APC 2015 Annual Report Download - page 181

2015 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 179
BUSINESS REVIEW
4
TRENDS IN SCHNEIDER ELECTRIC’S COREMARKETS
1.3 Utilities and Infrastructures
Electrical Utilities
In generation, renewables continued their expansion in 2015, fuelled
by on-going cost declines. Wind and solar rapid growth spread to
new territories in emerging countries. At the end of the year, COP21
was the confi rmation that electric utilities have to engage in a path to
decarbonise their mix. Also that in this new energy world of energy
effi ciency they have to re-think their business models, strengthen
their networks and digitize their operations.
In networks, investments were thus sustained and those in software
and smart grids accelerated.
However pressure from regulators, investors and consumers did
not relieve, driving operations and asset the optimisations projects
across the board.
These trends will positively affect Schneider Electric, widening its
market for grid modernization or asset and operations management
solutions. For a given capacity of power generation, renewables,
with their often distributed nature, offer a larger accessible market
for Schneider Electric products and solutions. They also imply a
transformation of the system as a whole, opening new realms, for
example in demand management.
Oil and Gas
The year 2015 has seen a normal demand growth (around
+1,2%), and supply growing and still higher than demand by about
+1.5mb/d. As a consequence crude and refi ned products stocks
are continuing to pile up. The North American unconventional
production has further increased through most of the year, to
eventually start a gradual decrease of 0,1mb/d per month.
Increased productivity and cost cuttings and previous upstream
investments have enabled many operators to continue producing,
despite the low barrel prices. Saudi Arabia continues its race for
market share. Iran now authorized back in the game may add half
a million barrels per day (0,5% world production) could increase
further tension on supply.
This surplus situation has led most upstream players to signifi cantly
cut their investment in 2015, in particular in exploration. Similar cuts
have been announced for 2016. These two consecutive years of
upstream spending cuts could be considered as a new normal to
a new level around USD500 billion a year, after 4 years of hyper-
infl ation .
Midstream and Downstream markets somewhere benefi ts from low
oil prices and show increased profi ts for integrated majors IOCs.
Schneider Electric Oil ,Gas and Petrochem sector with no exposure
to the exploration, and historical position in midstream and
downstream acquired through recent acquisitions shows good level
of resilience. In addition, with a less affected opex , we experienced
growth on Field Services and Software. We also benefi ted from our
customer intimacy to further improve customers’s uptime and ROI
with Our Solutions and Digital Services portfolio.
Our value strategy based on - Solutions, Services , Software and
Digital Services- toward Strategic majors considering business
transformation through innovation and optimized architectures
should support further resilience of Schneider Electric Oil ,Gas and
Petrochem activity.
Data centers and Networks
The global IT market experienced slow but steady growth in 2015
partly due to the worsened economic environment in emerging
markets.
Our transactional single phase market remained soft, as the
demand of Small& Medium Business (SBM) for power protection
products for servers and PC continued to stagnate. Growth in Asia
and Europe was offset by the weakness in Russia, Latin America
and China.
Large Enterprises continued to deploy IT in a hybrid environment
of on-premise, colocation, hosting and cloud in 2015. Due to data
sovereignty and privacy concerns and regional demand for data
center capacity, an increasing number of hyperscale data centers
are being built in the North America market and in various locations
in Europe, Asia and Latin America. Schneider Electric is leveraging
its global presence and comprehensive data center solutions to
accommodate our customer needs wherever they decide to locate
their IT infrastructure.
As internet use is trending towards bandwidth-intensive content
and the increasing adoption of the «Internet of Things», computing
power and storage is increasingly placed at the edge of the network
closer to end users. The IT business is well positioned to penetrate
in various edge computing applications with its micro data center
and modular data center offers.
Industrial markets achieved steady growth along with a moderate
outlook for infrastructure investments in power generation, chemical
production and semiconductor.
The year of 2015 also marked the initial commercialization of energy
storage solutions for home, commercial buildings, datacenters
and utilities. Schneider Electric entered the lithium ion energy
storage market with the presentation of EcobladeTM at the COP21
Conference on Climate Change in Paris in December 2015.
The Ecoblade solution combines advanced software analytics,
modularity, and IT-style server designs in a smart battery that can
scale up from 1kw to more than 1MW for homes, commercial
buildings and utility substations.