Market frameworkGovernment electricity participants
Who are the principal government participants in the electricity sector? What roles do they perform in relation to renewable energy?
In the Brazilian energy sector, there are a few authorities responsible for defining policies applicable for renewable energy, mainly:
- the National Energy Policy Council is responsible for advising the president on the sector’s development and to ensure that the country’s energy supply needs are met;
- the Ministry of Mines and Energy (MME) is responsible for the general planning of the country’s energy sector and monitoring energy supply. Also, the MME plans the occurrence of renewable energy auctions in order to foster the development of the sector;
- the National Electric Energy Agency (ANEEL) is responsible for the regulation and the supervision of the power industry in accordance with MME guidelines;
- the Energy Trading Chamber (CCEE) is an association responsible for registering all power supply agreements, accounting transactions of the spot market, including but not limited to renewable energy transactions and managing certain sector charges. It is also the purchaser in the power purchase agreements (PPAs) ‘granted’ to bid winners in Reserve Energy Auctions structured by the federal government to balance the grid supply;
- the National Grid Operator (ONS) is an association responsible for coordinating and controlling generation and transmission systems; and
- the Energy Research Company (EPE) is responsible for studies and research to support the planning of the energy sector by the other governmental authorities. EPE also performs a technical accreditation of projects that are willing to participate in governmental energy auctions.
In addition to the main governmental authorities listed above, the government (either federal, state or municipal) also controls certain distribution, transmission and power-producing companies. The renewable energy producers may hold a commercial relation with these companies either through a connection required for the energy delivery or within energy purchases by the distribution companies through public auctions organised by ANEEL.Private electricity participants
Who are the principal private participants in the electricity sector? What roles do they serve in relation to renewable energy?
According to ANEEL, in June 2019, there were 1980 independent power producers, 58 distribution companies and 224 transmission companies. The private participants are the majority among such players.
Specifically with regard to renewable energy, the significant increase in the number of wind and solar projects in the past 10 years is a result of private investments that have been fostered over recent years owing to incentives created by the federal government (creation of the PROINFA programme, discounts on connection fees and regulation of on-site generation, among others).
Relevant players in the clean energy sector such as CPFL Renováveis, Actis, Votorantim-CPPIB, Contour Global, AES Tietê, Cubico, ENEL Green Power, Rio Energy, CER and Ômega have been strongly investing in the Brazilian renewables sector. Statkraft Energias Renováveis, EDF Energies Nouvelles, EDP Renováveis, Brookfield Renewables and Força Eólica have also made important investments (see the 2016 Review of Three Trends Highlighting the Accelerating Global Energy Market Transformation elaborated by the Institute for Energy Economics and Financial Analysis (IEEFA)).Definition of ‘renewable energy’
Is there any legal definition of what constitutes ‘renewable energy’ or ‘clean power’ (or their equivalents) in your jurisdiction?
The Brazilian legal framework does not have a legal definition of ‘renewable energy’.
Nevertheless, Law No. 9,478, dated 6 August 1997, sets national policies for the rational use of energy resources based on certain principles such as the use of alternative sources of energy through the economic use of raw materials available and the applicable technologies and protection of the environment.
Also, for the purpose of ANEEL’s regulation, some renewable energy projects are entitled to obtain a discount applicable to connection tariffs for the use of transmission and distribution systems; namely, hydro power plants with a power equal to or less than 50MW (limited to the amount of 30MW of energy injected into the system) and solar, wind and biomass or qualified cogeneration, in accordance with ANEEL’s regulatory definition, with power equal to or less than 300MW.Framework
What is the legal and regulatory framework applicable to developing, financing, operating and selling power and ‘environmental attributes’ from renewable energy projects?
The Brazilian power sector has two different energy markets: the free market (ACL) and the regulated market (ACR). In the ACL, the generation companies and traders can freely negotiate the price for sale of energy to other generation companies, traders and free and special consumers.
In the ACR, distribution companies buy energy from generation companies that have won public auctions organised by the federal government. The conditions, amounts and rates for sales of energy are determined through the auctions. Also, the auctions may be organised only for renewable energies and, in that case, by securing a specific commercialisation environment for renewables and long-term power purchase agreements, the federal government has fostered the development of such market in Brazil.
With the purpose of constructing and operating renewable energy projects, entrepreneurs must obtain licences to be issued by the federal government, represented by the MME or ANEEL.
