The end of Hydro surpluses: Quebec must untie the hands of independent producers

Montreal, July 6, 2023 – Liberalizing the electricity market would help Quebec deal with the anticipated end of Hydro-Quebec’s energy surpluses, according to a study published this morning by the Montreal Economic Institute.

“The end of Hydro-Québec’s electricity surpluses threatens to transform the Crown corporation from a motor into a drag on the flourishing of rural regions in Quebec,” says Gabriel Giguère, public policy analyst at the MEI and author of the study. “Notably, independent producers should have the right to step up when Hydro-Québec refuses to hook up an economic development project.”

With the current supply level, it is expected that Hydro-Québec’s electricity surpluses will be a thing of the past as of 2027.

Already this year, the entrepreneurial projects under consideration by the Department of the Economy, Innovation, and Energy would require 10 times Hydro-Québec’s remaining energy capacity.

The MEI singles out two obstacles to the development of independent electricity suppliers to complement Hydro-Québec, namely:

• the prohibition against directly supplying companies; and
• the 50 MW cap on production capacity for independent dam projects supplying the crown corporation.

According to the study’s author, raising this 50 MW production capacity ceiling for independent dam projects would notably allow indigenous communities to contribute to development as partners in the operation of potential dams on their territory.

The study also notes the contribution of Quebec firm Innergex and its 200 MW solar park in Ohio, which provides clean energy to Amazon’s facilities in the state.

“We have homegrown companies that are leaders in the supply of clean energy abroad, but which are restricted in terms of prospering in Quebec by laws that are poorly adapted to our needs,” explains Mr. Giguère. “If we authorized independent producers to supply energy to complement Hydro-Québec’s supply, the entire Quebec economy would come out ahead.”

The government of Quebec is undergoing consultations on Quebec’s energy future, in ahead of the end of Hydro-Québec’s electricity surpluses.

The MEI study is available here.

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The MEI is an independent public policy think tank with offices in Montreal and Calgary. Through its publications, media appearances, and advisory services to policy-makers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship. 

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