Why the Electricity 4.0 moment is here

The U.S. wastes 62% of its energy. Electrification and digitalization are here to fix that, according to Schneider Electric’s U.S. country president, Aamir Paul.

When you think about the major energy transitions of the 1800s and 1900s, it’s easy to focus on only one side of the story: the supply side. But Electricity 1.0 is not only the story of switching from domesticated livestock to domesticated electricity. Electricity 2.0 goes deeper than the migration from decentralized mill power to centralized power plants. And there’s more to Electricity 3.0 than replacing fossil fuels with green power.

The real story is what’s happening on the demand side. How do these new energy sources create value and spur innovation for end users? Is there reliable and accessible infrastructure at the point of consumption? These are the questions that determine whether energy transitions succeed.

To accelerate today’s energy transition to a net-zero future, we must therefore focus on solving for the demand side: our homes, buildings, data centers, industrial sites, and infrastructure. Above all, we should all consider what must change when these points of consumption also become points of generation.

For over a century, electrons have flowed one direction. What happens when we change that—when we generate and consume energy in the same place, at scale? Such a change is possible. In a forthcoming study, the Schneider Electric Sustainability Research Institute will share modeling that estimates rooftop solar today could cover 40% of all U.S. electricity needs.

Let’s be clear: This energy transition is a systemic change, and solving it will require a systemic approach from grid to plug. It’s called Electricity 4.0, and it’s the synthesis of two mega-trends: electrification and digitalization.

Organizations that adapt early to this sweeping change will become leaders in the new energy landscape. Schneider Electric is leading the digital transformation of energy management and automation. Below is the theory and practice of Electricity 4.0, to help organizations understand how to begin to chart their own path.

The rise of Electricity 4.0

Wherever you look, energy is going digital and electric. Why digital? Because digitalization makes huge amounts of previously invisible energy waste visible. And why electric? Because electricity is the most efficient form of energy and, therefore, the best vector of decarbonization. The merging of electrification and digitalization is called Electricity 4.0.

Tectonic shifts in markets, policy, and infrastructure will move proverbial mountains to make Electricity 4.0 and our net-zero future possible.

  • In markets, consumers and ESG investors are seeking companies with legitimate decarbonization bonafides. Data shows sustainability drives consumer brand preference, while a 2021 NYU Stern meta-meta-analysis found that ESG performance correlates with financial performance. And scrutiny over greenwashing is growing.
  • In the public sector, policymakers are looking into ways to regulate emissions. The Biden administration set a goal to halve emissions by 2030, which means we’re on a decarbonization “speed run,” with just 32 quarters to go.
  • And in the world of the electrical grid, which is on the cusp of a once-in-a-generation federal investment, utilities and regulators need to achieve 21st century outcomes with a 20th century grid.

Less energy waste, less carbon. Less carbon, less cost.

Electricity 4.0 adoption is accelerating due to the role energy plays in emissions and operating costs. Climate change is an energy challenge. It’s also an emissions challenge.

  • Energy accounts for 74% of U.S. greenhouse gas emissions, including 92% of carbon emissions, according to the U.S. EIA.
  • In 2020, 62.3% of all energy was wasted in the U.S., according to Lawrence Livermore National Laboratory.
  • Energy efficiency alone can reduce emissions by 57%, according to an American Council for Energy Efficiency study.

Electricity 4.0 creates a virtuous cycle between energy cost savings and emissions reductions. Less carbon means less cost. In commercial buildings, energy costs account for an average of 30% of operating budgets. In data centers and other energy-intensive facilities, that number is often much higher. Energy waste has become one of the most avoidable drags on profitability, and digitalizing energy is how you seek and destroy it.

Maintaining the status quo of energy waste is now just as much a choice as change, in greenfield and brownfield alike. Schneider Electric just commissioned a new commercial building that consumes one-tenth of the energy as a conventional building, yet cost only 5% more to build. It’s possible to achieve a climate-positive, carbon-negative data center. After a digital transformation, Schneider’s 62-year-old factory in Lexington, Ky., was recognized as one of the world’s most advanced smart factories.

Technology ready for primetime

Unlike some other cleantech, the technology behind Electricity 4.0 isn’t speculative; it already exists at scale. And it’s already proven its value. At Schneider, an analysis found that digital efficiency projects deliver 24%  energy consumption savings, on average, and in some cases up to 85%. The analysis also found that digitally enabled energy management projects achieve an average five-year payback.

So, what is this Electricity 4.0 technology, then? It’s not simply solar panels and EVs. Instead of a few discrete innovations, it’s more like an integrated technology stack that connects IoT-enabled hardware (e.g., switchgear, power distribution units, and so on), to edge control software (e.g., power monitoring systems). Once this data is collected on-premise, it travels to the cloud, where big data analytics identify energy waste, downtime threats, and other insights.

That may sound a bit too theoretical, so here are some practical examples of Electricity 4.0 in action.

  • Guardian Glass: This leading glass manufacturer must keep its production lines running efficiently and continuously. To do so, the company upgraded its Iowa plant’s electrical systems. It connected IoT-enabled hardware (e.g., meters and capacitor banks) to power monitoring and advisory software. The new intelligent system delivered a two-year payback by achieving a 97% power factor and 4% monthly utility credits.
  • Brookville Smart Energy Bus Depot: With a goal to achieve a 50% zero-emissions bus fleet by 2030, Montgomery County, Md., built the first-of-its-kind 5.6 MW combined microgrid and e-bus charging facility, equipped with solar and digital microgrid controls. And by using an Energy as a Service financing model, the county paid zero upfront costs for this major infrastructure investment.
  • Walmart: Of course, for all the energy use you can’t reduce, you should replace it with zero-carbon energy. And beyond operational energy use, there’s your entire supply chain’s carbon footprint to consider. According to a CDP study, supply chain emissions are, on average, is 11.4 times larger than operational emissions. That’s why Schneider is helping Walmart’s U.S. suppliers gain access to renewable energy. Walmart’s ambitious Project Gigaton goal is to avoid a billion tons of carbon emissions by 2030—and they’re already 42% of the way there.

Electricity 4.0 and the race to net-zero

The way we all use energy is already changing across the realm of global commerce—in industry, infrastructure, buildings, homes, and beyond. Organizations such as Guardian Glass, Montgomery County, and Walmart are already forging ahead confidently into the new energy landscape. Their stories demonstrate the virtuous cycle between less energy waste, less carbon, and less cost.

All told, Schneider Electric is helping 150-plus Fortune 500 companies design and deploy net-zero strategies built on Electricity 4.0 technology.

To get started, find success stories, how-to guides, and other net-zero inspiration head to Schneider Electric.

Note: This article was created by Schneider Electric.