Imagine the kind of projects. Quebec will see hundreds of wind turbines grow on an area the size of the island of Montreal. Not just once, but every year for the next 10 years.
And it is in this context that Hydro-Québec announces a major change in its strategy. From now on, the state company intends to be the prime contractor for most new projects in Quebec, whereas it is the private sector which has mainly been this for 20 years, by call for tenders.
This is the great challenge that the necessary decarbonization of our economy imposes on us, nothing less.
In other words, CEO Michael Sabia almost announces the nationalization of wind power development in Quebec. Wow!
More precisely, Hydro-Québec must add 1,000 megawatts (MW) of wind power to its fleet each year within 10 years to reach its target of 10,000 MW. The pace will have to be five times faster than that of the last 20 years.
Why does Hydro want to become the prime contractor? For three reasons, essentially, explains its CEO.
First, Quebec will not be able to achieve such targets by scattering small private projects across the territory. To achieve this, the state company judges that it is necessary to develop immense projects of 1000 MW each or more, which typically extend over an area of some 500 square kilometers, biodiversity requires, the equivalent of island of Montreal.
To date, private projects have totaled 4,000 MW, varying between 21 and 350 MW each. The average project developed since 1999 by the private sector has been 92 MW, or 10 times smaller than the parks planned by Hydro.
These megaprojects – and this is the second reason – will allow Hydro to reduce costs by around 20% to 25%, thanks to economies of scale, says Michael Sabia. “This is a figure that we are currently experiencing,” he said at a press conference, probably referring to the projects in Hydro’s pipeline.
Such reductions are possible when a single large buyer like Hydro negotiates with turbine manufacturers, for example, especially in this era where the entire planet, hungry for wind turbines, is clogging up supply chains.
These huge projects, which we want to develop on public land, will also allow Hydro-Québec to better plan its new electricity transmission lines, which small, scattered projects make difficult.
The corollary of this major development – this is the third reason – is the obligation to obtain the essential social acceptability for each of the megaprojects.
Hydro is betting that Quebecers will trust the public company more than private developers. Above all, Hydro will develop these projects in partnership with cities and Indigenous communities. And it will not be a facade partnership: the parties will have a direct participation in the capital, for example a third each.
Partnerships will not immunize projects from criticism – BAPEs will continue to take place – but they are a necessary step to diminish them. “They are the key to success,” believes Michael Sabia, who says he is responding to the concerns of the many people consulted (some 600 from all walks of life) over the past six months.
Moreover, the new strategy was received very positively by the Union of Municipalities of Quebec, among others, which judges that it fits “perfectly” with its vision.
Friction with Fitzgibbon?
A first project under the new version should be announced by the end of the year, with municipalities and indigenous people as partners, I was told at Hydro.
Surprisingly, the Minister of Energy, Pierre Fitzgibbon, was not specifically aware of his state company’s plan, even though it had been approved by the board of directors. He was informed of this on Tuesday, we are assured in the minister’s office.
Another surprise: Hydro presents its strategy a week before the tabling of the energy bill prepared by Mr. Fitzgibbon. Is there sand in the gear?
In the past, the minister has not hidden his desire to see the private sector play a certain role in the development of energy in Quebec. However, Hydro’s plan does the opposite, although the state-owned company does not rule out having private companies among its partners, or even still making certain calls for tenders for the private sector.
Energy expert Pierre-Olivier Pineau describes the strategy as a “real surprise”. “It’s a major change. And the fact that it was announced a week before Fitzgibbon’s bill is strange. This is a small affront to the government, because everything suggests that a greater role for the private sector is desired. »
The HEC Montreal professor does not deny the advantages stated by Hydro, but fears the unproductive effects of the monopolistic juggernaut that the state company represents. The Montreal Economic Institute has also criticized Hydro’s new plan, judging that it will cost Quebecers dearly.
One thing is certain, Hydro-Québec Production can develop, within the framework of current law, its own wind projects without being indebted to the Régie de l’énergie. This is the case with the current Neiges wind farm, a 1,200 MW project currently being implemented in the Quebec region in partnership with the firm Boralex.
The new law, however, risks changing the situation. Certainly, it should eliminate the sub-entities of Hydro-Québec (Production, Distribution and Transport), but it will force the state company to demonstrate the public interest of its decisions, according to my information.
A whole file to follow…