Lefosse Energy Day Magazine

Trends, innovations, and opportunities

A multidisciplinary analysis of legislative changes, the ESG agenda and the overall impacts on the energy sector

Check out the full text of the debates and comments from our members and guests

Lefosse Energy Day, held on August 31, with the participation of clients, partners, and associates of our office, is more than an unprecedented event in the legal market. On the following pages, you will find full content coverage of our event during the Lefosse Energy Day discussions.

Innovative, modern, dynamic, and with deep knowledge of our clients’ business.

More than debating the legislation and legal aspects of the power sector, we put business on the agenda, in a multidisciplinary way and close to our clients, with analyses and debates on legislative changes, market trends, the ESG agenda, and global impacts on the power sector. Without energy, there will be no growth.

Our Energy practice works on high impact and pioneering cases in the market, with a multidisciplinary vision, which reinforces our leadership in the area. We pioneered structuring of self-production projects in the country, besides having the opportunity to contribute to the implementation of most largest projects of this nature, such as Vale x Casa dos Ventos, Pontoon x BRFoods, two Unipar x AES projects, Unipar x Atlas, M Dias Branco x Omega, Focus x Liasa, among others. We worked in the first distributed generation program in large scale in Brazil and we are running the largest ongoing one in course in Brazil with solar and wind energy sources, with Vivo. We were the leading advisor in the capitalization of Eletrobras, one of the largest processes ever conducted in the history of the country. Concerning gas, we worked on the State privatization of Sulgás, the natural gas distributor for Rio Grande do Sul.

This performance in complex and reference cases, not only for the legal market, but also for the Brazilian economy, is proof of Lefosse’s growth, which has established itself as one of the leading full-service law firms in Latin America’s largest economy. In 2021, we achieved records in mergers and acquisitions (with more than BRL100 billion in transactions) IPOs, follow-ons (with a financial volume above

BRL55.8 billion) and private equity transactions (BRL15.4 billion).

With offices in São Paulo and Rio de Janeiro, our team consists of 57 partners and more than 310 professionals in the legal staff, ready to continue growing with creative, innovative, and sophisticated solutions.

Talita Porto (Câmara de Comercialização de Energia Elétrica) - Keynote Speaker

PL 414 and the sector

modernization: the challenges and opportunities with auto-production

Alexandre Viana (Thymos Energia)

Bruno Uchino (Grupo Unipar)

Eduardo Tinoco (Shell)

Elisa Pascoal (Casa dos Ventos Energias Renováveis)

Moderator: Raphael Gomes (Lefosse)

Since the release of Public Consultation (PC) No. 33 in 2017, the power sector has discussed the modernization of its regulation in face of the energy transition and the advance of new technologies. After five years discussing it in our society, Bill (PL) 414, which provides a new regulation for the sector and includes the total opening of the Free Trading Environment (“Free Market”) including low-voltage consumers, is under discussion in the Brazilian House of Representatives and may be voted on later this year.

“The bill is an important step for us to consolidate the free market opening process”, said, Talita Porto, Vice President of the Board of Directors and Director of the Market Management Area of CCEE (Chamber of Commercialization of Electric Energy), at the opening of the event and before the first panel, The bill reaching the Brazilian House of Representatives coincides with a moment in which self-production of energy has become

one of the investment boosters in the electricity sector and an important source of financing for the expansion of Brazil’s generating capacity.

Self-production is not a new segment, it has existed since 1996, but today there is an explosion, especially of self-production by equivalence, a regulatory figure that allows the consumer to have an equity stake in a Special Purpose Company”, said Raphael Gomes, Lefosse’s Energy partner.

“The fees are increasing and in the next five to ten years they should continue to rise, and this leads to interest in self-production, since there is more predictability in the electricity bill, and the self-producer is exempt from fees”, says Alexandre Vianna, partner-director of Thymos Energia.

In order to invest in renewable energy and connect their business strategy to the ESG agenda, in addition to obtaining greater predictability in energy expenditures and reducing their cost by not paying certain fees, companies in various sectors of the economy are investing to produce their own energy, both in the regulated market (GD – Distributed Generation) and the free market (APE – Self Production). The investments for the next five years should exceed BRL25 billion.

