With his action plan “Towards a decarbonized and prosperous Quebec,” new Hydro-Québec CEO Michael Sabia aims to invest $155 billion to $185 billion by 2035, an annual average of $12 billion to $16 billion.
In the context of these massive investments that Hydro-Québec is planning to significantly increase its electricity production, a financial partnership with the Caisse de dépôt et Placement seems advantageous to me.
We could kill two birds with one stone: while Hydro-Québec modernizes and expands its network, the Caisse finances it, either as a partner or as a simple lender.
Hydro could thus finance itself cheaply and at the same time enable the Caisse to make money with this financing. Instead of paying billions in interest fees to foreign investors, Hydro would put them into our nest egg.
- Listen to the economy part with Michel Girard above QUB radio :
The debt will triple
Hydro-Québec’s long-term debt currently stands at nearly $52 billion. The massive future investments that new CEO Michael Sabia wants to make carry the risk of tripling Hydro’s debt.
Sabia’s new investment plan is huge. As evidence, it should be noted that the amount of money (up to $185 billion) to be invested in this action plan exceeds the total amount of investments that the Government of Quebec will make over the next 10 years under the Quebec Infrastructure Plan 2023 -2033 plans to do. We are talking about a total investment of $150 billion over 10 years across all sectors under the government’s purview: road networks, schools, hospitals, public transport, parks, water retention systems, accommodation centers, etc.
FOR MORE POWER
With these investments of 155 to 185 billion by 2035, hydropower will be able to add 60 TWh or between 8000 and 9000 MW of additional power. This corresponds to the current performance of the state-owned company’s three largest hydropower projects, namely LG-2, Manic-5 and the Romaine complex.
In short, here are the investments Hydro-Québec’s new CEO wants to make over the next 11 years:
- $45 billion to $50 billion in labor and equipment purchases aimed at ensuring the sustainability of the electric distribution network (compound poles, conductor protection, buried power lines, etc.);
- $30 billion in “private and public” investments to expand new wind capacity;
- $35 billion to $45 billion to build new hydroelectric power plants and improve the performance of existing plants;
- $45 billion to $50 billion for new electricity transmission infrastructure between new production facilities and points of consumption;
- Billion dollars to undertake energy efficient renovations and increase incentives that can cover up to 50% of the cost of purchasing energy efficient equipment (heat pumps, smart thermostats, water heater controls).
Photo Pierre Paul Poulin
Hydro’s enviable position
Countries are currently increasing investments to decarbonize their economies with clean energy. In 2022, $1,600 billion will be invested in the energy transition. Global investment is expected to reach $40 trillion by 2030.
We in Quebec are in an enviable position and have a good lead in this global race for clean energy. And at the lowest rates in North America.
Investing 155 to 185 billion in additional electricity production by 2035 is certainly a lot of money on a Quebec scale.
But if we move forward, Hydro’s big boss believes this will enable Quebec to adequately meet the long-term energy needs of homes and businesses while being able to profitably export the surplus we produce.
IMPORTANT ENERGY INVESTOR
If Hydro-Québec needs financial partners to implement its action plan, we would be crazy not to count on the Caisse.
Not only does she have plenty of money with her $424 billion net worth entrusted to her care, but you should also know that the Caisse has made significant investments in power generation infrastructure around the world.
EXAMPLES?
- La Caisse is present in a strategic electricity transmission network of 695 km in Brazil.
- In 2015, the Caisse participated in the acquisition of the 99-year lease for Australia’s largest electricity transmission network.
- In 2016, the company invested in thermal, hydroelectric and electricity generation and distribution assets in India through the investment platform.
- In 2018, it lent money to Colombian power generation company Empresas Públicas de Medellín (EPM).
- In 2021, the Caisse consolidated its role as majority investor in Énergir, half of whose assets (US$8 billion) are now linked to the production and distribution of electricity and renewable energy and services.
- In 2022, the Caisse acquired the Terna Group’s portfolio of electricity transmission assets in Brazil, Peru and Uruguay.
- Also in 2022, the company increased its stake in Apraava Energy, which is expected to play a key role in decarbonizing the Indian economy.
We can only hope that the “current” between the new head of Hydro-Québec, Michael Sabia, and his successor at the head of the Caisse, Charles Emond, goes well!
