruxure Building is Indriati Hospital, the 25-storey hospital in Solo, Central Java, which allows it to reach financial efficiency by 30% for power distribution, secure power, and building automation. The overall solutions cost the hospital Rp 15 billion, but as the upgradability and flexibility of the system can last up to 30 years, it will be more efficient than common systems requiring constant redevelopment.
Schneider also works closely with state electricity company PLN; its early participation in the 35,000MW megaproject, with one being the installment of microgrid for 20MW Mobile Power Plant in Nabire and 50MW and Jayapura, both in Papua, last year as well as other projects that will continue for the next 10 to 15 years.
It also works on electricity distribution and explores renewable energy sources such as solar, windfarm, and geothermal. “There needs to be enough power to be able to supply the huge population of Indonesia, it is better for existing installations to be more energy efficient,” says Xavier.
Although confident in being the market leader in Indonesia, Schneider’s challenges remain in obtaining appropriately competent employees for their core businesses. It has been working with the Ministry of Education of Indonesia and the French government to provide training at Indonesian vocational schools. Externally, the rupiah depreciation and the trade war between China and the U.S., two huge markets of Schneider, could affect manufacturing costs.
Schneider’s future investment focuses on their factories across the region, by merging them to create better economies of scale and transforming them into smart factories for more efficiency. In Indonesia, it targets industrial zones and taps Sumatra, Kalimantan, and Sulawesi other than Java. It also strives to bring power to remote areas by working with PLN using microgrids. The investment potentials in Indonesia is thus enormous and certainly huger than in the past two years combined.