Peter Herweck has over twenty-five years of experience in B2B environments, having successfully held various executive positions in Germany, Japan, China and the United States. He has extensive experience in multiple industry segments such as Pharmaceuticals, Food & Beverage, Metals, Mining and Transportation, as well as specializing in topics such as automation, the digital transformation of industry 4.0 and the development of long-term business strategies. In 2016 he joined Schneider Electric's Executive Committee as Executive Vice President of Industrial Automation, his current position as he gives this interview to Smart Water Magazine, focused on the company's response to the COVID-19 pandemic.
The first question is a must. How is Schneider Electric dealing with the impact of COVID-19?
Answer: We at Schneider Electric have coordinated teams globally, regionally and locally to ensure business continuity and are fully focused on two key priorities:
- Ensuring the health & safety of our employees worldwide and implementing measures and protocols as per government directives;
- Ensuring that our customers’ needs are fulfilled to the best of our abilities and leveraging our multi-hub global supply chain and service organizations to ensure business continuity and flexibility;
Schneider Electric is recognized around the globe as an essential business providing service continuity to critical infrastructure such as hospitals, data centres, IT networks, temperature-controlled food supply chain, energy, transportation, and water cycle management.Ensuring continuity of service 24x7, to critical industries in all the countries and communities where Schneider Electric operates is the Group’s responsibility and its first contribution to the fight against Covid-19.
In addition, the Schneider Electric Foundation launched the Tomorrow Rising Fund to provide response, recovery, and resilience to the most affected communities with fundraising and volunteering activities.
This fund will support emergency, longer-term reconstruction activities and maintain education and professional training for the most disadvantaged in our communities. Schneider Electric commits the first investment to the fund and will match donations of employees. Our stakeholders, shareholders, suppliers and clients, will also have the opportunity to participate.
Schneider Electric is recognized around the globe as an essential business providing service continuity to critical infrastructure
Q: What is your assessment of the response of the water industry to this challenge?
A: The water industry turned to securing supply for their key stakeholders and focused on the management of their workforce and supply-chain. Besides operational impact, the industry reacted quickly to grant free water access to people who are in need, as many have had a loss of work.
Energy savings projects can help water operators save money on OpEx which can be funnelled toward infrastructure projects
Q: In the United States, NACWA estimates the impact of the coronavirus on the water utilities to cost $12.5 billion. How will this affect the future of the water sector globally?
A: With this deficit amounting to about 30% of US Municipal water market CapEx, this will have a noticeable effect on the industry. There are several potential ways out of this dilemma such as:
- Federal/National water infrastructure stimulus packages to help bridge the gap in funding.
- Private capital participation (PPP) may increase as well, since there is a lot of capital waiting to be deployed and water is a long-term growth market. It could drive both further privatization of the water sector and joint financing of critical infrastructure projects.
- Energy savings projects which are still not as common in water as in other industries, can help water operators save money on OpEx which can be funnelled toward infrastructure projects. For example, we partnered with the City of Atlanta (USA) to implement the EcoStruxure solution for energy savings, measuring across their water and wastewater facilities, which will result in savings of $32.5 million in 15 years plus $17 million in future capital savings.
Q: Although it was already a clear trend, the confinement of a large part of the planet has led to a huge leap towards the digitalisation of services. What is your insight about this?
A: This has been a trend for some time and it is set to continue, very likely on an accelerated trajectory for Digital Water or Smart Water. A very recent market research publication (source: Bluefield Research) on the US and Canada projected an acceleration of Digital Water by an additional 2% to a total 8.7% CAGR (or an aggregated market volume of over $100m from 2019-2030) in this sector. We have experienced strong growth in the implementation of digital services across geographical locations. For example, our EcoStruxure Augmented Operator Advisor has been installed at a desalination plant and water treatment plant in Saudi Arabia and a water treatment plant in Chile. Additionally, our EcoStruxure Asset Advisor solution, which provides predictive maintenance for our customers’ critical power equipment, has been installed within treatment plants located in Mexico, US and Columbia.
The larger and medium sized utilities have long paved the way for usage of smarter and more digital technologies in the water space
Apart from the current pandemic, a few other drivers for digitalization include:
- Difficulty to find a capable workforce to replace retiring workers.
- Improvements in operational oversight, leading to an optimized cost structure and reduced spending.
- Better managing the assets by predicting failures before they occur.
- Increasing regulations leading to more sophisticated monitoring, early warning systems and reliable reporting.
Q: Are those utilities who had previously invested in digitalisation responding better?
A: The larger and medium sized utilities have long paved the way for the usage of smarter and more digital technologies in the water space. In many cases, they couldn’t have handled the complexities of their businesses anymore, if it hadn’t been for progressive automation and digitization.
Another critical success factor is leveraging an ecosystem of partners. Small utilities don’t have all the expertise they need in-house, so IT and OT partners are often essential to develop and support digital technologies.
Here, cloud-based systems and solutions will make a huge difference, because they don’t require a large support footprint on the utilities’ side and can be effectively hosted and managed by the large cloud and service providers.
