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The federal government is cutting Newfoundland and Labrador out of its East Coast power grid megaproject, giving Quebec an edge over its East Coast competitor as both provinces' utilities seek to expand business beyond their borders.

The Atlantic Loop — a proposed set of regional power grid upgrades — appeared in Tuesday’s federal budget, with Ottawa saying it would invest in transmission line upgrades in Quebec, New Brunswick and Nova Scotia. Details were scarce, but Canada’s National Observer confirmed with Finance Canada that the omission of Newfoundland and Labrador and Prince Edward Island was no accident, even though they were included in past conversations.

To phase out coal-fired electricity by 2030, as the federal government has promised, Nova Scotia and New Brunswick plan to import renewable energy from outside their borders. When the Atlantic Loop proposal was first announced, the idea was to build a regional power grid capable of moving huge amounts of hydro power from Quebec and Newfoundland and Labrador into the Maritimes to displace coal.

Throughout last year, federal officials met with provincial leaders and executives at the power utilities, including senior representatives from Newfoundland and Labrador and its Crown utility Newfoundland and Labrador Hydro (NLH), according to meeting notes Canada’s National Observer received through federal access-to-information requests.

The Atlantic Loop, indicating Newfoundland and Labrador’s inclusion, as shown in a Natural Resources Canada report from March 2022.

But without sufficient and reliable transmission infrastructure to send power outside of Newfoundland and Labrador, the province is less likely to factor into Atlantic Canada’s decarbonization plans.

On Thursday, Natural Resources Minister Jonathan Wilkinson said Budget 2023 provides “transformational” investments that will allow the provinces and territories to grow their grids while cutting pollution. He called the Atlantic Loop the most obvious example of how to move clean electricity from where it's generated to where it’s needed.

Newfoundland and Labrador “has been involved in conversations around the Atlantic Loop,” he said. “But the direct conversations in terms of the transmission infrastructure [have] been largely with Quebec, simply because most of the power is assumed to be coming from the Quebec grid.”

However, Wilkinson pointed out some of the power could also come from Churchill Falls, a hydro dam in Labrador that's been a point of contention between the two provinces for decades. Churchill Falls is the country’s second-largest hydroelectric dam. It provides about 15 per cent of Hydro-Québec’s total power but is located in Labrador. It’s jointly owned by Hydro-Québec and NLH. Though the latter is the majority owner, because of the way the contract was set up in the 1960s, Hydro-Québec has reaped most of the benefits. As of 2019, the lopsided deal has garnered $28 billion in profits for Quebec compared to about $2 billion for Newfoundland and Labrador. The latter province launched a court challenge to reopen the deal but lost in the Supreme Court of Canada in 2018. The current contract expires in 2041.

Newfoundland and Labrador is out of the federal government's East Coast power grid project, giving Quebec an edge over its East Coast competitor as both provinces' utilities seek to expand business beyond their borders. #AtlanticLoop

The deal is so bad for Newfoundland and Labrador that even Quebec Premier François Legault admitted as much in February when he travelled to St. John’s to kick off negotiations with Newfoundland and Labrador Premier Andrew Furey over the dam’s future. During those talks, Legault told reporters he understood the frustration Newfoundlanders and Labradorians felt and apologized for the “bad contract.”

The federal support announced in Budget 2023 for transmission lines to bring electricity from Quebec to the Maritimes could tilt those negotiations between Quebec and Newfoundland and Labrador because Ottawa is effectively subsidizing Hydro-Québec’s access to markets beyond its borders.

A David versus Goliath struggle

Quebec is an energy superpower. Its provincially owned utility, Hydro-Québec, has assets worth $82.7 billion and generating capacity of over 37,000 megawatts, making it the largest utility in the country and one of the largest in North America. Newfoundland and Labrador, on the other hand, is a fledgling regional energy power with just over 8,000 megawatts of generating capacity and assets worth under $20 billion. Newfoundland and Labrador has major energy projects it wants to develop but needs to lock in customers to justify them.

Investing federal dollars in Quebec’s transmission infrastructure risks weakening Newfoundland and Labrador’s bargaining position on Churchill Falls. Because the two provinces are competing for customers in the Maritimes, the federal government’s investment in transmission upgrades is effectively siding with Quebec, though Wilkinson denies this.

“I don't think we're intending in any way to tip the (Churchill Falls) negotiations,” Wilkinson said. “We certainly are hopeful to see progress there, but also the two parties have to find pathways to agreement.

