In more detail
Under the Law, the federal government can grant the right to use offshore areas for electricity generation, through either direct contracting ("Authorization") or a competitive bidding process ("Concession"). The operation of power generation services requires authorization from the federal electricity agency (ANEEL).
Key principles outlined in the Law include sustainable and local development, rational use of natural resources, environmental protection, reduction of carbon emissions, harmonization of traditional ways of life, and free, prior, and informed consultation with affected communities.
Granting is given through one of these modalities:
- Permanent Offer: Based on requests from interested parties, the granting authority designates areas for exploitation under the "authorization" modality, through direct contracting; or
- Planned Offer: The granting authority designates areas for exploitation based on its own planning, under the "concession" modality, through a bidding process.
The Law also establishes mandatory technical, economic-financial, and legal qualification requirements for participants, and the need for a preliminary study of the area, including location and socio-environmental impact assessment.
The Law imposes restrictions on potential project sites and mandates environmental studies at various stages. A prior environmental impact study must be conducted during project assessment, and this information will be part of the publicly accessible Brazilian offshore energy inventory database. Once the project is implemented, companies must conduct environmental monitoring at all stages and adopt conservation measures.
The granting authority must seek to resolve overlapping area issues among interested parties. If redefinition is impossible or no agreement is reached, the granting authority will initiate the Planned Offer ("Bidding Procedure").
The Law mandates three types of government participation payments by granted companies:
- Subscription Bonus: Amount established in the bidding notice, corresponding to the payment offered in the bidding procedure.
- Area Occupation Fee: Annual fee calculated in Brazilian reais per square kilometer (BRL/km²).
- Proportional Participation: Monthly payment from the start of commercial operation, based on a percentage of the energy generated.
Funds collected will be distributed among federation entities (Union, states, and municipalities) and sustainable development projects. The Law allows for transferring grants with prior authorization of the regulator, and the right to market carbon credits generated from the project.
Finally, the Law requires all offshore generation project grants to include decommissioning provisions, ensuring sites be recovered to a state as close as possible to their original condition after the project's life cycle ends.
Specific regulations will define:
- Prior locational definition of offshore exploitation areas (called "prisms") based on suggestions from interested parties or on the authority's determination.
- Procedures for submitting prism suggestions and requesting a Statement of Prior Interference (DIP) from relevant government authorities.
- Applicable sanctions and penalties.
On a connected note, Brazil's President vetoed certain provisions unrelated to offshore project development, such as extending benefits for coal-fired plants until 2050 and extending terms for distributed generation projects.
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