One example is Unipar, which operates in the petrochemical area. “Energy is a strategic input, besides the cost issue, investing in producing renewable energy has the benefit of seeking decarbonization”, said

Bruno Uchino, Unipar’s Board of Directors

Chairman, which has already developed three self-production projects since 2018.

Another example is Shell, which has chosen Brazil as one of its worldwide priority markets. As such, the country should receive a portion of the USD2 to USD3 billion per year to be allocated for renewable energy projects worldwide. “We have been seeking anchor customers for these ventures, entering into an agreement with Gerdau on solar energy,” said Eduardo Tinoco, Shell’s commercial manager for energy and renewable solutions.

The segment’s expansion has coincided with a change in the investors’ profile. A project developer, Casa dos Ventos Energias Renováveis has noticed new stakeholders.

“Before, there were only big companies interested in the segment, now you see smaller companies and a very big interest from the ESG agenda”, said the legal director of Casa dos Ventos Energias Renováveis, Elisa Pascoal.

The bill is an important step for us to consolidate the free market opening process.

Despite this growing interest, there are fears. Entrepreneurs are closely following the progress of Bill No. 414, which besides addressing the opening of the low voltage electric energy free market, may create impacts for the EPA , by directly and deeply affecting the legal regime of self-production in the country. First, the Bill proposes to make it mandatory for selfproducers to adhere to the new rules within 90 days. This creates uncertainty, since the new rules would apply immediately to contracts already executed.

If this provision means mandatory compliance to the new rules, under penalty of losing the selfproducer status, it would mean compliance to a more onerous regime, incompatible with the

contracts executed and investments made by the companies under the current regime.

Second, the Bill’s substitute provides that after the new law goes into effect, remote self-production can only take place for consumption units with a demand greater than 30 MW. For lower demands, only the energy self-produced in the same place of consumption will be considered. In practice, a self-producer with a power plant elsewhere, whose consumption is 25 MW, will be charged for the 25 MW it consumes. On the other hand, a competing consumer, in the same economic sector, with a consumption of 30 MW, may keep the current regime in relation to the payment of the CDE and other charges. Large consumers

with space to build energy developments on their land will have benefits not accessible to smaller consumers, creating a non-isonomic competitive situation.

After the inputs and interactions of associations, companies in the sector and society, it is expected the publication of a new substitute for the Bill, which brings an evolution of the self-production institute without affecting contracts and keeping legal security, which is so important to attract investments to the country.

While there is no news about the Bill, the market continues to heat up, developing increasingly sophisticated, self-production structures, offered by a growing number of generators to serve consumers with different profiles, who are increasingly demanding.

From left to right: Alexandre Viana (Thymos Energia), Bruno Uchino (Grupo Unipar), Eduardo Tinoco (Shell), Elisa Pascoal (Casa dos Ventos Energias Renováveis) and Raphael Gomes (Lefosse)

Legal Framework for Distributed Generation: new ways of consuming energy in a market driven by ESG

Bernardo Marangon (Exata Energia)

Solar Distributed Generation (DG) has seen strong growth in Brazil since the Brazilian Electric Energy Agency’s Resolution 482/2012, which allowed the modality. In ten years, the segment has already accumulated more than 10 GW of installed capacity, with more than 1 million homes and industries with photovoltaic panels installed to reduce the electricity bill, due to legislation that allows the credits obtained with mini generation to be deducted from the bill issued by the distributor.

Caio Guimarães (Telefônica Brasil)

Eduardo Tobias (Watt Capital)

João Pedro Neves (RZK Energia)

Moderators: Pedro Dante (Lefosse) and Rafaela Canito (Lefosse)

Today the volume produced in installed solar panels already accounts for 4.3% of all consumption in the regulated market, according to a survey by the CCEE (Chamber of Commercialization of Electric Energy). The forecast from the Ten-Year Plan 2031 of Empresa de Pesquisas Energéticas (EPE) is that the country will have 37 GW of installed capacity of distributed solar generation in 2031 and 7% of the country’s load. The new regulatory framework may increase this expansion and

should reinforce the figure of the prosumer, which democratizes the electricity market.

