Hydro plan helps Quebec rise to the climate challenge and stay competitive

Hydro-Québec’s (HQ) unveiling of its Action Plan 2035 last Thursday marks a profound departure from its two most recent planning exercises under CEOs Eric Martel (2020) and Sophie Brochu (2022) who both bet on the failure of Quebec's decarbonization strategy.

For the first time, a Canadian electric utility announced plans to ensure sufficient clean electricity will be made available to fully support legal climate objectives. It is not, like Ontario’s Independent Electricity System Operator’s recent Pathways to decarbonization, an evaluation of the challenges of getting to net zero by 2050, but a real plan that aims to meet the strong demand coming from clients (whether citizens, private or public sector) who want to decarbonize.

Indeed, all over the world, the pressure from the client base is strong as citizens electrify and investors are requiring plans to reduce Scope 1, 2 and 3 emissions, forcing actors all along the supply chain to take actions to meet buyers' expectations.

In provinces with low-carbon electricity, such as British Columbia, Manitoba, Ontario, and Quebec, investors are coming with energy-hungry projects as current clients move to electrify heating and cars, adding pressure on already tight grids.

HQ, for example, strongly opposed the City of Montreal's objectives of banning natural gas heating because it had not deployed in time the power lines needed electricity to ensure this service during the coldest days of the year.

The new action aims to make sure HQ is no longer an active opponent but a leading supporter of decarbonization. The path to meeting climate goals is not easy nor cheap, even for a province for which electricity already supports 40 per cent of total energy demand, well above Canada's average of 24 per cent, and is clean at more than 99 per cent.

Hydro-Québec projects that it will need to nearly quadruple its yearly investments in the coming years (from $4 billion to $5 billion annually in the last five years to $12 billion to $16 billion starting next year), maintaining this level of investment over the next decade and more.

The scale of expansion is massive: while HQ added 100 terawatt hours (TWh) in its golden years, between 1964 and 1989, it will have to build twice as fast between now and 2050 to add 150 to 200 TWh, while competing with the rest of the world for the same resources: workers, turbines, transformers, copper wires, etc.

This cannot be achieved with the ever-lowering productivity of Quebec's construction sector. HQ, building on its long experience of successfully delivering on large projects, will have to innovate on technology, as well as, with the support of Quebec's government, regulatory approaches, accelerate decisions and deployments and reduce the need for manpower, while lowering costs in the long run. Robots, as well as human and artificial intelligence, will be of great service if HQ is to succeed.

HQ does not need to go it alone.

Electric utilities across Canada would benefit from working together to pool resources and knowledge, share challenges and solutions and improve costs. This is the mandate of the Canada Electricity Advisory Council, a group created by federal Natural Resources Minister Jonathan Wilkinson, from which, interestingly, HQ is absent.

Dedicating 75 per cent of new resources to its existing client base, HQ's plan underlines the need to decarbonize Quebec's current energy system structure, in opposition to Premier François Legault and Economy Minister Pierre Fitzgibbon, who see Quebec's cheap and clean electricity as a way, first and foremost, to attract new investments, largely ignoring the greenhouse gas emission reduction goals that were reiterated legally by Legault during his first mandate.

The government's untenable positions are exemplified by Legault’s claims that the massive investments, which will inevitably raise the cost of electricity, will have no impact on the price charged to residential clients, whose annual increase will forever be capped at three per cent.

Instead of trying to bring back the rigour in the discussion of this crucial aspect, Fitzgibbon went on to say that the industrial and commercial sectors, as well as the government, would pick up the price difference while maintaining industrial tariffs would remain highly competitive.

In addition to preventing an open discussion with citizens regarding the price of electricity versus other energy sources, opening the door to endless discussions about the non-respect of the cap on electricity rates, this statement stands in total contradiction with the fact that to attract investments today, with one of the lowest official industrial rates in North-America, Quebec is still compelled to offer significant additional rebates, as we were reminded by Radio-Canada recently.

Many details are still missing from HQ's ambitious action plan.

Where will new infrastructure be built?

How will acceptance from all stakeholders be gained?

Where will we find workers?

A number of observers have already underlined the challenges that need to be met if HQ is to reach its goals. Yet, HQ has not invented the climate crisis we are facing, nor is it responsible for the goals adopted at international forums, as well as at the national, provincial and municipal levels.

HQ is simply taking the lead in Canada in putting forward an implementation plan that not only respects these ambitions but builds that essential infrastructure to allow all Quebecers to do their share and maintain Quebec's competitiveness in a global economy that is decarbonizing.

Normand Mousseau is professor of physics at Université de Montréal and scientific director of the Institut de l’énergie Trottier at Polytechnique Montreal. Co-chair of Quebec’s Commission on Energy Issues (2013-14), he is also co-director of the Energy Modelling Hub, co-founder and research principal of the Transition Accelerator and founding board member of the Canadian Climate Institute.