The licence can be granted through two different procedures:
- an administrative procedure carried out by ANEEL, through which the entrepreneur asks the regulatory agency to issue a specific licence after presenting legal, technical, economic and financial accreditation documents and information; or
- participation in ACR public auctions, after which, in addition to receiving the relevant licence, the power agent executes regulated power purchase agreements (CCEAR) or reserve energy agreements (CER) for the sale of electricity under ACR.
After obtaining a licence, renewable energy projects must comply with the milestones of the construction schedule defined by a referred licence. When reaching the test operation and commercial operation phase, respectively, the projects shall request to ANEEL’s approval to become operational.
In relation to project financing, see questions 29 and 30.
The environmental attributes of the renewable energy projects in Brazil were essentially related to the Clean Development Mechanism (CDM) in order to sell the certified emission reductions (CERs) among the Annex I parties of the Kyoto Protocol. During the enforcement of the Kyoto Protocol, Brazil was allowed to trade CERs with developed countries - and a significant part of these certificates involved renewable energy projects. Currently, taking into account the signature and ratification of the Paris Agreement, a new legal and local framework is due to be approved and, in this case, is closely related to the nationally determined contributions (NDCs) presented by Brazil.Stripping attributes
Can environmental attributes be stripped and sold separately?
As described in question 4, Brazil is currently awaiting the enactment of new rules and proceedings owing to the entry into force of the Paris Agreement. Therefore, regardless of specific initiatives, so far we do not have a structured or even established significant market involving the trade of environmental attributes.Government incentives
Does the government offer incentives to promote the development of renewable energy projects? In addition, has the government established policies that also promote renewable energy?
In 2002, the government created a programme to foster renewable sources (PROINFA) with the purpose of increasing the participation of renewable energy sources in the Brazilian power mix through the implementation of small hydropower plants, wind and biomass plants.
Under PROINFA, the commercialisation of energy from such projects is secured by long-term power purchase agreements entered into with Centrais Elétricas Brasileiras SA - Eletrobras, as offtaker of the energy, under fixed and predetermined prices.
PROINFA was executed through a simplified bidding procedure, in which selection criteria included priority for such projects with environmental licences.
By the end of the PROINFA, despite the delays associated with the start of commercial operation, 119 renewable energy projects were constructed and are already in operation.
Regarding other incentives, Law No. 9,427, of 26 December 1996 authorised ANEEL to grant a discount to TUST and TUSD fees (fees for the connection to transmission and distribution systems) for wind, solar, biomass and small hydropower plants.
In addition, Law No. 13,203/2015 provides that biomass, wind and solar power plants will receive a 50 per cent discount on TUST and TUSD fees as long as their production capacity is lower than 300MW provided that the projects participated in energy auctions on or after 2016 and the projects were granted with licences during or after 2016.
ANEEL authorised a further discount of 80 per cent for solar plants that begin operations by 31 December 2017, with a reduction to 50 per cent after the tenth year of operation. Nevertheless, as explained in question 9, in accordance with public hearings carried out by MME in 2017, the Federal Government is currently studying the possibility of revoking TUSD and TUST discounts applicable to future renewable energy projects since it understands that the benefit has already achieved its purpose; namely, the growth of the Brazilian clean energy market.
In addition, as mentioned in question 4, the government may organise at its own discretion auctions whereby only renewable producers participate and sell to distribution companies. Auctions of this kind were held in 2007, 2010 and 2015.
Are renewable energy policies and incentives generally established at the national level, or are they established by states or other political subdivisions?
Renewable energy policies and incentives are established on a national level by the authorities described in question 1. However, some states have been developing incentives for renewable energies. For instance, some states have been regulating tax incentives for distributed generation, and the State of Pernambuco has carried out solar energy auctions to foster the industry in the Brazilian northeast.Purchasing mechanisms
What mechanisms are available to facilitate the purchase of renewable power by private companies?
Private companies may purchase power from renewable energy projects either:
- through renewable energy auctions carried out by the government (the purchase, as highlighted in question 4, is made by distribution companies) or by other private companies;
- by purchasing energy freely from third parties as special or free consumers; or
- through the development of small on site-generation energy projects, in accordance with ANEEL’s Normative Resolution No. 482/2012 (REN No. 482/2012).
In accordance with REN No. 482/2012, power consumers willing to implement a small on-site power generation system (which must be qualified as renewable energy or cogeneration projects) are authorised to use net metering systems and to compensate any excess energy with future energy demand hired from local distribution companies.
