Hydro-Québec Scenarios Planning Report

Disclaimer: The analyses and recommendations in this report are those of the author and do not represent the opinions or business operations of Hydro-Québec.

Introduction

In the summer of 2025, Hydro-Québec’s New York Office engaged in a scenarios exercise, facilitated by New York University’s Energy, Climate Justice, and Sustainability Lab, to assess the changing landscape of U.S.-Canadian energy markets and identify key uncertainties that were emerging from dramatic shifts in U.S. energy and climate policy. The aim of the exercise is to provide a systematic process to consider harder to quantify qualitative forces or influences that will shape the energy transition in the U.S. Northeast. The exercise was designed to assist participants to identify and gain a better understanding of possible discontinuities that might occur over the next ten years and think through how to make Hydro-Québec strategies and project development as resilient as possible to unexpected changes to the existing business outlook. Examining scenarios allows entities to consider multiple potential futures and to think of these futures as tangible possibilities rather than relying solely on expert forecasts. Creating these storylines encourages participants to expand their thinking beyond quantitative analyses and to consider challenges and opportunities that might otherwise go unexplored. It allows companies to examine what outcomes they can expect under a wider range of economic, regulatory and societal conditions under varying operating strategies and develop a more resilient business strategy that can readily adapt to changes.

To begin the scenarios development process, participants were asked to brainstorm qualitative factors that fall within seven general categories of events, circumstances, and influences that could, in all likelihood, adjust market trajectories over time. The seven categories included: technological breakthroughs, socio-cultural discontinuities, behavioral change, policy or regulatory trends, geopolitical influences, environmental factors, economic factors. To further guide their storyline creation, participants were given the following matrix defining four different boundary conditions. Four groups were created and assigned to one of these four quadrants diagrammed below to use as the core theme and parameters for their scenario construction.

With these factors and parameters established, the four scenarios were established and compared to Hydro-Québec’s existing 2035 Action Plan.

Current Hydro-Québec 2035 Action Plan ^[1]

Hydro-Québec is a public utility that manages electricity generation, transmission and distribution assets in Quebec and neighboring markets including the U.S. Northeast. The company has 37,370 MW in generation assets. The company operates over 60 hydroelectric generating stations and over 34,000 km of high voltage transmission running across Quebec province. Hydro-Québec expects to increase its exports to the U.S. Northeast with the completion of the Champlain Hudson Power Express in 2026 which will add 1,250 MW of energy shipments to New York and with the construction of the New England Clean Energy Connect which will add 1,200 MW of energy shipments to New England.

Hydro-Québec’s 2035 Action Plan outlines a strategic response to the province’s accelerating electricity demand and the broader objective of achieving full decarbonization by 2050. Over the past seven years, Québec has seen an increase of 10 TWh in electricity consumption, largely driven by a combination of residential development and the emergence of new electricity intensive sectors such as data centers, greenhouses, and blockchain operations.

Projections in 2023 forecast a total increase of 60 TWh by 2035, comprising of 38 TWh by 2032 and an additional 22 TWh by 2035. This was updated from a 2022 projection forecasting an increase of 25 TWh in demand by 2032. 

The updated model uses a top-down framework focused on Canada’s overall push towards full decarbonization. The projection indicates that decarbonization efforts will account for 75% of the increased demand by 2035 and that full decarbonization will require an additional 150-200 TWh between 2035 and 2050. This new projection aligns closely with the 2035 Action Plan and Hydro-Québec’s broader Strategic Plan, both of which prioritize long-term sustainability, electrification, and climate commitments. 

Hydro-Québec is employing a broad strategy to meet rising demand that includes both reducing consumption and expanding clean generation. Demand-side management through a combination of energy efficiency programs, demand response initiatives, rate redesigns, and technical support will provide reductions to peak demand by 1,600 to 1,800 MW and cut overall annual energy use by 22 TWh. On the supply side, Hydro-Québec is planning a major expansion of renewable generation. It aims to develop 10,000 MW of new onshore wind capacity, of which 4,000 MW has already been secured through procurement contracts with commercial operation dates between 2026 and 2029. Hydropower remains a key part of the generation mix, with plans to add between 3,800 and 4,200 MW through a combination of refurbishments, small hydro procurement, pumped storage systems, and a potential new hydro complex. In addition to wind and hydro, other renewable sources such as solar power, battery storage, and renewable natural gas are expected to support system flexibility and peak demand. Hydro-Québec also anticipates selectively using electricity imports to manage seasonal variability and maintain reliability.

