Skepticism about Hydro-Québec’s ability to meet rising local demand for green electricity has some concerned that not only will power rates in the province rise, but that attempts to decarbonize and meet climate-related goals will be impeded as well.

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The utility, which for years has enjoyed surplus production that it committed to long-term export contracts, is now expected to face a power shortage of over 100 terawatt-hours  as early as 2027, a May study by the Montreal Economic Institute found. The think-tank’s study noted that Hydro-Québec’s most recent strategic plan determined “unequivocally” that its current capacity is not enough to meet growing demand.

Our surpluses have melted like glaciers under the sun of climate change

Energy minister Pierre Fitzgibbon

The utility has put a number of measures in place to address rising demand, such as dynamic pricing, adding new wind and renewable energy to its portfolio, and increasing the capacity of its generators. The utility has also requested that 270 megawatts of electricity originally slated for the blockchain sector — the technology that facilitates cryptocurrency trades — be put on hold.

But those efforts are not enough, said Gabriel Giguère, public policy analyst at the MEI and author of the May study. “Everything Québec is proposing to deal with the end of the energy surplus is either too little, too late, or a bit of both,” he said in a press release.

“Hydro-Québec is doing a lot to meet the increasing demand,” countered Caroline Des Rosiers, the company’s spokesperson, in an emailed statement. “Almost every market in the world is faced with the same situation: having to meet significantly higher demand for clean energy.”

The utility’s inability to respond to rising demand could affect consumer’s wallets, said Normand Mousseau, professor of physics and scientific director of Trottier Energy Institute at Polytechnique Montreal, but could also jeopardize Quebec’s climate goals: a 37.5 per cent reduction in greenhouse gas emissions by 2030 followed by carbon neutrality by 2050. The main issue, he added, is the winter peak.

The ‘dual energy’ debate

The utility has difficulty meeting demand when winter weather is at its coldest. On Feb. 3, for example, when temperatures in Montreal dipped to -26 degrees Celsius and -41 with the wind chill, the utility had to import extra power from Ontario and the U.S.

In order to manage peak demand in the winter, the utility partnered with Énergir, the province’s main natural gas distributor. Some customers can opt to use “electricity for the most part, and natural gas during periods of extreme cold, when pressure on the power grid is at its highest.”

Given that this agreement depends on natural gas, it is fundamentally “disconnected from the (climate) goals,” said Mousseau.

The utility disagreed with this assessment. “The dual energy program is actually a very concrete means of acting right now to fight climate change while minimizing the impact on the environment and society,” wrote Des Rosiers.

Jocelyn Allard, president of the Association of Industrial Electricity Users of Quebec, disagrees. He argues that it might be more prudent to direct natural gas toward heating homes, and preserve the electricity for broader climate goals, such as electrification of mass transit, he said.

End of an era

Difficult decisions will need to be made, energy minister Pierre Fitzgibbon said earlier this year, now that the utility’s “era of surpluses” is coming to a close.

“Our surpluses have melted like glaciers under the sun of climate change,” he added.

For years, the utility’s energy surpluses enabled it to comfortably export a portion of its electricity within Canada, to Ontario and New Brunswick, and to the northeastern United States. In 2022, the province exported 35.6 TWh outside Québec, and distributed 180.6 TWh within the province.

But as demand continues to increase, these surpluses will diminish, the utility noted in a report.

The utility expects demand for electricity to increase by 25 TWh — equivalent to 14 per cent of Québec’s current electricity demand — by 2032. The increase is mainly the result of the province’s shift away from fossil fuels toward greener technologies such as electric vehicles and solar power.

The utility aims to increase wind production from 4,000 megawatts to 8,000 by 2030, and increase the capacity of existing plants by 2,000 megawatts by 2035, wrote Des Rosiers.

When it comes to the green transition, the province is leaps and bounds ahead of other jurisdictions; already, 94 per cent of the province’s electricity production comes from hydropower. The rest comes from sources such as wind and solar.

