Globe and Mail
September 2, 2014
An Ontario-Quebec power pact would have a win-win outcome
The days of energy isolationism may be coming to an end for Ontario and Quebec. Canada’s two largest power-consuming provinces, which have long followed their own paths when it comes to electricity, could soon join forces in an energy partnership that will pay dividends on both sides of the border. What’s more, unlike the fallout from deals involving Alberta’s oil sands, this one won’t require building any new pipelines nor will it leave behind a huge carbon trail for future generations.
Ontario Premier Kathleen Wynne’s recent pursuit of Quebec’s surplus hydro power signals the overdue realization that Ontario’s yearnings for energy self-sufficiency are a mug’s game, at best. What matters to households and businesses is the cost of power, not its province of origin. Ontario has already wasted billions on natural gas-fired power plants that were never built and could potentially squander billions more refurbishing aging nuclear stations in a bid to prop up the province’s atomic industry. Of course, that could just be throwing good money after bad, given it’s been roughly 20 years since a country stepped up to buy a Candu.
The Ontario government has wisely put plans to refurbish its fleet of nuclear plants on hold for the time being. Over the next 15 years, though, it will have to overhaul some 8,500 megawatts of nuclear capacity. It’s clearly not a decision that can be entered into lightly. The Darlington station alone will require a minimum of $13-billion in capital spending if it’s going to continue to be in the province’s medium-term power plans.
Ontarians already pay some of the highest electricity prices in the country. Importing power from Quebec is a much cheaper and more reliable option than continuing to depend on nuclear. Quebec’s recent export deal with Vermont is at prices that are 30 per cent lower than what Ontario can expect to see if it decides to maintain its fleet of nuclear plants. And that’s a best-case scenario. If history is any guide, you can double any estimates provided by the nuclear industry to find the price Ontario’s electricity users will actually pay once the inevitable cost overruns start to pile up.
Ontario wouldn’t be the only winner from an inter-provincial power deal. Quebec has an abundance of power to offer, but it also urgently needs to find new markets. Its traditional customers in the U.S. northeast are getting increasingly enamoured with natural gas and the long-term prospects for low-cost power that’s part-and-parcel of the shale gas revolution.
Shale gas has proven to be a fierce competitor to Quebec’s hydro industry in its key U.S. export markets. Thanks to new supply from shale formations, natural gas is not only abundant, but it’s cheap too. In the last few years, Quebec has had to slash prices to remain competitive.
Ultimately, though, hydro is a tough option to beat in the energy game. Many natural gas producers are already questioning the economic viability of maintaining shale production at today’s depressed commodity prices. If the industry decides to let off the throttle, less drilling and a more limited supply would send prices higher.
Hydro’s nearly invisible carbon footprint is also a welcome sight for a warming planet. In a world that’s becoming more conscious of carbon emissions, it’s easy to see how hydro becomes that much more valuable, if only as an alternative to burning more coal.
Hydro power is far and away the most significant source of renewable energy in the world, accounting for nearly 20 per cent of global electricity generation. Unlike other renewable options, such as solar, hydro also doesn’t need any market-skewing government policies, like feed-in tariffs, to make it cost effective.
Canada’s spot as a world leader in hydro also shouldn’t be overlooked. Hydroelectric power accounts for more than 60 per cent of our country’s electricity generation. Some 475 hydroelectric power stations scattered across the country produce more than 370 terawatts of power every year. It’s an amount that’s second only to China.
According to the Canadian Hydropower Association, Canada still has enough hydro capacity to more than double current output. By one estimate, Quebec alone has the potential to develop another 40,000 megawatts of hydroelectric power. To put that in context, Alberta’s total power generation capacity currently stands at around 14,000 megawatts.
A Quebec-Ontario power accord could be the catalyst for developing some of that untapped hydro potential. For all of the uproar about the oil sands, in a carbon-constrained world, hydro may yet become Canada’s most valuable source of energy.