Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 34
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Brazil
In this context, further details regarding the
licensing process will be provided by IBAMA
by means of upcoming normative instructions. These instructions will outline the specific requirements, procedures, and guidelines that need to be followed for obtaining
environmental licenses in connection with
offshore wind farms.
3.5. Associated risks
As offshore energy generation remains in
the early stages of development in Brazil, the
lack of specific regulations and a well-established framework can introduce additional market risks for project development,
particularly from an international lenders’
perspective. The following are some key
considerations:
• Regulatory Uncertainty: The lack of
comprehensive and clear regulations
specific to offshore wind energy can
create uncertainties and challenges for
project developers and lenders. The
lack of established guidelines regarding
environmental impact assessments,
permit processes, grid connection and
revenue mechanisms can make it difficult to accurately assess and mitigate
risks associated with the development
of a project.
• Permitting and Approval Delays:
Without a well-defined regulatory
framework, the licensing and approval
processes for offshore wind projects
may be protracted and unpredictable.
Delays in obtaining the necessary permits and authorizations can increase
project costs, erode investor confidence and impact the financial viability of
a project.
• Revenue Mechanisms and Power Purchase Agreements (PPAs): A well-defined regulatory framework is crucial for
establishing revenue mechanisms and
enabling long-term Power Purchase
Agreements (PPAs). Revenue mechanisms include methods and strategies
implemented to generate income
from renewable energy projects like
offshore wind farms. Two common
examples of revenue mechanisms are
feed-in tariffs or competitive auctions,.
The absence of such mechanisms can
create uncertainties around revenue
streams and hinder lenders’ confidence in the project’s financial stability.
• Connection facilities issues: The
environmental licensing process for infrastructure and equipment necessary
to connect renewable energy projects,
such as power plants, to the electrical grid (connection facilities) can be
complex due to the need to traverse
coastal regions, which may be densely
populated, have significant tourist
appeal, or involve areas of environmental preservation. These aspects affect
both the connection lines of the power
plants and the necessary system
reinforcements to enable the transmission of generation, and thus can
significantly influence the feasibility of
the projects.
