The recent resignation of Sophie Brochu as head of Hydro-Québec seems to bear witness to major differences of opinion on the company’s strategic vision. Clearly, the stakes are higher than simply replacing a talented leader. To grasp them, it is useful to take a look at the French case.
France’s recent experience
France is the country where the share of nuclear energy is the largest in the world. It has enabled France to benefit for a long time from cheap carbon-free electricity. Unfortunately, nuclear power is no longer competitive, because new power plants are more and more expensive, while the price of renewable energies has fallen sharply over the past 15 years.
Despite the financial abyss constituted by the new Flamanville nuclear power plant, EDF (for Electricité de France, the equivalent of Hydro-Québec in France) continues to move forward and proposes the construction of six new power plants.
Clearly, France still clings to its status as a civil atomic superpower. Most French people share this idea that the French nuclear industry contributes to the image and greatness of France in the world.
The parallel with Quebec
Let’s come to Quebec. The parallel with France is obvious, except that our own nuclear power stations are the dams. They cost more and more to build, because the best places have already been used and each new project becomes less profitable than the previous one.
Let’s take the example of the Romaine: in construction cost alone, this project cost around 7.5 billion for an annual production of 8.5 TWh. For the same output, wind turbines today cost about three times less.
Mr. Legault must face the facts: the dams have been the spearhead of the company for 60 years and are the source of its past successes. But, just like the construction of nuclear power plants in France, the construction of dams in Quebec is part of a backward-looking, unsuitable and too costly strategy. You have to move with the times, recognize that conditions have changed and adapt your strategy accordingly.
Let’s take a closer look at the possible strategies. In Quebec, we are told that, in the years to come, we will need both more energy and more power.
More power
During peak periods, during periods of extreme cold, all the dams are running at maximum power, and Hydro-Québec no longer has much leeway. How to increase it?
We can say, as in France moreover, that the wind turbines do not work all the time and that the wind could not be at the rendezvous on very cold days. In this perspective, we are told that only dams give us the assurance of obtaining available power when we need it.
But there are other solutions to this potency problem. One possibility would be to increase prices during peak periods (and decrease them during other periods) to encourage savings during critical periods. This is also a solution proposed by the Minister of the Economy but rejected by Mr. Legault.
However, this solution is used by almost all European countries. In addition, one day it will be necessary to prevent everyone from charging their electric car during peak hours. A change in Hydro-Québec’s pricing method is therefore inevitable.
Energy needs
Mr. Legault asserts that Quebec must increase its production by 100 TWh by 2050. Unlike power needs, energy needs can be met by dams as well as by solar or wind power. But these are much cheaper.
In the case of wind turbines, Mr. Legault affirms that the private sector must deal with it. But it must be understood that these contracts include a return on capital of approximately 12% and that at the end Hydro-Québec does not become the owner of the installation.
Mr. Legault should however remember that all the dams built by Hydro-Quebec remained his property once paid for, which explains why Hydro-Quebec electricity is so inexpensive today. In the end, only maintenance and operating costs remain, and these are minimal. Why do anything differently with wind turbines which, too, could produce cheap electricity after being paid for?
We can also wonder why we invest in a generation fund that yields 6% per year, while we pay 12% to the private sector to invest risk-free in wind turbines. Mr. Legault, who comes from the private sector, should nevertheless understand that it is preferable to invest at 12% rather than 6%.
Explore other solutions
There are also other solutions. It is high time that Hydro-Quebec took an interest in Quebec’s offshore wind potential. Today, it is a much faster developing sector than traditional wind turbines thanks to more constant and stronger winds at sea than on land. The Americans have just decided to seize this opportunity on the east coast. To date, we only know that Quebec’s offshore wind potential is very significant. Before deciding on a strategy for the next 25 years, let’s start by looking at the options!
In closing, let’s come back to France. Following the stoppage of Russian gas imports, the French government appealed to everyone for more sobriety. This campaign was a resounding success, as electricity consumption fell by 10%. Across Quebec, this is the equivalent of three times the Romaine project!
Many consider the green discourse, which consists in saying that it is cheaper to save energy than to build new power stations, to have little credibility. However, the French experience clearly shows that this strategy deserves its full place in Quebec.
Mr. Legault wants to build the James Bay of the 21ste century, but his vision is completely outdated.