Investing in the new energy landscape - a supplier’s perspective

Simon Duval Smith talks to Danny Winn, Business Director, EV Operations, Schneider Electric about investment in hardware and software and empowering customers with charging and V2G installations

There has been a lot of talk recently about V2G and about helping consumers understand how much their vehicles can be a power storage centre.

Steven Armstrong

Danny Winn

"I think the biggest challenge is centred around the business model; if you look at the cost of a V2G charger, they will typically be four times the price of a standard charger," he says, adding: "Then one needs to consider the annual benefits of using V2G, in an optimised model, they would be somewhere between £300 ($386) and £400 per year so it is difficult to sign off on the hardware purely on a financial basis. In addition to that one has question marks around erosion of battery quality, something that is not entirely clear yet.

"At a local level, the benefits for consumers are not great yet; aggregated to the grid, the benefits can be considerable of course."

Of course, there are other risks - if a consumer suddenly needs to use their vehicle during a balancing period - when the battery is depleted through giving up its energy to the grid - then there could be a problem, as Winn says: "If you are an evangelist for this system then you might take these risks but for many consumers the risks are too great and the rewards are not big enough, yet."

Are the tech suppliers doing enough?

This point stimulates the debate of whether the cost infrastructure should be brought down by suppliers such as Schneider Electric - should they lead the charge for cheaper and more widespread charging? Winn says there is an element of 'wait and see'. "We want to see where the market is moving before we invest too heavily in it; every company in the sector is looking at research and development around both data and systems hardware."

Controllability of all aspects of charging, and ultimately V2G, is key for suppliers and consumers alike and Winn feels this is vital, "Development of the hardware is crucial, as it is such an important part of proving an effective business case but also having the systems and the software that can aggregate those benefits, that deliver something tangible to the customer." The market is approximately 1% of the level it will be at maturity, with 2.5% being the entry point for ‘early adopters’ there is still some time before all of the business models in e-mobility become clear.”

Growth through a change of focus and acquisition

Schneider Electric are hardware experts with a rich and varied background in manufacturing process control and automation and I ask Winn if that side of the business is fairly straightforward, where it touches on mobility solutions. He says that the company has developed its current business structure partly through acquisition, "In March 2018, we acquired 65% of AVEVA, the industrial software business, and we are owners of many different types of software systems across industrial automation, IT and data centres, and also EV and energy management systems. If you split us down into hardware, services and systems, software and systems are now our biggest business area. We are moving into connected interoperable products, rather than being totally focused on manufacturing equipment services."

Investment in R&D

It may hard to visualise investment in software in comparison to developing hardware and machinery and software is where Winn sees the greatest expenditure in R&D. "From an R&D perspective, we invest 5% of our global revenue. We are further investing in development of our offer through acquisition, in the last year you will have seen us expanding quite aggressively; rather than just straightforward acquisitions, we have bought substantial stakes in businesses like ASCO Power Technologies. We also have a seed investment strategy, where we have taken huge sums of money and spread it across hundreds of smaller investments in startups and other smaller business. In the e-mobilty space we have the EV charging business but we have also invested in EV Charge point/marketing display start up and fleet analysis, which is a crucial part of helping large fleet operators successfully an profitably switch to EVs.” 

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