Year in, year out, Hydro-Quebec (HQ) exports approximately 33.5 TWh. In 2019, HQ exported 33.7 TWh — representing 16% of all electricity sold by HQ but 22% of its net income. Exports are more profitable than domestic sales.
Inexpensive electricity forms part of the social contract between Quebec’s population and the Quebec state, the sole shareholder of HQ. As a result, Quebec consumers pay the cheapest electricity rates in North America.
About 75% of HQ exports go to three US states: New York, Massachusetts and Vermont. The rest is sold to Ontario and New Brunswick.
For decades, HQ and the Quebec government have tried to increase US exports. These efforts have usually met with mixed results — but this state of affairs may be changing.
New York State has ambitious plans to move to 70% renewable electricity by 2030. In pursuit of this objective, New York is about to launch a call for tenders for the supply of 1,500MW of renewable electricity into New York City.
Moreover, on October 15, 2020, the New York Department of Public Service confirmed that existing hydropower is eligible for renewable energy credits when it is delivered into New York City. This is a first in that state.
HQ intends to bid and use the Champlain-Hudson Power Express (CHPE) as its transmission solution.
CHPE is a near shovel-ready project to build a 1,250MW transmission line from the Quebec-New York border all the way down to New York City. The novel feature of the project is that most of the line would be buried under Lake Champlain and the Hudson River.
CHPE is a project that has been in development for at least 10 years and has fewer challenges than the two other US export transmission projects pursued by HQ: the New England Clean Energy Connect (Quebec to Massachusetts via Maine) and the Northern Pass Transmission Project (Quebec to Massachusetts via New Hampshire). Northern Pass was abandoned in December 2019 by its US proponent.
Perhaps the most important CHPE advantage is that it does not have to pass through another state to reach its intended recipients. It is designed to be built entirely in New York state and for the sole benefit of its residents.
The Northern Pass project has eloquently demonstrated how “not in my backyard” (NIMBY) sentiment is particularly strong when a transmission line project is for out-of-state purposes.
The New England Energy Connect project will confirm over the next 18 months whether passing through a state is a project killer. If that is the case, novel transmission solutions will have to be envisioned, perhaps including reaching Boston via an undersea cable from Nova Scotia.