To support this expansion, Hydro-Québec plans to build approximately 5,000 kilometers of new transmission lines, with an associated investment of $45 to $50 billion by 2035. By making transmission development plans publicly available, the utility hopes to improve coordination with private sector developers and ensure more efficient project delivery.

Hydro-Québec estimates that achieving its goals will require around 35,000 qualified construction and energy workers annually. This demand is occurring at the same time as other large infrastructure projects across Québec, putting pressure on labor markets. To reduce the challenge of workforce availability, Hydro-Québec will support accelerated training and skills development programs and benefit from new provincial legislation, such as Bill 51, which introduces greater labor mobility and job flexibility.

Hydro-Québec has also expressed interest in the construction of bi-directional transmission lines between Quebec and the U.S. Northeast. The goal of these lines would be to create a cooperative system between Quebec’s hydropower and U.S. renewable energy. In this system, when renewables in the U.S. are not producing electricity, hydropower from Quebec would be deployed to provide the needed baseload power, while when renewables are overproducing the excess energy would be sent to Quebec allowing reservoirs to refill and effectively serve as batteries for the excess power. Modeling from MIT^[2] indicates that such a system would increase capacity and improve efficiency, which would reduce the need for fossil fuels and provide reductions in electricity cost that would outweigh the cost of building the new transmission line.

Ultimately, Hydro-Québec expects to invest between $155 billion and $185 billion by 2035, averaging $12 to $16 billion annually. The majority of this investment, around 60 percent, will go toward system growth, with 27 percent allocated for reliability and resilience projects and the remaining 13 percent covering additional operational expenses. 

New Trends and Key Uncertainties

The scenario exercise resulted in the identification of six top risks facing Hydro-Québec’s current 2035 Action Plan. Discussion of these risks follows below:

U.S.-Canada Trade Under the Trump Administration

Despite these promising growth plans, Canada and the world at large has seen major political and economic shifts in the two years since the 2023 announcement of the company’s 2035 action plan. These shifts are creating an increasingly uncertain landscape for the company’s future. The trade war, ushered in by the United States under the current Trump administration, has altered the formerly reliable, consistent economic partnership between the U.S. and Canada raising new questions about future trade trends, prompting the Canadian government to reevaluate its future economic planning. Prime Minister Mark Carney has targeted to remove all internal trade barriers in Canada, promoting the increased flow of energy resources from east to west, rather than south to the United States. Carney’s administration has already begun this process with the signing of Bill C-5 (One Canadian Economy Act) on June 26, removing federal barriers to interprovincial trade and facilitating the development of major infrastructure projects^[3]. Various proposals are circulating in Canada,  promoted by both the Liberal and Conservative Parties, to create a national energy corridor for pipelines, transmission lines, and rail^[4]. 

Canada shipped its first liquefied natural gas (LNG) cargo from the new Kitimat terminal in British Columbia to markets in Asia at the end of June^[5]. This joint venture between Shell Plc, Petronas, PetroChina, Mitsubishi Corp, and Kogas serves as the first of several other LNG facilities under construction in Western Canada in hopes to capture growing demand for LNG in Asia. Challenges to interprovincial trade remain as provincial governments still have various, often incongruous, trade restrictions in place that continue to limit internal trade. In diversifying external trade beyond the United States, Canada faces geographical challenges as the United States. is its only border country, meaning that diversifying exports would require expansion of port infrastructure and leaves non-coastal provinces at a greater disadvantage. Still, the impact of the U.S. tariffs on the Canadian economy demonstrates not only the importance of diversifying Canada’s trade, but also the continued risks at play during the process of diversifying. Despite exports to the U.S. dropping by 10% between May 2024 and May 2025, 68% of exports are still going to the U.S.^[6]. This deep economic connection means that Canada must be cautious in decoupling its economy from the United States to avoid exacerbating the trade war and worsening its economic consequences.

