I have nothing against the idea of a company that would like to produce its own electricity for its needs in Quebec. And nothing against the idea that it does without Hydro-Québec to do this.
After all, who could be? Producing wind electricity in Quebec – the one at stake – costs approximately double the rate offered by Hydro-Québec to large industrialists. Why double? Because Hydro’s rates are based on the average of its past costs, costs which are much lower, with its old plants, than those of the new projects.
In short, by letting large energy-hungry industrialists produce themselves – great good to them if they deem it profitable despite the high price – Hydro-Québec saves. In doing so, our state corporation brings more profits to its shareholders, Quebecers. And gone is the Energy Dollarama label affixed to Quebec that Sophie Brochu was talking about.
Partial privatization?
I have nothing against it, in principle, but the bill that Pierre Fitzgibbon is preparing for the month of March goes further. And it raises legitimate questions about a partial privatization of electrical energy in Quebec.
Context is important. Energy-intensive projects by companies are increasing, but Quebec will lack energy in the coming years, given the transition to an economy low in greenhouse gases (GHG). So much so that it is up to the Minister of Energy, Pierre Fitzgibbon – since a recent change – to refuse a large number of the projects in the running.
Imagine the political dilemma of saying no for this economic development enthusiast…
Currently, the law does not prevent a company from producing its own energy, essentially, provided that it is in a location adjacent to its activities and with its own transmission lines.
The minister wants to expand the scope of this private self-production, judging that the current model lacks flexibility. Several ideas are on the table, but ultimately, a new law could allow a group of companies in a region to come together to produce energy for their own needs, which is not currently allowed.
Above all, the law would make it possible to resell excess energy to Hydro-Québec, in the gentle version, or to other private companies, in a more liberal version.
The criterion for allowing it? Whether the projects aim for decarbonization or are of strategic importance.
Hydro, heavy monopoly
On Monday, in an interview with Radio-Canada, the minister clarified that there could be no question of allowing the use of the Hydro-Québec transmission network to do this, contrary to what the industrialists are demanding.
Such an authorization – with tariffs for the use of the Hydro network – would be akin to privatizing part of the sale of electricity in Quebec. A wind farm in Sept-Îles, for example, could sell its electricity to battery sector companies in Bécancour.
There is no doubt that such a change would shake up the big monopoly that Hydro-Québec constitutes, forcing it to adjust to competition, which would be welcome. All economists say it: monopolies show less dynamism and innovation, which deprives customers of more attractive prices and services than with healthy competition.
A cannibalization of labor
However, the overabundance of electrical projects confuses the issue. Whether developed by Hydro or privately, these projects will require an enormous amount of labor in the construction industry, a workforce that is already in high demand and aging.
Last June, the Commission de la construction du Québec (CCQ) predicted that the industry would need 16,000 new employees each year within 5 years, given demand and departures. In total, that’s 90,000 workers within 5 years in an industry that has nearly 200,000.
What demand ? You know it: that for housing and, more relevant here, for infrastructure and engineering works. The Quebec government and municipalities must renovate thousands of old infrastructures, in addition to adding public transportation networks, in particular.
According to the CCQ report, 26 of the 34 construction trades have very good or excellent employment prospects, given aging and the insufficient number of graduates.
However, this could only be the beginning. These perspectives do not take into account the enormous needs targeted by Hydro-Québec in its strategic plan submitted in November 2023, i.e. after the CCQ forecasts.
The state-owned company plans to invest $180 billion by 2035, including $80 billion in repairs and $100 billion in new energy projects to meet the demand driven by the energy transition.
Within 10 years, Hydro estimates that its construction workforce needs will increase from 15,000 to 55,000. This means 40,000 people will be added to the thousands of new employees planned by the CCQ1. Ayoye!
In short, employees will be rare and the possible hiring of private electricity producers for their projects will bypass those of Hydro. This phenomenon, combined with the need for materials, will drive up prices.
So we’re back to square one. Private projects may well be interesting, strategic and green, but they risk harming those of our national producer. Not to mention that at the end of the day, the interesting production sites for wind turbines are not infinite, nor is the acceptability among citizens.
To be acceptable, the minister’s bill must adequately circumscribe private energy development, otherwise Quebec would not come out a winner. Looking forward to a debate on the subject.
1. Please note that these Hydro-Québec estimates are not made on the same basis as those of the CCQ. Some employees will be employed by Hydro-Québec, others will work in sectors not subject to the construction industry and therefore outside the scope of the CCQ’s estimates. The picture nevertheless remains on a sharp rise.