Decree regulating the construction and operation of offshore power generation projects is published

In brief

The Federal Government has enacted Federal Decree no. 10,946/2022, which establishes and regulates the guidelines for energy generation in offshore projects, particularly with regard to the use of maritime space and the exploitation of natural resources. With the publication of the Decree and according to the Ministry of Mines and Energy (Ministério de Minas e Energia or “MME”), certain gaps are expected to be filled, in addition to a greater regulatory assurance involving the development of offshore power generation projects. The Decree will come into force on June 15, 2022.

More details

The development of offshore power generation projects (especially wind projects) in Brazil has been under discussion for some years by investors, companies and entities in the energy sector, including the development of some projects already in progress before the regulatory and environmental authorities.

Although some projects are already at an early stage of development (with environmental licensing applications underway, for instance), some legal gaps and uncertainties still remain regarding the possibility of implementing offshore power generation projects in Brazil, particularly with regard to the use of maritime space and the exploitation of natural resources.

Among the main innovations brought by the Decree, we highlight the possibility of assigning the use of physical space and use of natural resources in inland waters under the Union’s control, in the territorial sea, in the exclusive economic zone and on the continental shelf, for energy generation in offshore projects.

The assignment of use agreements mentioned in the Decree will have two purposes: the commercial exploration of an offshore power plant under the regime of independent power production or self-production; or the performance of research and technological development activities related to offshore power generation. Under the first scenario, the assignment of use will be charged for, whilst in case of research and technological development, the assignment of use will be free of charge. In addition, the Decree also divides the assignment of use into two modalities:

1. Planned Use Assignment: offer of prisms previously established by the MME to interested parties, through a bidding process, and in accordance with the spatial planning of the Sea Resources Interministerial Commission (Comissão Interministerial para os Recursos do Mar or “CIRM”). The MME will establish the guidelines for the referred bidding procedure; and
2. Independent Use Assignment: assignment of prisms requested by the initiative of the parties interested in their exploration, without the need for a bidding process. In this case, the MME will receive the application and may reject it when there is evidence of an intention of speculative use by the applicant, due to the large extension of the requested area or the low level of exploitation of other areas already assigned to the applicant or to companies of the same economic group.

Another innovation is the creation of the Previous Interference Declaration (Declaração de Interferência Prévia or “DIP”), with the purpose of identifying the existence of the prism in other facilities or activities. The obtaining of the DIPs is a requirement for the assignment of use regulated by the Decree, but does not exempt the interested party from complying with the relevant laws and regulations and obtaining other applicable licenses in order to carry out works, implement and operate offshore power generation facilities.

The DIP is not a single document and must be issued by several authorities involved (each authority will issue its own DIP) to enable the assignment of use. From an environmental perspective, for instance, the DIP must be issued (i) by the Brazilian Institute of Environment and Renewable Natural Resources – IBAMA (Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis), which must inform the existence of other environmental licensing processes underway for the exploitation of the area; and (ii) by the Chico Mendes Institute for Conservation and Biodiversity – ICMBio (Instituto Chico Mendes de Conservação e Biodiversidade), which must inform if the area is located in a conservation unit or if there is a conservation unit nearby and on potential future uses of the assigned area. DIPs must also be issued by the Air Force, the National Agency of Petroleum, Natural Gas and Biofuels – ANP, the Ministry of Infrastructure, the Ministry of Agriculture, Livestock and Supply, the Ministry of Tourism and the National Telecommunications Agency – ANATEL. Finally, the Decree provides that specific auctions may be held for the contracting of offshore power, in accordance with planning studies to be developed by the Energy Research Company (Empresa de Pesquisa Energética or “EPE”) and that the MME shall issue supplementary regulations to the Decree within one hundred and eighty days from the date on which the Decree comes into force.

Although there are still regulatory, financial and technological challenges related to the feasibility of implementing offshore power generation projects, the Decree provides the legal security needed to attract new studies and investments for these projects, opening the doors to an alternative form of renewable energy generation with an enormous potential in the Brazilian electricity matrix.

Our Energy, Mines and Infrastructure and Environmental Practice Groups remain available for further clarification.