Hydro-Québec Introduces Wind Development Strategy

On May 30, Hydro-Québec (HQ) released its "Wind Development Strategy" (the strategy).  The strategy outlines HQ's plan to add 10,000 MW of wind capacity to meet an increased demand of 60 TWh by 2035. To achieve this goal, 1,000 to 1,500 MW of new capacity will need to be deployed annually over the next decade.

HQ has noted that meetings with stakeholders have revealed a clear message: municipalities and First Nations want change to HQ’s development model, emphasizing the need for improved planning and coordination. A recurring theme in these discussions was that social acceptability and public confidence must be the foundation of upcoming projects. Yesterday’s release was HQ’s attempt to address that feedback.

In particular, HQ has identified five key challenges in developing wind energy. Social acceptability is crucial, as municipalities and First Nations are seeking partnerships. Coordination with the evolving transmission system is also essential - HQ’s Action Plan 2035 highlights the need for 5,000 km of new transmission lines by 2035, and HQ has announced its intention to publicly disclose the planning of its transmission network. Access to the workforce is another challenge, with HQ aiming to mobilize 35,000 workers annually to meet its 2035 objective.

Additionally, securing equipment will be critical, as HQ anticipates a global addition of 1,000,000 MW of new wind capacity between 2024 and 2035. Ensuring greater predictability in developing large-scale projects will help stabilize supply chains. Finally, HQ expects to achieve significant cost savings, anticipating a 20% reduction through economies of scale.

Under the newly proposed approach, HQ would designate itself as the project manager (FR – Maître d’Oeuvre) for new project development. Leveraging its close relationships with municipalities and First Nations, HQ aims to play a structuring role, ensuring social acceptability, economic benefits, and the growth of the wind sector in Québec. In line with this approach, HQ's strategy fundamentally changes the historic roles of HQ, First Nations, municipalities, and Independent Power Producers in developing wind projects in the province.

HQ will assume the roles of project manager, investor, and off-taker. Municipalities and First Nations will act as investors and will be involved from the early stages in the development of projects. Independent Power Producers (IPPs) will serve as technical experts and investors.

HQ's wind strategy outlines its commitment to initiate discussions with First Nations and municipalities promptly. These discussions aim to establish partnerships and identify geographic zones conducive to wind development. Subsequently, HQ will launch a competitive process to engage wind developers in Québec.

Economies of scale are a recurring theme in HQ’s wind development strategy. The strategy emphasizes the necessity of large-scale projects exceeding 1,000 MW to meet demand and drive cost reductions. Additionally, smaller projects will remain part of requests for proposals, a practice consistent with HQ's approach over the past two decades.

HQ has provided the following timeline for the development of these large-scale projects: Identification of zones and community partners will take 6 to 18 months, project planning will span 1 to 2 years, the construction of the wind farm will take approximately 2 years, and the operation of the project is expected to last 25 years or more.

With such a dramatic change in approach to wind development, it’s largely anticipated that the government and HQ will receive significant feedback on the new strategy.  This approach would fundamentally change the role of private sector investment in the province, and it is unknown whether and how much interest there will be in projects developed under this framework.

As always, we will continue to follow this framework's evolution and would be happy to help you understand and engage in these policies in the coming weeks and months.