Uncertain Outlook for U.S. Offshore Wind

The discussion of diversification of Canada’s export plans comes as states in the Northeast struggle to meet their climate and clean energy goals. The Trump administration’s removal of tax credits for wind and solar energy^[7] and its active opposition to new projects for those energy sources has created an inhospitable and uncertain environment that is expected to hinder the expansion of renewable energy. The primary target of these actions has been offshore wind, with the DOI’s Bureau of Ocean Energy Management recently rescinding the Wind Energy Area designation of over 3.5 million acres of unleased federal waters previously targeted for offshore wind development, including the Gulf of Maine and the New York Bight^[8]. 

Nuclear Power in New York State and Beyond

In New York, this changed federal policy was cited as the reasoning behind New York State’s decision to terminate a major transmission expansion project for offshore wind, putting up to 8 GW of clean energy at risk^[9]. Combined with anticipation of rising electricity demand from data centers and electric vehicle adoption, the uncertain outlook for offshore wind has prompted a renewed interest in nuclear power by both public and private entities. New York Governor Kathy Hochul announced that New York intends to build new, zero emission advanced nuclear power stations in the state as part of New York’s broader strategy to achieve a zero-emission electricity sector by 2040^[10]. The governor targeted the state to build 1 GW in new nuclear capacity. New York’s Indian Point nuclear plant was fully decommissioned in 2021 and keeping the site shuttered was part of the closure agreement, rendering the possibility of siting small nuclear reactors (SMR) there as extremely difficult. But three other nuclear sites are under consideration, including Constellation’s Nine Mile Point Clean Energy site in Oswego^[11].

Increased access to nuclear energy in the New York market could create increased competition for Quebec electricity exports, depending on overall demand trends for electricity in the region. In other locations in the United States, rising data center energy demand has already prompted private U.S. companies to sign power purchasing agreements to support nuclear power projects in Pennsylvania and Illinois. Constellation Energy announced that they plan to invest $1.6 billion into reopening reactor 1 at the Three Mile Island nuclear station as part of a 20 year power purchase agreement with Microsoft^[12].  Meta has also concluded a 20-year power purchase agreement with Constellation that will keep its Clinton nuclear plant in Illinois in operation^[13]. 

U.S. federal policy support for nuclear energy has expanded recently, including an executive order issued by President Trump on May 23, 2025 directing the U.S. Department of Energy (DOE) and other departments to support nuclear energy expansion through loan assistance, fuel cycle strengthening, and workforce expansion^[14]. However, even with increased policy support, development of new nuclear projects still faces major challenges as significant construction delays and cost overruns in recent projects like the Vogtle Nuclear Plant in Georgia limit investor interest. Shortfalls of skilled nuclear workforce also raises concerns about how to staff plants once they are operational. Policy support for nuclear energy remains generally low in Canada, especially in Québec, with the exception of support for SMR development in Ontario, Alberta, Saskatchewan, and New Brunswick^[15]. Recently, the Ontario government approved Ontario Power Generation’s plan to start construction on the first of four SMRs to be built at its Darlington nuclear site^[16].

Data Center Demand for Electricity

Since 2023, there has also been an unprecedented boom in the growth of Artificial Intelligence and with it, new demands for the electricity to fuel the data centers that drive its uptick. In its 2024 Report on U.S. Data Center Energy Use^[17] the DOE reported that data centers used 176 TWh of electricity in 2023 representing 4.4% of total U.S. electricity consumption. The report projects this demand to increase to between 325 and 580 TWh by 2028 representing 6.7% to 12.0% of total U.S. electricity consumption forecasted for that year. The high energy requirements for AI data centers are adding a new level of uncertainty to existing projections of future energy demand. Tech industry experts like Eric Schmidt and Sam Altman have stated that the only limitation to AI is electricity and expressed the need for an energy breakthrough to support its expansion^[18]. Reports by Wood Mackenzie^[19] indicate that data centers have been growing 10-20% annually, with an estimated 134 GW of new data-center capacity announced in the United States this year, up from 50 GW in 2024. For the U.S. Northeast, this growth is projected to increase power demand by 3-4% by 2030. In Canada, Mordor Intelligence projects that the Canadian data center market will increase from 750 MW in 2024 to 1,160 MW in 2029^[20]. Hydro-Québec’s original 2022 projection predicted that data center energy demand will increase by 4.1 TWh by 2032^[21], accounting for over 10% of the expected overall increase by 2032 in the company’s forecast. 

