Interview with Frédéric GODEMEL, Executive Vice-Pres. Power Systems & Services, Schneider Electric

Well, look, without going very far into the future, but if you look at the next 20 years, it's pretty obvious that the train is there. By the way, it was there 10 years ago, but it is now accelerating. The reasons for that are that in the challenge we have to decarbonize the energy usage, electricity happens to be the best solution by far. For two reasons: it can be generated in a greener manner, meaning with more and more renewables. We now have a decarbonized source of generation. And the second reason is that it's flexible to use, meaning it's quite adapted to the usage in many domains that before were using fossil fuels and are now moving to electricity. And what's most visible this year, especially in Europe, is the speed at which electric cars are becoming a new way of traveling. It's faster than what we even thought. I think everybody can witness it in Europe—the speed at which it goes.

Yeah, look, this trend of—what I would call—massive electrification is not without challenges. We're facing two types of challenges. Challenge number one: integrating more renewables in the source of generation, and renewables are not stable in terms of generation capacity. So at the generation side, it requires integrating much more flexible sources of generation, and this is a challenge. Challenge number two is that usage will become much less stable than before. Why? Because when people largely use electric cars, the peak of consumption when people go back home will be higher. So more intermittent generation and a peak in energy usage that will be higher. All this requires more flexibility and a different way to manage energy. That means, probably, governments and regulators will put more measures in place to allow people to use energy at less peak hours, more during the night and things like that. And if we want to cope with that, we have to keep our research on digital ways to exchange information on energy. That's where we put most of our effort today—on flexibility and digitization of energy. Because the only way to manage these flexibilities is, as soon as you exchange energy, to exchange data as well, and to understand where the usage is and where it will be in the next hour or two. That's where we do a lot of investments ourselves and in partnership with other companies. For example, the car manufacturers, the people working on the algorithms of car usage—we need to partner with those people so that we deliver end-to-end solutions that manage the grid in an efficient way.

I see three main challenges. Number one, which is not new but is the acceleration of integration of renewables, and probably operators whose network generation will be based on renewables above 50 percent. That's challenge number one. It will probably go with injecting some storage points at various levels—not something people are often used to. The higher the percentage, the more challenges, but the profession has worked on this one. Challenge number two: devices on the network are using a gas that is not great for the environment, which is SF6. It's a good gas for electrification but not great for the environment. All distributors will have to move to solutions without SF6, and we now offer solutions based on air that are completely green. There is a challenge of circularity because they need to properly take back all the products with SF6 that are on the network. Probably a big challenge for the next 20 years—to decarbonize the switchgear on the network. Challenge number three: connecting with users. Not just putting in meters, which is obviously necessary if you want to invoice and measure consumption, but interacting in a flexible way with users and being able to generate a seamless interaction. Users will not spend time looking at the time to charge. They want energy and they want the cheapest possible energy. The challenge for distributors and retailers of electricity will be to interface with users and associate the production of renewables with consumption. I would not put the entire pressure on the distribution grid operators—I would put it first on the regulator, so that regulation favors a different use of energy, favors the right periods to use energy, and favors much more flexibility so that people understand that when there is a day with a lot of wind and sun, that's probably the right moment to recharge some of the capacity we will have deployed on the networks.

I really think we need to evolve regulation. What we see in many places of the world is that if regulation is not evolving, people may suffer power cuts and network instability, and people react very strongly to that. We had a recent example in Texas where there was a huge power cut because of climate conditions. I don't think people can accept that. The best way to anticipate that is to work on regulation. Regulation number one: regulations that favor flexibility. Regulation number two: something that incentivizes the entire chain to use more and more clean energy so that they become what we call prosumers—actors of the grid who basically simply give data so that operators can manage it better. If the regulation does not change in this regard, it will become a source of complexity. It can be fixed with higher levels of investment, but higher investment would mean a higher price of energy. We think there is another way—not more investment, but more flexibility in energy usage.

It will be my pleasure, Gail.