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Interview

with Patrick Simon, CEO of EDF Norte Fluminense

16.09.2013 / Energyboardroom

You stand amongst the youngest CEO’s in the country, managing an important asset for the energy supply of Rio de Janeiro. How have you been embracing your new position since you joined in 2008?

When I arrived, I found a company that was very profitable already. My mission was therefore to continue this past success and further increase revenue, while at the same time fostering technical and safety improvements. Fundamentally, my mission was to increase EDF Norte Fluminense’s prominence within the EDF group.

In the past, EDF had decided to sell its mains asset in Brazil, Rio de Janeiro’s electricity distribution company Light, but kept Norte Fluminense. Thanks to this company, EDF had the option of reestablishing itself, and becoming an active player in the energy market.

My role was to bring a breath of fresh air to EDF in Brazil, and this began by communicating Norte Fluminense’s successful results and highlighting the quality of our human resources. My belief is that our plant’s employees are highly skilled, reliable people and our European colleagues should be more aware of this. Our staff has a palpable motivation and their accomplishments over the years are proof of their determination. Our technical, safety and financial results are among the best of all EDF’s operations worldwide.

To maintain high levels of motivation, we have invested in renewing our equipment, control room and, importantly, we have developed a new working environment. For instance, we recently started a new painting program, providing the plant with new designs and paintings. EDF carried out a worldwide survey – 133,000 workers – to better know about working conditions and people satisfaction in all the EDF Group companies. EDF Norte Fluminense ranked first with more than 90 percent of satisfaction rate. More: 99 percent expressed their pride to work for Norte Fluminense. These are our accomplishments. We are proud of them and it is my duty to maintain them.

What motivated EDF’s decision to focus on thermal power?

Brazil suffered an energy crisis in 2001, with an unprecedented power shortage that shocked the country. Following this major incident, the government decided to develop thermal power plants to secure the national energy supply.

EDF Decided to build this IPP (Independent Power Plant) using its knowhow in the business of Gas Combined Cycles.

The thermal power plant you are operating here is fueled by natural gas. What was behind the decision for using natural gas? 

Our supplier of natural gas is Petrobras, and we have a long-term contract with them. As Petrobras is the sole long-term supplier of this resource we are, clearly, highly reliant and cost sensitive to the gas they supply.

We are developing a new natural gas project named Paracambi, a 600 MW gas fuel power plant. We have the land, authorizations, access to the grid and natural gas pipelines. We are only missing the gas contract as Petrobas has not yet given us a competitive offer. This is one reason we lost the auction in 2011 in the face of competition from very cheap renewable energies such as wind. We would like to bid again at the next auction but are still waiting for a more favorable contract from Petrobras or any other gas supplier we may find.

There are high expectations for the future of natural gas in Brazil. With the recent discoveries in the Santos Basin and the potential for shale gas development, there is no doubt that Brazil has security of supply. However, today the situation is critical and access to natural gas is complex and costly. It is unclear how long it will take to extract these assets, and until then we must rely on current supplies, but will not take just any price for that supply.

How is EDF portrayed as a technologically advanced company in thermal power development? 

EDF as a global company uses state of the art technologies and solutions to satisfy demand in the energy sector, such as thermal, hydro, nuclear, wind and solar. We also address transmission, distribution and energy efficiency requirements. EDF has an ambitious program in Brazil and we are in contact with leading decision makers and local players in the sector to find new opportunities and raise awareness of our company’s capabilities within the energy sector.

Our thermal power plant operates at a 99 percent rate of availability, which could be a world record! It is a perfect example of how EDF’s technology means our plant operates at optimal levels. Siemens provides our equipment, and informs us that our results from their technology are amongst the best in the world.

What are your plans to further grow EDF’s operations and revenues – USD 485 millions in 2012 – in Rio de Janeiro? 

Henri Proglio, EDF’s global CEO came to Brazil in 2011 and again this year. He confirmed the will of EDF to grow in Brazil. The power sector is highly competitive, even more so with the auction system, but the opportunities here are immense and thermal power is not the sole point of interest for us. Currently, we are investigating how we could participate in hydropower projects. We are conducting a feasibility study on environmental and technical aspects of the Tapajos river basin located in the Amazon with Eletrobras, Endesa, Neoenergia, GDF Suez and others. By the end of 2014, we hope to be active investors in this project. This project – considering its size of around 8 GW installed capacity – is of key importance for EDF in Brazil. Several of our expatriates and a small team are working on the details of this project.

Furthermore, we are interested in a wide variety of projects including nuclear power. We have a contractual relationship with Eletrobras Eletronuclear with regard to Brazil’s nuclear program. This cooperation agreement does not involve Angra III nuclear plant but new, future projects. Of course, after Fukushima’s incident this program has been delayed and it may take a long time to progress. Brazil has all the conditions that would make nuclear power a success. Our French engineers have visited the facilities of Angra and were impressed by the level of operational quality, safety and systems used, even with technology dating back to the late 70’s.

Finally we wish to have a grasp on the renewable energy industry here in Brazil, as the EDF group is a world leader in wind and solar power through its subsidiary EDF Energies Nouvelles. However, energy prices so far on these resources are not sufficiently attractive for us to become actively involved in Brazil. In the next five years we see a lot of potential for these energies. Come what may, these energies are already showing significant potential. Therefore, we decided to start a pilot solar project with Light, a solar rooftop for Maracana fooball stadium. The project was done to highlight EDF’s solar power capabilities and commitment to renewable energies. Finally, our solar panels bringing electricity to our thermal power plant represent Rio de Janeiro’s largest solar project in terms of capacity as well.

What is the footprint you want EDF to have in Brazil? What new projects are you considering to give EDF a stronger presence in Brazil and Latin America? 

EDF is focusing on its staff and sustainability. EDF is more than a company generating electricity, providing safe working conditions and excellent financial results to its shareholders. We want EDF to be known as the best company to work for, where all stakeholders benefit from our activities. EDF Norte Fluminense received the Social Accountability Certification SA 8000, which was the first to be won by our group and one of the very first granted in Brazil. This is testament to the fact that we create the best conditions not only for our workers but for our subcontractors as well. In a country with so many social and economic inequalities, it is our duty to give the appropriate conditions and benefits to all our stakeholders. Our policy action means not only workers but their families as well gain access to our retirement and healthcare plans. Finally, we have many social and cultural programs taking place in Macae and in Rio de Janeiro and we are proud of our efforts to maximize the wellbeing of Brazilian citizens. This represents our footprint in Brazil and we intend to continue these programs indefinitely.

If we were to come back in five years’ time, where would you like us to find EDF NF? 

EDF NF in five years will be part of a global company and likely will have a second thermal power plant at Paracambi. We will own a medium and a large hydropower plant, and be focused on the best environmental management plans across our operations, bringing the highest benefits to the local communities located in these areas. Finally, we will develop a wind farm program as well as a trading company to commercialize energy. Hydro, wind and thermal power represent a very interesting mix that will enable us to process a very sophisticated commercialization program. This is an ambitious plan and my dream. I feel confident we will attain these targets.

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