Increasing Cyber Security Challenges

Another uncertainty facing the electricity industry going forward is the increasing threat from the growing frequency of cyber-attacks in light of geopolitical tensions and wars in Europe and the Middle East. The 2021 ransomware attack on the Colonial Pipeline by non-state cyber group DarkSide demonstrated the severity of this risk as it caused the U.S. key refined products pipeline to be shut down for five days, resulting in local fuel shortages along the line’s delivery area and driving panic buying by consumers^[22]. Among state actors, Russia has enhanced its use of cyber warfare, with its Main Intelligence Directorate (GRU) carrying out cyber-attacks on the Ukrainian power grid and against Western logistical entities providing assistance to Ukraine^[23]. Russia is alleged to have also engaged in physical attacks on power infrastructure outside of Ukraine by damaging power lines in the Baltic Sea^[24]. Beyond Russia, other state actors like Volt Typhoon in China, Andariel in North Korea, and Iran pose additional threats. Austerity measures taken by the Trump administration have seen a $135 million budget cut to the Cybersecurity and Infrastructure Security Agency and the loss of nearly a third of its workforce puts further pressure on the capacity of public and private organizations to track and prepare for cyber-attacks^[25]. While Canada is not likely to be a primary target for these groups, Hydro-Québec’s interconnections with U.S. power grids puts it at risk as the United States becomes more deeply involved in the Russia-Ukraine and Iran-Israel conflicts. The implementation of smart grid technologies to improve grid efficiency and operation adds further surface area that can be exploited by malicious states and entities.

Risk of Extreme Weather

The worsening climate crisis also introduces additional environmental challenges that will impact both the effectiveness and security of Hydro-Québec’s power infrastructure. Climate change is raising temperatures globally and has increased the risk of heatwaves and droughts by increasing their duration and severity. During these conditions, there is lower energy output from hydroelectric plants and greater demand for electricity for cooling which puts strain on the power grid. In 2024, the U.S. Energy Information Administration reported that hydroelectric power generation in the U.S. was down 13% compared to the 10-year average as a result of worsening drought risk nationwide^[26]. The increased frequency of extreme weather events like floods, wildfires, and snowstorms also puts transmission infrastructure at greater risk of being damaged or destroyed.

Four Scenarios

Scenario 1 - AI Boom/Bust (High Regulation, Extensive Tech Breakthrough)

The race for dominance in artificial intelligence intensifies after China announces a breakthrough commercial robot that raises the possibility that Beijing could potentially reach Artificial General Intelligence (AGI) before the United States. A push is on by the U.S. and its allies to accelerate the path to AGI and a cooperation agreement is signed between the U.S. and Canada to take advantage of Canada’s low energy prices and expanding grid. American AI companies flock to Quebec and Montreal becomes a hub for a booming AI industry. 

As a massive new AI industry takes hold in Quebec, the province sees an unprecedented surge in electricity demand causing a spike in energy prices. To support this demand, Hydro-Québec makes large investments into generation and transmission expansion. The longer timelines of nuclear energy projects and the intermittent generation of renewables make them unviable options for supplying such a rapid rise in demand. To cover growing needs, natural gas power plants are constructed, and the Canadian government offers tax incentives to industry to expand the production of natural gas to fuel the plants. The costs of expansion investments are passed on to consumers, further increasing energy costs. As costs increase, local sentiment turns against the AI industry in Quebec. Politicians begin to call for new limitations on data center expansion and seek investigations into the rising cost of electricity in Quebec, putting Hydro-Québec’s rate procedures under increased scrutiny.