In January 2022, Law No. 14.300 was enacted, establishing the regulatory framework for solar DG in Brazil and provides for exemption of some fees until 2045 for companies and end consumers who apply for this modality until the end of 2022. “The new regulatory framework brings advantages for those who migrate to GD at this time. There are still new candidates wanting to invest in the sector, but the time to take advantage of the current rule is running out”, says Bernardo Marangon, managing partner of Exata Energia. The legislation also ensures greater legal security for investments in the area, with many companies investing resources due to the 100% clean source sustainability appeal, as well as savings in the electricity bill due to the offset of components, which implies a reduction in the energy bill.

The numbers show that this is a model that is here to stay”, said Pedro Dante, Lefosse’s energy partner.

As about 60% of the energy produced in the country comes from hydro sources, more or less intense rainfall may have impacts on the electricity bill due to this system of fee scales (activating more expensive thermal plants), which also undergoes annual readjustments, granted by Aneel. Those who are in the free market or in solar DG may be exempted from this additional cost and other fees, so they end up gaining more predictability over their electricity costs, which have been among the top five operating costs of a company.

Vivo selected the distributed generation model for its units served at low voltage. In the case of the telecom operator, the sources are solar, hydro and biogas, which will meet 90% of consumption. A total of 85 solar plants will be built in 25 states in the country, 38 of which have already been completed. The company has also started to evaluate business in the solar DG segment. With 110 million accesses and 60 million consumers, it is starting to look at ways to engage suppliers and customers with an eye on the potential market opening. “In Minas Gerais, we have a renewable energy product in partnership with Comerc that gives a discount on the bill. This is being offered to 250 clients, still on a B2B basis, but we should go to B2C”, says Caio Guimarães, assets director of Telefônica Brasil.

Main points:

Law No.14.300/2022, the new milestone of solar DG

• Exemption from some fees until 2045 for those who join the modality by the end of 2022.

• As for those consumers who decide to start to use solar energy after 2023, they will start paying 15% of the established rate for distribution tariffs, and the proportion will increase over time:

starting in 2023; starting in 2024; starting in 2025; starting in 2026; starting in 2027; starting in 2028.

Therefore, starting in 2029, 100% of the tariff rules determined by the federal government will start to apply.

Solar DG has enabled consumer empowerment, they become a mini or micro generator of electricity. “This comes amidst the discussion of Bill 414, that provides low voltage free market opening, making 88 million potential free customers in Brazil. Solar roofs create various business models, and you can attach batteries to them, or you can add loads”, said João Pedro Neves, CEO of RZK Energia.

In July, Congress overrode two presidential vetoes to Law No. 14.300, sanctioned in January. The decision creates even more opportunities for financing Solar DG projects. It became possible to frame distributed mini-generation investments as infrastructure projects for electric energy generation under the Special Regime of Incentives for Infrastructure Development (REIDI), which reduces to zero the rates of PIS and Cofins (Brazilian taxes) contributions on the acquisition of assets, construction materials, and services intended for use or incorporation in the beneficiary’s infrastructure works.

For financial institutions, a new financing option is created that can unlock billions in credit, such as issuing debentures with incentives. It should be noted that before this possibility, the industry was already issuing Certificates

of Real Estate Receivables (CRIs). “The credit options such as simple debentures, incentives, CRIs should gain more scale and capillarity with the new framework, going to the shared solar DG and gaining many more states”, noted Eduardo Tobias Ruiz, managing partner of Watt Capital. The new regulatory framework has also brought the growing sophistication of this market, which has led to the emergence of new alternatives such as the product subscription clubs and the offer of the modality by banks to their account holders.

Law No. 14.300 also represented a relevant reinforcement for the thesis that ICMS (Brazilian tax on consumer goods) is not levied on operations for the offset of electric energy performed within the Electric Energy Compensation System (SCEE) “This is because the Legal Framework expressly recognized that DG is nothing more than the production of electric energy for one’s own consumption, reinforcing that the injection of energy into the distribution network by the consumer in the SCEE has the nature of a mere free loan,” analyzed Rafaela Canito, Lefosse’s Tax lawyer.

From left to right:

Caio Guimarães (Telefônica Brasil), Eduardo Tobias (Watt Capital), João Pedro Neves (RZK Energia), Rafaela Canito (Lefosse), Bernardo Marangon (Exata Energia) and Pedro Dante (Lefosse)

Rafaela Canito, Lefosse’s Tax lawyer

Alongside bills are currently being analyzed in Mato Grosso, São Paulo, and Rio de Janeiro, with a view to expressly recognizing at the state level the non-levy of ICMS on distributed generation operations in general, including for power plants with higher power or in distributed generation modalities such as multiple consumer units or shared generation.

