Hydro-Quebec has the least room for maneuver this winter of any power producer in America, according to a report. In extreme conditions, the state-owned company would have to implement load shedding and cut off power to customers.
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On Wednesday, Hydro-Québec announced it would pay top dollar to obtain supplies from major industrialists like Resolute, which just signed an agreement with the state-owned company. If Hydro-Québec so chooses, Resolute Forestry Products (PFR) can sell up to 60 megawatts of electricity this winter at a price of 14.4 cents per kWh.
That's almost as much as the Hilo program's approximately 22,000 participants provided energy savings last year, or the equivalent of the consumption of 9,000 homes.
Above all, this agreement shows Hydro-Québec's limited scope for action in the event of extreme cold.
The “interruptible option” allows Hydro-Québec's industrial customers to voluntarily interrupt or reduce their electricity consumption during periods of extreme cold and peak demand in order to add electricity back to the grid. Hydro-Québec to avoid electricity outages.
According to PFR, this is a continuation of an existing agreement. “What is different this year is that we wanted to expand our involvement from our factories in Saguenay to Jonquière. And to do that we needed the approval of the Quebec government,” explains Louis Bouchard, v.-p. Public Affairs for Papier Excellence, parent company of Résolu.
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More scope
On the other hand, Hydro-Québec's reserves are becoming increasingly scarce, according to a report by the North American Electric Reliability Corporation (NERC), an organization whose aim is to ensure the reliability and security of networks in North America. These reserves could prove insufficient in the event of extreme conditions such as a prolonged period of severe cold, the report said.
In a scenario with extreme conditions, Hydro-Québec would have a margin of -2%, according to the report, which would force the state-owned company to implement load shedding and cut off power to customers.
20%
In comparison, this margin for the province of Ontario is 20%.
Additionally, according to the report, in a normal scenario, Hydro-Québec has the least room for maneuver of any producer in America.
“To my knowledge, this is the first time that Quebec is in negative territory,” points out Jean-Marc Pelletier, a former Hydro-Québec engineer who also worked for 25 years at the Hydro-Québec Research Institute (IREQ).
“We have always made agreements with paper manufacturers and large industrial buyers to meet peak demand. But there aren't enough of them at the moment. The demand for electricity in Quebec has increased and they are suffering at the bottom line,” he adds.
Black eye
PFR owns seven hydroelectric power plants for its own production purposes with a total installed capacity of 176 MW, five of which are located on the Shipshaw River.
The Journal attempted to find out what price PFR would receive from Hydro-Québec for its MW output, but Hydro refused to provide an answer. “Large industrial customers who choose the uninterruptible power option enable the curtailment of around 1000 MW during the winter peak period every year. However, the information in each of our customers’ files is confidential,” Hydro-Québec spokesperson Francis Labbé told us.
However, Hydro-Québec's price list shows that the price of interruptible electricity is 14.39 cents per kWh.
According to Jean-Marc Pelletier, the situation is something of a black eye for Hydro-Québec.
“Hydro-Québec has gone from being a reliable electricity supplier in the northeast of the market to a producer that has to import electricity for Quebec's future needs or even close factories to avoid complete outages,” he laments.
“And to correct these mistakes, we're going to punish people here by asking them to turn down the heat or turn on their dishwasher at 3 a.m.!”
From electricity surplus to electricity shortage
- November 2018: “We have surpluses, we have to export them.” –Éric Martel, CEO of Hydro-Québec, during the presentation of the strategic plan
- March 2022: More than 100 additional terawatt hours (TWh) of clean electricity will be needed for Quebec to reach carbon neutrality in 2050, or more than half of Hydro-Québec's current capacity, according to a new strategic plan presented by the company. State and presented by CEO Sophie Brochu.
- December 2022: Quebecers must reduce their electricity consumption, warns Pierre Fitzgibbon, the minister responsible for Hydro-Québec. Reduced heating costs, hourly prices… The minister in charge of energy has considered everything, including the installation of thousands of wind turbines in the north.
- September 2023: The Minister for Economy and Energy, Pierre Fitzgibbon, points to the possibility of doubling electricity production capacity by 2050 by creating further partnerships with private companies.
- September 2023: “Electricity is no longer a commodity. There has been a perception in Quebec for years and decades that there is plenty of electricity with significant surpluses. […] “We need to adjust prices to better reflect the reality that electricity has now become a valuable commodity.” Michael Sabia, CEO of Hydro-Québec, during a Zoom meeting with employees, his first since his appointment.
- November 2023: Due to the development of the battery sector and growing industrial needs, Hydro-Québec will run out of electricity two years earlier than expected, forcing the company to increase its imports during peak winter periods. A year ago, Hydro expected to have enough electricity by 2029. However, in a document filed with the Régie de l'énergie, the state-owned company says it is now looking for new deliveries for 2027, two years earlier than forecast in November 2022.
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