Sector focus
A new dawn?
Brazilian lawyers could benefit
from a rise in renewable
energy project work, but only if
developers get better access to
finance
Law firms in Brazil are hoping
that the new government’s plan
to grow the wind and solar power
sector will generate a substantial
rise in work, particularly in
relation to the financing of
projects. However, there are
still substantial barriers to the
expansion of renewable energy –
with developers facing escalating
borrowing costs – so lawyers are
hoping political changes will see
more projects being kick-started,
with the result that law firms’
workflow will increase.
Brazil has taken major strides
in relation to renewable energy,
and the incoming government of
President-elect Jairo Bolsonaro,
who takes office on 1 January
2019, has promised to speed up
permitting, which is likely to
enable projects to begin operations
more quickly, according to
lawyers. Renewable energy
represented 82 per cent of Brazil’s
installed electricity generation
capacity in August 2018, according
to the energy ministry, with
capacity having increased by
seven gigawatts over the past year.
Hydropower installed capacity
stands at 102 gigawatts, followed
by biomass with 14 gigawatts,
while wind power contributes 12.9
gigawatts to the grid, and solar
power makes up 1.6 gigawatts.
The country held its most
Christian de Lima Ramos, RZ
Advogados
Renewable energy makes up 82 per cent of Brazil’s installed electricity
generation capacity
recent power auction, dubbed
A-6, in August of this year. A
total of 2.1 gigawatts of capacity
was awarded, and this followed
an earlier auction in April, which
means a strong pipeline of projects
is expected to enter operation by
2024.
Brazil’s renewable energy
sector had been hindered by the
suspension of projects as a result
of investigations being conducted
in connection with the $9 billion
Operation Car Wash money
laundering scandal that engulfed
many companies. However, the
new government is expected
to give priority to projects by
streamlining permit processes.
“I believe all energy projects
will see a major boost in the first
couple of years of Bolsonaro’s
administration,” says Christian
de Lima Ramos, a partner at RZ
Advogados. “There is a major
backlog of projects that were
suspended, those will soon be
back on track, either in the hands
of their former sponsors, or, more
likely, under investors entering
into Brazil.” De Lima Ramos
continues: “I believe Bolsonaro’s
administration will streamline
and speed up licensing processes
– this is a must in Brazil, as these
processes currently take many
years.”
De Lima Ramos argues that
an acceleration of the permitting
process will not be detrimental
18 • THE LATIN AMERICAN LAWYER • December 2018
to the environment. “Creating a
more dynamic and streamlined
method for licensing does not
entail being less protective of the
environment and the ecosystem,
but the ‘must-do’ factor is cutting
the red tape,” he claims. “This is
where the new administration will
focus its efforts,” he says.
However, even with permits
being granted more quickly,
the renewable energy sector
in Brazil still faces barriers
related to financing, according
to Débora Yanass, an associate
at Tauil & Chequer Advogados,
an affiliate of Mayer Brown.
“The main challenges for the
renewable energy industry are
securing competitive financing
– given that funds provided by
Brazilian development bank
BNDES have been reduced – and
maximising cost-efficiency and
return-on-investment amid a
trend of renewable energy price
reduction,” she says. Yanass
adds that another challenge is
“implementing projects within
their construction schedules, as
well as regulatory risks associated
with project revenues that depend
on the free market settlement
carried out by the electric power
sector’s chamber of commerce
(CCEE)”.
De Lima Ramos says renewable
energy investors have cause for
optimism given that Bolsonaro’s
proposal includes supporting the
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