BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano and Luisa Tortolano Barreto, Tauil & Chequer Advogados in association with Mayer Brown
Authorisation acts make reference to the obligation of authorised agents to comply with ANEEL Normative Resolution No 921/2021, which sets forth the rights and obligations of independent power producers and self-producers under authorisation. Construction Schedule Both the concession agreements and authorisation acts of greenfield projects establish a construction schedule with the dates for achieving intermediary milestones and the dates for commencing the com- missioning and commercial operation of the power plant; and, specifically for solar, wind and thermal power plants, authorisation acts indicate a 54-month term for commencing their commercial operation. Projects that sell energy in the regulated market, by contrast, usually have the commercial operation date required to meet the supply term for the specific auc- tion in which they negotiated power, unless the entre- preneur requests a shorter term (eg, in order to sell power in the free market by an earlier date). Performance Bond In relation to greenfield power generation projects that have sold energy in the regulated market, a perfor- mance bond must be submitted by the concessionaire or authorised agent to ANEEL, usually for an amount equivalent to 5% of the project’s capital expenditure (CAPEX) – as indicated by bidders in energy auctions in the regulated market – to guarantee the timely implementation of the project pursuant to its approved construction schedule. Assured Energy Concession agreements and authorisation acts may also indicate the officially approved power output of the project, the so-called assured energy ( garantia física ), which is the maximum amount of power that the concessionaire or authorised agent is entitled to sell to the market. The project’s assured energy can be revised in cases specified in the regulations. Penalties Non-compliance with the terms and conditions of con- cession agreements and authorisation acts is subject to penalties imposed by ANEEL after an administrative proceeding, based on ANEEL Normative Resolution No 846/2019. Depending on the seriousness of the
violation, ANEEL may impose penalties of a warning; fine; suspension of works or activities; specific per- formance; temporary prohibition from participating in public auctions for new concessions, permissions, or authorisations and entering into contracts with ANEEL; revocation of authorisation; intervention and forfeiture of the concession or permission. 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities If the proponent fails to reach an amicable agreement with landowners over compensation for the construc- tion and operation of power generation facilities on their land, the proponent may request the issuance of a Dec- laration of Public Utility ( Declaração de Utilidade Públi- ca or DUP) by ANEEL, pursuant to ANEEL Normative Resolution No 919/2021, which entitles the proponent to easement or expropriation rights over these lands. Based on the DUP, the proponent may judicially obtain injunctions against landowners to access their land, and the court will define the fair compensation due to landowners, usually based on market value. However, according to ANEEL’s precedents, the DUP only covers lands required for construction of hydro- power plants or high-voltage transmission lines and substations necessary to connect power plants of any source to the electricity grid. 3.5 Decommissioning a Generation Facility Apart from certain environmental obligations applica- ble to decommissioning of nuclear power plants, there are no specific requirements for decommissioning of generation facilities in Brazil. Power generation facilities under the concession regime will revert to the federal government, upon compensation if the investment by the concession- aire has not been fully amortised. Power genera- tion facilities under the authorisation regime, except hydropower facilities, may be freely disposed of by the authorised agent.
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