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Opinion: Quebec and Ontario have much to gain from energy co-operation

By working together, they can grow their economies, create jobs, lower Ontario’s electricity bills and increase Hydro-Québec’s profits.

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Premier François Legault says he is prepared to make Ontario an offer on electricity that will be too good to refuse. Given the difference in cost between producing power from Quebec’s legacy dams and rebuilding Ontario’s aging nuclear reactors, it won’t be a hard offer to make. 

But while Ontario should eagerly accept the premier’s offer of power, it should shun his additional offer of jobs from building new dams. Quebec currently has a major power surplus, with the vast majority of this power being sold on the North American spot market at rock bottom prices (in the first nine months of this year the average price of Hydro-Québec’s exports was only 4.3 cents per kWh). Quebec can quickly ramp up its exports to Ontario, under a more equitable long-term contract, without mixing any new cement.

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The real job potential lies in helping Quebec exploit two massive additional resources — energy efficiency and wind power — to create thousands of megawatts of clean, exportable power at a fraction of the cost of building new dams.

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Quebec’s energy efficiency lags far behind Ontario’s. In fact, it lags behind pretty much everyone — its electricity consumption per person is the highest in the world, in part because for Quebecers, electricity is relatively inexpensive. Even factoring in things like the province’s large aluminum industry and colder climate, there is no question that Quebec can drive down domestic electricity usage to increase its export supplies. By investing in cost-effective energy efficiency measures, Quebec can double the export potential of its heritage water power facilities. Innovations like LED lighting, variable speed motors, air source heat pumps and smart controls are driving an efficiency revolution that most political leaders have failed to factor into their mega-project visions, but that could create a whole new source of power available for export at fat profits.

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Ontario has been at this efficiency game for some time and is well positioned to sell expertise or products that would help Quebec increase energy efficiency.

And then there is wind. Quebec’s wind power potential is absolutely massive. Quebec could harvest roughly 300 billion kWh per year if it developed all the potential economically viable wind projects within 25 km of its current grid. That’s more than double Ontario’s total electricity demand, and when combined with Quebec’s hydro reservoir system (a giant battery), this power can be made 24/7 “firm” power for export. 

Ontario was at one time a North American leader in wind power component manufacturing. But demand within the province has largely blown out due to opposition fuelled by the initial high costs of renewable energy projects. These days, however, wind is out-competing coal and natural gas as the lowest-cost supply source in many places. In 2014, Quebec signed wind contracts at 6.3 cents per kWh — a great deal compared to power from Romaine or future new water power projects. Demand from Quebec could help resuscitate Ontario’s struggling wind industry and create good green jobs — especially if procurement was tied to an export agreement. 

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Finally, the provinces could also share in another area of growing demand — nuclear decommissioning. Quebec made the smart decision to shut down its high-cost Gentilly-2 Nuclear Station in 2012. Ontario needs to do the same with its much larger and even older Pickering Nuclear Station, which produces power at four times the cost of Quebec spot market power. With nuclear plants falling like dominos due to high costs and increased competition from renewable sources across North America, decommissioning is quickly becoming a growth industry. The two provinces can jointly build expertise and capacity by taking apart the toxic legacy of these two old CANDU plants.

By working together, Ontario and Quebec can grow their economies, create jobs for both provinces, lower Ontario’s electricity bills and increase Hydro-Québec’s profits.

Jack Gibbons is an energy economist, former Toronto Hydro commissioner and is currently chair of the Toronto-based Ontario Clean Air Alliance.

 

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