“We are of the view we need to find clean sources of energy in order to enable Nova Scotia and New Brunswick to be able to meet the 2030 timelines for phasing out coal, (and) we think the Atlantic Loop is the best option in that regard.”

Power is always political

Larry Hughes, an energy system expert and a professor at Dalhousie University, told Canada’s National Observer that energy planning is always about politics. Hydro-Québec plans to increase its capacity 50 per cent by 2050 to support the province’s decarbonization goals, so the pressure is mounting for the utility to secure access to either Churchill Falls or other potential projects to avoid not having enough power.

“Hydro-Québec, strangely enough, needs power,” Hughes said. A proposed project in Labrador called Gull Island is another “attractive” option to Quebec, he explained, because if built, it could generate about half of Churchill Falls’ capacity. If Quebec loses access to Churchill Falls during the ongoing negotiations, Gull Island could make up a significant chunk of the difference.

However, Newfoundland and Labrador has previously said it would only develop Gull Island if long-term export contracts could be signed. Without better transmission lines, that would be hard to do: one of the province's current subsea cables, for example, can handle up to 475 megawatts. Gull Island, meanwhile, could generate up to 2,250 megawatts.

If it’s assumed New Brunswick and Nova Scotia will get power from Quebec, it becomes increasingly unlikely Newfoundland and Labrador will secure long-term contracts, thereby weakening an important bargaining chip for the province.

Newfoundland and Labrador's energy department did not return a request for comment.

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It seems ironic that a federal government, which wants to help provinces green their economies, chooses to approve the Bay du Nord oil project but is not helping NL develop & export clean hydro power. NL also has a huge wind power potential but it will be difficult to develop that for export without transmission capacity. C'mon Minister Wilkinson, up your game!

I second that motion.

“Newfoundland and Labrador, on the other hand, is a fledgling regional energy power with just over 8,000 megawatts ...” This is misleading. At one kilowatt per person this is enough power for a population of eight million, more than ten times the population of Newfoundland and Labrador.

Maybe they have a lot to sell.

Also, don't mistake *domestic* consumption of electricity in the house, which averages 1 kW/person, with all electricity needed to run streetlights and factories and mines. This page:

indeed indicates that NL has 8 GW of generating capacity. Ontario has 35.

I can tell you that Alberta was generating 12GW of electricity on the night of Dec 21, when it was about 95% gas, because the wind was dead and the sun was down. With only 4M people, that's 3kW/person, despite low use of electricity for heating.

Not long ago the feds stepped in with $$ to assist NL with the Muskrat Falls debacle. I don't have a problem with that though I do wish that NF had the necessary expertise to negotiate, as it were, with the big boys. I don't mean that pejoratively but it's apparent that the domestic skills in handling hydro projects need an upgrade. I also note that, to my limited understanding, Danny Williams was able to effectively wield "the bird", when necessary, vis-a-vis Voisey's Bay.

This situation kinda highlights what's lacking in this country, in my view, that being interprovincial cooperation. We've got a bunch of parochial, self-interested fiefdoms myopically focused on what's best for getting their resources to market. Preferably, it sometimes even seems, foreign markets rather than other Canadian markets.

I think we'll have to wait to see what happens between QC and NL but the feds could improve the future negotiating prospects of NL by being ready to assist in financing additional undersea transmission capacity to get NL electricity to committed markets by routes other than through QC. That's on the assumption that such undersea infrastructure makes economic/logistical sense. Lacking such transmission capacity, perhaps NL would be able to turn to methods of hydro energy conversion and portable/mobile energy storage and become a research centre of excellence. ??? (Just not cucumber batteries, please!

In any event, QC had better be viewing NL as a solid partner in this, rather than rube.

It seems that Newfoundland & Labrador has more than enough power to meet the needs of its population, but it is not easy to export their surplus, and very costly.
It would be better to produce hydrogen/ammonia with their water and wind power and position itself as a major shipper, with good ports and closeness to Europe.

I hope the piecemeal federal approach to expanding Canada's electrical grid doesn't become standard practice. We need bigger and bolder steps not just as line items in the climate policy brainstorming sessions (if they actually have any) but as a rock solid, all-inclusive economic policy.

QC is leading the pack by planning to double its electrical output. However, one can argue that building more habitat-destroying hydroelectricity isn't the right direction to take, especially considering the affordability of solar and wind and the large potential returns on deep geothermal.

