Schneider Electric is company No 1 in the field of sustainable development worldwide according to Corporate Knights
Sergey Semenov, Director of the ‘Energy Efficiency and Sustainable Development’ business in Russia, CIS and Poland at Schneider Electric tells us how a maritime academy graduate directs investment projects in energy production, how soon the fields of solar electric panels will appear in Russia and what companies should do to convince investors to support their climate agenda.
– Sergey, tell us about yourself. Business in the field of sustainable development is a completely new direction for Russian economy. How did you come to the sphere? Where did you study? What was your career like before Schneider Electric?
I graduated from the Admiral Ushakov Maritime State University in Novorossiysk, my home town. I specialized in economics, IT and financial services. Then, I studied "Information Technologies" in a graduate school in Moscow, received an MBA degree from the Moscow International Higher Business School and continue to attend advanced training courses everywhere from Skolkovo to MIT.
As you can see, I have studied a lot and for a long time, but I can tell you with confidence that I received my major knowledge and experience in the work place. Education helps you to structure the experience and take the right management decisions. It should not be underestimated, but you cannot rely exclusively on theory.
At my first job, I headed projects on the integration of energy management systems and SAP for the Federal Grid Company of Unified Energy System and projects on the development of commercial accounting systems in substations. This is how my career in energy production started. I realised that this field was not as boring as I had imagined. I was especially interested in the projects on the junctions of IT, energy production and innovative solutions. I like to develop projects from scratch in general. Once I was even involved in creating an energy retail company in the oil and gas sector.
After several years of work in state companies, I was offered to work at Schneider Electric as a project manager in energy efficiency. There I understood what it means to work in international business. It's great when the company gives you space to unlock potential and apply experience to the maximum without spending time and resourced to control every step you take. Then, I headed an energy service division created from scratch, worked as a sales director and, as aresult, became Director of the "Energy Efficiency and Sustainable Development" business in Russia, CIS and Poland at Schneider Electric.
– You developed the direction of energy efficiency in the Russian subdivision from scratch. At first, you established it in the Russian branches of Schneider Electric and now you promote it among customers through optimising processes related to energy efficiency. Your work in Schneider Electric is just a profitable business or something more than that?
Imagine that you are getting married and you need someone to teach you a wedding dance. You look for a choreographer. If they tell you that they can teach you, but they can’t dance themselves, will you hire them?
Not to be a poor dance teacher, Schneider Electric started with its own company. We integrated energy management systems at all our factories in Russia and worldwide. We introduced sustainability development principles in all business processes. This year, Schneider Electric has been named company No 1 in the field of sustainable development worldwide according to the Corporate Knights research agency.
Only having gained this enormous experience, having signed under global climate goals on reducing carbon dioxide emissions, having reached these goals, having shown our expertise in the field, we have the right to offer similar services to our customers.
All the solutions we implemented can be transferred into a tangible dimension. For example, we can count how many hectares of forest is needed to compensate for the carbon footprint that we reduced for ourselves and our customers. It turned out that this territory can be compared to a hundred of Gorky Parks in Moscow.
Today, more and more companies in Russia require climate advisers and services to achieve their climate goals. The customers don’t have to specialise in the field of sustainable development or energy efficiency, since they have their own expertise. It’s great that there are companies like ours that provide such services. However, I don’t want us to be the only ones in this market. As many experts from the professional community as possible should be joining the field. It will help us and our colleagues to develop and achieve global goals in climate change together.
We help our partners to adjust their production processes in accordance with the Sustainable Development Goals in the UN as wellas find and implement the required solutions. For example, some companies still do not know how cheap has become the cost of a kilowatt-hour of electricity produced with the use of renewable energy sources. What is more profitable: to connect to an electric grid company or construct your own gas generator set? How can you reduce greenhouse gas emissions with the use of a gas-gen set? These are specific tasks that should be delegated to experts. A healthy demand for these services in Russia has started to grow extremely fast.
– Why? Are the Sustainable Development Goals of the UN, carbon footprint reduction, environmental protection really important for Russian companies or is it just a tribute to fashion?
