Manitoba has inked the most lucrative deal in the province's history to store wind power and send electricity to Minnesota.
The 15-year deal, worth $4-billion, is to start in 2020 after the construction of a new hydro dam.
"This is the largest dollar sale of exports that we've had in the history of Manitoba Hydro in absolute dollar terms," Premier Greg Selinger said Wednesday. "Today is a day worth celebrating."
Under the agreement, Manitoba Hydro will sell 250 megawatts from 2020 to 2035. It will also import wind energy from the state and store it, selling it back to Minnesota when demand for energy grows.
Manitoba Hydro also signed a deal with Wisconsin Public Service for 100 megawatts from 2021 to 2027.
Both deals underline the importance of building a new transmission line along the west side of Lake Manitoba, Mr. Selinger said. The proposed route has been hotly debated. Some believe it disrupts too many properties and should be built in the eastern part of the province, which the NDP government is hoping will become a UNESCO world heritage site.
"If we do this properly, it will allow us to have a sustainable market for our exports for many generations to come," Mr. Selinger said. "It's part of increasing the transmission capacity within Manitoba which will pair up with the reality that we need increased transmission into the American marketplace. It will strengthen our ability to provide energy to our customers south of us."
Manitoba exports about 40 per cent of its energy - 2,000 megawatts - and these deals will boost that by another 20 per cent, Mr. Selinger said.
The Minnesota deal will help keep Manitoba's electricity prices low and will create jobs in northern Manitoba when construction of the dam gets under way, he added.
Manitoba Hydro chief executive officer Bob Brennan said the province's power is increasingly in demand as U.S. states start regulating how much of their energy must come from renewable sources.
"The Wisconsin legislature just approved large hydro to be a renewable source," he said. "As that happens in more and more states, our product will be much more valuable."
In a release, Minnesota Power said the deal fits with the utility's "strategy of lessening its dependence on carbon-based generation."
"Buying hydroelectric power from Manitoba Hydro is the lowest-cost option for meeting the electric demands of its customers in the 2020 time frame," the statement said.
The deal also allows Minnesota to essentially use Manitoba as a "rechargeable battery" by storing energy from wind farms in North Dakota, the utility said.
"When Minnesota Power transmits power northward, Manitoba Hydro will absorb it into its system - in essence storing the wind power, using the Manitoba system as a rechargeable battery," the utility said. "This wind storage provision will allow Minnesota Power to balance its energy position and maximize the value of its wind resources."
The deals still need regulatory approval.