Saudi Arabia offers huge opportunities for energy efficiency

Interview with Ziad Mortaja, Country President of Schneider Electric

Let’s talk about the infrastructure in Saudi Arabia. Do you see a lot of projects happening in 2016 and 2017?
 
I would like to talk about the utility company. I think demand for energy in Saudi Arabia will continue to grow. This is due to multiple reasons. First, major cities are growing and there is a big urbanization process taking place. People are moving from remote villages to big cities seeking better jobs and lifestyles. Second, if you look at the demography of the Saudi population more than 65% of Saudis are less than 35 years old which means when they get married, they will start looking for houses and jobs. This increases the demand for growth in cities and the utility company has to fulfil this demand. Third, the major infrastructure expansion has been going on in terms of metro, roads etc. which puts its impact on the utility company to reconsider its own infrastructure and it will start to consider how to redesign its network to fulfil these demands more efficiently. More initiatives are coming from the government nowadays for diversifications of the economy.

We see more incentives for the industrial activities in the country. So, every sector will require energy-fulfilment in terms of the increase in energy demand, reliability, and safety. This is a big load on the company to fulfil. We are actually an active participant and Saudi Electric Company is a big client of Schneider Electric globally. We are actually doing business with them and expanding our portfolio to fulfil the growing demands on the company.

Saudi Arabia is professing on efficiency because the sector is putting huge pressure on the budget. How can Schneider help Saudi Arabia focus on efficiency in reducing the waste?

Ethically, we believe we are the global leader in energy management and automation. We also believe that with our solutions we can help our clients make the best of their energy. In some cases our solutions can improve efficiency by 30%. The opportunity for energy efficiency in the Kingdom is huge. The solutions that could be deployed and explored in the Kingdom are various. The introduction of different sources to generate energy in the first place needs to be explored, looked at from the regularity point of view, and need to be economically considered. The consumption of energy, not only generation and transmission, need to be considered as well, and there is a big opportunity for saving here.

The latest moves from the utility company in terms of the ways they are charging their industrial clients, in terms of their power quality and efficiency, would surely drive their energy efficiency agenda high within the country. If you look at the generation side and the way generation is done in the Kingdom and the expected demand for energy, you will see that it is not a sustainable model and the Kingdom knows this. Schneider has solutions across the value chain from the generation side, in terms of the efficiency and management, and in terms of transmission and consumption and in various sectors. We have solutions for industrial clients in the various segments as well. We help our customers leverage their energy in the most efficient way.

The latest moves from the utility company in terms of the ways they are charging their industrial clients, in terms of their power quality and efficiency, would surely drive their energy efficiency agenda high within the country.

 How do you see your strategy going forward in 2016-2017 and what are your main strategic initiatives?

Schneider electric has been investing in the Kingdom for the last thirty years. We have three industrial plants and employ more than 1200 people in the country. We are operating a critical sector, which is energy. Part of our strategy is to make sure that we are an active participant in the social and the economic developments in the kingdom. We believe life is on where energy is on. Our investments have been to fulfil demands and provide the best energy efficient solutions for our clients. The year 2016 brings a new set of challenges to our business in the Kingdom due to the economic cycle and the nature of the Saudi economy. To adapt to those changes we have a set of initiatives for 2016 and 2017 to make sure that we continue to deliver on our three promises. The first is that we want to be an active member in the social and economic development of the kingdom. Despite the potential slowdown of the economy represented by the drop down in the prices of the oil. Second, we work closely with local government agencies to ensure we present our knowledge into the economy and the largest number of people and sectors to make sure that we train people in energy safety, reliability, sustainability and efficiency. Third, we consider the environment in everything we do.

I am proud to say that we are ISO 50001 certified because of our energy efficiency. We are green in all our energy activities. Our set of initiatives is as follows: first we are introducing new offers for the market to deal with energy efficiency, which includes software and hardware at the same time. In the past, energy efficiency was not on top of our client’s agenda due to the low prices of energy in the Kingdom compared to other parts of the world. The policy has changed now and we want to help our clients to deal with this essential change. Second, we are increasing our investments with local companies for the sake of diversification and to help those companies invest in our technologies by providing licenses and capabilities to address market needs. Third, we believe that some market sectors, like food and beverage, will not be affected by the drop in oil prices. For us this is a big opportunity to focus on. Finally, we are investing in our services in the kingdom. We are opening more and more capabilities directly and with our partners to ensure we can address the requirements effectively. Those are the set of initiatives in 2016 that will extend to 2017. In the past mega projects were considered big market opportunities. Nowadays, services and efficiency are real opportunities for Schneider electric.

