activity, which means new solar or wind power plants may be developed by a wholly foreign owned enterprise on the same basis as they may be developed by a domestic enterprise. However, if a foreign investor seeks to acquire a solar or wind power plant (whether operating or under construction), it must obtain the approval of either the national office of MOFCOM or its regional offices (depending on the total monetary value of the power plant and structure of the acquisition).
Under current Chinese law, acquisition of a solar or wind power plant by a foreign party does not in itself require approval from State Administration of Foreign Exchange, but any foreign loans issued by a foreign party (including stockholder loans) must be registered with SAFE before they may be disbursed.
The National Electric Energy Agency (“ANEEL”) and the Energy Research Company are the predominant regulatory bodies governing the electricity generation sector in Brazil. These governmental agencies are responsible for enacting rules and regulations related to, among others, granting licenses to enter the electricity generation market, setting tariff rates, regulating the auction process used to award PPAs and establishing the incentive structure for producers of renewable energy.
The electricity market in Brazil is divided into two segments: (i) the regulated market where electric energy is supplied at rates and tariffs resulting from auctions to sell electric energy to distribution companies or to the Electric Energy Commercialization Chamber (CCEE), and (ii) the free market, in which any supplier (generators, distributors, self-producers, independent producers, traders of energy, etc.) can directly sell energy to consumers at market rates.
We currently market energy generated by our wind power plants in the regulated market. With respect to the regulated market, the ANEEL established an auction system for awarding contracts for the production of renewable energy. Domestic and foreign companies (solely or in consortium), private equity funds and special purpose vehicles are eligible to bid at auction. If a foreign company prevails at an auction, it must incorporate a Brazilian company to receive the power generation authorization and to enter into the PPA. Bidders are required to deposit a bid bond equal to 1.0% of the power plant’s estimated cost, which must be declared by the bidder and approved by the ANEEL beforehand. This bond is returned after the contract is signed if the bidder wins the auction; otherwise, it is returned immediately following the auction. Auction winners also need to deposit a project performance bond equal to 5% of the investment cost that is released after certain power plant milestones are completed.
Several penalties are applicable in the event of delay in achieving certain milestones set in the PPA contract and in the ANEEL authorization. Among other default events, the ANEEL has the right to terminate the contract if a delay in achieving milestones exceeds one year.
Brazilian law does not restrict the foreign ownership of electricity generating companies, but a company owning generation projects in the electric energy sector must be incorporated in Brazil.
The Electricity Act, 2003 (the “Electricity Act”) is the principal legislation that regulates the generation, transmission, distribution, trading and use of electricity in India. The Electricity Act governs the establishment, operation and maintenance of energy generating companies and prescribes technical standards in relation to its connectivity with the Indian power grid. The Electricity Act provides that an energy-generating company may establish, operate and maintain a generating facility without obtaining a license under the Electricity Act if it complies with the prescribed technical standards relating to connectivity with the power grid. In addition, an energy-generating company is permitted to sell electricity to any distribution or trading licensee and, where permitted by the respective state regulatory commissions, to consumers subject to availing open access to the transmission and distribution systems and upon payment of applicable charges.
The Electricity Act establishes a two-level regulatory system: (i) the Central Electricity Regulatory Commission (“CERC”) is responsible for regulating the tariff charged by generating facilities owned by the Indian government and other independent power producers involved in generating or supplying electricity in more than one state, and for regulating the inter-state transmission of electricity, and (ii) State Electricity Regulatory Commissions (“SERCs”) are responsible for regulating intra-state transmission and supply of electricity within each of their respective states. These commissions are responsible for a variety of functions, including determining tariff levels, granting licenses and settling disputes between the generating companies and the licensees.
The Indian government has established the Ministry of New and Renewable Energy (“MNRE”), to facilitate, on a national level, research, development, commercialization and deployment of renewable energy systems for various applications in rural, urban, industrial and commercial sectors. In 2011, the MNRE established the Solar Energy Corporation of India (“SECI”) as a not-for-profit company to facilitate the development of solar energy generating capacity in India.