France's Schneider Electric has relocated its Asia Pacific headquarters to Beijing from Hong Kong, and says it has a deal with China's State Grid to help the nation build a smart electrical grid.

"Our goal is to cut 20 percent of energy consumption in smart grid power transmission," said Zhu Hai, president of Schneider Electric China, at a press conference on the company's relocation Tuesday in Beijing. "Electricity transmission and power distribution is our main job on the smart grid project."

The company revealed the deal, which could not be confirmed, Tuesday at a press conference on its Beijing headquarters. Calls to State Grid went unanswered.

"We will work with the State Grid both as a commercial and technology partner," said Eric Rondolat, executive vice president of Schneider Electric. He refused to offer further details on the deal.

China will begin large-scale smart grid construction next year. Smart grids are designed to harness power from alternative energy sources, such as solar and wind power, and reduce the amount of electricity lost in transmission. Nearly two-thirds of electricity generated in the country is lost in power transmission.

State Grid reported its profits plunged from 47.1 billion yuan ($6.9 billion) in 2007 to 9.66 billion yuan ($1.41 billion) in 2008, down 79.5 percent. It is expected to report a 2009 loss of 45 billion yuan ($6.59 billion).

The Standing Committee of the National People's Congress, China's top legislative body, approved an amendment to the Renewable Energy Law in December 2009 urging development of an advanced power grid incorporating more renewable energy.

At last September's UN Climate Change Summit, President Hu Jintao said China would vigorously develop renewable and nuclear energy to reach a goal of generating 15 percent of the country's total electricity from renewable sources by 2020.

China's existing power grid is designed to transmit the predictable, constant energy produced by traditional sources such as coal. Wind and solar energy are less steady, as they are impacted by weather factors.

"The biggest obstacles for the national grid are the lack of self-adjustment and self-control capabilities," said Yan Luguang, an academic at the Chinese Academy of Sciences.