The Legal Framework expressly recognized that DG is nothing more than the production of electric energy for one’s own consumption, reinforcing that the injection of energy into the distribution network by the consumer in the SCEE has the nature of a mere free loan.”

Global Economy: the impacts of the PPAs in dollars and the financing of energy projects

Allan Gabriel (Itaú BBA)

Igor Fonseca (Banco Santander)

Renata Rossetti (Banco do Brasil)

Silvana Bianco (IDB Invest)

Moderators: Miriam Signor (Lefosse) and Raphael Gomes (Lefosse)

Since 2017, with the change in BNDES’ position on infrastructure financing, with credit rates closer to the market and an issue coordinator stance, the capital market has gained a more relevant role in the Power Sector. New capturing instruments gain space, at the same time that new lenders may appear in the context of Law No. 14.286, establishing the new Brazilian exchange framework and increasing legal security for companies willing to enter into energy purchase and sale agreements in foreign currency, therefore creating opportunities.

With the end of the Long-Term Interest Rate, the TJLP, and a more liberal agenda, the capital market has been growing with more complex and bolder structures with a steady pipeline”, said Miriam Signor, Lefosse’s Infrastructure partner.

IDB Invest, the private sector arm of the InterAmerican Development Bank Group (IDB), granted a total credit guarantee of BRL315 million to cover the issue of debentures for financing the construction and operation of phase II of the solar complex in Pirapora (MG). The project, developed and operated by EDF Renewables and Canadian Solar in Brazil, has an installed capacity of 191.5 MW of combined heat and power generation. The complex will be the first large-scale solar photovoltaic project to be financed through project financing in Brazil. “The appeal of sustainable energy and the ESG agenda have been important for us to finance these innovative projects”, said

Silvana Bianco, Investment Principal Officer at IDB Invest.

The debentures incentivized under Law No. 12.431, which grants income tax exemption on the proceeds earned by the buyers of these bonds, have played an important role in project financing. “Today we see a sophistication in the market, with houses acquiring papers in the secondary market and professional managers following this segment, that is starting to have terms and conditions that are much more adequate to the long-term profile of the investment”, said Allan Gabriel, co-head of Project Finance at Itaú BBA.

With the new stance of BNDES – previously the main financier of the undertakings – the projects have sought various fund-raising instruments, composing a mix of options. One alternative is to access regional development funds. “They have attractive costs and make a difference to compose this mix, there are funds from the Northeast for these purposes and there are also lines from Sudene for energy, with previous consultations today of BRL5 billion, because they want to show themselves relevant”, said Renata Rossetti, Project Finance director at Banco do Brasil (BB).

the new Brazilian foreign exchange framework, increased the legal security for companies willing to enter into contracts for the purchase and sale of energy in foreign currency creating opportunities. For example, the ten largest free consumers in Brazil are exporters; in Brazil, more than 30% of wind capex is in foreign currency; in solar energy, these numbers are even higher, and may reach 60%.

The text meets a long-standing demand of large exporters to be able to balance their main cost lines with their revenues in foreign

Enacted by the Federal Government on the last business day of 2021, Law No. 14.286 established

From left to right: Miriam Signor (Lefosse), Silvana Bianco (IDB Invest), Igor Fonseca (Banco Santander), Allan Gabriel (Itaú BBA), Renata Rossetti (Banco do Brasil) and Raphael Gomes (Lefosse)

currency. The rule was also advocated by segments of the power sector that see the possibility of guaranteeing a natural hedge against exchange rate variations for projects’ items’ cost that are charged in dollars, as well as allowing access to alternative sources of financing abroad.

Entering into agreements to purchase and sell energy in dollars is nothing new. Generators and large consumers had already been executing such agreements, but the process was considered too bureaucratic and complex, and its use was quite restricted.

The new framework, which will come into effect on 12/30/2022, should simplify and reduce the bureaucracy of the operations,

benefiting companies and people who need to make exchange operations in their activities. The legislation now allows payment in foreign currency for “agreement entered into by exporters in which the counterparty is a concessionaire, licensee, authorized representative or lessee in the infrastructure sectors.”