The majority of large companies worldwide have already supported climate goals of the UN. If their support remains at the level of slogans, they will not achieve the required capitalization, so they move only forward. To reach the emission reduction goals, they work not only with their carbon footprint, but also with the emissions of their suppliers, since it’s an integral part of their cumulative impact ‘on the climate. It works like a domino effect. At some point, all companies will have to reduce greenhouse gas emissions. The companies working for export will have to do it first. Besides, regular consumers become more conscious in their consumption patterns. More often than not, they chose the goods based on the way they were produced including the use of ‘green’ energy. That is why almost all companies work with digital transformation. It enables them to optimize technological processes and deliver the results of their work to the customers.
– Even in Russia? How many similar requests are there?
All directors of large-scale facilities understand that digital ecosystems, "cloud" analytics and other investments in the field are a "must have". I was surprised myself how fast IT solutions enter our life and how rapidly they develop. Only a few years ago, we had to explain the specifics of our offer in the market. Now, we often see the requirements to the business models for project implementation already in the scope of work. Everyone got accustomed to "Soft as a Service" long ago and now it is time for "Energy as a Service". CAPEX is replaced with OPEX, companies pay for the result rather than for the right to have something unnecessary.
– You have just mentioned the ‘Energy as a Service’ direction. Is it developing in Russia? Or is it still quite an exotic thing?
No, it is not. Our partners have refused from investing in power engineering equipment. They have become spoilt in a good way. They actively buy energy resources selected specifically for their case or rent generator sets. In other words, they pay for kilowatts as opposed to ‘hardware’. It is almost always cheaper than buying electricity from the grid. If the long-term perspective is considered, power generating equipment is purchased and registered in the books on condition of a guaranteed ROI. We are certainly happy to implement such ‘turn-key’ projects, but we also provide regular consulting services and look for alternative suppliers. For example, a company has a goal to increase the share of renewable energy sources. It wants to conclude an agreement with the supplier on purchasing ‘green’ energy called a power purchase agreement in the West. A power producer can build its own solar or wind farm next to the consumer and sell energy to the facility directly or with the help of "green certificates".
We also provide services to optimize business models by finding a supplier and an optimal implementation option as well as by developing a financial structure for the business transaction. To reach the sustainable development goals with maximal efficiency, one should select the right technical solution based on WACC, compare financial models, chose an investor, agree on contractual obligations, and most importantly, guarantee a reduction of greenhouse gas emissions as a result.
– Is Russia with its vast spaces a good place to become a leader in renewable energy sources?
Sunny Bordeaux and Novorossiysk, my home town, have a similar climate and are located in the same line of latitude. The number of sunny days per year there is enough both to grow excellent grapes and produce wine as well as to set up cost-effective power stations given that the kilowatt-hour cost is one of the highest in the South of Russia. If you add the cost of connecting to the grid, it is clear why they are installing solar collectors and panels all of the region now.
If we can generate electricity and sell ‘green certificates’ to Europe, I think that solar panels will soon replace some sunflower fields and melon plantations.
– It sounds like science fiction about future worlds from our childhood. Let’s talk about the present. Can you tell me about some recent interesting projects?
Clearly, we have huge projects, where our solutions support the work of critical technological processes. | have been talking a lot about hundreds of millions of roubles that we save for our customers and about increasing our customers’ ratings of sustainable development in international climate organisations. We also have funny cases.
One of our customers was extremely proud of his new monitoring and control system at the production facility. Having introduced energy management system with the elements of artificial intelligence and having performed energy production investment analysis, we found that his industrial controllers are programmed not just inefficiently, but irrationally. We rebuilt the work mode of software controllers, which resulted in great cost efficiency. Then, we decided to analyse the existing agreements between the customer and energy suppliers and check bills for electricity. Based on our recommendation, the customer changed the energy purchase agreement, which saved him over 60 million roubles compensating for the losses in the previous periods. Our work paid back in less than several days. Indeed, we have many solutions to optimize energy costs. Visit us at the Innovation Summit in April and you will see it for yourself.
– Please, tell us about the Innovation Summit in Moscow on 27-29 April.
I really enjoy the events held by Schneider Electric. My job takes me to various exhibitions online and offline. Last year, the approach to these events changed a lot and there are few interesting events that you want to visit. At our summit, you will be able to touch and test in real time mode the solutions presented by speakers with the use of all the required individual protection means. You will be able to put on a virtual reality headset and see how predictive analytics or maintenance service are performed with the help of augmented reality. There will be many other unique solutions provided by us for sustainable development in many industries from uninterrupted power supply to gas generator sets.
– Is energy efficiency and sustainable development your only interest?