Large commercial and industrial consumers usually opt to commercialise energy in the free market or become self-producers, in order to cut costs and be able to freely negotiate the energy price.Legislative proposals
Describe any notable pending or anticipated legislative proposals regarding renewable energy in your jurisdiction.
The Paris Agreement became nationally enforceable on 6 June 2017, owing to the enactment of Federal Decree No. 9,073/2017 and the prior signature and ratification of the treaty within the local jurisdiction.
The Brazilian government launched a public consultation, which was open until 30 July 2017, that aims at collecting inputs for the national strategy for implementing and financing Brazil’s Nationally Determined Contribution (NDC). In this regard, we expect the development of new executive measures to promote programmes, financing and credit lines in order to implement the Brazilian NDC. Additionally, renewable energy projects tend to generate a great market, considering that local NDCs aims to achieve 45 per cent renewables in the energy mix by 2030.
Also, in 2017, MME opened two public hearings aimed at receiving contributions from market players to reformulate and improve the Brazilian power sector’s legal framework. The first public hearing discussed general principles and guidelines applicable to the sector, while the other approached specific measures that could positively affect the market. These public hearings resulted in a draft of Bill of Law, which is now under discussion by the Brazilian Congress.
The main provisions addressed by the public hearings that affect the Brazilian renewable energy market are:
- change in the tariff benefits related to renewable energy;
- expansion of access to the energy free market. This expansion was already implemented by means of the issuance of MME Ruling No. 514/2018, which provides for the gradual reduction of the access requirements from 2.5MW to 2MW from July 2019 to January 2020; and
- creation of capacity public auctions.
The public hearings recommended the end of discounts applicable over the TUSD and TUST fees for new renewable energy projects. Such recommendation was based on the fact that Brazil has already developed a sustainable and strong renewable energy market. The public hearings also recommended an ‘incentive award’ that would replace the aforementioned discounts, which would vary according to the amount of energy produced by the plants. The first draft of the Bill of Law prepared after the public hearings accepted the first suggestion but it provided, alternatively, an obligation for the Federal Government to create policies to stimulate the use of renewable energies up to 31 March 2020.Drivers of change
What are the biggest drivers of change in the renewable energy markets in your jurisdiction?
According to the 2016 Review of Three Trends Highlighting the Accelerating Global Energy Market Transformation of IEEFA, recent projections show that Brazil has the potential for 880GW of wind generation.
The country benefits from wind assets along its long coastline, which ranks Brazil as the fourth in the world - behind the US, China and Germany - in terms of potential to expand wind generation. Over the years, wind projects have grown constantly, reaching 9 per cent of the energy matrix of Brazil today (according to information published by the Brazilian Association of Wind Energy - ABEEOLICA, in 2018 there were 583 wind power plants in the country representing 14.71 GW of installed capacity).
Solar projects are also increasing. In the past two years, the number of solar projects grew by 70 per cent and players estimate that by 2030 the solar source will correspond to 10 per cent of the energy matrix.
In this scenario, we believe the biggest driver for the expansion of renewable energy projects in Brazil in the next few years will be the high number of still undeveloped wind and solar power potential with high favourable (and steady) wind and solar resources, together with a progressively lower availability of huge hydropower potential, which have been historically the main source of power in the country’s energy mix.
Foreseeing the changes in the Brazil’s energy matrix, ONS is studying how to adapt the system operation, especially now that on-site generation is increasing. Based on the sector’s expectations, ONS foresees the necessity to modify the operational dynamics and calculation of the energy spot market price (PLD).Disputes framework
Describe the legal framework applicable to disputes between renewable power market participants, related to pricing or otherwise.
In the ACR, the conflict will hardly rise from the energy pricing, as the price is set according to the bids presented by energy producers in public auctions. However, the conflict may rise from different understandings in connection with the application of Trading Rules enacted by CCEE or from the failure of any of the parties to comply with their contractual obligations. If this occurs, first the parties will try to solve the conflict amicably and then, if it is not possible to solve the conflict amicably, the parties shall discuss the dispute at the Conciliation and Arbitration Chamber of the Getulio Vargas Foundation (FGV) in Rio de Janeiro.
In the ACL, based on the Trading Convention approved by ANEEL Resolution No. 109/2004, the parties shall also elect the Conciliation and Arbitration Chamber of FGV as conflict resolution mechanism under power purchase agreements.
Utility-scale renewable projectsProject types and sizes
Describe the primary types and sizes of existing and planned utility-scale renewable energy projects in your jurisdiction.
