Hydro-Québec chief executive Michael Sabia says the Canadian hydropower giant will spend as much as $110-billion on new generating facilities and transmission lines over the next decade as the utility ushers in an aggressive growth plan that aims to ween the province off fossil fuels and transform the economy.
Under a new blueprint unveiled by Mr. Sabia Thursday, Hydro-Québec, one of the world’s biggest producers of hydroelectric energy, will spend between $90-billion and $110-billion until 2035 on new infrastructure that will produce renewable power and transport it.
The CEO plans to triple the volume of energy that the provincial Crown corporation gets from wind, add significantly more hydropower by increasing the output of current facilities and building new ones, and try to double energy efficiencies from current customers. The utility will also build 5,000 kilometres of new power lines.
“You can’t overestimate the need to act now for the future of Quebec,” Mr. Sabia told reporters at a news conference Thursday in Montreal. “Decarbonization is fundamental for the environment but also for a prosperous economy. The availability of clean power is becoming more and more the defining factor for global competitiveness.”
Mr. Sabia was plucked from his former job as the federal deputy minister of finance to lead Hydro-Québec after the unexpected departure of former CEO Sophie Brochu earlier this year. Three months into the job, he has now set the utility on a new course that will see it invest $185-billion to increase its size and capability, including at least $90-billion for new production and transmission assets.
Many of the ideas in Mr. Sabia’s blueprint are familiar to those who have read past Hydro-Québec strategic documents. But what the CEO outlined Thursday is remarkable for the size of spending planned. It speaks to the urgency with which he sees the climate crisis as well as the opportunity for Quebec as a clean-power producer.
The utility has spent $4-billion to $5-billion annually on investments and operating expenses for the past 20 years but is now tripling that to a range of $12-billion to $16-billion a year. That’s twice as much as what was spent during the construction of the James Bay hydropower stations in the 1970s and 80s.
“It’s huge,” said Bruce Lourie, president of the Ivey Foundation, a non-profit that supports Canada’s net-zero transition. “The reason this is important is because it’s actually signalling the scale of investment that’s required” to decarbonize. “What this does is put real numbers on paper in a jurisdiction by a company that has the responsibility to do it.”
Such massive investment could come at the expense of profits delivered to the government. Hydro intends to finance one-third of its spending through internal cash flows and the balance by tapping external financing. That includes issuing bonds as well as exploring other financing sources it hasn’t previously used, Mr. Sabia said.
Most of Hydro-Québec’s power is generated by a network of dams and hydroelectric stations in the north, built decades ago. Quebeckers have almost taken it for granted that those dams would produce cheap energy forever.
But the era of surplus electricity is over. The utility now estimates Quebec will need between 150 and 200 terawatt hours (TWh) of additional power if it wants to achieve carbon neutrality by 2050 – double the electricity consumed today. To put the province on that trajectory, Hydro-Québec estimates that it will need another 60 TWh by 2035, which means adding between 8,000 and 9,000 megawatts of installed capacity.
At the moment, half of the energy consumed in the province comes from fossil fuels such as natural gas and petroleum products.
Hydro-Québec’s leaders are banking on energy efficiency to create some of the power needed – because getting the most out of Quebec’s existing power makes more economic sense than building anything new.
Mr. Sabia is vowing to push harder and faster on efficiency with new measures like higher rebates for high-efficiency equipment, such as heat pumps.
But that won’t be enough. New sources of generating capacity will be needed and Mr. Sabia said Hydro-Québec would launch the first steps toward building new hydropower facilities.
Adding wind power and boosting the capacity of existing hydroelectric generating stations will be a focus in the near term because those will yield results more quickly than building new dams and hydroelectric stations, Mr. Sabia said. The utility will also integrate more solar energy and battery storage into its grid.
“This is a change in our strategy,” Mr. Sabia said. “We’re going to try to diversify our sources of power.”
Quebec Premier François Legault has mandated Hydro-Québec to update its studies on the viability of building new dams, an effort that began with a preliminary analysis on the hydroelectric potential of the Little Mecatina River in Quebec’s Côte-Nord region. No final decisions have been made on building any new dams.
Significant support will be needed from First Nations leaders and other stakeholders before any hydro project moves forward, Mr. Sabia said. Indigenous communities, he said, will be financial partners in projects and would help define the scope of any projects.
The Montreal Economic Institute, a free-market think tank, said independent electricity producers will have to play a larger role in Quebec’s energy landscape if Hydro-Québec wants to secure the volume of new power it’s talking about.
Quebec should notably remove the regulatory limit of 50 megawatts of capacity for independent dams, the MEI says.
The MEI also recommends that the provincial government authorize independent producers to sell their energy directly to commercial and industrial consumers if they want to.
Nicolas Van Praet