Brazil lawmakers are told prompt offshore wind vote has become 'critical' as clock ticks on 2025 tender plan

Brazil risks seeing offshore wind investors move elsewhere as time starts to run out on plans to approve the regulatory framework that would allow the country to stage its first tender in 2025, industry leaders have warned.

The allure that Brazil holds for offshore wind developers was made amply clear in 2022, when Senate approval of a proposed regulatory framework triggered a rush of companies into the country.

Submission of environmental permitting proposals adding up to more than 230GW of potential projects showed the level of interest, even allowing for the fact that these developer-led applications were on a preliminary, fee-free basis, and were often on overlapping areas.

Embroiled bill

But Brazil’s offshore wind bill became embroiled in a web of congressional politics and is still awaiting approval almost two years after that first Senate vote.

With time running out to get the bill passed this year – partly because of the political distraction of nationwide local elections in October – the country’s ambitions of staging a first offshore tender in 2025 are in grave danger, according to Ricardo de Luca, Brazil country manager for global wind developer Corio Generation.

Deep politics

These legislative problems are rooted in the complexities of coalition politics in Brazil.

When the offshore wind bill moved from the Senate to the Chamber of Deputies after the 2022 vote, lawmakers with links to diverse and regionalised lobby groups managed to add several amendments that extended existing energy subsidies unconnected to offshore wind.

The amendments extended an established support framework for onshore wind but also did the same for gas and even coal-fired power stations in certain regions, as well as for some regional electricity distributors.

Political analysts saw these moves as an attempt to hitch a ride on an offshore wind bill that seemed to be coasting for congressional approval, but it has caused major problems.

One study, published by Brazilian firm PSR Energy Consulting and Analytics suggested that the five amendments would eventually add 25bn Brazilian reais ($5bn) to electricity bills over the course of time.

To some onlookers, the offshore wind bill has becoming increasingly associated with the threat of higher bills, even when this was never its intention.

In a communication to a Senate committee hearing on the topic last week, the drafter of the bill, former senator Jean Paul Prates, pointed out that the legislation was intended to be entirely subsidy free and was meant to apply exclusively to tapping the renewable energy potential of the Brazilian offshore.

“There was never any intention of creating subsidies for offshore wind and even less so for other sources such as gas or coal,” Prates wrote.

Elba Gannoum, executive president of the Brazilian Wind Energy Association (Abeeolica) told industry forums that the world is “not going to wait” for Brazil if the country fails to put its regulatory system in place.

She called for a robust industrial policy for offshore wind and urgent approval of a regulatory framework that does not depend on subsidies "which Brazil cannot afford".

The imbroglio has continued long enough to cause real distress in the industry, amid local interpretations that the uncertainty has been instrumental in persuading at least two companies — named as Copenhagen Infrastructure Partners and BlueFloat Energy — to shut up shop in Brazil.

"It is hard to see how new budgets will be approved for next year if this bill does not get through Congress."

In De Luca's view Brazil has been enjoying priority status in many portfolios for the last three years, but the honeymoon period is over.

“Many companies are worrying if they will be able to continue if they are faced with the prospect of another year with nothing happening. This means Brazil could miss out on all those aims it has set itself on new industrialisation and clean energy targets,” he said.

Action stations

Brazilian energy minister Alexandre Silveira and the country's secretary for the green economy and decarbonisation Rodrigo Rollemberg have continued to offer reassurances that the bill will be approved. The rapporteur for the bill, which is now back in the Senate, has continued to press for removal of the offending clauses.

But some of these amendments are backed by politicians who form part of the governing coalition and there is growing scepticism about whether they can be struck out, with regional interests in play,

Thus, despite his opposition to subsidies, Prates has called for the bill to be passed with the amendments intact and he suggested resorting to "other means" to strike out the offending clauses.

One option is a presidential veto, although President Luiz Inacio Lula da Silva has not signalled that he will take this path.

De Luca takes the same view. “The (Mines & Energy Ministry) have said it will take one year to get ready for the offshore wind tender following approval of the bill. The important thing at this time is to see the bill passed,” he says.

"There is still time to hold the (offshore wind tender) next year, but this window will close soon."

There are also some expectations within the industry that Brazil’s status as COP30 climate summit host next year will galvanise President Lula da Silva's administration to push out its offshore wind plans and resist pressures to retain the amendments.

For its part, Corio Generation has already gone further than many developers.

The company has filed permitting applications for five projects of 1.2GW each and signed cooperation agreements with two potential marshalling bases, namely the Acu industrial port complex in Rio de Janeiro state and with EBR, a Brazilian-Japanese shipyard in southern Brazil.

Each facility is in close vicinity to two of the company's proposed wind farm projects and both are experienced in serving Brazil’s offshore oil industry.

Only one of Corio's five projects is in the north-east of Brazil, the region which has the most favourable winds in Brazil but is already rich in renewables capacity and currently lacks infrastructure to get surplus energy to the big markets further south.

“Everyone can see great potential for green hydrogen in (the northeast), and Brazil is one of the few countries that has capacity to do large scale green hydrogen at low cost, but this is a long term game. Our investment has to start by targeting the grid and we will be ready when green hydrogen projects come later," De Luca commented.

"We see more potential in the south and south-east at first, but we will develop our interest in the north-east too."