Hydro-Québec, which will soon be 80 years old, has accumulated 193 large-power industrial customers during this period.
In recent months, the Crown corporation has received requests for new high-power connections from 230 companies, an unprecedented situation. This strong acceleration in demand is not unique to Quebec, as investments related to the energy transition exceeded US$1 trillion globally for the first time in 2022, an increase of more than 30% compared to 2021. The pace of investments will increase for several more years since it will be necessary, according to McKenzie & Co, to invest 275 trillion US dollars in the energy transition by 2050 to overcome the greatest peril of all time. We are proposing a re-examination of our ways of doing things in the light of this new paradigm to maximize the advantages we can derive from it.
Our hydroelectric plants and their reservoirs are our most valuable asset if we wish to take advantage of the energy transition since they will allow us to considerably increase the production of intermittent renewable energy without jeopardizing the continuity of the electricity supply. We could probably increase the annual production of electricity by 200 to 400 or 500 TWh by using solar or wind energy, on sea or on land, because these are now the least expensive technologies. Hydro-Québec would use intermittent energy when it is available, even if it means having to fall back on its power stations when this form of energy is insufficient.
It is legitimate to wonder why, in these circumstances, the government is preparing to accept only a small proportion of the 230 projects submitted. Of course, the acceptance of all these projects would have a significant effect on the electricity tariffs of the population. These new supplies, at a price of at least 9.69¢ per kWh (the price excludes the cost of transmission), would quickly affect all customers by raising the cost price of electricity, which was 3 .33¢ per kWh in 2021. This would be unavoidable under the algorithm used by the Régie de l’énergie to set rates.
How to get around this problem if we want to accommodate companies that require 5 MW or more of power?
Why not allow renewable energy producers to directly satisfy the demand of these large industrial customers, as is already done in the European Union, the United States and Alberta?
The producer would invoice its costs of production, connection and use of the transmission and distribution networks of Hydro-Québec as well as a royalty covering the guarantee of a constant supply by our state-owned company. Since Hydro-Québec will never own this electricity, its production cost will be excluded from the Régie de l’énergie’s algorithm.
This will certainly result in a higher rate than the one currently in effect for Hydro-Québec’s 139 large industrial customers. However, this will not affect Québec’s ability to attract major investments since the energy transition requires a very strong increase in demand for green energy everywhere on the planet, a need that will be satisfied mainly by new solar or wind power plants. Few states, however, can count on a hydroelectric heritage like that of Quebec to ensure continuity of electricity supply. The other available technologies capable of ensuring this continuity, whether nuclear power plants, gas-fired power plants augmented with a carbon capture device, green hydrogen or batteries, are all more expensive than Quebec hydroelectricity at which is adjacent to wind or solar.
The energy transition considerably increases the value of our hydroelectric assets. Quebec has the best offer available on the planet to meet the requirements of the energy transition, at the lowest cost. We could make the most of it if we adopted the suggestion made above without making Quebec households and small businesses bear the cost of this transition. Our contribution to the global energy transition will then be commensurate with the value of the hydroelectric heritage from which we benefit.