That means, for example, the possibility of entering into power purchase agreements (called “PPAs”) in the free contracting environment, whereby an exporter, as buyer, can purchase power from a licensee or concessionaire, as seller, and stipulate the payment obligations in foreign currency.

“The new framework opens up an additional alternative for financing, with dozens of international banks able to look at this market

The exchange reform creates dollas opportunity for PPA Exchange legislation can be accessed here

Main points:

• It authorizes payment in foreign currency of obligations, enforceable in Brazilian territory, stipulated in agreements entered into by exporters, where the counterparty is a concessionaire, licensee, authorized representative or lessee in the infrastructure sectors, which includes energy services.

• The receipt in the exporter’s own payment account in a financial institution abroad and in an account of a non-banking institution authorized to operate in foreign exchange will also be allowed. These changes bring more flexibility and ease to companies, facilitating business development.

in a segment that has relevant costs linked to the exchange rate. This can mean more competition and better credit conditions for the borrower”, said Igor Fonseca, Head of Power and Project Finance at Banco Santander.

M&As and the new business in the power sector

Dina Vainzof Storch (Brookfield Asset Management)

Flavio de Picciotto (Lazard)

Sérgio Fonseca (CTG)

Túlio Machado (XP Asset Management)

Pedro Mateus (Faro Energy)

Gonçalo Capela Godinho (Lefosse)

Moderator: Carlos Mello (Lefosse)

The movement of mergers and acquisitions in the power sector remained heated this year, and should continue given Brazil’s leadership position in renewable sources in a scenario where the ESG agenda is gaining strength around the world, distributed solar generation is advancing, new technologies such as offshore wind power and green hydrogen are attracting investors, as well as opportunities in the areas of transmission, marketing, and distribution. Besides the consolidation operations, there is big interest in the formation of joint ventures that join interests of power generators and large consumers.

Despite the challenges arising from the current macroeconomic scenario, and geopolitical elements, the industry continues to generate a truly impressive volume of M&A transactions. What we have seen is a strong bet by investors on the long-term fundamentals of the sector and of Brazil”, says Lefosse’s M&A partner, Gonçalo Capela Godinho.

There is a relevant M&A movement in the power sector and it extends from small entrepreneurs in SHPs to large transactions involving funds or large companies”, said Carlos Mello, Corporate and M&A partner at Lefosse.

Brazil has leadership in renewable sources, so there is interest in operations in hydro, solar, and wind, in addition to some companies and investors taking the first steps in new areas such as offshore wind and green hydrogen”, says Raphael Gomes, Energy partner of the firm.

The participation rate of renewable energies in Brazil’s electric energy matrix is 83%, according to data from the Energy Research Company (EPE), well above the 29% registered in the rest of the world. More than BRL250 billion should be directed over the next ten years to investments in generation and transmission of renewable energy. “For at least more than ten years, the power sector has been very consistent in mergers and acquisitions with an attractive regulatory framework and competitive sources”, said Flavio de Picciotto, Lazard’s managing director.

In mergers and acquisitions, solar and wind power plants have led the companies’ intentions, but there is also interest in hydroelectric power. Today about 60% of the electric energy produced in Brazil comes from hydroelectric plants, a little more than 10% from wind power, and solar plants are already at 8%, according to a survey by Absolar, those being the three main sources of generation in the country.

One highlight is distributed solar generation, which has been gaining presence since its emergence in 2012. Today there are 1.3 million consumers who have adhered to the modality.

“The segment is growing by 1 GW per month. We should see a heated sector in 24 months with consolidations because it is very pulverized”, said the CEO of Faro Energy, Pedro Mateus. “In addition to fragmentation and many small companies operating in solar DG, there is a need to have commercial platforms to gain more customers and have capillarity and scale to meet customer demands”, analyzed Dina Vainzof Storch, senior vice-president at Brookfield Asset Management.

The advance of intermittent sources, such as solar and wind, in the matrix should also lead to the adoption of energy storage systems, and a new pricing system for water stored in the reservoirs of hydroelectric plants that func tions like giant water batteries.