The expansion of AI also sees a major increase in the use of AI for generating disinformation. Fake pictures and news articles become widespread worsening political divides and social unrest in the U.S. and Canada. A fake news story about a political scandal in the Canadian government goes viral and snowballs eventually resulting in a mass shooting attack in Ottawa. Once it becomes clear that the story was AI generated it ignites growing public opposition and triggers widespread protests in Quebec against AI. The attack and public outcry prompt government bodies in Canada and the U.S. to impose strict regulations on the use of generative AI. Stricter energy efficiency requirements on data centers to limit power usage follow. The tightened regulations reduce the profitability for AI companies to remain in Quebec and many close or move out of the province. With a sudden loss of offtakers for new generation and transmission projects Hydro-Québec’s utilization rates nosedive and with it, profit levels.

Scenario 2 - Cyber 9/11 (High Regulation, Low Tech Breakthrough)

Attempts to foster a sustained ceasefire falter, and the war in Europe between Russia and Ukraine escalates, with electricity networks on both sides of the conflict increasingly targeted. The failure of peace talks to bring about a lasting cessation of hostilities forces the United States and Europe take an increasingly active role in the conflict. NATO responds to Russian incursions into Baltic border areas by adding troops and missile stockpiles to those regions while tensions between the U.S. and Iran over its nuclear program also leads to sporadic kinetic actions on both sides. The escalation of conflicts spills over into the U.S.-China relationship as U.S. and European sanctions policies increasingly target Chinese entities buying Iranian and Russian oil. Following a successful bombing raid by Ukrainian missiles that damages Russia’s main oil export terminal at Novorossiysk, a coordinated 24-hour cyberattack hits financial and commercial centers in major U.S. cities. The attack creates a public panic and has significant economic repercussions as businesses and trading centers are unable to operate. Generation and transmission infrastructure are damaged, and a worried public makes a run on banks. Preliminary investigation links the attacks to a consortium of players with ties to Russia, China, and Iran. 

As a precaution, different regional electricity authorities decide to disconnect interconnections to reduce the scale of threat. The U.S. and Canada also agree to limit interconnections and exports of electricity. Hydro-Québec curtails almost all electricity exports to NYISO and ISO-NE. Subsidies for tech companies and transmission projects are curtailed and military spending is increased as the threat of larger scale war looms. The United States and Canada ban the import of technological goods from China, including solar panels, wind turbine parts, and transmission technologies. The social effects are significant as individuals and businesses limit the usage of computer connected systems and many businesses move out of large urban areas. Economic growth and electrification slow down greatly as demand for EVs, data centers, and building decarbonization plummets. Hydro-Québec sees a large drop in electricity demand causing loss of revenue and surplus generation capacity. To limit risk from potential further attacks, the Quebec interconnection begins conversion into an asynchronous grid.

Scenario 3 - Adapting Through Innovation (Low Regulation, Extensive Tech Breakthrough)

Short of annexation, the Trump administration becomes determined to realize more economic gains from Canada and instigates a massive trade war imposing steep tariffs to get more deference from the Canadian government on a variety of matters. Among other trade counter-actions, the Quebec government stops all electricity exports to the U.S. The trade war triggers a major recession in Canada as trade relations with the U.S. deteriorate sharply. The Canadian government enters into talks with the EU and China as potential markets for Canadian petroleum products and natural gas exports. 

At the same time the trade war is worsening, the ETS and CBAM in the EU and California’s Cap-and-Trade program show unexpected success in improving emissions. The IMO regulations on GHG come into effect in 2027 and China expands its ETS. Encouraged by this success, Brazil and other countries begin to implement their own carbon markets. There is a surge in demand for low carbon fuels and electricity as companies try to meet the emissions limits. Renewable energy projects see a surge of financial support as they sell carbon credits to companies trying to lower their carbon tax obligations. The SMR at Darlington is completed with only minor setbacks, and the Idaho National Laboratory announces new breakthroughs in advanced nuclear technology, prompting a surge of investment into new nuclear projects for carbon-zero baseload power. New SMR projects pop up all over the U.S. and Canada as tech companies look for energy to power new data centers. More favorable public opinion on nuclear renews the possibility of recommissioning the Gentilly-2 CANDU reactor and the development of new SMRs at the site.