Since the province’s electricity is already decarbonized, the priority then becomes electrifying its economy. But this largely depends on Hydro-Québec’s ability to respond to the needs of large industrial clients, who are trying to decarbonize.

But going forward, the utility will need to be selective about which industrial projects get connected to the grid, said Hydro-Québec’s Des Rosiers in an email.

The utility “is preventing big residential building owners from moving to electricity. It is saying, ‘We don’t have enough capacity,’” said Mousseau. To him, this is akin to “preventing industries (from moving) away from gas.”

Des Rosiers said that this perspective is “inaccurate,” adding that the utility has received an exceptional number of project requests from companies looking to go green. “Choices will have to be made. It would be impossible for any utility to meet the demand that we’ve received.”

Though the utility will turn down local contracts, it has promised to honour its overseas export agreements, Des Rosiers wrote, which include a 25-year, $20-billion contract to supply 10.5 terawatt-hours per year to New York state, and a 20-year contract to supply 9.45 TWh per year to Massachusetts.

‘A double standard’

Some question the utility’s decision to continue exporting electricity abroad when there is soon to be a shortage at home.

It’s a double-standard, said Allard. “It’s really frustrating to be told for … the last year-and-a-half, ‘We can’t tell you if we have enough power for your project,’” he said, “then you turn around, and they were pushing, and finalizing, and implementing those major … long-term contracts to the U.S…. So why are we telling people that we don’t have enough here?”

He added: “I have to say, it is still frustrating to think that we’re not able to accommodate a request for Quebec demand, especially on the industrial side, which (is) often the economic engine of many regions of Quebec.”

The utility signed the contract with New York state in 2021. The contract with Massachusetts was originally signed in 2018, but faced roadblocks. In November 2021, Maine residents voted in a referendum and rejected the construction of a hydroelectric corridor that would cut through the state. In late April, a Maine jury ruled that construction could proceed.

But a group of Maine legislators see concerns that the utility now may be unable to meet demand as proof that the risks of the corridor project were undersold.

The legislators recently wrote to Quebec Premier François Legault to “express (their) strong concerns about recent changes in energy supply and demand in Quebec,” and alleged that the premier has been secretive about the plans for “four or five” dams, opting not to disclose information such as where the dams would be located because he did not want to panic any communities that lived near the rivers.

“Many people in New England have lived with a myth that Quebec has so much power that it doesn’t know what to do with it all,” they wrote. “The reality is much more complicated, and we believe Quebec has a responsibility to fully reveal that complexity to the public, including to those who live in export markets for HQ power.”

Mousseau said opposition from the legislators should be taken with “a grain of salt,” because “these are the same people who have been opposing the line forever.”

‘A monopoly’

The energy landscape differs significantly in Québec, versus New England.

“In the U.S., you’ll often be able to shop around to get better rates as far as electricity is concerned,” Allard said. “In Quebec, it is a monopoly, totally and completely, for Hydro-Québec, so there (are) no alternatives.”

Even so, the province cannot depend solely on existing infrastructure to meet its green transition goals. The diversification of supply is essential, said Jean Habel, director for Quebec and Atlantic Canada at the Canadian Renewable Energy Association.

“Achieving the ambitious goal of adding more than 100 TWh of renewable energy by 2050 will require a lot of renewable technologies,” he said, “and we are confident that solar, energy storage and wind will play a larger role in terms of the energy production in general.”

He added, “I think we need to be innovative and diversify our approach in terms of supply.”

The Montreal Economic Institute agrees, in its report, that diversification is key to meeting Québec’s demand, but offered a solution that to some might appear paradoxical, within the context of the green transition: natural gas.

It is “a source that provides a reliable, secure, and efficient supply to the energy mix,” the report notes.

There’s still a chance for Québec to meet its growing energy needs without turning to natural gas, but it depends on what Hydro-Québec does next, Mousseau said.

“We need to build (wind turbines and dams),” Mousseau said. The shortage isn’t here yet, so now is the time to act, he said, and build capacity. “Find ways to get there, instead of always looking at the hurdles. Let’s move.”

• Email: mcoulton@postmedia.com | Twitter: marisacoulton