Hydro-Québec – Case Study

COMPANY OVERVIEW //

MONTRÉAL, QUÉBEC

www.hydroquebec.com

   Manic 2 Hydroelectric installations
   (photo credit: Hydro-Québec)

Hydro-Québec supplies electricity in Québec, where the company is responsible for ensuring reliable and continuous service. It sells excess output to other suppliers in northeast Canada and U.S., and purchases electricity from other suppliers in periods of peak power demand. The company has partnerships in place with other power producers in Québec, such as Alcoa and Rio Tinto Alcan, which buy or sell electricity to Hydro-Québec depending on their seasonal output. Selling and purchasing excess electricity is made possible through 17 interconnections with the Ontario, New Brunswick, and U.S. northeast power systems.

Hydro-Québec owns and manages 59 hydroelectric generating stations, 26 large reservoirs, 571 dams, four thermal and one nuclear power plants, 33,453 km of electric lines and 514 electric substations.

HYDRO-ELECTRIC UTILITIES IN A CHANGING CLIMATE

The effect of a changing climate on electric utilities will depend on the assets at risk and their location. For instance, hydropower production is likely to be more vulnerable to climate change than thermal power production. Assets located on the coast may be vulnerable to sea level rise, and those dependent on glacier-fed rivers will be affected by earlier onset and more rapid glacial melting. Facilities located in northern Canada could be affected by degradation of permafrost as temperatures increase. Several elements of the planning, design and operations of electricity assets are sensitive to changes in average and extreme climatic conditions:

// Renewable electricity production relies directly on aspects of the climate (such as wind or solar radiation) or natural resource endowment (such as surface runoff).

// The supply of coal, oil, gas, or uranium to thermoelectric or nuclear power plants could also be affected by a changing climate at the extraction or transportation stages (e.g. because of limited water or supply-chain disruptions during storms).

// Hydropower output is directly affected by seasonal precipitation, temperature, and glacial and snow melt. Hydropower plants may face increased risks of spillover and dam failure during heavy downpours. Thermal power plants can suffer small changes in optimal performance due to a changing climate, through effects on operating efficiency or cooling water temperature.

// Transmission and distribution assets (e.g. electric lines, transmission poles, sub-stations) are vulnerable to climate change, for example through risk of damage to lines.

// Finally, higher temperatures and changing rainfall will affect electricity demand for space heating and cooling, with implications for peak loads.

DRIVERS

Hydro-Québec recognizes that sound climate risk management is key to the company’s success, as 97% of its electricity output comes from hydroelectricity, and the company already manages highly variable water flows into its reservoirs.¹²

In the 1980s a number of low-stream-flow events raised the profile of weather and climate risk management within the company. Hydro-Québec commissioned studies to determine whether these events were due to a natural climatic cycle or other causes. At the time, the company considered special management measures in addition to improved reservoir management, including a guarantee fund shared by different utilities and special insurance coverage.

In recent years, a number of costly weather-related disasters have further highlighted the risk of a changing climate for electricity generation, transmission and distribution.

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Between July 19^th and 20^th 1996, heavy rainfall in the Saguenay-Lac-Saint-Jean region of Québec caused severe flooding. Floodwater overtopped a number of dams, which aggravated the effect of rainwater flooding.¹³ Hydro-Québec was forced to spill water from some of its reservoirs to preserve the integrity of its dams. The company estimated the repair costs for its transmission and distribution network to be around $10 million.¹⁴

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In January 1998 freezing rain caused ice accumulations of over 80 mm in certain areas of Québec and Ontario.¹⁵ The ice storm caused severe power outages and left over 1.6 million people without electricity in Canada.¹⁶ The transmission and distribution network failed because of ice loads in excess of design standards on electric lines, support structures (such as poles and pylons) and surrounding tree branches. More than 3,000 km of Hydro-Québec’s network was damaged by the storm, which left 24,000 electric line poles, 4,000 transformers and 1,000 steel pylons in need of repair. The ice storm cost Hydro-Québec $725 million in 1998; the company invested over $1 billion in successive years to strengthen its transmission and distribution network against possible similar events.¹⁷

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Between 2001 and 2004, dry conditions and reduced water levels in Hydro-Québec’s reservoirs created a concern about long-term production deficits.¹⁸

Finally, the Québec government has asked questions or made requests to Hydro-Québec to consider climate change impacts in its project planning.^c

A FOCUS ON RESEARCH AND PLANNING

In 2002, Hydro-Québec’s research institute (IREQ) developed a research program to further knowledge of climate change, business impacts and technological adaptation options in the mid- to long-term, so that risks could be managed and opportunities exploited.

