RFP Results Announced by Hydro-Québec
Hydro-Québec announced on March 15, 2023 the seven submissions it had retained following the two calls for tenders launched on December 13, 2021. Collectively, these submissions total 1,303.36 MW of installed capacity, and are required to meet growing demand for electricity in Québec and other markets served by Hydro-Québec. Deliveries of electricity from these submissions are required to start no later than December 1, 2026.
The selected submissions include five for the acquisition of the original 480 MW block of power from renewable sources, totalling 1001.04 MW, and two for the acquisition of 300 MW block of wind energy, totalling 302.32 MW of installed capacity. Six of the seven winning submissions are wind energy projects. With respect to the Hydro-Québec Production winning submission, Hydro-Québec indicated that it plans on using existing systems and infrastructure.
The average supply cost predicted in the chosen submissions is 6.1 cents/kWh (2022 dollars). The list of projects retained is as follows:
Electricity supply contracts are expected to be signed between Hydro-Québec and the various electricity producers retained in the coming weeks. Regulatory filings to approve the contracts before Québec's Régie de l'énergie will follow. The producers are also responsible for obtaining authorizations, permits and other regulatory filings to start construction work.
Details of New 1,500 MW RFPs Launch
A day later, on March 16, 2023, the Office of Québec's Minister of Economy, Innovation and Energy and Minister responsible for Regional Economic Development announced a 1,500 MW wind energy block call for tenders ("RFP"), to be launched by Hydro-Québec at the latest by March 31, 2023. This announcement followed t the enactment of the Regulation respecting a 1,500-megawatt block of wind energy in the Gazette Officielle du Québec.
This RFP will include a novel geographical component: certain regions have been identified as being favourable to quick integration into Hydro-Québec's power grid. A map outlining these various integration zones was made public, which is reproduced below. Projects submitted to the RFP must be located in the target areas.
Figure 1 Map of key regions,: Source: Hydro-Québec
As indicated on the Hydro-Québec map. certain regions' capacity to receive energy is expected to be capped to varying degrees. Regions identified include Saguenay-Lac-Saint-Jean, Rivière-du-Loup, Nicolet, Baie-Comeau, the Montreal area, Salaberry-de-Valleyfield, Montérégie, Des Cantons, and Montmagny.
Successful projects will be required to connect to Hydro-Québec's main transmission network between December 1, 2027, and December 1, 2029.
Order-in-Council 214-2023 (Concernant les préoccupations économiques, sociales et environnementales indiquées à la Régie de l'énergie à l'égard d'un bloc de 1 500 mégawatts d'énergie éolienne) was also published concurrent to this announcement. It provides guidelines on economic, social and environmental considerations for the upcoming 1,500 MW RFP, such as local community benefit requirements for the energy projects to be submitted. Three key objectives are detailed:
- local community participation in projects should be around 50%;
- a project's Québec content should be equal approximately to 60% of the project's total spending; and
- projects should favour the development and maintenance of harmonious relations with Indigenous communities.
With this announcement, the Québec Government restated its goal for the Province to generate approximately 4.7 TWh of energy by 2029 in order to meet the growing demand for electricity in the context of electrification, energy transition, and decarbonization of the Québec economy.
Our team at McCarthy Tétrault continues to closely follow the development of upcoming Québec RFPs, as well as the Québec energy developments generally. If you would like more information about renewable energy RFPs, including project development, financing or regulatory aspects, we are here to help. Please contact Louis-Nicolas Boulanger, Mathieu Leblanc, Jacob Stone or any other member of the Power Group at McCarthy Tétrault with any questions or for assistance.
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