The operations have as stakeholders large foreign and Brazilian companies, and investment and pension funds already present in Brazil who seek to consolidate their positions, such as in the solar and wind sectors, in which the stakes are pulverized. Large oil companies are also present, as they globally work with global pollutant emission reduction targets and have positioned Brazil as one of their investment platforms in renewable sources.

“We see a lot of business ahead of us in the next three to four years, we have 1.6 GW of projects that may have our investment decision in the coming months” , said Sergio Fonseca, Business Development Director at CTG Brasil, one of the largest hydroelectric generators in the country today, and which

has also been investing in renewable sources. “In the last two years, there was a relevant change in the interest rate, it went from 2% a year to almost 14% now, many transactions didn’t take place because of a repricing of assets”, said the head of infrastructure at XP Asset, Túlio Machado.

Besides the generation area, there are opportunities in power transmission and commercialization sectors. In transmission, financial and other investors have sold interests in Special Purpose Companies (SPCs) to traditional operators.

On the other hand, in marketing, the potential low voltage free market opening, recent Public Consultation 131, released by the federal government in July to open up high

voltage, and the sophistication of the segment, with derivatives and the arrival of banks and large oil companies, may also stimulate consolidation. The arrival of the free market to high voltage starting in 2024 may give the opportunity for 100,000 companies to migrate to this environment, the largest expansion in the history of free power market, which currently has only 10,000 free energy consumers.

From left to right: Flavio de Picciotto (Lazard), Pedro Mateus (Faro Energy), Dina Vainzof Storch (Brookfield Asset Management), Sérgio Fonseca (CTG), Túlio Machado (XP Asset Management) and Carlos Mello (Lefosse)

Offshore wind: the perspectives for the new source

Diogo Nóbrega (Copenhagen Infrastructure Partners)

Marcello Cabral (Eletronorte)

Matheus Noronha (ABEEólica)

Fabíola Sena (FSET)

Moderator: Raphael Gomes (Lefosse)

With a potential of 700 GW, Brazil could repeat the success of onshore wind power and become a relevant player in offshore wind power in the next decade, at a time when green hydrogen could also play an important role in the world. The development of this new technology will not be immediate in the country, since there are several challenges to be faced: CAPEX costs, contracting methods, financeability, clarity of the regulatory framework, and environmental barriers.

“There is a window of opportunity for Brazil to take advantage of its potential, starting in the 2030s there will be a leadership from Asia in this segment, which will hinder countries that enter this technology later”, said Diogo Nóbrega, president of Copenhagen Offshore Partners, that has USD29 billion invested in renewable energy assets today. By 2030 it will be USD130 billion allocated. In Brazil, there are 4 GW in offshore wind projects that could come off the drawing board in the next few years. “There is great potential in Brazil, and we are starting to see the first regulatory steps being taken and some challenges ahead”, pointed out Matheus Noronha, leader of the offshore wind energy and new technologies area of Associação Brasileira da Energia Eólica (Abeeólica). One challenge will be the first contracting, which will take place in a different scenario from that seen in onshore wind expansion. On December 14, 2009, in order to support diversification of the power generation matrix, the federal government held the first auction for the exclusive

contracting of wind sources. The auction was a turning point in the industry. The Reserve Energy Auction (LER No. 03/2009) contracted 71 projects with joint capacity of 1,805.7 megawatts (MW), at the average price of BRL148.39/MWh (discount of 21.49% in relation to the ceiling price of BRL189/ Wh). It was the first milestone in the expansion of wind power, today the second largest source of electric energy.

The new model for the power sector, sanctioned in 2004, had in 2009 the regulated market as a major source of impetus. Today, the scenario has completely changed: distributors have been suffering from under-contracting for a few years, distributed solar generation is advancing rapidly, the free market accounts for one-third of the country’s load. Since 2018, 75% of wind project contracting has been driven by the free market. “There are three ways to contract energy, through the free market, through regulated auctions and through reserve auction. The distributors are under-contracted, it’s a new technology, and that can make it difficult for the free market to start using it, and as an energy source, another question arises: is there room in the tariff?”, said Fabiola Sena, founder of FSET consulting and CEO of Head Energia.

Because those are large investments (a project over 1 GW may exceed BRL15 billion), investors and lenders see that the first offshore wind contracts should come through regulated auctions. one of the possibilities that entrepreneurs discuss is the inclusion of the first offshore wind projects in a reserve auction in 2023 that could

is a window of opportunity for Brazil to take advantage of its potential.

contemplate ventures to come online at the end of the decade.

