Since the creation of Hilo, a subsidiary of Hydro-Québec dedicated to energy conservation, the state corporation has injected at least $30 million into it, according to estimates by the Homework. Despite these significant investments, the independent subsidiary is still far from achieving its objectives. Its parent company now confirms its partial repatriation within Hydro-Québec, two months after having thanked its director.
To meet the challenges of the energy transition, Hydro-Québec is doing everything it can to change the habits of its consumers. During very cold weather, some 20,000 Hilo subscribers equipped with smart thermostats are offered the option of lowering their heating. Customers who accept these “challenges” get credits on their bill.
However, Hilo is expensive. Per kilowatt, this is the most expensive means of winter demand management in Hydro-Québec’s toolbox. The installation of thermostats by electricians, the purchase of appliances, the salaries of the 150 employees of the subsidiary, the offices and the compensation paid to subscribers represent considerable costs, absorbed by the whole of public society.
Since Hilo is an independent subsidiary, Hydro-Québec refuses to disclose the losses associated with this style project start-up launched in 2019. She argues that this information is strategic and competitive. The duty therefore estimated the various expenses very conservatively: salaries of $25/h, installation costs of $300, thermostats at $40, etc. The sum of these various elements is close to 30 million dollars.
Informed of these estimates, Éric Filion, vice-president at Hydro-Québec and chairman of the board of directors of Hilo, confirms to the Homework that it is indeed “tens of millions” of dollars that have been injected into the subsidiary since its creation.
According to Mr. Filion, the investments in Hilo make it possible to reduce the amounts intended for the development of the electricity network and the production of a similar volume of energy. Since this fall, the mission of the subsidiary has been specifically articulated around the needs of Hydro-Québec. “Hilo helps us balance electricity supply and demand. This is not an objective of growth and revenue generation, but rather to meet the needs of the network by involving our customers,” he summarizes.
However, in three years of existence, the subsidiary has still not achieved its objectives. According to internal documents obtained by The duty, Hilo only released an average of 10 megawatts (MW) of power during peaks last winter, compared to its parent company’s expectations of 28 MW. And Hydro-Québec cultivates great ambitions for its subsidiary, estimating that it would release more than 600 MW of power during peak periods as early as 2029.
“This winter, our goal is to free up 47 MW thanks to Hilo,” assures Mr. Filion. And we will achieve the goal. And we are sure that we will reach 95 MW next year,” he adds. Hilo currently has 19,200 customers.
To give the necessary boost to the organization, Hydro-Québec regained control of Hilo this fall. After thanking the general manager of the subsidiary, Sébastien Fournier, the state-owned company took control of its board of directors by appointing its vice-presidents. It is the Director of Business Planning and Customer Intelligence at Hydro-Québec, Martine Fillion, who manages Hilo.
The Crown corporation is now confirming to Homework the partial repatriation of the subsidiary. “We can seek greater synergy between the two organizations. Of course, there are duplicates with certain activities at Hydro-Québec,” says Mr. Fillion, citing marketing, commercialization and operations as examples.
Hilo helps us balance electricity supply and demand. It is not a goal of growth and revenue generation.
The subsidiary will remain autonomous in terms of technological development. “Hilo will continue to be our technology arm for all innovation beyond the counter. We are very active on the residential side, but since this summer we have also started deploying our technologies for the business components,” he says.
Hilo’s reorganization is part of a larger restructuring of the Crown corporation. At the start of 2022, Hydro-Québec integrated the three major divisions – distribution, production and transmission – into a single entity, which had previously operated independently of each other.
However, the “technology arm” will soon open up to smart home ecosystems connected to other thermostat systems. “We want to have partners who will deploy their connected objects, and we want to offer the interface with these objects. We don’t necessarily want to be the entity that sells these technologies,” explains Mr. Fillion.
Hydro-Quebec is now trying to establish partnerships with Quebec companies – including Sinopé, with whom the company is in discussion – but also with “big players” like Google Nest. “To work with them, we first need a commercial agreement, but we also have to do development so that the Hilo technology is compatible with their connected objects. »
In October, the subsidiary concluded an agreement with the Newfoundland thermostat manufacturer Mysa, whose technologies will be available once compatible with the Hilo system, ie next year. Resulting from an agreement between Stelpro and Hydro-Québec, the subsidiary wants to be more open to technologies from different suppliers. The goal: reach more customers. “The most important thing is to accelerate our deployment,” notes Mr. Fillion.