With the days of endless cheap hydropower in Québec coming to an end, and the Northeastern U.S. hoping to rapidly scale up intermittent renewables, the two regions may be forced to fundamentally reconsider the role of hydropower on the grid. 

Power has historically flowed south, and just a decade ago, government-owned corporation Hydro-Québec actively sought two contracts to send large quantities of power to the U.S. It eventually reached deals with Massachusetts and New York that led to a pair of major new transmission projects: the 1,200-MW New England Clean Energy Connect (NECEC) and the 1,250-MW Champlain Hudson Power Express (CHPE). 

NECEC and CHPE are aiming to be in service by 2025 and 2026, respectively, and are tied to long-term supply contracts that will ensure that baseload power will flow from Québec to the Northeast well into the 2040s. 

At the same time, increasing power demand in Québec has forced Hydro-Québec to re-evaluate the role of hydropower going forward while spurring concerns in the U.S. that it will not have enough power to fulfill the contracts. 

While Hydro-Québec has maintained that it will be able to meet the NECEC and CHPE contracts, the corporation acknowledges that a paradigm shift is on the horizon for its hydro fleet. 

“When you look forward, we don’t have more surpluses that we could do another two [contracts] tomorrow — not like that, not in that same fashion,” Serge Abergel, COO of Hydro-Québec’s U.S. operations, told RTO Insider. 

Instead, the company is eyeing a long-term change in the role hydropower plays on the grid, transitioning from baseload to a long-duration storage resource that can help balance and firm up the growing amount of wind and solar resources. 

“We’re at a point in time where the traditional way of how we’ve been doing things in the past — sending [from] north to south large blocks of energy 24/7 — is completely changing,” Abergel said. The proliferation of intermittent renewables “will create a very strong need for a balancing resource, and that’s where our hydropower will be able to play a different role.” 

Enough Energy, or Enough Capacity?

In 2021, a group of MIT-affiliated researchers published a study modeling the optimal configuration of a high-renewables grid in 2050, aimed at better understanding the role of large Canadian hydro resources. 

The researchers initially expected to find hydropower to be “this very flexible baseload resource, something like nuclear, but even more flexible,” co-author Emil Dimanchev told RTO Insider. 

“But what we found from our modeling was something very different,” Dimanchev said; “specifically, the fact that if the system was operated optimally, the best thing to do would be to do a two-way trading of electricity,” with Canadian hydro operating “more as a battery rather than this flexible source of energy.” 

The modeling found that increasing the transmission capacity between Québec and New England would help expedite the decarbonization of the power sector while reducing the need to overbuild intermittent renewables. The analysis also found that Québec did not need to add any hydropower for it to play a substantial balancing role, noting that investments in new hydro plants “are deemed uneconomical by our model” compared to investments in new wind and solar. 

“Québec already has this huge battery, so intermittency is not a problem,” Dimanchev said. New wind and solar resources “can be immediately firmed up with existing hydro.” 

To prevent short-term power supply issues, Hydro-Québec is planning to spend $90 billion to $110 billion CAD by 2035 to increase its generating capacity by 8,000 to 9,000 MW, largely through new wind resources, demand reductions, upgrades to existing hydro generators and new hydro facilities. 

The study’s findings also speak to more recent questions of whether Québec has enough power to justify additional transmission projects, Dimanchev said. 

“The question that people are raising now is, ‘Is there enough energy to serve all the contracts and new transmission lines?’” Dimanchev said. “Well, that might be a problem in the short term, but what our study shows is that in the long term, we should think of this resource as a battery, so the question is not so much, is there enough energy, but is there enough transmission capacity to use that battery?” 

The potential of Canadian hydropower as a long-duration storage resource is the basis for another potential transmission line, the Twin States Clean Energy Link, a proposed 1,200-MW two-way connection between New England and Québec. 

Aiming to come online in the early 2030s, the National Grid-led project touts its potential “to balance New England’s renewable resources during times of peak demand, while also sending surplus renewable power generated in New England — such as offshore wind — to Québec when it’s not needed.” 

The project has already received a vote of confidence from the U.S. government: In September, the Department of Energy committed to purchasing a significant portion of the line’s capacity to minimize the project’s overall development risk. (See DOE to Sign up as Off-taker for 3 Transmission Projects.) 

South-of-the-border Constraints

Although added transmission capacity between Québec and New England could help unlock the balancing potential of hydropower, the benefits are largely contingent on reaching a high level of surplus renewables. 

“This doesn’t apply today because we are just in the early stages of this deployment of intermittent renewables,” Hydro-Québec’s Abergel said. However, by 2035, “we believe there’ll be sufficient intermittent resources in the Northeast to start having a viable concept.” 

Reaching a high level of renewable power in New England will require significant investments in local transmission infrastructure to interconnect new solar and wind resources, said Francis Pullaro, executive director of RENEW Northeast. 

“The biggest challenge of getting renewables or land-based wind built in Maine has always been the lack of adequate transmission,” Pullaro said, adding that southern New England also desperately needs transmission upgrades to interconnect large-scale offshore wind projects. 

Regarding the NECEC line, the baseload power it will send could end up undermining the development of wind and solar resources in Maine by using up headroom on the existing system and causing more frequent curtailments of renewables, Pullaro said. 

“If the states are going to be investing in new transmission, another line to Canada shouldn’t be the top priority,” Pullaro added. 

While the New England states have long struggled to reach an agreement on how to allocate costs for new forward-looking transmission projects within the region, Pullaro expressed measured hope about recent discussions among the states, ISO-NE and NEPOOL stakeholders over a new longer-term transmission development process. (See NEPOOL Nears a Vote on Order 2023 Compliance.) 

“I think there’s a lot riding on it,” Pullaro said, adding that for years, “we just haven’t been able to get the region to galvanize around internal transmission to benefit our clean energy buildout. And maybe we’ve finally arrived at the moment where this new process can help.” 

Long-term Contracts

While the contracts for NECEC and CHPE will run for 20 and 25 years, respectively, the need for significant additions of clean balancing resources could arise sooner, assuming the states can overcome significant hurdles related to internal transmission and the deployment of offshore wind. 

“In [the] short term, it might be helpful to have the baseload contract, but I think it’s worth raising the question of whether it can be renegotiated in 10 years, for example, to allow for two-way trading,” Dimanchev said. 

While the current contracts will keep the power flowing north-to-south, the NECEC and CHPE lines will be able to operate bidirectionally, although some system upgrades might be needed to facilitate south-to-north transmission. 

Operating the lines bidirectionally would also require new types of contracts or major changes to the existing contracts. 

“It will involve some way of ensuring that one region commits to selling onto the market when prices are at a certain point, whereas the other region [exports] when prices are below a certain point,” Abergel said. “Developing the business model for this new way of doing things is critical.” 

Abergel added that some regulatory changes may also be needed to enable more efficient two-way power flow, pointing to the “considerable” exit fees that apply to power sent from New England to Québec. 

“We have the contracts that we have right now; we’re committed to them; but when we look to the future, working back and forth with our partners and sending energy over the border when needed really is the wave of the future, and that’s what we’ll be working on,” Abergel said.