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energy security and investment
Will hydropower from Quebec supply New York City?
In Québec, electricity is cheap. Hydro-Québec, a state-owned utility, has over 60 generating stations that use the province’s rivers to produce power. One of them is Beauharnois, southwest of Montreal on the St. Lawrence River.
It’s a long brick building. Men in jump suits and hard hats work on giant rumbling machines that generate power.
But hundreds of miles south in New York City, power is really expensive. A lot of demand, plus congestion on the state’s grid, means that the rate payers’ electricity bills are through the roof.
So what if you could funnel the cheap power from Québec into the New York city market?
Donald Jessome is president and CEO of Transmission Developers, Incorporated. His company plans to do exactly that.
"We’re connecting one of the strongest systems in North America in Québec, to the other strongest system in America which is New York," Jessome said.
TDI’s project is called Champlain Hudson Power Express. They want to a run an underground HVDC transmission line from the Canadian border, under Lake Champlain, under the Hudson River, the East River, and the Harlem River and into New York City.
The line would deliver 1000 megawatts of power – and cost at least $2.2 billion.
The plan’s currently before New York state’s Public Service Commission.
Canadian power producers often look south, across the border, for business.
But Hydro-Québec only has one transmission line into the US: from James Bay, in far northwestern Quebec, to Boston.
So the Champlain Hudson Power Express is a big opportunity.
Maxime Lonctôt is director of wholesale markets at Hydro-Québec. He says the company works to keep prices low in the province and makes their money from the energy they export.
"That’s going to be a really important project for us because it gives us access to a new market. We cannot physically sell to New York city right now," Lanctôt explained.
"This project is basically an electrical extension cord from Canada just flooding the marketplace in New York," said Gavin Donohue, head Independent Power Producers of New York, a trade association.
He says that the Champlain Hudson Power Express puts New York state’s power producers at a disadvantage.
"And you do have struggling areas in upstate New York where smaller power plants are trying to make a go of it and this project will certainly take away huge ability of them to prosper in an economic development way."
And Donohue says the capacity that the CHPE line will supply already exists in New York state.
"We have across the state in upstate New York probably 3000 megawatts in New York state just sitting there every day. So when you come down to does the marketplace need this power? To us it’s obvious that it does not."
Then there’s the economics. Donohue believes that the $2.2 billion price tag on the transmission line is a low-ball estimate.
And Jean-Thomas Bernard, a professor of electricity economics at Québec’s Laval University and the University of Ottawa, says that hydropower is going to face tough competition from natural gas in the marketplace.
"Hydro-Québec, 5 or 6 years ago, was netting about 8 or 9 cents per kilowatt hour on the export market. Nowadays they have difficulty getting 3-4 cents per kilowatt hour due to the huge plunge of the natural gas price. So I am rather pessimistic about this development," Bernard explained.
TDI says customers in New York City will see lower power bills but won’t have to assume any of the cost.
It’s not clear yet clear what impact the project would have on electricity customers in other regions.
TDI estimates communities along the route will see around 1200 induced jobs during the line’s construction.
The company reached an agreement with unions along the route earlier this month.
Right now, they’re working with Blackstone Group, a major private equity firm, to finance the project.
The draft environmental impact statement for the project will be published this spring.
TDI hopes to have their permits in place by the end of the year.
Morning Trail Mix