Brazilian Ministry of Mines and Energy sets standards and guidelines for offshore electricity generation

Just nine days after the end of Public Consultation No. 134/2022, the Ministry of Mines and Energy (MME) surprised the energy market with the publication of Ordinance No. 52 on October 20, 2022, setting the rules and procedures for assigning the exploitation of offshore electric power plants. Energy will be generated under the regime of independent production or self-produced energy, based on the guidelines of Decree No. 10,946, of January 25, 2022. In January, content published on Único – Mattos Filho’s news portal – by the Infrastructure & Energy practice area, detailed the points of this decree.

In summary, Ordinance No. 52 regulates a series of topics related to offshore energy generation, such as the types of assignment required for using offshore areas, procedures for engaging in public bidding and contracting, and the responsibilities of the Brazilian Electricity Regulatory Agency (Aneel), the Energy Research Company (EPE), and the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP).

Ordinance No. 52 defines two possible types of assignment of areas: planned and independent. For a planned assignment, the MME will determine the scope for contracting, subject to a specific public bidding process after prior identification by the EPE. In this identification process, the EPE must analyze the potential scope and other activities or facilities. For this, the EPE must request the respective Prior Interference Statements (DIP) from the competent authorities – such as the Brazilian Institute of Environment and Renewable Natural Resources (Ibama), the ANP, and the Brazilian Navy Command.

For an independent assignment, the areas to be assigned must be previously requested by the interested companies. To make this request, companies must request a confirmation of the scope availability from Aneel. If Aneel confirms the availability, interested parties will have up to 90 days to formally request the use. After Aneel’s confirmation, interest companies will be responsible for obtaining the necessary DIPs. After obtaining the DIPs with confirmation from the applicable authorities and entities, the assignment will only take place after a prior bidding process. Ordinance No. 52 does not define the type of public bidding process to which the areas will be submitted.

Regardless of the type of assignment (planned or independent), the DIPs must indicate whether there will be any interference preventing other activities or facilities. For example, assigned areas should not overlap with areas producing oil and gas.

After the scope is defined (with a DIP confirming the non-interference), the winning company will enter into the assignment contract with the Brazilian federal government. Through this contract, the assigning company will be entitled to use the offshore area upon payment of annual compensation to the Brazilian federal government. The term of this contract will depend on whether the assigning company will be granted energy generation rights. If so, the contract and the assignment will be in force for the same period – otherwise, the contract will be in force for ten years.

Compared to the draft ordinance submitted to public consultation, the ordinance introduced the following changes and additions:

Methodology for calculating the amount payable to the Brazilian federal government

The draft submitted to public consultation established that the value would be defined based on studies carried out by the EPE, observing, among other factors, the expected electric energy generation in the area reserved. Ordinance No. 52 clarifies that the EPE may be consulted to define the value – however, it does not mention whether it is mandatory to comply with the EPE’s analyses. Additionally, there will no longer be a need to observe generation estimates (article 6).

Participant’s history in offshore generation projects

Ordinance No. 52 defined that the participants’ history in assigned areas for other offshore projects will be considered for:

• Evaluating the maximum limit of the area to be assigned in a single assignment contract (article 11, l);
• Technical, operational, economic, financial and legal purposes within the context of the bidding process for independent and planned use (article 26, paragraph 1). This new requirement can be relevant for new participants that are not yet operating with these projects.

Participation in the bidding process

In the planned assignment, the EPE may carry out public bidding to identify those interested in investing in studies to identify the areas to be assigned. Ordinance No. 52 clarified that participating in this call for bids does not prevent the investor from participating in the bidding process (article 13, paragraph 5).

See our material on the subjects of Ordinance 52.

For more information, please contact Mattos Filho’s Infrastructure & Energy practice area.