Schneider Electric set to invest more than $700mn in US energy sector

Good morning, and welcome back to Energy Source, coming to you this week from Lausanne, Switzerland where the FT is hosting its annual Commodities Global Summit.

In today’s edition my colleague Amanda Chu has a scoop on French industrial giant Schneider Electric, which is planning its largest-ever investment in the US market. But first we wanted to bring you a flavour of the discussions from the first 24 hours of the three-day event on the shores of Lake Geneva.

The Energy Source team is here in force with myself, Jamie Smyth, Malcolm Moore and Leslie Hook interviewing on stage some of the most senior figures in global energy and commodity trading including the chief executives of Vitol, Trafigura, Mercuria and Gunvor and the head of commodities at Citadel.

It’s a fascinating time in a sector that underpins the global economy — here are four themes that have dominated conversations so far:

Interpreting Trump: The dizzying array of executive orders that have flowed from the White House in the first two months of Donald Trump’s presidency has meant US policy is changing day by day and even hour by hour. European commodity traders joke that they now spend the morning waiting for Washington to wake up to see what fresh havoc the US president will sow in which market.

For now the changes wrought by Trump’s tariffs and other interventions are complicating the trading environment but not yet crimping profits. However, there had already been a chilling effect on the willingness to make big capital investments in the US, executives said. What remains to be seen is whether, when taken together, Trump’s myriad executive orders represent a strategy.

“The problem that Americans all have right now is that Trump is the only one who is speaking for America,” said Karin von Hippel, a distinguished fellow at the Royal United Services Institute and a former US diplomat. Current US officials are in effect unable to speak for Washington as the US president can and does over-rule them, she said. “It’s all in Trump’s head and he thinks he’s the genius that can make it all happen.”

Harnessing AI: The increased access to sophisticated artificial intelligence models was lowering the barriers to entry for financial traders who want to start dealing energy and commodity products, said Sebastian Barrack, head of commodities at US hedge fund Citadel, which has led the way on data-backed commodity trading for the past decade.

“It has become ubiquitous in the sense that it is now accessible to non-technical people so the audience, which can absorb this into their processes has now started to broaden significantly,” Barrack said. Physical trading specialists were hiring record numbers of data scientists to drive efficiency gains, while financial trading specialists were seeking to acquire bigger and better data sets to inform their models, he added. “How that converges is more efficiency, more players in market . . . [and] that brings with it some extra volatility.”

Navigating tariffs: Trump’s onslaught of tariffs has threatened to turn global trade on its head with the full impact yet to be seen.

“The world has changed fundamentally,” said Michael Barton, managing partner at mining-focused investment fund Orion Resource Partners. “It’s a pretence that everybody’s operating under WTO policy.”

Luz María de la Mora, a director at UN Trade and Development, said it was clear that the World Trade Organization needed reform but that its “rules-based trading” system was better than the “power-based” system that the US was seeking to impose. “Maybe WTO has many shortcomings, weaknesses . . . but it’s better than the alternative,” she said.

What next for Russia: The consequences of Trump’s attempted rapprochement with Moscow have huge implications for the commodity trading industry given Russia’s vast natural resources. Ultimately there is an unspoken recognition that if western sanctions were lifted, the big European trading houses would seek to trade Russian commodities again as soon as possible. However, most traders and analysts argued that the lifting of western restrictions on the country remains a significant way off.

As for Trump’s motivation for seeking a normalisation of US relations with the Kremlin, Alexander Gabuev, director of the Carnegie Russia Eurasia Center, was sceptical that it might form part of a geostrategic move to destroy the strengthening ties between Russia and China. “This is fantasy land,” he said, stressing the depth of the trading relationship between Moscow and Beijing. “They [Russia] know that four years down the road Trump might not be in the White House and then they have a very reasonable bet that the country next to them will still be China . . . and it’s still going to be run by somebody called Xi Jinping. Why would you rock the boat.” (Tom Wilson)

Exclusive: Schneider Electric set to invest over $700mn in US energy sector

Schneider Electric is set to invest over $700mn in the US energy sector over the next couple of years, the largest single planned investment in the company’s 135-year history in the American market. 

The French industrial giant told Energy Source that the investment would create more than 1,000 new jobs and that the “vast majority” of capital would be directed towards the manufacturing of electrical equipment, including expansions in its factories in Missouri, Ohio and Tennessee. 

“There’s an industrial renaissance happening in the US. It requires us to think differently about energy systems, about resiliency, about efficiency, about interactions with the grid, and frankly, about automation,” Aamir Paul, Schneider Electric’s head of North America, told Energy Source. 

The announcement arrives as the US electricity system undergoes a historic surge in power demand driven by the race to lead in artificial intelligence and the renewed focus on domestic manufacturing.

US electricity consumption, which is at record highs, is expected to grow by another 16 per cent by 2029, according to think-tank Grid Strategies.

In addition to expanding manufacturing capacity, Schneider Electric is opening a laboratory in Massachusetts to test power systems for the AI data centre market and an innovation centre in Texas. While the latter project was announced at the S&P Global CERAWeek energy conference earlier this month, today’s announcement marks the first time the company has made public its cumulative capital plans to invest in the US market.

Schneider Electric’s investment comes amid a flurry of large manufacturing commitments across corporate America in the first months of Trump’s presidency as executives seek to minimise tariff threats. 

Paul denied the role that Trump’s economic policy played in the company’s announcement and called for more clarity on the US president’s tariff plans. North America is the largest and fastest-growing market for the French company, making up 36 per cent of revenue, according to Schneider Electric. 

“We have to respond, like everybody, in the market where the conditions change. But at this point, we’re looking for more clarity on that,” Paul said. (Amanda Chu)

Power Points

• Donald Trump said the US would impose a 25 per cent tariff on all imports from any country that buys oil from Venezuela, a move that could roil crude markets.

• Activist investor Elliott Management has taken a stake of nearly 5 per cent in RWE, calling for the German energy group to accelerate its share buyback programme. 

• The world’s appetite for energy rose faster than usual last year because record high global temperatures meant more power was used for cooling.

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.