See questions 3 and 4.Development issues
What types of issues restrain the development of utility-scale renewable energy projects?
In the coming years, the following issues may affect the development of renewable energy projects in Brazil.
In 2016, in view of the downturn that affected the financing ability of development banks and the Brazilian economy in general, entrepreneurs were facing difficulties and struggling while turning to the National Economic and Social Development Bank (BNDES) for financing. Such matters can be resolved through the use of financial instruments in the Brazilian capital market and by improving regulations in order to enable the entrance of foreign investors. In addition, in view of the commercial structure adopted to fund energy projects in the country, it is possible to verify that Brazil still lacks financing through non-recourse project finance structures.
Transmission constraints or lack of transmission capacity may prevent the development of energy plants (including but not limited to renewable energy projects). During 2012, several wind power projects were unable to start their commercial operation due to the failure of certain transmission companies to construct connecting facilities. However, nowadays, projects facing transmission constraints are expressly exempted from liabilities related to regulatory or contractual penalties (when dealing with power purchase agreements executed in the ACR), but they are not entitled to receive revenues until the project is completely connected and operational.
Regarding equipment suppliers, federal and state governments still have to develop mechanisms to attract power equipment suppliers to Brazil. For instance, we have a growing photovoltaic panels market, the development of which could help the reduction of the price of solar energy in the country.
HydropowerPrimary types of project
Describe the primary types of hydropower projects that are prevalent.
In Brazil, hydropower projects are only considered renewable if their power capacity is equal to or less than 50MW, as mentioned in question 3.
The construction and operation of small hydropower plants (PCH) involves certain advantages, especially of socioeconomic and environmental nature, in relation to hydroelectric power plants (HPP), such as:
- greater adaptability to small watercourses, since they have smaller characteristics, which allow the development of simpler projects;
- lower development time;
- reduced environmental impacts; and
- the construction and operation depend only on a licence from ANEEL (as opposed to HPP where the right to construct and operate is granted by means of use concession agreements).
Because of these advantages, PCH projects efficiently expand the energy generation on a rather tight schedule and, therefore, enable demand to be met in rural areas and small urban centres since, in most cases, it is a complementary source of energy.
What legal considerations are relevant for hydroelectric generation in your jurisdiction?
Hydropower represents a substantial part of the Brazilian energy mix. Therefore, in general, this source is broadly regulated.
Regarding PCH projects, the legal considerations described in relation to licences (see question 4) are applicable.
However, the Brazilian market has been facing a few difficulties associated with the hydropower regulatory model, specifically concerning the limitation of the generation scaling factor’s effects and judicial lawsuits discussing such limitation, locking in the accountability and financial settlement of CCEE’s spot market, which may trigger a few regulatory and legislative changes in a near future.
Describe the prevalence of on-site, distributed generation projects.
Through REN No. 482/2012, ANEEL regulated micro and mini on-site generation, allowing final consumers to install power generations projects (wind, solar, etc) in their residence or other commercial or industrial facilities and offset energy with the local distributor (energy generated is injected into the grid and is used to reduce the consumption of electricity from the consumer unit). The rule is valid only for consumer units that use renewable energy sources (such as hydro, solar, biomass, wind and qualified cogeneration).
Consumers that install on-site generation systems are not allowed to commercialise the excess energy generated and they may only offset such excess energy with credits from the distribution company.
The on-site generation system may be (i) micro systems that comprise power plants with installed capacity lower than or equal to 75kW or (ii) mini systems that comprise power plants with installed capacity superior to 75kW and inferior to or equal to 5MW.Types
Describe the primary types of distributed generation projects that are common in your jurisdiction.
After ANEEL’s first reviews of the REN No. 482/2012, the number of distributed generation projects has been increasing. Owing to such regulatory changes, the regulation now allows the distributed generation system not to be necessarily installed on-site (therefore, the consumer can install its facilities in a location other than the point of consumption), provided that all units are in the same distribution concession area.
Despite the flexibility provided by the regulation, in Brazil, on-site generation still corresponds to 85 per cent of the distributed generation systems already installed. This high percentage is related to the fact that the majority of the generation systems are located in residential consumer units (corresponding to 73 per cent), followed by commercial consumer units with only 17 per cent.
Aside from these statistics, Brazil has a few examples of distributed generation systems located apart from the consumers units, which are owned by third parties. For example, a relevant player of the Brazilian market developed a pioneer distributed generation project, which comprises a solar condominium project of 3,420 photovoltaic panels installed in the city of Tabuleiro. This project was structured as a remote self-consumption project and the system has been rented by a network of pharmacies called Pague Menos for 15 years.
