Newsletter

On October 20th, 2022, the Brazilian Ministry of Mines and Energy (“MME”) published Ordinance No. 52/GM/MME, which establishes the procedures for the onerous “Usage Assignment” agreements in offshore wind power. The Ordinance comes into effect on November 1st, 2022, and complements the provisions set by Decree No. 10.946/2022.

Offshore wind power generation projects within hydrocarbon exploration and production (E&P) areas are not subject to the Ordinance’s regulation, which focus on offshore power production for third parties and self-production regimes.

Competent Authority

• The National Electric Power Agency (ANEEL) is the authority to grant “Usage Assignment” agreements and corresponding governmental acts. The management of offshore areas shall favor the One Portal for Management of Offshore Areas (“PUG-offshore”), a virtual system recently introduced by Interministerial Ordinance MME/MMA No. 3/2022 that aims to be the single place for all information related to Offshore Areas.

Usage Assignment main features

• The Assignment concessionaire will be responsible for managing the concession area for all its purposes, including power generation.
• The granting authority is not required to hold public bids for power-purchase agreements targeting the energy produced by offshore wind farms, nor the specific transmission auctions for transporting such energy to shore.
• Usage assignment for independent production or self-production will last for 10 (ten) years unless ANEEL provides its relevant power generation license, case in which the term will be extended according to the term of ANEEL’s license and extensions, while also observing the required decommissioning duration.
• The Secretariat of the Federal Union’s Heritage (SPU) shall provide its prior approval to the bidding of prisms located in federal areas by checking their availability and subjecting them to the Statement of Prior Interference (Declaração de Interferência Prévia - “DIP”) procedure.
• Recap: DIP is the tool created by the Offshore Wind Decree (Decree No. 10,946/2022) by which several authorities inform whether power generation in the relevant prisms affects other activities, such as fishing, shipping routes, etc.

‍Bidding procedure

• Recap: there are two forms for assignment of offshore areas (“prisms”): planned assignment (by government initiative) or independent assignment (by private initiative).
• Planned assignment:

1. shall be promoted by the Brazilian Energy Research Company (“EPE”), by their initiative or by request of the MME;
2. the assignment procedure will only start after ANEEL confirms the availability of the prisms;
3. the EPE will be responsible for obtaining the DIPs and submitting the resulting reports to the MME;
4. after evaluating the reports, the MME will define which prims to include in future planned assignment auctions.

• Independent assignment:

1. the interested parties shall submit the supporting documentation to ANEEL through the PUG-offshore portal, observing the requirements of article 16 of MME’s Ordinance No. 52/GM/MME;
2. once the documents have been accepted and ANEEL has confirmed the prism’s availability, the interested party shall request the DIPs within the PUG-Offshore to submit the resulting reports to ANEEL.

• Prisms with DIPs authorizing offshore wind power generation will be allowed for inclusion in future auctions. The entities listed in art. 10 of Decree No. 10.946/2022 are those responsible for the DIPs, including the Command of the Brazilian Navy, the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA), the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP), the Ministry of Tourism (MTur), National Agency of Telecommunications (ANATEL).
• The bidding procedures for independent and planned assignments will be further specified in future MME regulations.

Study of Offshore Wind Power Potential

• EPE will be responsible for reviewing and issuing opinions about offshore wind power potential studies for being further submitted to ANEEL’s evaluation.
• The approval of such studies by ANEEL is a condition for ANEEL’s power generation license (“outorga”). The approval of the studies and the granting of ANEEL’s license for power generation may take place at the same time.
• In the planned assignment, the studies may be carried out as follows:

1. after the bidding process, at the winning bidder’s risk and liability; or
2. before the bidding process, at EPE’s liability or other entities indicated by the MME.

The offshore wind power projects aiming to obtain a Usage Assignment agreement, submitted to the MME before the publication of Ordinance 52, shall be ratified or corrected according to the Ordinance provisions while also being transferred to the PUG-offshore new system.

Ordinance No. 52/GM/MME is available in Portuguese here, Decree No. 10.946/2022 here, Ordinance MME/MMA No. 3/2022 here.

The Energy and the Oil, Gas & Offshore teams are available in case of doubts.