I enjoy practising martial arts and Thai boxing. Unfortunately, I don’t fight professionally. They don’t invite me to the UFC, so I work in the field of energy efficiency. However, releasing energy in the boxing ring, I can remain within the verbal field during negotiations without resorting to my fighting skills. This is a joke, of course. I like fishing.
I graduated from the Admiral Ushakov Maritime State University in Novorossiysk, my home town. I specialized in economics, IT and financial services. Then, I studied "Information Technologies" in a graduate school in Moscow, received an MBA degree from the Moscow International Higher Business School and continue to attend advanced training courses everywhere from Skolkovo to MIT.
As you can see, I have studied a lot and for a long time, but I can tell you with confidence that I received my major knowledge and experience in the work place. Education helps you to structure the experience and take the right management decisions. It should not be underestimated, but you cannot rely exclusively on theory.
At my first job, I headed projects on the integration of energy management systems and SAP for the Federal Grid Company of Unified Energy System and projects on the development of commercial accounting systems in substations. This is how my career in energy production started. I realised that this field was not as boring as I had imagined. I was especially interested in the projects on the junctions of IT, energy production and innovative solutions. I like to develop projects from scratch in general. Once I was even involved in creating an energy retail company in the oil and gas sector.
After several years of work in state companies, I was offered to work at Schneider Electric as a project manager in energy efficiency. There I understood what it means to work in international business. It's great when the company gives you space to unlock potential and apply experience to the maximum without spending time and resourced to control every step you take. Then, I headed an energy service division created from scratch, worked as a sales director and, as aresult, became Director of the "Energy Efficiency and Sustainable Development" business in Russia, CIS and Poland at Schneider Electric.
– You developed the direction of energy efficiency in the Russian subdivision from scratch. At first, you established it in the Russian branches of Schneider Electric and now you promote it among customers through optimising processes related to energy efficiency. Your work in Schneider Electric is just a profitable business or something more than that?
Imagine that you are getting married and you need someone to teach you a wedding dance. You look for a choreographer. If they tell you that they can teach you, but they can’t dance themselves, will you hire them?
Not to be a poor dance teacher, Schneider Electric started with its own company. We integrated energy management systems at all our factories in Russia and worldwide. We introduced sustainability development principles in all business processes. This year, Schneider Electric has been named company No 1 in the field of sustainable development worldwide according to the Corporate Knights research agency.
Only having gained this enormous experience, having signed under global climate goals on reducing carbon dioxide emissions, having reached these goals, having shown our expertise in the field, we have the right to offer similar services to our customers.
All the solutions we implemented can be transferred into a tangible dimension. For example, we can count how many hectares of forest is needed to compensate for the carbon footprint that we reduced for ourselves and our customers. It turned out that this territory can be compared to a hundred of Gorky Parks in Moscow.
Today, more and more companies in Russia require climate advisers and services to achieve their climate goals. The customers don’t have to specialise in the field of sustainable development or energy efficiency, since they have their own expertise. It’s great that there are companies like ours that provide such services. However, I don’t want us to be the only ones in this market. As many experts from the professional community as possible should be joining the field. It will help us and our colleagues to develop and achieve global goals in climate change together.
We help our partners to adjust their production processes in accordance with the Sustainable Development Goals in the UN as wellas find and implement the required solutions. For example, some companies still do not know how cheap has become the cost of a kilowatt-hour of electricity produced with the use of renewable energy sources. What is more profitable: to connect to an electric grid company or construct your own gas generator set? How can you reduce greenhouse gas emissions with the use of a gas-gen set? These are specific tasks that should be delegated to experts. A healthy demand for these services in Russia has started to grow extremely fast.
– Why? Are the Sustainable Development Goals of the UN, carbon footprint reduction, environmental protection really important for Russian companies or is it just a tribute to fashion?
The majority of large companies worldwide have already supported climate goals of the UN. If their support remains at the level of slogans, they will not achieve the required capitalization, so they move only forward. To reach the emission reduction goals, they work not only with their carbon footprint, but also with the emissions of their suppliers, since it’s an integral part of their cumulative impact ‘on the climate. It works like a domino effect. At some point, all companies will have to reduce greenhouse gas emissions. The companies working for export will have to do it first. Besides, regular consumers become more conscious in their consumption patterns. More often than not, they chose the goods based on the way they were produced including the use of ‘green’ energy. That is why almost all companies work with digital transformation. It enables them to optimize technological processes and deliver the results of their work to the customers.