Breakthroughs in synthetic conductive materials for long distance electricity transmission makes it feasible to consider linking Eastern Canada and the U.K. by undersea wire and key markets with established carbon markets are increasingly using hydrogen for seasonal storage and as a fuel in long haul trucking and shipping as well as for heavy industry. Hydro-Québec joins a government-led effort to build a green hydrogen export project, signing MOU agreements with Europe on the East coast and is investigating blue hydrogen projects on the West coast for export to Japan and China, though competition from India’s increased exports of green ammonia is seen as a factor hampering West coast trade. China is also shifting its shipbuilding to methanol and green ammonia and is building a domestic industry to fuel its own fleet of bulk marine transportation ships. Other countries begin investment into ammonia powered ships and green ammonia production as companies express greater interest in reducing their Scope 3 emissions. 

Scenario 4 - Climate Catastrophe (Low Regulation, Low Tech Breakthrough)

The election of President Donald Trump to a second term in 2024 ushers in a period of low global action on climate change. In the United States, federal climate policy comes to a standstill, with key climate policies either delayed or repealed. The Methane Waste Emissions Charge has been suspended for ten years until after 2034 and other rollbacks of EPA policies such as an end to vehicle tailpipe greenhouse gas emissions standards are in the works. The 2025 reconciliation bill also prescribes a firm phase out of solar and wind tax credits and ends consumer tax credits for electric vehicles, raising questions about the progress clean technologies will make past 2027^[27]. 

In light of the changing atmosphere regarding strict carbon restrictions in the United States and elsewhere, the 2025 Conference of the Parties (COP 30) in Belem, Brazil, is considered a failure, with only a small number of countries submitting enhancements to their existing nationally determined contribution (NDCs) pledges to reduce greenhouse gas emissions. As a result, the UN Framework Convention on Climate Change synthesis report on the collective 2035 NDCs shows the world is moving further away from an under 2 degrees temperature trajectory. Even Europe, which sticks with its binding greenhouse gas emissions targets for 2040, finds several countries backsliding while others are tapping the controversial flexibility clause to buy carbon credits instead of making the kinds of sharp reductions needed. 

The Intergovernmental Panel on Climate Change (IPCC) revises its estimate that the world was on track to warm 2.7 degrees Celsius by the turn of the century. In a new special Assessment Report released in 2028, the IPCC warns that the world is on a path towards over 3.04 degrees warming by the end of the century and notes that substantially more probability for extreme heat, sea level rise, habitat and coral reef loss and drought is likely. The IPCC warns that new compound and cascading risks are taking place that are increasingly difficult to manage. Global poverty is on the rise as a result of increased major extreme weather events and global economic growth begins to slow dramatically as a result. Reinsurer SwissRe reports that global GDP is 15 percent lower than it would have been had temperatures not topped 3.2 degrees warming. China and India’s economy is significantly affected by constant heat waves, droughts, and devastating coastal typhoons. Heat deaths in Europe rise above 20,000 people each summer and tourism to the continent has declined significantly. U.S. flash flooding and heat wave events become the norm, forcing more and more people to work remotely in major cities. 

In New York City, air conditioning levels reach new heights and peak summer electricity demand reaches over 40,000 MW. Eventually, more Americans start to exit major cities, with migration to Midwestern states around the Great Lakes whose climate is considered more temperate. Wildfires have also rendered parts of California and Texas as uninhabitable given the collapse of insurance markets and continued storms and flooding have greatly decreased the coastlines of cities in Florida, with major buildings abandoned and increased building inland with more climate proof designs. U.S. and global sentiment about climate action begins to shift as it becomes increasingly clear that more drastic interventions are needed both for adaptation and for reducing future emissions to prevent further warming of the planet. The negative backlash against fossil fuel companies gains momentum, with protests almost daily in cities around the world. Bans on future sales of internal combustion engine (ICE) cars are implemented across the OECD and in India and China and major economies, including all of the G20 economies, except Russia, agree to fully decarbonize their electricity sectors within 10 years. 

