It’s time to reflect on how much to charge industrial actors for their electricity consumption, says the president and CEO of Hydro-Québec, Sophie Brochu.
The public corporation won’t be able to offer the same rate indefinitely without “digging a financial hole,” she said.
Due to hydroelectricity’s smaller environmental footprint, Hydro-Quebec is experiencing unprecedented industrial demand, Brochu said during an address to the Council on International Relations of Montreal (CORIM) on Monday.
The electrical production capacity for the industrial sector in Quebec is 8,500 megawatts (MW), compared to 5,000 MW for Ontario, she said.
“Today, there are more than 10,000 MW [worth] of people who want to come and settle in Quebec. Big projects — 100, 200, 300 MW. In the last ten years, not a single 50 MW project has come to Quebec,” she said.
The comments come at a time when the Crown corporation estimates that it will need new electricity supplies starting in 2027. Quebec will need an additional 100 terawatt-hours (TWh) of energy if the province is to reach carbon neutrality by 2050, according to Hydro -Québec’s 2022-2026 strategic plan, which was unveiled at the end of March.
These new sources of supply are also expected to cost more. The cost of power from the heritage block of hydro projects is three cents per kilowatt hour (kWh). The average cost from post-heritage supplies will average 11 cents.
“If we get supplies at 11 cents and we have an industrial rate of five cents, well, that doesn’t work,” said Brochu.
It will be up to the government to decide whether it’s worth selling electricity at a loss in certain cases by taking into account the economic spinoffs of a project, such as innovation, job creation or tax spinoffs, she said.
TOUGH CHOICES TO COME, MINISTER PREDICTS
When asked about the subject at the beginning of the month, provincial Economy Minister Pierre Fitzgibbon mentioned that it would inevitably be necessary to decide to prioritize industrial projects in Quebec due to the tightening of electricity surpluses.
“Some projects perhaps in the future will not see the light of day because the allocation of hydroelectricity would be more beneficial for Quebec to put it elsewhere,” he said.
“This is clearly an issue that needs to be addressed.”
Quebec intends to prioritize two areas for projects requiring high energy consumption: greenhouse gas reductions and the creation of collective wealth, the minister explained.
The electrification of transport, hydrogen, the battery sector, aluminum and green steel are among the industries that are “consistent” with these priorities, he said.
BEING CLEAN JUSTIFIES HIGHER PRICES, BROCHU ARGUES
Brochu said, however, that Quebecers must question the value of selling their electricity at a low price.
“We don’t want to stay in the paradigm of ‘we don’t sell expensive,’ knowing that our marginal supply costs are much higher than our historical costs, so we will not dig a financial hole for life,'” she said while elaborating on her earlier comments at a press briefing on the sidelines of the event.
Hydropower has environmental benefits that justify higher billing for businesses, she said.
“If you are able to sell a product and you are able to sell it for more because you are clean, that means you are able to pay more for your electricity because it is clean,” she said.
But Hydro-Quebec alone is not going to decide on the rates paid by companies, argued Brochu. It is a societal decision, she said.
“It’s not what I think that’s important, it’s what Quebecers will think,” she said in an interview. “Our job is to bring the facts.”
This report by The Canadian Press was first published in French on April 11, 2022.