– Even in Russia? How many similar requests are there?
All directors of large-scale facilities understand that digital ecosystems, "cloud" analytics and other investments in the field are a "must have". I was surprised myself how fast IT solutions enter our life and how rapidly they develop. Only a few years ago, we had to explain the specifics of our offer in the market. Now, we often see the requirements to the business models for project implementation already in the scope of work. Everyone got accustomed to "Soft as a Service" long ago and now it is time for "Energy as a Service". CAPEX is replaced with OPEX, companies pay for the result rather than for the right to have something unnecessary.
– You have just mentioned the ‘Energy as a Service’ direction. Is it developing in Russia? Or is it still quite an exotic thing?
No, it is not. Our partners have refused from investing in power engineering equipment. They have become spoilt in a good way. They actively buy energy resources selected specifically for their case or rent generator sets. In other words, they pay for kilowatts as opposed to ‘hardware’. It is almost always cheaper than buying electricity from the grid. If the long-term perspective is considered, power generating equipment is purchased and registered in the books on condition of a guaranteed ROI. We are certainly happy to implement such ‘turn-key’ projects, but we also provide regular consulting services and look for alternative suppliers. For example, a company has a goal to increase the share of renewable energy sources. It wants to conclude an agreement with the supplier on purchasing ‘green’ energy called a power purchase agreement in the West. A power producer can build its own solar or wind farm next to the consumer and sell energy to the facility directly or with the help of "green certificates".
We also provide services to optimize business models by finding a supplier and an optimal implementation option as well as by developing a financial structure for the business transaction. To reach the sustainable development goals with maximal efficiency, one should select the right technical solution based on WACC, compare financial models, chose an investor, agree on contractual obligations, and most importantly, guarantee a reduction of greenhouse gas emissions as a result.
– Is Russia with its vast spaces a good place to become a leader in renewable energy sources?
Sunny Bordeaux and Novorossiysk, my home town, have a similar climate and are located in the same line of latitude. The number of sunny days per year there is enough both to grow excellent grapes and produce wine as well as to set up cost-effective power stations given that the kilowatt-hour cost is one of the highest in the South of Russia. If you add the cost of connecting to the grid, it is clear why they are installing solar collectors and panels all of the region now.
If we can generate electricity and sell ‘green certificates’ to Europe, I think that solar panels will soon replace some sunflower fields and melon plantations.
– It sounds like science fiction about future worlds from our childhood. Let’s talk about the present. Can you tell me about some recent interesting projects?
Clearly, we have huge projects, where our solutions support the work of critical technological processes. | have been talking a lot about hundreds of millions of roubles that we save for our customers and about increasing our customers’ ratings of sustainable development in international climate organisations. We also have funny cases.
One of our customers was extremely proud of his new monitoring and control system at the production facility. Having introduced energy management system with the elements of artificial intelligence and having performed energy production investment analysis, we found that his industrial controllers are programmed not just inefficiently, but irrationally. We rebuilt the work mode of software controllers, which resulted in great cost efficiency. Then, we decided to analyse the existing agreements between the customer and energy suppliers and check bills for electricity. Based on our recommendation, the customer changed the energy purchase agreement, which saved him over 60 million roubles compensating for the losses in the previous periods. Our work paid back in less than several days. Indeed, we have many solutions to optimize energy costs. Visit us at the Innovation Summit in April and you will see it for yourself.
– Please, tell us about the Innovation Summit in Moscow on 27-29 April.
I really enjoy the events held by Schneider Electric. My job takes me to various exhibitions online and offline. Last year, the approach to these events changed a lot and there are few interesting events that you want to visit. At our summit, you will be able to touch and test in real time mode the solutions presented by speakers with the use of all the required individual protection means. You will be able to put on a virtual reality headset and see how predictive analytics or maintenance service are performed with the help of augmented reality. There will be many other unique solutions provided by us for sustainable development in many industries from uninterrupted power supply to gas generator sets.
– Is energy efficiency and sustainable development your only interest?
I enjoy practising martial arts and Thai boxing. Unfortunately, I don’t fight professionally. They don’t invite me to the UFC, so I work in the field of energy efficiency. However, releasing energy in the boxing ring, I can remain within the verbal field during negotiations without resorting to my fighting skills. This is a joke, of course. I like fishing.