寄稿

Renewable Energy inBrazilJosé Roberto Oliva Jr., Partner1

Julia Batistella-Machado, Senior Associate2
Energy Practice of Pinheiro Neto Advogados
With around 16.3% of energy consumption in 2019coming from wind and solar sources, not including
another 28.7% from hydropower plants, Brazil is alreadythe number one nation in the adoption of renewables— at least in relative terms. When observing the absolute
numbers, however, it becomes clear that there is still a lotof potential to explore and opportunities of investment tomeet the production of other countries with similar
territorial magnitudes: Brazil’s renewable outputs stands
only 30% that of China’s and 34% of the US’s, and iscomparable to the production of Germany, a country
devoted to clean energy but nearly 24 times smaller.
The installed capacity of solar and wind power plants
in the country is already 3.2 GW and 17.3 GW.
Adding pre-operational power plants that hold a grantfrom the government (known as Outorga), thesenumbers rise to 18.0 GW and 29.4 GW. Solar panels
installed by households and companies still suppliedby distribution concessionaires sum another 4.5 GW
of installed capacity connected to the power grids.
These numbers illustrate the adoption of renewables
in Brazilian’s energy mix and its potential for further
development, which was fostered by specificregulations applicable to renewables. Since 2002, theBrazilian government has specific incentives for“alternative sources”, a concept that includes solar,wind, and biomass with a maximum installed capacityof 300 MW and small hydro with a maximum installedcapacity of 50 MW. Benefits consist of at least 50%
discounts in the tariffs for the use of the distribution or
the transmission network (known as “TUSD” and“TUST”) both for the power generator and for theenergy consumers contracting these sources.
The Provisional Measure No. 998, of September 1, 2020,
that was recently approved by the Congress and should
be sanctioned or vetoed by the President before March 1,2021, encourages new investments in renewables in2021, due to the transition period that was established.
The government will continue to grant such TUSD andTUST discounts for renewable projects for a limit time:
only for power plants requesting the Outorga within 12
months from the date the law is enacted and entering into
operation within 48 months from the date the Outorga isissued. After granted, the projects remain entitled to thebenefits until the end of the Outorga’s validity (usually of35 years). The law also outlined the creation of a new
incentive for sources with low carbon emissions,although such a mechanism is yet to be detailed.
Other aspects of the country’s power sector regulation
also favor investments in renewables:・The sector comprises a consolidated institutionalframework of authorities with combined technical

Table 1. Prime energy consumption for the selected countries, considering equivalent output units.
Oil

Natural gas

Coal

Nuclear

Hydro

Renewables

Total

China
(9,596,961 km2)

Country
Absolute
Relative

27.91
19.7%

11.06
7.8%

81.67
57.6%

3.11
2.2%

11.32
8.0%

6.63
4.7%

141.7
100.0%

United States(9,371,174 km2)

Absolute
Relative

36.99
39.1%

30.48
32.2%

11.34
12.0%

7.6
8.0%

2.42
2.6%

5.83
6.2%

94.66
100.0%

Germany(356,733 km2)

Absolute
Relative

4.68
35.6%

3.1924.3%

2.3
17.5%

0.67
5.1%

0.18
1.4%

2.12
16.1%

13.14
100.0%

Brazil(8,510,295 km2)

Absolute
Relative

4.73
38.1%

1.29
10.4%

0.66
5.3%

0.14
1.1%

3.56
28.7%

2.02
16.3%

12.4
100.0%

Source: the authors, based on data from BP, Statistical Review of World Energy, 2020.

2021.321

expertise and experience, including the Ministry ofMining and Energy (“MME”), the Electric Energy
National Agency (“ANEEL”), the Energy ResearchCompany (“EPE”), the National Grid Operator(“ONS”) and the Electricity Trade Chamber(“CCEE”), among others.
・The country has an open access regulation forconnecting to the grid, with fixed tariffs per MWhestablished by the federal government and acontinuous expansion of the transmission system.
ANEEL is also discussing specific regulations toindemnify, under certain criteria, power plants
affected by curtailments and constrained-off
situations determined by the ONS.
・The legal system enables eminent domain andeasements over the areas needed for the transmission
lines between the power plant and the point ofconnection to the electric network, provided that
regulations are observed.
・Several ongoing reforms tend to increase thedemand for new power generation projects,
including the gradual liberalization of the electricity
trade market, the segregation of purchase of powerand energy, the implementation of hourly energy
spot prices, and loosen regulations for the energy
supply to electric cars.
・There is a class of “special consumers” that may
migrate to the free market under the strict condition ofpurchasing their energy supply from “special energy”
sources only, which include solar, wind, biomass, andhydro with a maximum capacity 50 MW.
・While part of the market is still supplied bydistribution companies, regulations allow these
individuals and companies to produce their energy
from clean sources and to inject it into the distribution
grid in net metering schemes (known as “distributedgeneration”), and solar has been the preferred source.
・Further tariff incentives remain applicable to “selfgeneration” projects and entitle the exemption ofcertain sectoral charges included in the TUSD orTUST, and specific corporate structures are being
created among developers, investors, and consumers
for this purpose.
・There are still tax incentives for infrastructure projects
and other benefits for renewable sources depending
222021.3

on the characteristics and location of the power plantthat should be assessed on a case-by-case basis.
New technologies should also foster investments inrenewables in Brazil. Offshore wind power plants havestarted to gain traction in 2020, and around sevenprojects have already requested environmental licensing.
Green hydrogen is also expected to advance major
market opportunities. The Hydrogen Council estimatesthat Brazil can take the lead for green hydrogen, due tothe fast expansion of renewables in the country. Inaddition, the Brazilian National Energy Policy Council
defined the technology as strategic to the country, whichmeans that more Research & Development (“R&D”)
projects will be funded on the matter in the following
years with resources from mandatory R&D investmentsof public services concessionaires.
All being said, renewables are an inexorable reality in
Brazil’s present and future, with an increasing numberof projects being developed every day and with evenmore potential for investment. Further developments
are sure to come, due to the liberalization of theelectricity trade and the entrance of new technologies.
1. José Roberto Oliva Júnior is a partner at Pinheiro Neto
Advogados and head of energy practice. He has more than
18 years of experience on matters related to the energy
industry, focuses mainly on energy, M&A, project finance andconstruction concerning energy sector. Mr. Oliva Jr isconsistently ranked among the country’s top energy lawyers
by publications Chambers Latin America and Chambers
Global, The Legal 500, Latin Lawyer 250 and IFLR1000.
2. Julia Batistella-Machado is a senior associate at PinheiroNeto Advogados and part of the infrastructure/ energy
area of the firm. Her practice focuses in assisting clients in
M&A transactions and regulated auctions, setting up
consortiums and joint ventures, privatizations, providing
support on regulatory aspects and risks involved in doing
business in the Brazilian Energy Sector. Julia holds a
Master in Science (MSc) in Regulation from The London
School of Economics and Political Sciences.
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