Gustavo Estrella, CEO of CPFL Energia, says in an interview in the UOL Líderes series that the world will hardly escape advancing in nuclear generation. “We see conflicts in Europe over the gas issue. I think Europe will need to invest in nuclear energy, but it is important to put this in a very pragmatic and objective way”, says the head of CPFL.
The executive defends, however, the expansion of clean and renewable energy sources, such as solar and wind.
“Today, our electric park has 83% of renewable energy. The world has, on average, 27%. We have all the conditions to maintain or even increase this number of renewable energy because they are the most competitive sources and the generation potential in Brazil is very large, whether with solar or wind power, which still has a huge capacity to be explored”.
Estrella also talks about the importance of thermoelectric plants; the arrival of smart meters; the company’s investments in ESG and how to reduce the price of the energy tariff.
Listen to the full interview with Gustavo Estrella, CEO of CPFL Energia, on the UOL Líderes podcast. You can also watch the video interview on the UOL YouTube channel.
Read excerpts from the interview below:
Energy shortage in the world
UOL – The Brazilian government is planning the construction of a new nuclear power plant. What is your opinion about this type of energy?
Gustavo Estrella – We are far below in nuclear power generation compared to the rest of the world. Our nuclear matrix accounts for about 2%; in the world, it is currently 10%.
The good news is that we have cheaper and more efficient alternatives to nuclear. Looking in the short term for the matrix’s growth design, I would continue to focus on renewable energy, especially wind and solar.
It is important to point out that the world will hardly escape expanding in nuclear generation. We see conflicts in Europe over the gas issue.
Europe will need to invest in nuclear energy, but it is important to put this in a very pragmatic and objective way. Nuclear generation today is done in a much more efficient and safer way than it was a few years ago.
So what does Brazil need to do to reach 2030 with totally clean energy?
Brazil came out ahead. Our electricity park has 83% renewable energy. The world has, on average, 27% renewable energy and is still heavily dependent on coal and natural gas. Brazil has hydropower and is recently coming up with wind and solar.
We are fully capable of continuing with clean and renewable generation, but the infrastructure to manage an increasingly diversified park of generation sources brings great complexity to the operation.
One of the challenges is what we call intermittency. With a 100% thermal generator park, I know exactly when the generation starts and when it ends and I relate this to my needs. When I depend on natural resources —rain, wind, sun—, I bring intermittence [falta de sol ou vento em determinados períodos do ano].
Another challenge is in the transmission. We have very strong generation capacity in the Northeast, especially with wind and solar, but the consumption center is in the South and Southeast regions. How to bring this new capacity to the great centers of consumption?
But, by investing in thermoelectric plants, wouldn’t we be on the opposite path to sustainability?
This is a good question to think about: the concern needs to be tariff too. We’ve managed to grow with renewable generation as much as we can, but it’s more economical to have thermal capacity available for those few times when we need additional capacity.
The year 2021 is very much alive in the memory of Brazilians, with the worst hydrology in the last 90 years. How often will we have a hydrology so bad that we need the entire thermal park as we needed last year?
And how many thermals will we need to make this balance?
In my view, something around 20% [atualmente são 17%], but just as important is being competitive in these thermal plants. We currently have very expensive thermals. The idea is to have a more efficient thermal park, with cheaper energy.
How is CPFL Energia?
Gross Operating Revenue (2021)
Net Operating Revenue (2021)
Net income (2021)
Investment Forecast (2022-2026)
- BRL 21 billion, of which BRL 17.6 billion in distribution
Percentage of market dominated by the company
- 14% of the national market
- Second largest energy distribution company in the country
- Enel, EDP, Energisa, Equatorial, Neoenergia
- Serves 687 municipalities
- 90% residences
- 5.6% industries, commerce and service providers
- 3.5% rural customers
What would be your three proposals to improve Brazil’s electricity sector?
The main agenda should be the market opening process, combined with the need to incorporate technology, in addition to a focus on renewable energy.
Why is the market opening of the sector important?
We have an agenda in which the role, importance and demand of our client are increasing. Therefore, we need to have an open, competitive environment in which other companies offer more products and services and establish this competition.
With the opening of the market, will the electricity bill decrease?
The current challenge is the price of energy. Market opening tends to bring more competition, more innovation. The expectation is to have higher quality and lower prices.
We have recently seen the reduction of the ICMS rate. There was an immediate impact, in my case, of almost 10% reduction in the total price of energy for the final customer. So, it is necessary to think about reducing the tax burden, subsidies, and expanding the matrix to have cheaper energy.
What can companies do socially to improve the country?
We need to incorporate our social, environmental and governance responsibility into our business strategy. And we’ve done it. We are a company that ranked fourth in the ISE, which is B3’s corporate sustainability index.
We have the CPFL nos Hospitais program, a partnership with public hospitals, where we install solar panels to reduce energy consumption. In recent years, we have invested R$ 150 million, with more than 300 hospitals benefited. For the next three years, the expectation is to invest another R$ 140 million to reduce energy consumption.
What innovations and investments does the company foresee for the coming years?
With network automation, we can now know exactly when and where the power outage occurred. I manage to divert the load to reconnect as many clients as possible. In many situations, when the customer calls, the problem has been identified.
The next step is the installation of smart meters. Currently, the meters are read one by one at the customer’s house. When we have smart metering, we can better manage customer consumption.
In the very near future, we will have a differentiated hourly rate for residential customers.
Do Brazilians spend more energy than consumers in other countries?
The Brazilian sets the example. In 2001, when the last rationing took place, we had an average reduction of almost 30% in consumption. It’s a world case. Our per capita consumption today is one of the lowest in the world.
What is your opinion on the social tariff?
We have a discount of up to 40% for the low-income customer. The social tariff plays an important role for a class of customers who, without this discount, would find it very difficult to pay the bill.
Who is Gustavo Estrella?
- Vice President of Finance and Investor Relations (CPFL)
- Investor Relations Officer (CPFL)
- Planning and Control Director (CPFL)
- Manager of Economic and Financial Planning (CPFL)
Undergraduate and Graduate
- Business Administration (Uerj)
- MBA in Finance (Brazilian Capital Market Institute – Ibmec/RJ)
- Cycling, Barbecuing and Traveling
- “Mauá – Entrepreneur of the Empire”, by Jorge Caldeira – “Portraits a born entrepreneur, who with resilience and perseverance overcame all the adversities of the time”
- “The Wolf of Wall Street”, by director Martin Scorsese – “Films based on facts are my favorites. This one portrays the reality of the financial market of the 80’s/90’s”