Ontario has no intention of renewing the electricity purchase contract concluded with Hydro-Québec, which will expire next year, but the electricity thus released should find takers elsewhere.
Posted at 5:30 p.m.
“As we have already said, there is no shortage of demand,” said a spokesperson for the Crown corporation, Lynn St-Laurent.
In its most recent strategic plan, Hydro-Québec foresees having to increase its production to meet the growing demand for electricity generated by the energy transition, in Québec and in neighboring markets.
Ontario will not renew the five-year contract concluded in 2016 with Hydro-Québec for the purchase of 2 terawatt hours of electricity per year, Radio-Canada reported on Tuesday. In the short term, this means a loss of revenue for Hydro-Québec, but these 2 terawatt hours represent a fraction of the 30 terawatt hours that Hydro-Québec exports each year. The Quebec state corporation also hopes to finalize two large long-term export contracts with Massachusetts (9.5 terawatt hours) and New York (10 terawatt hours).
In addition to the contract that binds them until next year, Quebec and Ontario regularly exchange energy according to the needs of their respective markets. These exchanges will continue, Hydro-Québec said yesterday.
The contract that Ontario decided not to renew was nevertheless advantageous for both parties, observes Jean-Thomas Bernard, energy specialist and professor at the University of Ottawa.
If Ontario has decided to put an end to it and rely on natural gas power plants, it is not to save money, according to him, because the price of Quebec electricity on export markets is linked to the natural gas price.
Ontario has chosen to maintain its nuclear power plants and to depend on gas-fired power plants to serve as the basis for intermittent solar and wind energy. There are many uncertainties about the evolution of gas prices, which have doubled over the past year.
This choice also implies an increase in greenhouse gas emissions, but it is an argument that does not weigh heavily in the government of Doug Ford, notes Jean-Thomas Bernard.
During his first mandate, Premier Doug Ford took Ontario off the carbon exchange and ended the rebate on the purchase of an electric vehicle.
Ontario’s geographic position, close to American shale gas production sites, may also explain its energy choices. “We must also remember that Ontario had a very bad experience with renewable energies under the McGuinty administration,” recalls the professor.
This government’s efforts to develop solar and wind energy with the help of large subsidies have produced few results but have considerably increased the electricity bills of Ontarians. The price of electricity for Ontario consumers today is double that of Quebec.
For Hydro-Quebec, the sales contract with Ontario is advantageous “because there are still surpluses currently,” notes Jean-Thomas Bernard.
At one time, Hydro-Quebec hoped to sell more electricity in Ontario and invested in a new 1,250 megawatt interconnection with the neighboring province.
However, according to Hydro-Québec, these interconnection capacities can be used to increase exports to New York State and the American Midwest.