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Hydro-Québec is facing mounting pressure on its power supply, most of which is generated by a network of dams and hydroelectric stations in the province’s north and from the partly owned Churchill Falls project in Labrador.Jacques Boissinot/The Canadian Press

Hydro-Québec has struck a deal to buy electricity from Brookfield Renewable Partners LP unit Evolugen under a 40-year contract as the Quebec utility shores up its power supplies to meet ballooning demand for clean energy.

Canada’s biggest electricity producer said Tuesday it will purchase the entire output of Evolugen’s Lièvre hydroelectric assets in Quebec, which have an installed capacity of 263 megawatts (MW). No specific financial terms were disclosed. Power deliveries under the agreement began in late December.

Four generating stations located along the Rivière du Lièvre in the Outaouais region will supply Hydro-Québec with about 1.5 terawatt-hours (TWh) annually – equivalent to the energy used by 90,000 homes, the partners said. (There are 1,000,000 megawatts in a terawatt.)

Under the pact, Hydro-Québec will also obtain Evolugen’s power transmission rights to the U.S. Northeast, allowing the utility to export more energy to New England.

“With this strategic agreement, we are adding capacity and renewable energy to our supply in a context of increasing demand in both Quebec and neighbouring markets,” Pierre Despars, Hydro-Québec’s vice-president of corporate strategy and business development, said in a statement. “[This] is particularly useful for us during winter peaks.”

Montreal-based Hydro-Québec is facing mounting pressure on its power supply, most of which is generated by a network of dams and hydroelectric stations in the province’s north and from the partly owned Churchill Falls project in Labrador. It also buys power under contracts from wind energy and other renewable power producers and purchases electricity on the spot market.

Unusually cold temperatures in January prompted the Crown corporation to ask Quebeckers to reduce their power consumption. The utility has also been tapping TransCanada Corp.’s natural gas plant in Bécancour occasionally to supplement its power.

In its latest forecast update released in November, Hydro-Québec predicted demand from Quebec customers will increase by 12 per cent from 2019 to 2029 as the economy grows, more industrial projects such as power-hungry data centres sprout up, and consumers adopt electric vehicles in greater numbers. Interest is also rising from outside the province, and the utility is keen to book more export contracts such as the one signed last year to deliver power to New York.

Hydro-Québec currently has a total system capacity of roughly 37,200 MW of power available from its own generation facilities. To meet the anticipated increase in demand, it plans to source more supply from external renewable energy producers and step up efforts to achieve better energy efficiency from existing customers, among other strategies. Its Romaine-4 hydroelectric generating station in northeastern Quebec comes online this year.

The utility has received “an astonishing” number of requests in the province to tap its electricity from promoters of large-scale industrial projects in recent months, distribution and supply chief Eric Filion wrote in a letter published in the Journal de Montréal Jan. 21. Each of them requires at least 50 MW of power, equivalent to the consumption of 18,000 homes, he said.

To put that in context, Hydro-Québec currently has about 30 big industrial customers of comparable size to the potential clients – a client base the utility has been able to manage because they’ve come on progressively over decades, Mr. Filion said. These existing customers require a combined 6,500 MW of power while all of the new requests add up to 10,000 MW – too much for the utility to accommodate.

“Let’s be clear: The interest of promoters in settling in Quebec is excellent news. But we have to keep a cool head and use our energy in the best possible way,” Mr. Filion wrote, adding Hydro-Québec is now working with the Quebec government on new guidelines to prioritize the most promising projects. “We can no longer operate on a ‘first come, first served’ basis.”

The contract with Evolugen includes a clause for the purchase price to be adjusted over time, said Hydro-Québec spokeswoman Caroline Des Rosiers. The exact terms are confidential and represent commercially sensitive information, she said.

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