ImpactAlpha, Sept. 21 – When the coronavirus pandemic shut down much of the world economy this spring, Emmanuel Lagarrigue worried the momentum toward a clean energy economy would be lost.
The concern was strategic for Lagarrigue, the chief innovation officer for Schneider Electric, the French equipment giant. Schneider has carved out a leading role helping customers shift to what Lagarrigue call digitized, decentralized, decarbonized electricity.
So Lagarrigue reached out for answers. “Actually, that’s not what happened,” Lagarrigue says on ImpactAlpha’s latest Agents of Impact podcast.
Data point No. 1: A large developer of renewable energy assets told Lagarrigue that his new competitors are oil majors like Shell, BP and Total, who are finding better returns on capital in renewables than in drilling for oil.
“That’s going to put price pressure downward on renewables. Renewables are going to be cheaper, even cheaper than that we anticipated,” Lagarrigue said. “The crisis, and especially the oil and gas price war, are just accelerating the energy transition.”
Data point No. 2: In Melbourne and Adelaide in the last few months, Schneider piloted artificial intelligence software that predicts, on the basis of zip codes, household debt and other factors, who is likely to buy residential solar systems.
“We had a 45% success rate,” Lagarrigue says, an astonishing response for cold-call solicitations. “People were telling us ‘Yes, I think I’m ready. If you can install it in the next three months or three weeks, the business is yours.’”
Data point No. 3: Last year, electric vehicles accounted for about 2% of new cars in the U.S., 3% in Europe and 5% in China. In Europe in June and July, with government incentives, EV market share was 9%.
“So acceleration, rather than anything else, in all those trends,” he says.
Schneider is betting on those trends both to steal a march on stodgier competitors and protect itself from disruptive startups out to unseat an incumbent. Last month, Schneider partnered with Huck Capital to develop and operate 5-megawatt on-site micro-grids to help commercial and industrial building owners switch to clean energy. Like many of Schneider’s internal startups, the initiative will be spun off into a separate company.
In April, Schneider, along with Breakthrough Energy Ventures, invested $11 million in Natel Energy in Alameda, Calif., to develop low-cost, “regenerative” hydropower technology that Natel says delivers “habitat creation, improved water quality and sustained increases in groundwater and aquifer recharge rates.”
Last year, Schneider helped incubate and launch EIQ Mobility in Oakland, Calif. to help vehicle fleet operators make the switch to electric by integrating electric vehicle makes and models, charging systems, incentives and tax credits, electricity rates and carbon footprints into plans and budgets.
Lagarrigue forecasts global consumption of electricity will triple in the next 20 years. Much of that will be off-grid, and not just because of sustainability.
“It just economically doesn’t make sense,” he says. “It makes much more sense to produce your own energy on the roof of your data center, your hospital, your shopping mall, your office building, your house, your manufacturing plant. It’s just cheaper. It’s more resilient. You don’t have to suffer the instability of the grid that you start seeing in some places of the world today, like in California, these days, or in Australia.”
Lagarrigue said the transformation of the electric grid from a centralized hub and spoke to a distributed network mirrors the internet-driven transformation of telecommunications.
“There are many, many similarities with the decentralization of compute,” he says. “And many of the disruptions we are observing or anticipating are very similar to the disruptions that the information technology and the telecom industry went through 20 years ago.”