Duty went into the field to see how the construction of the electrical line intended to supply New York City was progressing, and what the repercussions will be. In this text: the Quebec side.
An icy wind blows on the Hertel post, in La Prairie. In the courtyard, a gigantic transformer has just been delivered by train. At the top of a nacelle, workers attach an insulator to one of the pylons that convey alternating current to the conversion station. Power lines spring from the ground: they snake underground towards Lake Champlain. Hydro-Québec’s facilities, on this side of the border, are a perfect mirror of those of its partner Transmission Developers Inc. (TDI) in New York.
Since the genesis of this export project in the early 2010s, the energy context in Quebec has turned around like a glove. The surplus was replaced by scarcity. Now that the contract has been signed, industrial players in Quebec are tearing their hair out at the idea of seeing this energy go to the United States.
Nevertheless, Hydro-Québec assures that the contract will be “profitable”, with revenues of around 30 billion over 25 years. “We are positioned to have stable, predictable and significant revenues for Quebec for decades. Then, our electron highway will be in place for the future,” underlines Lynn St-Laurent, senior advisor for external relations at Hydro-Québec.
A crucial feature of this “highway” is that electrons will be able to run along it in both directions. Certainly, the current contract only provides for the export of hydroelectricity from Quebec to New York. In the long term, however, the Champlain Hudson Power Express (CHPE) line will also make it possible to import surplus wind electricity generated off the coast of New York during high winds. Hydro-Québec hopes to buy this energy at a low price, and sell that from its reservoirs when prices rise. This is the famous “green battery of northeast America” that François Legault likes to talk about.
At the conversion station, we are expecting the arrival of the converters from May 2025. Thanks to these state-of-the-art devices, it will be possible to reverse the direction of the current on the line with a single click. The two other interconnections between Quebec and New York also allow a reversal, but not as quickly. “Now, it is possible without mechanical reconfiguration,” emphasizes Étienne Veilleux, engineer at the supplier Hitachi, who accompanies us on the site.
“All economic models will tell you: when we allow more exchanges of electricity, there is a reduction in the total cost of production,” explains Justin Caron, economist specializing in environment and energy at HEC Montréal. In a study published in March 2024, Mr. Caron calculates that, in a scenario of total decarbonization of northeastern North America, it is necessary to add 6,900 megawatts (MW) of interconnections between Quebec and New York to minimize the costs of the energy transition. With its 1,250 MW, the CHPE project is “well below what could be useful,” says the professor.
The 4 TWh clause
In recent years, Hydro-Québec has sold approximately seven terawatt hours (TWh) per year to New York State: this corresponds to 3.5% of all its energy. These transactions are concluded on the instant market (“ spot ), as needed. The 10.4 TWh of exports provided for in the CHPE contract – which will arrive in the heart of a New York which runs on fossil fuels – could replace part of the instant exports, but Hydro-Québec will continue to trade on the Stock Exchange of electricity with its other interconnections.
It must be said that the 10.4 TWh per year constitutes a ceiling: the contract provides for an “obligation to deliver” which only applies 80% of the time. The state company can therefore choose to cut power on the CHPE line for up to 73 days a year. And this, whenever it suits him — during extreme cold, for example.
Another clause in the contract obliges Hydro-Québec to produce 4 TWh of additional renewable energy (wind and solar) per year by December 2028. Make no mistake: on paper, it is hydroelectricity that Quebec sells to New York. However, with this clause, the Americans ensure that Quebecers do not offset their exports with an increased use of fossil fuels, which would cancel out the claimed climate gains.
Clearly, to respect the 4 TWh clause, Hydro-Québec must plant new wind turbines on Quebec territory. Only one project is mentioned in the contract: the Apuiat wind farm, on the North Shore. What pressure does this put on the state corporation? Mme St-Laurent explains that the requirement will be met thanks to the entry into service, from 2022 to 2026, of several wind farms totaling 5.7 TWh per year. “These projects were not made necessary by the contract with New York since they were already planned,” she indicates.
Paid or not?
It is impossible to exactly compare the profit pocketed by Hydro-Québec in New York with the price of its new wind energy supplies, which amounted to 8¢ per kilowatt hour (¢/kWh) in 2023. Indeed, the sharing of revenue between Hydro-Québec and TDI are confidential. Notwithstanding the threat of a 25% customs tariff by Donald Trump, we know that the two partners must jointly receive an income ranging from 14¢/kWh in 2026 to 25¢/kWh at the end of the contract.
“It’s complicated, but if we just look at the short and medium term benefits, we don’t really make money with that, compared to new supplies,” estimates Normand Mousseau, scientific director at the Institute of energy Trottier and professor of physics at the University of Montreal. The price obtained is nevertheless “reasonable”, according to him. The contract makes it possible to develop interconnections — a good thing — but reduces the energy available for the decarbonization of Quebec.
“It’s really profitable, this contract. It allows Hydro-Québec to accelerate its investments to achieve the energy transition,” said Yvan Cliche, energy specialist and fellow at the Center for International Studies and Research at the University of Montreal. To judge the contract, it is necessary to compare its revenues to the average production cost of Hydro-Québec, and not to the cost of new projects, thinks Mr. Cliche.
With the CHPE line, the promoters claim a reduction in emissions of 3.9 million tonnes of CO2 per year [voir autre texte]. This is an upper limit, if the line is used 100% all year round. This good climate change will not appear in Quebec’s greenhouse gas balance sheet, but it will slow down global warming just as much. “For us, this contribution is important,” says M.me St-Laurent. That said, are we breaking from our commitment to supporting decarbonization in Quebec? No way. »