When we discussed with Cisco how much they can save from utilizing internet it turned out to be in billions. Has Schneider conducted any studies that can help the Saudi government saving money by employing technology or similar things?

We believe that demand for energy will double in the next forty years. The challenge is that we need to cut carbon emissions by half as well. Global growth in population means increased demand for energy. The other thing is that the demand for internet represents an increased demand for energy on one side and that utility has to be more and more efficient and leverage those capabilities that exist in technology to deliver solutions in a better way on the other side. Most of our R&D and product statistics coming from the market take that into account.

We are uniquely positioned because today we have been ahead of competition to introduce those types of capabilities into our products to give our customers more insightful information about their energy usage and their energy capabilities as well. We bring a lot of software capabilities of the energy utilization of the environment into the IT world. We believe IT and operational technology are coming together to provide the customer with the best possible way to decide on their business. So, the internet of everything which Cisco is spreading around the world, we are an active participant into delivering this new way of coming into the world. We are integrating those capabilities into our equipment and at the same time give our customers the best visibility of their infrastructure. So we usually save 30% of the current energy utilization with the deployment of those standard solutions.

One of the major challenges is that Saudi Arabia is using huge amounts of oil for power generation which can be sold in international markets. At the same time it is trying to use gas to generate electricity. However, the Petrochemical industry is consuming a large portion of this gas. How do you think this problem can be resolved?

The world is moving from a monolithic way of generating, transmitting and consuming energy—which is what has been going on for centuries—into a more distributed and connected world. The renewable sources of energy generation are coming to play be it solar or wind. New structure is now being introduced to the energetic architecture that we have been living in for a long time. In my opinion, generation is to come closer nowadays to consumption. The commercial viability of the alternative solutions of generation has reached a point where they are seriously being looked at in many countries and industries around the world. This is for the sake of looking for different sources of generating and consuming energy at the same time. I believe this will hit all the countries around the world including Saudi Arabia. So, it is a matter of time.

The big wave that is coming towards the energy industry is this. In the past, we used oil, gas or nuclear in the generating plants which is reliable and safe. However, what we see today is a new trend no more generation is happening, but the consumption is taking place, leveraging new technology that became commercially viable nowadays as a good alternative to the traditional methods of generating energy. This needs to be integrated to the overall environment and needs regulations and laws by the government to enable those strategies. Personally, I believe that Saudi Arabia has many of those renewable sources available at its consumption and needs to be looked at in a more effective way. I also believe there are some serious initiatives in the Kingdom to start reducing energy consumption by using solar power. I have seen some announcements recently that some cities will start actually developing some of those plants based on solar power.

Allegedly, 260 billion dollars are being spent globally on annual bases on investing in renewable power. However, Saudi Arabia has postponed the implementation of its solar energy plants because of the regulations. How far do you think that would affect or slow down the moving into renewable sources of energy?
 
I have been living in Saudi Arabia for nineteen years. Though they have late starts, when they take a decision they move very quickly and aggressively. I have seen this happen several times. It is only a matter of clarifying some of the regulations and laws. Once this happens, I think a boom in this industry will be noticed. Saudi enjoys a year-long sunshine and the climate in general is suitable for this kind of technologies.

Do you think that with the drop of the price of oil, the fossil fuel can again become very competitive?

It is not only about the price of the fossil fuel. There are the latest agreements that have been signed in Paris about carbon emission. I believe that the renewable, clean energy is not an option any more. I think that every nation used to endorse it and take it very seriously. The drop in oil price is a temporary thing and might last for some time but will eventually recover. What is happening to the prices is a disruption in the market. So with the integration of generation capabilities is going to change and Saudi Arabia will not be immune from that.  It will definitely happen at one point of time.

Would you like to add anything?

All I want to say is that Schneider works closely with its clients in the Kingdom. We have more than eight thousand clients. We contribute to finding solutions across the energy value chain for the various specialized sectors. We have been in the kingdom for 34 years and I believe we are staying here for a longer time. We operate in a very important sector for the human life. I believe it is an exciting time because this is coming at a time where more and more needs to be done. So, more efficiency needs to be introduced and to reserve more of the resources of the planet for the future generations. It is an exciting time because the government has a lot in that regard and we want to be the partner with the Kingdom when it comes to energy agenda.