String Inverters Single-Phase Solutions for the North American Market (2011): Page 7 of 10

Schneider Electric. Founded in 1836 and incorporated in 1981, Schneider Electric is a global leader in active energy management solutions headquartered in Rueil-Malmaison, France. The company has more than 110,000 employees in more than 100 countries. Publicly traded on Euronext, a pan- European stock exchange, the company reported sales revenues of 19.6B euros for 2010, 24% of which were generated in North America. Schneider Electric acquired Square D, a leading US electrical equipment manufacturer, in 1991. Since 2011, activities at Schneider Electric have been organized into five operating segments: power, energy, buildings, industry and IT. Renewable energy solutions and services are grouped within Schneider Electric’s power portfolio. In 2010, this operating segment of the company accounted for 53% of total revenue, or 10.3B euros. According to the company’s annual report, Schneider Electric’s power business is currently number one in the world in low-voltage markets and number two worldwide in installation and control systems. The report also describes renewable energy as a “lever for growth” within this operating segment. It notes: “Solutions and services (in the power business) are seeing growth again thanks to renewable energy solutions.”

Emphasis on the renewable energy sector is part of a transformation stratagem initiated at Schneider Electric in 2002. Strategic acquisitions in the 1980s and 1990s helped the company transition from being a family-owned steel business to a publicly traded world leader in electrical products. Management at Schneider Electric has recently sought to diversify and enhance its portfolio of solutions to anticipate changing energy requirements in the future. In July 2008, as part of this strategic realignment, the company acquired Xantrex Technology in an all-cash transaction valued at approximately $500M. In addition to portable power products for mobile applications, the Xantrex product portfolio includes battery-backup and grid-direct inverters for residential applications, as well as an extensive line of commercial and industrial inverters.

It is worth noting that Xantrex, which was founded in 1983, had its own history of strategic acquisitions in renewable energy and power conversion technology. Over a 2-year period, starting in 1999, Xantrex acquired three inverter companies: Heart, Statpower and Trace Engineering. While Xantrex used the products and technologies acquired from Heart and Statpower primarily in mobile and consumer electronic solutions, the assets acquired from Trace were used in both grid-direct and utility-interactive battery-backup solutions. Xantrex’s early grid-tied experiences using Trace technology were not without challenges. The Trace Sun Tie inverter, Xantrex’s only residential grid-direct inverter when it was released in July 2001, suffered from multiple problems with its MPPT algorithm, which the company was slow to address until these issues became well publicized. Around the same time, in November 2001, Xantrex received notification that UL was decertifying its battery-based Trace SW series inverters for utility-interactive operation. While Xantrex fixed this problem relatively quickly with the release of an add-on gridtied interface, the company’s responsiveness was once again called into question.

Given the rapid rate of change in the solar industry, these decade-old bumps in the road for Xantrex were ancient history—until January 18, 2011, when Schneider Electric announced a recall of approximately 25,000 Xantrex GT series and private-labeled inverters. Whatever memories this announcement may have brought back for industry veterans, Schneider Electric’s management of the Xantrex recall is a marked departure from the past. First, it was the company’s own quality control processes and procedures that identified the potential problem—prior to any reports of injury or property damage. Second, in initiating a voluntary recall, the company was adhering to its own internal quality control standards. The Schneider Electric annual report states: “Despite its testing and quality control procedures, the company’s products might not operate properly or might contain design faults or defects, which could give rise to disputes in respect to its liability as a seller or manufacturer.... To prevent or limit these risks, the company recalls products if there are any doubts whatsoever that a product or one of its components is not 100% safe in respect of people and/or equipment.”

“Schneider Electric takes product safety and quality very seriously,” explains Ron Catanzaro, vice president of marketing. “We identified a potential safety issue in the North American single-phase Xantrex GT series grid-tied inverter related to a component on the circuit board. We reported this to the Consumer Product Safety Commission and agreed to a voluntary field repair upgrade, which involved a kit to replace the component and further strengthen the enclosure. As the solar industry matures, Schneider Electric and other global suppliers will support events like this with well-established processes, policies and actions that are commonplace in other industries.”

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