Hydro Quebec Considers Projects Other than Northern Pass
Although its future Northern Pass transmission line to New England is not yet complete, Hydro-Québec plans to launch preliminary studies that could ultimately result in additional interconnections with Maine and Vermont.
The Crown corporation, which hopes to grow its export revenues and double its sales by 2030, is waiting for a firm supply contract, but says it wants to move on “positive signals” from New York and the states that make up New England.
“The message is very clear,” Hydro-Québec vice-president of business development Steve Demers said in an interview. “There is a need for clean, renewable energy. The needs are significant. ”
An independent agency responsible for managing electricity trade for New England says it needs about 15,000 megawatts, partially because of the shutdown of nuclear power and coal plants.
Hydro plans to order a feasibility study to determine the route of a line from Quebec to the Vermont border that would then meet the New England Clean Power Link project.
In a second project, the Crown corporation wants to get closer to the state of Maine, Demers said.
“We want to know what all this implies on the Quebec side,” he said.
Preliminary studies are expected to be completed within six months.
The potential costs of the projects have not been announced. The Quebec portion of the Northern Pass project is valued at close to $620 million, rising to $2.1 billion south of the border.
About 22.5 of the 30 terawatt hours exported annually by Hydro-Québec are destined for the U.S. market. Hydro is already investing in the Northern Pass to respond to Massachusetts’s call for tenders for a long-term supply contract for 9.45 terawatt hours.
Last year, exports represented $803 million of the Crown corporation’s net income of $2.86 billion. New England accounts for half of its export market, compared with 25 per cent for New York.
Pierre-Olivier Pineau, HEC Montréal chair of energy management, said it is normal to have doubts about the relevance exporting energy when market prices are just 2 to 4 cents per kilowatt-hour. However, he says New York wants half its electricity to be renewable by 2030. Now, it is at 24 per cent: “There’s tremendous relevance.”
Solar and wind energy are becoming more important competitors for Hydro-Québec because they have lower production costs, but according to Pineau, it will be difficult for large projects to set up in New York and New England.
“The challenge is not only to be able to offer a competitive price, but to be able to guarantee deliveries, which wind and solar cannot do,” he said.