In Conversation With Philippe Delorme, CEO Europe Operations, Schneider Electric
6 March 2023
As Europe celebrates 30 years of the Single Market, the need to leverage its full potential in the face of the ongoing energy crisis, threats to industrial competitiveness and the urgency of decarbonisation, has never been greater. We sat down with Philippe Delorme, CEO Europe Operations, Schneider Electric, to get his perspective on this pivotal moment for Europe’s net zero transformation and the ways forward.
From your perspective, what is the scale of what's at stake here?
Quite simply, the stakes have never been so high when we talk about energy in Europe. Since the terrible human tragedy of the war in Ukraine and the ensuing energy crisis in Europe, we've learned very quickly that it is absolutely vital for Europe to have a clear roadmap for energy sovereignty and independence. I would go so far as to say that if we don't sort out and reboot our energy strategy, I think Europe is in real trouble. We are facing a real existential risk here because I don't think Europe can stomach five years of unaffordable energy, and the risk of blackouts, and so on.
Now, there is good news and bad news. The bad news is that it's a really big risk. The good news is that it’s a strong catalyst for things to finally move faster.
You and your business are on the front line of making the net zero transformation happen. What do you see as the biggest challenges we face to get there faster and what are the solutions?
First off, what’s great is that there are many solutions, and many of them, by the way, are European-based technologies, digital solutions or services. And, Europe has defined policies that overall make sense. The challenge we have is indeed to get there faster, and that is partly about policy process and partly about being more balanced in terms of the attention paid to the demand side of the energy market equation.
In the short-term, the fastest way to decarbonise is to act on the demand side and drive energy efficiency.
Since the energy crisis, we have seen calls for a massive acceleration of wind, solar, and possibly green hydrogen – that is, the green supply. That is great, but I would say that in the short-term, the fastest way to decarbonise is to act on the demand side and drive energy efficiency. We like to say at Schneider that, comparing this with the Covid crisis, energy efficiency is the best vaccine – the only vaccine, actually, because all other measures will take way more time. That includes, I should emphasise, putting in place technologies and new business models for demand response systems, to have greater flexibility between supply and demand.
A second problem that we have is around funding. When you look at how we spend the money in Europe today, in the past 14 months, we spent more than €700 billion to subsidise fossil fuels. Which is as much or more than what Europe has put into REPowerEU.
Zooming in a bit more on the solutions, could you give any examples of what is working already and what’s possible?
Buildings are currently the biggest energy consumer in Europe, responsible for around 40% of EU energy consumption and 37% of greenhouse gas emissions. So, right there is a big part of the potential and, as I said, many technology solutions exist to do something about this. The key for rapid decarbonisation is the convergence of electrification with automation and digital technologies for demand management – what we call electricity 4.0.
The key for rapid decarbonisation is the convergence of electrification with automation and digital technologies for demand management – what we call electricity 4.0.
Take IntenCity in Grenoble, France, our office building for more than 2,000 people. It is fully digitally designed to be extremely frugal in energy use, making it 10 times more efficient than the average building in Europe. As a result, it is able to be fully net zero, with the solar panels on the roof providing as much energy as the building needs over a full year. And, the investment in all these technologies is recovered in three to five years.
The potential in industry is equally exciting. An example there is our smart factory site in Le Vaudreuil, also in France, recognised by the World Economic Forum as a Sustainability Lighthouse, one of only a few worldwide. Full digitalisation of the manufacturing process there has enabled a 25% reduction in material waste and 17% less energy use so far since 2018, and we continue to optimise and improve.
As you say, many of the technologies, solutions and services for decarbonisation are European-based as of course is Schneider Electric. With Europe’s competitiveness in the spotlight these days, what is your view of the importance of the European Single Market today in enabling what you do?
Without the EU and the Single Market, I don't think Member States would come with initiatives like Fit for 55, REPowerEU and all the rest. And within the Single Market, there's been a lot of work to put in place standards, and that's very important to guarantee security and safety, and to ensure interoperability and trust in new technology. Standardisation will be extremely important to guide the market in the right direction and to help things to move faster. So, of course, we celebrate and recognise the achievements of the Single Market. At the same time, we need to challenge the speed at which things are going in the face of this burning platform that is the energy crisis and an urgency to decarbonise.
What Single Market issues do you experience and what do you see as the priorities for addressing those issues?
The challenge is that it’s a bit of a balancing act, between on the one side the clear need to have standards and legislation that are top notch and on the other making sure that we don’t stack up so many rules that industry struggles to be competitive. We also need to chase some level of simplicity, so that Europe doesn't become a bunch of procedures, but stays very focused on the long-term – which is a single market for decarbonisation – and on keeping the bar high.
The other part of that is making sure that we enforce the rules, because we've put in place a lot of rules in Europe, but we don't always check that those rules are being enforced. We need to ensure we have the right market surveillance on top of the rules.
A last word?
I don’t say lightly that I believe this is an existential threat we’re facing in Europe – one that goes beyond the magnitude of what we experienced with Covid. To overcome it, collaboration is going to be very important – close collaboration across industry sectors, between multiple stakeholders and, equally, between policymakers and industry. And, we are committed to that.