Making sure these solutions are scalable and cybersecure will be both a major requirement but also an operational benefit. As we see more overarching regional management structures evolving in the water space, at least in certain countries, smaller players as members of cooperative structures, can profit even more from such solutions.
Q: What types of digital tools are the advanced companies implementing and what is your advice for those just getting started in their digital journey?
A: We see a rising interest in anything that helps our customers reduce operating cost and extend the life of their assets. In fact, given our global presence in the water market we see this trend throughout all the regions. For example, we partnered with Acqua Novara, VCO in Italy and deployed a full EcoStruxure for Water solution, including telemetry, SCADA and integrated AVEVA software for water networks which resulted in a 10% reduction of water loss and 15% reduction in energy consumption.
We remind customers you don’t have to rip and replace, and recommend they start with automation tools in plants and networks that are open and easily connected to existing systems.Asset performance management is one of the first digital tools customers can implement on their digital journey to deliver tangible ROI. Additionally, cloud-based software “Advisors” are both minimally invasive and allow supervising and performing diagnostics without touching the equipment.
We should see an increase in awareness and treatment in the coming years, which will benefit us all and ultimately also industries
Q: Cybersecurity was already a priority concern before this crisis, but now it takes on a new dimension. Is the water industry prepared to deal with digital threats?
A: The water industry has made great progress over the years, but to stay one step ahead, we need to rethink the approach to cybersecurity, upfront. It requires new levels of collaboration in at least two areas. Our customers’ ability to defend themselves is only as strong as the technology that manages and controls their operations, but it is a shared responsibility. Vendors are responsible for providing state-of the-art and sufficiently hardened cybersecure OT/IT products and solutions, which Schneider Electric takes very seriously.
We deliver secure systems and solutions, following a “secure by design” lifecycle development process that has been certified to comply with the international cybersecurity standard. The certification warrants that cybersecurity is considered in every phase of our product development process. To keep technology secure, our customers are responsible for ensuring cybersecurity is and remains part of their operations lifecycle. Because an educated and aware workforce will frequently be their first and last lines of defence, they need to make sure everyone, everywhere is responsible for cybersecurity - we collaborate on this front as well.
Q: Let us talk about energy. It seems we are moving to a low-prices period. How can this impact water services management?
A: There is a connection between Energy and Water. Energy is needed to produce, enhance, treat and transport water throughout its cycle. Some sources estimate that 4% or more of the world’s electrical energy is needed for that. There is no question that energy is one of the major operational cost factors in the water industry today, besides labour cost and other consumables.
While the reduction of energy cost can be a good thing for water utility operators on the surface, the availability of cheap energy may cause some to lose sight of their goals to reduce the energy consumption in their operations, as part of their total cost reduction efforts and necessary efficiency gains. That being said, in an environment where cost savings is more critical than ever, we encourage utilities to seize the opportunity that energy efficiency brings long term — in addition to saving the environment, it’s also about saving costs. For instance, we deployed our EcoStruxure solution for integrated energy management at the Punta Gradelle wastewater treatment plant, built by Veolia WT in a tunnel, which resulted in 15% savings on energy consumption and 20% improvement on operational efficiency.
Schneider Electric provides cyber assessments, audits, certifications and other training services to ensure our customers have clearly defined responsibilities and procedures, are always following and strengthening their site security practices and are adhering to industry best practices, especially the product and security guidelines we provide to keep their installations as secure as possible. That approach goes a long way to dealing with digital threats.
Q: Increasing health concerns and the need to relax fiscal policies could lead to countries stepping up investments on infrastructure that guarantees water quality. Do you think there can be opportunities in this area once the pandemic is under control?
A: As previously mentioned, many of the past crises were followed by increased infrastructure spending as a major part of national stimulus packages.
In developing countries, the underprivileged are paying the highest price for water, even though in many of these regions tap water is very low cost or essentially free. The fact that this free water is often not safely potable causes people to buy bottled water at a significantly increased price, well more than the price we pay for drinkable tap water in developed countries. This is the highest form of social injustice, and something we urgently need to solve. In India, Schneider Electric has partnered with Harsha Trust and Pradan NGO to implement 220 solar water pumping systems impacting lives of 3,300 farmer families. The project has increased the area of cultivation thanks to pumping water to lands at higher elevation. The objective is to double the income of 30,000 farmers by implementing 4,300 solar microgrids to power 1,200 irrigation pumps, harvesting equipment and other agri-processing machines.
For the more developed world, ongoing advancement in water sensors, analytics and monitoring systems will lead to a gradual increase of regulations to improve the quality of our drinking water. Today, what cannot be easily measured will often not be regulated, because the effects of some substances on humans aren’t well known. Therefore, water will not be treated for potentially harmful substances such as runoff from agriculture or heavy industries, hormones and antibiotics, PFAS, microplastics or other contaminants. We should see an increase in awareness and treatment in the coming years, which will benefit us all and ultimately also benefit the various industries to improve their environmental footprint and sustainability.
Schneider Electric acknowledges this challenge by prioritizing water efficiency across operations through installing best practice technologies for water conservation.We are helping our customers drive their efficiencies across the entire water cycle, better manage their assets, as well as reducing their capital and operational costs.