Initial Guidelines for Offshore Wind Power Generation are Published by the Federal Government

Decree clarifies the requirements for the assignment of use of public assets in offshore areas for the purpose of generating electricity

The President of the Republic issued decree nº 10.946/2022, which provides for the assignment of use of physical spaces and the use of natural resources for the generation of electricity from offshore ventures. The decree applies to inland waters under the Union’s domain, territorial sea, exclusive economic zone and continental shelf.

The decree aims to fill the gap identified by public institutions, entrepreneurs, specialists and organizations of a regulatory framework for the exploitation of offshore electric potential in Brazil, in particular related to issues of implementation and the concession model. Much demanded by the wind generation sector, the decree constitutes an important advance in the development of the source in Brazil. The proposal was the subject of meetings and discussions between the Ministry of Mines and Energy (MME) and ministries involved with the topic, the Brazilian Institute for the Environment and Renewable Natural Resources (Ibama) and national and international organizations.

Decree No. 10,946 brings clarity to the mechanisms for assigning the use of areas in inland waters, in the territorial sea, dividing the procedures between the Secretariat for Coordination and Governance of Union Heritage (SPU) of the Ministry of Economy and the Ministry of Mines and Energy , in compliance with Law No. 9,636, of May 15, 1998. As they are public assets of the Union with multiple stakeholders, the regulation complies with the provisions of the United Nations Convention on the Law of the Sea, enacted by Decree No. 1,530/ 1995, with regard to the use of natural resources in the exclusive economic zone and on the continental shelf, for offshore electric power generation.

The published rule regulates that the authorization of the right to use Union assets in physical spaces located in inland waters, in the territorial sea and the use of natural resources in the exclusive economic zone and on the continental shelf for offshore electricity generation will be authorized by the MME , upon execution of a contract for the assignment of onerous use of public goods, in compliance with art. 18 of Law No. 9,636, of May 15, 1998, and Law No. 8,617, of January 4, 1993.

Such regulation is desirable and compatible with the transformations that the Brazilian Electricity Sector has been going through in recent years, especially due to the evolution of the electrical matrix. The measure accompanies the modernization of electric energy generation technologies by renewable sources and with great power capacity, important characteristics to meet the demand growth in the coming years.

The decree defines how the procedures must be conducted, where the assignment requests can be submitted and what steps the entrepreneur must follow to carry out the enterprise.

The assignment of use may be granted as a result of two different procedures: 1) Planned Assignment, which consists of offering prisms previously delimited by the MME to any interested parties; and 2) Independent Assignment, which involves the assignment of required prisms on the initiative of those interested in exploring them.

Once the assignment of use has been obtained, it will be the contractual obligation of the entrepreneur to carry out the necessary studies to identify the offshore energy potential, and must meet the criteria and deadlines defined in a specific act of the MME.

As for the grant for the exploitation of the electric energy generation service, no changes are made, and must be carried out after studies to identify the generation potential and upon authorization, given by the National Electric Energy Agency (Aneel), under the terms of Law No. 9074, of July 7, 1995.

In order to make the process less bureaucratic and contribute to the centralization of processes, the decree also provides for the possibility for the MME to delegate to Aneel the powers to sign the use assignment contracts and to carry out the necessary acts for their formalization.

The MME believes that the measure will result in an important step towards simplifying procedures within the existing legal possibilities, contributing to bring the necessary legal certainty to national and international investors interested in developing generation projects, including in offshore wind farms.

Offshore in Brazil

Brazil notably has favorable characteristics for the installation and operation of projects for offshore electricity generation. With 7,367 km of coastline and 3.5 million km² of maritime space under its jurisdiction, the country has an extensive continental shelf, with shallow waters along the coast. Added to the incidence of trade winds, present in the Northeast region of the country, of constant intensity and direction, Brazil has excellent characteristics for the feasibility of offshore wind projects.

The National Energy Plan 2050, prepared by the Energy Research Company (EPE) and approved by the MME Ordinance No. 451/GM/MME, points to an installed capacity of electricity generation by offshore wind in Brazil around 16 GW until 2050, if there is a 20% reduction in capex from this source. This perspective remains even with the indication of high growth in onshore wind capacity in the 2050 scenario.

In 2020, EPE included for the first time in the Ten-Year Energy Expansion Plan (PDE 2029), approved through Ordinance nº 38/GM/MME, the offshore wind source as a candidate for expansion, starting in 2027.

Considering the reality of this source in 2021, the PDE points out that offshore wind is still not competitive with other expansion options. But this scenario may change, depending on the evolution of the source’s technological maturity, as well as technical-economic, socio-environmental studies, and regulatory development, the latter being the object of the published decree.

As one of the great recent highlights that contributed to the evolution of national knowledge regarding offshore wind generation, there are the activities and studies developed by EPE to identify the Brazilian offshore wind potential that resulted in the publication in April 2020 of the Offshore Wind RoadMap – Prospects and paths for offshore wind energy.

The RoadMap aimed to identify possible barriers and challenges to be faced for the development of offshore wind power in Brazil, in addition to better understanding the aspects related to this source. It was identified that, for areas with speeds above 7m/s and 100m in height, Brazil’s potential would be 697 GW in places with depths of up to 50m – of which 276 GW for depths of up to 20m and 421 GW for depths of 20m to 50m

From the publication of the decree and new regulations, it is expected that the path for the development of offshore ventures can guide those interested in developing and undertaking in Brazil. At the same time, it is envisaged that offshore generation will gradually occupy a place of relevance in the Brazilian electrical energy matrix and boost the generation of jobs over the next few years.

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