According to ANEEL Technical Note No. 0056/2017-SRD/ANEEL of 24 May 2017, as of 2012 the distributed generation system increased 407 per cent. Today, there are 84,832 distributed renewable energy plants, totalling an installed capacity of 1,037,304.40 kW.Regulation
Have any legislative or regulatory efforts been undertaken to promote the development of microgrids? What are the most significant legal obstacles to the development of microgrids?
See questions 16 and 17.
In Brazil, the main obstacle for distributed generation systems is the lack of access to financing. Nevertheless, ANEEL opened a public consultation in 2018 in order to discuss the improvement of regulations applicable to distributed generation and, among other matters, alternatives for the funding of such projects.
In addition, the increase of distributed generation systems may represent a future problem for distribution companies. As opposed to other jurisdictions, in Brazil, distribution companies may not hold power generation assets, therefore, these companies do not participate in the growing market of distributed generation systems, do not benefit from tariff reduction and suffer the financial impacts associated with the decrease in tariff revenues from the development of distributed energy projects. Currently, distribution companies are exploring alternatives; however, a further analysis of the regulatory model may be necessary in the near future.Other considerations
What additional legal considerations are relevant for distributed generation?
See questions 16 to 18.
What storage technologies are used and what legal framework is generally applicable to them?
Up to now, energy storage technologies have received little investment in Brazil; however, there are a few initiatives regarding their development, such as:
- R&D projects developed by sector players regarding storage alternatives; and
- a storage project with an installed capacity of 0.5MW to be implemented by AES Tietê within UHE Bariri, in the city of Boraceia, state of São Paulo.
Are there any significant hurdles to the development of energy storage projects?
In general, the main hurdles to be overcome are the cost of energy storage systems, uncertainties about regulation, performance and safety issues, use of less polluting materials and difficulty in capitalising storage projects.
Foreign investmentOwnership restrictions
May foreign investors invest in renewable energy projects? Are there restrictions on foreign ownership relevant to renewable energy projects?
Foreign investors may directly invest in Brazilian companies through traditional stock exchanges or direct acquisition of power producers.
Nevertheless, the primary means for foreigners to obtain a licence to construct and operate power facilities is to participate in competitive governmental public auctions, in which special obligations must be fulfilled in addition to those required of Brazilian companies, such as:
- if bidding alone, the foreign company will have to incorporate a special purpose vehicle in Brazil in order to receive the auction award, concession or licence; and
- if participating in a consortium, leadership of the consortium must be held by a Brazilian company.
Also, foreign investors can face restrictions in relation to the acquisition of rural properties in Brazil, which may impact the development of renewable energy projects or their acquisition. Despite the fact that power generation should not be considered an agrarian activity and, consequently, the ownership of the land (either to title of through lease agreement) should not be considered as a rural agreement, some entities that are connected to the federal government consider the restrictions established under Federal Law No. 5,709/71, as interpreted by Opinion AGU LA-01/2010, applicable to the lease of rural real properties by Brazilian companies whose majority capital is held, or that are controlled, by foreign entities and persons.Equipment restrictions
What restrictions are in place with respect to the import of foreign manufactured equipment?
From a financing perspective, BNDES finances through the FINAME programme the acquisition of domestic and foreign manufactured equipment. Foreign manufactured equipment must be accredited in FINAME to be entitled to the financing (the company may request an accreditation of an equipment before FINAME based on local content percentages). The financing amount depends on the equipment itself, reaching up to 60 per cent of the equipment value.
ProjectsGeneral government authorisation
What government authorisations must investors or owners obtain prior to constructing or directly or indirectly transferring or acquiring a renewable energy project?
See question 4.
Also, ANEEL’s prior approval may be required for corporate transactions involving the transfer of renewable energy projects, as described below:
- if the acquisition of a renewable energy project involves the transfer of assets (therefore the transfer of the licence itself), ANEEL’s prior approval will be required;
- if the acquisition involves a direct or indirect transfer of majority control of renewable energy projects from solar, wind farms or biomass sources, ANEEL shall only be notified within 30 days after the completion of the transaction; however, no previous approval of the regulatory agency is required in accordance with ANEEL’s Normative Resolution No. 484/2012 (REN No. 484/2012); and
- if the acquisition involves a direct or indirect transfer of majority control of hydropower projects (including PCH projects), ANEEL’s prior approval shall be required, in accordance with REN No. 484/2012.
