Offshore wind development and regulation in Brazil

Introduction

In January 2022, the Brazilian government published Decree No. 10,946/2022 (the Decree) with a view to establishing a regulatory framework for offshore wind power generation in the country. Regarded as the first piece of legislation aimed at regulating offshore wind farms in Brazil, the Decree contains general rules for the use of seabed areas.¹ The Decree entered into force on 15 June 2022. However, further regulation is still required to fully implement offshore power generation in Brazil.

The Brazilian National Congress is still discussing further proposals related to regulating offshore wind power generation activities. For example, in February 2021 the Senate proposed the Bill of Law no. 576/2021, which seeks to regulate seabed area rights for offshore power generation more generally. The Bill was approved by the Plenary of the Senate in August 2022 and is expected to be one of the regulatory frameworks for assigning offshore wind areas and projects in Brazil.

In 2023, Brazil brought in noteworthy legislative advancements in the field of renewable energies. These advances were driven by the Brazilian National Congress’s effort to approve proposals before COP28 in November 2023. It became known as the “Green Agenda.” A task force was responsible for examining a series of relevant projects, including the legal framework for offshore wind (Bill of Law No. 11.247/2018).

The Bill No. 11247/23 was proposed by the House of Representatives as a substitute for Bill No. 576/2021 and other pertinent proposals concerning offshore wind that had been discussed in the National Congress. The Bill establishes the legal framework for exploring offshore wind by regulating the assignment of seabed areas. Following approval by the Plenary of the House of Representatives, the Bill has been forwarded to the Senate for consideration. If approved by the Senate, it will undergo the process of presidential sanction and publication, formalizing its status as law.

As Brazil takes bold steps towards a sustainable revolution, the approved Bills set the stage for a greener and more sustainable energy landscape. Though the Bill is still under discussion and may undergo further changes in the Senate, the most significant provisions are outlined below.

Securing seabed rights to develop offshore wind farms

The Bill categorises the spaces to which it relates as the Brazilian federal government’s inland waters, territorial sea, exclusive economic zone, and the continental shelf of Brazil (each referred to in the Bill as a “prism”).

The Bill sets out two ways developers can secure rights to these physical spaces:

• planned offer for assignment of use
• permanent offer for assignment of use

We look at these processes in more detail below. The Bill also formalizes authorizations and concessions through grant agreements, divided in two phases for evaluation and execution.

Planned offer for assignment of use

The proposed text defines “planned offer” as the procedure in which the government offers pre-selected seabed areas, which are granted in the concession regime through a bidding procedure. 

Under the planned offer procedure, the government runs an auction process where interested parties bid for seabed rights over areas previously delimited by the granting authority. Selecting the auction winner is based on the highest economic return for the exploration of the seabed right. To be successful, the bidders have to prove they have sufficient technical, operational, economic-financial, and legal capacity to guarantee the implementation, operation and decommissioning of the offshore wind farm project.

The granting authority will publish further regulation covering the mandatory technical, economic-financial and legal qualification and promotion of the national industry the interested party has to fulfil. The authority will also carry out studies to define and delimit the prisms and will comply with the planning and applicable environmental policies, plans and programs.

The public notice communicating the bidding procedure will be accompanied by the basic draft of the grant agreement and will contain the information necessary for the successful auction, such as:

• the prism which is the object of the grant
• the connection facilities to the National Interconnected System (SIN), including the extensions and reinforcements to the basic network that will be under the responsibility of the generation plant
• the government participations
• the obligations and financial guarantees for decommissioning.

The Brazilian regulation is still at an early stage, so there are currently no provisions regarding the rights of recourse available for developers that are not successful in an auction process. There is also no rule yet in force stipulating the frequency of the auctions organised by the granting authority.

Permanent offer for assignment of use

In accordance with this procedure, the granting authority will delimit prisms for exploitation based on selection and requests from interested parties, which will be granted in the form of authorization.

The prisms on permanent offer will be awarded to interested parties if they fulfil the studies and other requirements, including the availability of a point of interconnection point to the SIN. Further regulation will provide for the studies and other requirements to support expressions of interest.

Once an expression of interest has been received, the granting authority will publish the request and initiate a public call for other interested parties, lasting a minimum of 120 days. The purpose of this public call is to identify the presence of additional interested parties, who have to submit minimum mandatory qualifications to be eligible to participate in the public call.

In the event of multiple expressions of interest in a prism that exhibit total or partial overlap, the granting authority must submit the requests to the planned offer and start the required bidding procedure.

Other rights / approvals

The award of seabed rights does not include additional rights such as:

• the right to grid connection or to export energy to the grid
• the right to subsidies or government support
• environmental licences or consents
• construction licences

These rights must be obtained through separate applications (as is the case for all other kinds of power projects in Brazil). 

The Bill also provides for mandatory government participation, which can be described as payments to the government based on the project, such as:

• subscription bonus upon obtaining the grant
• proportional participation due monthly and equivalent to a percentage of the value of the energy generated
• area occupation tax, calculated in BRL per square kilometer (BRL/Km²), to be paid annually.

To identify the viability of the area and the non-interference with other projects, the Bill requires nine government bodies² to issue a Declaration of Interference (DIP) using a centralized portal (one-stop-shop) called PUG-offshore so the prism can be granted. The DIP consists of a declaration issued by the Executive Branch to identify the existence of prism interference with other installations or activities. Submitting the DIP does not guarantee that a developer will get the additional rights or licences it requires for offshore wind farm development.

Bill of Law No. 11.247/2018 was drafted as the primary step in the development of projects, aiming to establish the fundamental provisions to assign areas. The Bill is not intended to comprehensively address the subject but rather to serve as an initial framework for future legislative and regulatory provisions.