Atlantic Canada's electricity is generated primarily from fossil fuels (coal, diesel, fuel oil and natural gas) and one nuclear power plant, Point Lepreau Nuclear Generating Station, with a net capacity of 660 MW. But Atlantic Canada's renewable energy potential is considerable.

In its Throne Speech on September 24, 2020, the Government of Canada announced its support for the Atlantic Loop, a project to "connect surplus clean power to regions transitioning away from coal."

The Muskrat Falls project on Labrador's Churchill River is an 824 MW hydroelectric generating station planned to begin operations in early 2021. Muskrat Falls also includes 1,600 km of transmission lines, including two undersea links. The first undersea link will connect Labrador to the Island of Newfoundland, and the second Newfoundland to Nova Scotia.

Another 2,250 MW could be harnessed at Gull Island, along the same river. Additionally, Atlantic Canada has ample wind, solar, biomass and tidal resources. If Québec is included in the Atlantic Loop, then most, if not all, of Atlantic Canada's fossil fuel generation could be replaced by renewable energy over the medium term.

Québec has large renewable energy surpluses. While exports to the US may absorb some surplus electricity, that avenue is limited as domestic US policy – including the incoming Biden presidential administration – favours domestic renewable energy over imports. It is therefore in Québec's best interest to seek additional markets and the Atlantic Loop may be a welcomed opportunity.

As proposed, the Atlantic Loop requires additional transmission facilities but, and perhaps more importantly, it will be necessary to change how some utilities do business.

An MIT study released last February concluded that the best use of Hydro-Québec's hydro-electrical facilities and reservoirs is when they are used to balance intermittent renewable electricity producers. Under this scheme, Hydro-Québec would sell electricity to a province or state when the wind or solar resources of that province or state are insufficient and in turn purchase electricity when there is surplus renewable electricity. By conserving water in its reservoirs, Hydro-Québec would in practice "store" energy for later use and become the battery for the Atlantic Loop or the Northeastern United States.

This complementary way of doing business would not only reduce utility costs but also has the advantage of being an easier political sell to both Atlantic Canada and the Northeastern U.S., as "two-way electrical flows" would not displace local renewable energy producers nor the jobs and investments they engender.

Greater grid integration in Eastern Canada and hopefully in the Northeastern U.S. would also serve as a model for Manitoba and British Columbia, two provinces with considerable hydro capacity and fossil fuel consuming neighbours.

As is often the case in Canada, the most important challenges to the execution of the Atlantic Loop are political rather than technological.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.