Offshore wind projects submitted to Brazil’s environmental regulator Ibama for assessment now total approximately 177 GW, according to federal public data published recently. The latest undertakings submitted are Ventos de São Francisco (2.96GW) and Ventos do Caiçara (1.96GW), by Monex Geração de Energia; Itapipoca (720MW), by Energia Itapipoca; and Mar de Minas I (1.5GW), by Cemig Geração e Transmissão. The full list of projects, which can be seen here, includes undertakings by large multinational groups such as Iberdrola, Qair, Equinor, Shell and TotalEnergies, in addition to developments by local firms such as Promo Logistica and Bi Energia. REGULATION Brazil is currently discussing a regulatory framework for offshore wind power generation. While the national congress is discussing a bill authored by senator Jean Paul Prates of the PT workers party in Rio Grande do Norte state, the federal government has published a decree and, more recently, two ordinances setting rules for this industry. One of the ordinances defines general guidelines for the utilization of offshore areas and the other creates a one-stop shop for permit applications for projects. “We’ll work so that, in the first half of next year, we’ll have the first bids for the assignment of use of areas,” Elbia Gannoum, president of local wind power association Abeólica, told BNamericas. COSTS Despite the movements in the political area and among industry players, commercial offshore wind generation in Brazil is unlikely to begin before the end of this decade. Besides the regulatory bottlenecks, there are uncertainties regarding the levelized cost of electricity (LCOE), which is a measure of the average net present cost of electricity generation for a generator over its lifetime. BNamericas spoke with two local specialists on the subject: Mark McHugh, founder and managing partner at En Partners “This is a difficult question to answer, as it very much depends on how the sector evolves and is partly a political question.” projects, which are unlikely to be COD [commercial operation date] Much before 2030, we were calculating early last year about US$80/MWh in shallow water with 15MW turbines with capacity factors of 62%. “The problem is that the early projects will need to take a disproportionate share of infrastructure costs at the beginning. If the ideas to charge a royalty on licensing of areas are followed through into regulation, it will also push these 2021 costs up. “Inflation on turbines and components is also increasing costs today. Roughly we’re talking about 3x onshore figures as a rule of thumb. Lots of people are talking these numbers down, based upon scaling up in the industry. Editor’s note: According to the International Renewable Energy Agency Irena, Brazil’s average weighted onshore wind LCOE in 2021 was US$0.024/kW, the lowest in the world. “Nobody seems yet able to answer how we kickstart this industry, except to talk about dedicated auctions with an indirect subsidy. I don’t think that Brazil is ready to do this, especially while there is still a substantial share of much cheaper hydro available to consumers. “There are lots of projects in early licensing, but no one is really ready to take a major step towards investment. Everyone seems to be putting their toe in the water just to see what will happen, I suspect it is because of fear of missing out.” Thiago Luiz Silva, a lawyer at legal firm Vieira Rezende “It’s still difficult to estimate the LCOE, because it depends on factors that are still being mapped in the market, such as supply chain, taxation applicable to the equipment, and logistical costs that vary depending on the region where the energy generation will be carried out. “The World Bank is actively working to estimate this value, with the support of some consulting consortiums. “Regarding the oil companies that have already submitted offshore wind projects to Ibama, I think the majors are thinking about the long term and ESG. The electrical projects of E&P [exploration and production] assets seem to me the most immediate application, so they can reduce the carbon footprint of the upstream and start positioning themselves as leaders of the new technology. “The fact is that if offshore wind generation was something very profitable, the projects would already be off the drawing board. The challenge is not only regulatory, but mainly technological and financial. Projects in shallow waters are perhaps easier to equalize. But the really big potential is in the region far from the coast.” INTERNATIONAL FIGURES According to Irena, Denmark had the world’s lowest offshore wind-weighted average LCOE in 2021 (US$0.041/kW). It was followed by the United Kingdom, Netherlands , China, Germany, Belgium, South Korea and Japan.