At the beginning of this year, the federal government issued Decree No. 10.946 with the initial guidelines for sector regulation, such as the onerous assignment for use of maritime spaces for offshore wind power generation. At this point, the federal government is working on an ordinance to detail the rules. One intention is to improve the interlocution of the various federal and state government agencies involved in the issue. Venturing in the segment involves knocking on the door of nine federal government institutions, from the Ministry of Mines and Energy to Ibama (Brazilian Environment Agency), even passing by the Fishing Industry Office linked to the Ministry of Agriculture.

The development cost of an offshore plant is high: a 1 GW capacity undertaking is built from a project that can demand BRL500 million, with wind measurement studies and geophysical analyses that are performed on maritime structures. If the entrepreneur participates in an auction with his project and is not the winner, will there be reimbursement for the project made? That is an uncertainty.

The high investment in the studies has also led to the discussion about the value of the concession for the enterprise, to be built in an area belonging to the Federal Government, may charge mandatory government participation, such as signature bonus, occupation payment, and proportional interest. Excessive burden may render investments unfeasible, as they are huge.

Today in Brazil, the 170 GW of projects that are under analysis by Ibama are dispersed among three Brazilian coastal regions: South, Southeast, and Northeast. There are questions

as to which cluster will have the greatest development when the technology gains ground. If it is in onshore wind energy, trade winds have positioned Brazil as the world leader in capacity factor; on the other hand, in offshore wind energy, the dispute has other tones.

PFor development of the segment, two points are essential:

an industrial port connection

From this perspective, all three regions have port systems that could become anchors for the rising offshore industry. In connection, the Northeast-Southeast transmission system will be reinforced by the end of the decade by bi-center systems, which in addition to increasing the exchange, they should bring unification of the two sub-marketsportfolio effect of the companies: search for exposure to winds different from those found in the Northeast – today the main onshore wind power center.

With offshore wind power, there will also be the challenge of building an industry that serves this segment at a time when global value chains are repositioning themselves. The scenario coincides with the world’s race for renewables in the face of climate change and the possibility of new pockets of investment in Brazil.

Offshore wind energy will gain space at a time when green hydrogen – in which Brazil may also play a world leadership role – may take off. The exchange reform, announced by the government at the end of 2021 and effective at the start of 2023, may bring financing from external financial institutions with an eye on projects in Brazil.

Amidst all these discussions, Bill No. 576/2021, which regulates exploitation of the offshore potential in Brazil, has attracted the attention of market players and is eagerly awaited, and may be the ultimate legal framework for structuring of the regulatory framework required for boosting the new source. “The government has the challenge of creating the enabling path for development of the new technology and for private investment”, said Marcello Cabral, advisor to Eletronorte’s CFO.

From left to right:

Diogo Nóbrega (Copenhagen Infrastructure Partners), Matheus Noronha (ABEEólica), Fabíola Sena (FSET), Marcello Cabral (Eletronorte) and Raphael Gomes (Lefosse)

Decree No. 10.946/2022 is a milestone. It represents the first step in regulation of the segment and can be accessed here: Decree No. 10.946/2022

Main points:

• The decree confirmed that MME will also be able to enter into assignment of the use of areas, currently assigned to the Department of Coordination and Governance of the Federal Government (SPU) of the Ministry of Economy, which may also assign them, according to the new norm.

• The assignment of use may be granted by two different procedures: - Planned Assignment, consisting in the offer of prisms previously delimited by MME to possible stakeholders; - Independent Assignment, involving the assignment of prisms requested upon the initia tive of those interested in exploring them.

Our partners

Gonçalo Godinho Corporate and M&A acesse

Carlos Mello Corporate and M&A acesse

Miriam Signor Infraestructure acesse

Pedro Dante Energy acesse

Raphael Gomes Energy acesse

Press play and watch the complete event video, with testimonials from our partners and the best moments from Lefosse Energy Day

Writing: Roberto Rockmann

Editorial production: Camila Luz, Cristina Calassancio, Danielle Polster e Luciana Inomata

Visual Production: Ideograma

Design e Camila Tirlone

Photography: Panóptica Multimídia