What type of offtake arrangements are available and typically used for utility-scale renewables projects?
See question 4.Procurement of offtaker agreements
How are long-term power purchase agreements procured by the offtakers in your jurisdiction? Are they the subject of feed-in tariffs, the subject of multi-project competitive tenders, or are they typically developed through the submission of unsolicited tenders?
In the ACR, the PPA is a result of public energy auctions, in which the winning bidders (power producers) and the distribution companies execute a predetermined PPA (part of the tender documentation), denominated CCEAR or CER. The CCEAR term depends on the auction (usually the supply period is 15 or 20 years), and the revenue structure is associated with the type of power generation, such as wind farms, solar or thermoelectric power plants. Usually, the revenues are divided into fixed and variable instalments calculated monthly according to the amount of energy delivered to the distribution concessionaire. In the ACL, the PPAs are freely negotiated by the parties. Since the sector players have been facing severe competition within ACR auctions, entrepreneurs are driving their attention to the development of new projects exclusively or partially based in long-term power purchase agreements executed in the ACL.Operational authorisation
What government authorisations are required to operate a renewable energy project and sell electricity from renewable energy projects?
See question 4.
Also, pursuant to Brazilian environmental laws and regulations, the location, construction, installation, expansion, modification and operation of activities or projects that cause or may cause any environmental degradation or that use natural resources are subject to environmental licensing requirements - and this rule includes the majority of power projects in Brazil (regardless of whether these projects are related to renewable energy or not). Environmental licences are valid for a specific period and their renewal must be requested in good time. Other environmental authorisations, such as vegetation removal and impoundment of water grants, may be also applicable to power projects.Decommissioning
Are there legal requirements for the decommissioning of renewable energy projects? Must these requirements be funded by a sinking fund or through other credit enhancements during the operational phase of a renewable energy project?
There are no specific regulatory requirements for the decommissioning of renewable energy projects in the operational phase. However, if the project is decommissioned during the licence term, penalties shall be applied by ANEEL and CCEE to assure the adequate performance of the power generators and the impacts of such performance on the system.
The decommissioning of renewable energy projects shall naturally occur when the licence’s termination date is reached. Such decommissioning shall not be understood as a penalty for infringing legal requirements.
Transaction structuresConstruction financing
What are the primary structures for financing the construction of renewable energy projects in your jurisdiction?
Brazilian financing structures usually include an initial bridge finance with commercial banks, secured by corporate guarantees by sponsors, followed by a permanent loan in a project finance structure with collateral based on the company’s assets, shares and credit rights. The majority of permanent loans in infrastructure projects have participation of public banks such as BNDES and are granted with subsidised rates. Project bonds with public placement have been an increasing alternative for permanent financing, but there is still no relevant secondary market for such bonds in Brazil.Operational financing
What are the primary structures for financing operating renewable energy projects in your jurisdiction?
Operational projects are more attractive to the market when it comes to financing as the pre-operational risk no longer exists and revenue collection allows the project a more balanced cash flow.
Nevertheless, the same funding alternatives described in question 29 and, specially, funding from the capital markets, shall be considered for operating renewable energy projects in Brazil.
Updates & TrendsRecent developments
Describe any market trends with respect to development, financing or operation in the renewables sector or other pertinent matters.Describe any notable pending or anticipated legislative proposals.Market trends31 Describe any market trends with respect to development, financing or operation in the renewables sector or other pertinent matters.
At the end of 2017 and in 2018, MME and ANEEL carried out different auctions for the delivery of energy produced by thermal, hydro, photovoltaic and wind power plants within six and four years as of the occurrence of the auction.
However, since the sector players have been facing intense competition within these bids, entrepreneurs are driving their attention to the development of new projects exclusively or partially based in power purchase agreements executed in the free market.Legislative proposals32 Describe any notable pending or anticipated legislative proposals.
As mentioned previously, MME opened two public hearings aimed at receiving contributions from market players to reformulate and improve the Brazilian power sector’s legal framework. The first public hearing discussed general principles and guidelines applicable to the sector, while the other discussed specific measures that could positively affect the market. These public hearings resulted in a draft of Bill of Law, which is now under discussion in the Congress.
In addition, ANEEL is currently reviewing the regulation applicable to distributed generation in order to improve the rules associated with the implementation of this kind of project in Brazil.