Canada needs to take a similar tack on a national basis using renewables and a smart grid, not just to follow QC's lead to address the increased demand of electrifying the existing domestic economy but to triple Canada's cumulative generation capability and build new industrial capacity based on renewables. Green steel and low emission cement come to mind using electrolysis or electric arc furnaces (steel) and induction kilns (cement). Green hydrogen also gets included on the list. All of these home grown industries -- plus their products and the expertise to design and build the related zero and low emission infrastructure -- should be readily accessible to our cities as they densify around new rail transit, and as a national and regional intercity rail network is built. Export markets await.

It makes no sense to exclude NF from connecting to an undersea cable mainly because its surplus hydro and wind power justify the effort. NF's wind potential is not just good, it's phenomenal. Is NF a part of Canada or not?

To not acknowledge the concept of a national clean energy corridor or smart grid network is a sign of weakness on the climate and economic files by the federal minority government. We need a National Climate Action Plan with genuine planning documentation and detailed terms of reference leading to in-ground infrastructure, not just a beancounter's delightfully archaic collection of tax objectives.

Parts of South Australia have recently arrived at a nearly 100% renewal power grid in a little as 100 days. How? Massive battery packs coupled with quickly installed new solar and wind. They are now looking at shutting down all coal-fired power plants in a year or two. Tesla played a big role and roundly trumped the Australian carbonites that were in power until the last election, and the naysayers who, rightfully in part, were critics of Elon Musk. Tesla's grid-scale stacks of batteries use lithium iron phosphate (LFP) chemistry, which is slightly less energy dense than the previous standard lithium nickel cobalt (LNC) chemistry which had dendrite and fire issues. LFP is now the standard in EVs, home power storage and stationary power arrays.

Advanced R&D into batteries is mainly realized by China's CATL and BYD (both have battery products now used in EVs by most automakers) is quickly pushing toward the next generation batteries that use sodium, sulphur, aluminium and silicon. Sodium sulphur has achieved four times (!) the energy density of today's primary lithium; lithium-sodium offers stable output in cold and hot weather. Sodium, of course, is readily available in seawater and no one foresees any shortages in future. There are other Western battery technologies just entering commercialization in large-scale power storage (iron air, liquid metal ...). All these revolutionary, disruptive advances occurred in just a handful of years and remain firmly planted on the cold economic side of the climate action ledger, well away from the heated rhetoric out there on both sides.

Our governments seem to be oblivious to the big stories about renewables in the mainstream, academic and financial press. I believe a decade of action on climate could result in a federally-owned smart grid that stretches from NF to Victoria, BC, with a couple of branches to the Arctic. Each 1,000 km section of a clean electricity corridor would contain high voltage direct current conductors (DC power has negligible losses to line resistance), several massive battery banks of various brands, and interties to provincial and US grids.

Farmers, private and public power companies and First Nations within a reasonable range of the grid would have the potential to connect to and sell their own wind and solar power to a federal non-profit wholesale power agency which will purchase, store and sell the power across the continent, taking advantage of the time zones and nighttime-daytime price differentials. Sharing power capacity will defray the costs of maintenance and replacement of the provincial and private generation infrastructure. QC Hydro sending power to California in milliseconds, BC Hydro to NYC, Manitoba Hydro to the Western Arctic, the imagination is the limit.

I've said it before, but if a carboniferous province gets all hot and bothered about a clean energy corridor built by the feds crossing into their territory, then let the feds use a recent, very solid legal precedence: the SCC decision on TMX crossing a provincial boundary as being solely in the fed's jurisdiction, no matter what the asset is carrying, the risk it poses to a province's jurisdiction, and assuming all the costs outside of a province's books. TMX carries toxic material that poses an environmental and economic risk on behalf of Alberta's interests, despite the rhetoric about "national interest." A clean power corridor poses far less risk of a province, and being part of national grid, truly is in the national interest.

This recent vid by Aussie Sam Evans, aka the Electric Viking, offers an exemplary description on the positive renewable power developments in South Australia. This effort can easily be replicated anywhere renewables and grid connections are viable. If it disrupts demand for coal and gas power plants and the delivery chain of refined bitumen into gas tanks, well, so what? Carbonized states should have seen it coming.

Isn't it amusing how seemingly every country, or even province, pronounces its own performance as "record" and proclaims itself (yet another) "climate leader."