Energy Transition: Not ‘If’ but ‘When’

TheFutureEconomy.ca: How is Hydro-Québec adapting to the energy transition that was confirmed by the Paris Accord?

David Murray: Our electricity production has been renewable since 1944 so we have been part of the energy transition for 73 years. Moreover, we have 22 autonomous grids up north and we have committed to converting them from oil power generation to more sustainable solutions by 2023, which will help our 99% get closer to 100%. We have committed to asking industry to bid on the transformation of these networks in the next two years and we already have four in process.

We also want to stimulate the Quebec market in terms of the electrification of the auto industry. We already have almost 1,000 charging stations and we aim to have 2,500 by 2020 while having a lot of discussions and watching the way the car market adapts and evolves.

“Our electricity production has been renewable since 1944 so we have been part of the energy transition for 73 years.”

As we are regulated by the Quebec Energy Board, we have proposed to them that they authorise money for us so we can launch a programme to convert the oil systems in the commercial industry to electricity. We still have to finalize the details with the Energy Board but we already started publicizing the programme and have received many positive responses in just a month and half, which is very encouraging. So it is going to be a win for the customer, a win for Hydro-Québec and in the end, it is going to be a win for the province because it will have a positive impact on the commercial balance. Gas and oil come from the west and the US, while electricity comes from the province so it is very positive for Quebec’s economy and industry.

What is Hydro-Québec working on as part of its innovation strategy?

We have our own research institute (IREQ – Institut de recherche d’Hydro-Québec) on the South Shore of Montreal where we have over 500 researchers who are making progress in all kinds of areas. We are investing in storage and we are developing our Esstalion Technologies large-capacity 1.2 MWh energy storage unit through a joint-venture with Sony. We plan to deploy it into our network in a year to assess the savings we can realize and to see how it helps deal with peaks in demand. Deploying these batteries across our network, both in distribution and in transportation, could change the way we build and invest in our network.

Our research institute has also developed an electric engine as part of our sub company, TM4. We have already produced over 5,000 units in China and we recently launched the first electric bus powered by our engine in Montreal. This is great news, especially when you consider all the buses on the road today and how the market is exploding in Asia. All of these examples show how we are working to be industry leaders and to keep GHG’s as low as possible.

“If we are investing in technology on a large scale, we have to invest in the right technology, in the right place and at the right time.”

We have also developed robots we call line scouts that run along a power line to check it for damages while the line is in use. This is a very unique innovation and we are starting to sell it to other countries around the world. We are also looking at different ways to use drones to inspect lines. One recent example involved a drone landing directly on a power line to check its condition in a location where the only other access would have been for a person to swim to it. Obviously, there are a lot of regulations from Transport Canada regarding drones that we have to respect but this technology is going to evolve and it is quite exciting.

You mentioned your partnership with Sony. Are there other examples of your collaboration with the private sector?

Yes, one example is what we are calling ‘the house of the future’. We have 2 prototypes already and the objective is to take a typical Quebec house and equip it with all the new devices that are available on the market, such as the Internet of Things, solar panels and batteries for instance. This involves a lot of software technology and over 500 sensors in the house.

Another example is a car which can be used as a battery. We recently did a simulation with a jeep plugged into a house during a power outage and the vehicle exchanged electricity with the house to supply it during that period. Using this technology, we could imagine a scenario where Hydro-Québec sends users an email or a text message to inform them of an outage and, depending on the battery capacity of the car, they can choose to use that capacity or switch to their solar system for instance.

Our researchers are trying to understand what these technologies will do to our network and understand where the future is going. If we are investing in technology on a large scale, we have to invest in the right technology, in the right place and at the right time. If you look at photovoltaic panels, they are evolving so fast that I could use a 3D printer to make one today. So we are always questioning ourselves on what we are going to do, when we are going to do it and what the win-win is for everybody – and that’s very interesting.

Hydro-Québec has an ambitious goal to double its revenue by 2030, how much of your strategy is geared towards Quebec versus other markets?

We do not limit ourselves and we see possibilities on many fronts right now. In Quebec, the switch from oil to electricity I mentioned before is definitely one opportunity. We also have a huge opportunity with data centers; our dams are full, we have a significant surplus of electricity and water is not an issue in Quebec. In the US, data centers are using 100 TW/h of electricity and as data centers set up in Quebec, this creates a huge opportunity for us and the province. We already have about 40 data centers in the Montreal area. We are looking for ways to stimulate business and create win-win areas based on the companies we currently have in Quebec. We are having meetings with some of the top IT-based companies and we have been receiving a lot of demand for our services since our prices are very competitive compared to the US.

“In the US, data centers are using 100 TW/h of electricity and as data centers set up in Quebec, this creates a huge opportunity for us and the province.”

Looking outside the province, Hydro-Québec already exports close to $1.6 billion a year and the pressures on US states to reduce their GHG emissions are an opportunity for us. There are opportunities in New York, New England and other places, and we are bidding on some of these projects, whereby we could almost double our exports.

85% of Quebec’s hydroelectricity is produced in the province’s north. How important is Quebec’s Plan Nord as part of Hydro-Québec’s strategy?

The Plan Nord is obviously important as most of our dams are in the north so we already invest a lot in the region. We are investing $15 million a year to support the industry and we are discussing the possibility to offer our 5 airports to facilitate the Plan Nord and generate business. Moreover, until 2020, we will evaluate the possibility to build another dam up north. For our autonomous grids, we are also looking at solar technology and how it is going to be integrated. We have parks that are producing electricity at lower and lower costs, but with temperatures below -20 degrees Celsius we need to ensure they keep working. We also have the issue of storage. So Plan Nord is obviously very important for us.

What potential does solar energy represent for Quebec?

It is an interesting question because everybody thinks solar is green, but you have to produce these solar panels and you have to maintain them. How long do they survive and how do you dispose of them at the end of their life cycle? Obviously, people will come up with ideas and we are definitely looking into it, especially at our ‘house of the future’. We want to assess the technology and see what kind of offer we can present Quebec’s people in terms of energy transition. Solar is one thing but all the systems and software that goes with it are another. And we also need to consider the investment people will have to make and issues surrounding how to build houses and how to position them for optimal efficiency. I do not think the world is at that point right now but it is transitioning so it is going to be interesting.

“Hydro-Québec already exports close to $1.6 billion a year and the pressures on US states to reduce their GHG emissions are an opportunity for us.”

What is being done to support Quebec’s energy cluster and help coordinate all the players involved?

The provincial government has recently set up Transition Energétique Québec (TEQ) to coordinate all initiatives and players involved in the segment, and support the energy transition, innovation and efficiency. A committee was just started and I recently met the person in charge to see how we are going to be working together.

What is your vision for Quebec as a global leader in the energy transition?

The energy transition is not a matter of ‘if’ but rather a matter of ‘when’. At Hydro-Québec, we have always been focused on innovation and bringing a lot of innovations to the market. We are recognized for our expertise worldwide and we want to keep being a leader. We are looking at different clusters focused on integrated networks, software, solar and storage for instance, and we are trying to learn from them to see how they are shaping, what is out there, where we are ready to go and what we can offer the people of Quebec. Now, at what pace are people willing to transition and how much are they willing to pay for that transition? That is the key question.