Hydro-Québec had put on hold its expansion plans in the late 2020s but by 2035 begins dusting off its options to increase hydroelectric power as well as other kinds of clean generation. It studies how accelerating EV adoption in the U.S. Northeast is opening up new opportunities and considers the best path for expansion of exported energy.

Implications and Recommendations for Hydro-Québec

Across three out of the four scenarios, opportunities for increased electricity exports to the U.S. Northeast are put at greater risk and the benefits of some form of market diversification strategy would pay off. 

Canadian public sentiment is increasingly favoring stronger domestic economic cooperation and easier interprovincial trade. In this sense, the possibility of building bi-directional transmission lines reduces risk by increasing the optionality of transmission projects. In particular, options to develop a cooperative system between renewables and hydropower with Ontario rather than with the New York or New England energy grids might find more traction. Ontario produces significantly more non-hydro renewable electricity than both New York and New England, making it a stronger partner for renewable energy collaboration. In 2021, Ontario generated 18,146 GWh from wind and solar sources^[28], compared to New York’s 4,936 GWh in 2022^[29] and New England’s 8,071 GWh in 2024^[30]. Partnership with Ontario is also more straightforward to manage, as it involves working with a single provincial government within Canada. 

While Northeast U.S. states generally maintain friendly relations with Quebec, coordinating a bi-directional energy system across multiple state governments, and across an international border, introduces additional complexity. These challenges are further compounded by the current U.S. federal government’s anti-renewable stance, which is hindering the growth of wind and solar in the U.S. Northeast. From a cybersecurity standpoint, internal expansion also presents fewer risks, as Canada is less likely to be a direct target of cyberattacks. Lastly, while geography limits opportunities outside North America, Hydro-Québec should monitor developments in long-distance energy trade, such as the potential for a transatlantic power cable to Europe^[31], non-U.S.-owned data centers looking to locate in Quebec, and production of green hydrogen or ammonia for storage and export.

Expansion of demand side management capabilities remains one of the most effective tools for improving grid security across all scenarios. This approach has the advantage of lowering investment requirements and shortening implementation timelines, reducing overall risk to bottom line commercial performance. The integration of smart grid technologies could also further enhance efficiency and provide additional operational benefits.

To the extent that Hydro-Quebec increases its portfolio for wind or hydropower resources, adding storage technologies, including seasonal storage in the form of green hydrogen production, could offer the company greater flexibility over time. A storage strategy would limit vulnerability that might come from weather-related risks like drought and also provide flexibility to meet time of day peak load requirements for new offshore wind projects. Development of a low carbon fuel strategy, such as green hydrogen, could increase Hydro-Quebec’s optionality to either use the hydrogen as storage with associated fuel cells providing electricity resources when wind or hydropower is not available or to export the green hydrogen in the form of green ammonia to shipping companies or EU customers.  Nuclear energy also presents a diversification option. It offers carbon-neutral baseload generation without the intermittency of wind or solar and is less dependent on weather conditions than hydropower. Ontario has established itself as a North American leader in nuclear development, particularly with its small modular reactor (SMR) project at Darlington. Although nuclear projects have historically faced delays and cost overruns, recent surges in public and political support such as New York’s announcement of a new nuclear initiative suggest a more favorable environment might be available to Hydro-Quebec as well. This shift could enable reconsideration of recommissioning Hydro-Québec’s Gentilly-2 reactor. If Ontario Power Generation’s SMR project succeeds, it could lower “first-of-a-kind” risks for Hydro-Québec and facilitate SMR deployment at Gentilly or other suitable sites.

Beyond nuclear, Hydro-Québec should invest in research and development of advanced battery storage technologies. Coupling large-scale storage with expanded wind capacity would mitigate intermittency challenges, improve grid flexibility, and provide safeguards against extreme weather disruptions.

Citations