In response to a series of costly weather events (the 1996 Saguenay-Lac-Saint-Jean flooding, the 1998 ice storm and drought conditions), Hydro-Québec and the Québec government joined efforts to create a unique consortium with the mandate to study regional climate, climate change impacts and adaptation solutions. Called Ouranos (the Consortium on Regional Climatology and Adaptation to Climate Change), this organization is partly financed by Hydro-Québec. As part of Ouranos, Hydro-Québec cooperates with Rio Tinto Alcan, Ontario Power Generation (OPG) and Manitoba Hydro on climate change risk and adaptation issues.

Since 2002, Hydro-Québec has developed a comprehensive work programme to tackle climate change, which includes the following elements:

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Identify areas of activity that are sensitive to climate change. Hydro-Québec consulted staff from different divisions to assess sensitivity to a changing climate. Hydro-Québec identified several areas of sensitivity and prioritized where further work is needed: for example, Hydro-Québec decided that assessing climate change impacts on water resources was a priority.

Figure 2 shows the areas of sensitivity that were identified.

// Project future changes in average and extreme climatic conditions. Through collaboration with Ouranos, Hydro-Québec has contributed to the development of future climate change scenarios that can be used to model business impacts.

// Analyze the implications of climate change for targeted activities. Hydro-Québec has used future climate change scenarios to model impacts on various elements of the business, working with staff from the Production, Distribution and Equipment divisions.

// Develop climate change adaptation strategies for Hydro-Québec’s activities vulnerable to climate change. Hydro-Québec wants to understand the implications of changing the operating rules of hydropower assets for future electricity output under a changing climate. In the next few years, Hydro-Québec will work toward mainstreaming climate risk management into planning, design and operations.

The company’s climate change impact and adaptation work has resulted in a number of important achievements. First, the company produced an extensive set of future runoff projections based on a number of climate change scenarios for each of its hydropower operations. Despite the high uncertainty across climate models, results point at a general increase in runoff by the 2050s, with a higher increase in the northeast compared with the southeast. Results also point to increased winter runoff and reduced summer runoff because of future higher rain to snow ratio and higher summer evaporation rates respectively. Furthermore, high river flows will occur earlier in the spring due to increased temperatures. Peak river flows will be lower on average due to reduced winter snow mass. Hydro-Québec has planned further refinements to its hydro-climatic modelling; for instance, it plans to analyze water flow and balance in Canadian bogs and fens.

The Hydro-Québec Equipment division used climate change scenarios to assess impacts on hydrological conditions for the ‘Eastmain 1A – Dérivation Rupert’ project. The results were presented at a public hearing to answer questions from the public on the cumulative impact of climate change for fisheries.¹⁹

Working with the Distribution division, Hydro-Québec’s climate change team integrated future temperature projections into the company’s electricity demand forecasts in 2008. The projected increase in average temperature reduced energy requirements by almost 1 TWh (0.5% decrease) per year as a result of reduced heating needs. Furthermore, Hydro-Québec forecast a 350 MW reduction in peak loads (1.0% decrease) using projected climate information. These reduced electricity demand forecasts have been incorporated into Hydro-Québec’s annual tariffs, as well as its 10-year Procurement Plan, both of which were approved by the Quebec regulator. Results showed that by 2050, 2TWh per year could be saved across all sectors as a result of reduced heating needs.^d

Hydro-Québec used future runoff projections to evaluate the environmental impacts of the hydroelectric development on La Romaine River and consider adaptive management measures that are flexible enough to cope with different possible futures.^e This approach was approved by the Canadian Environmental Assessment Agency in a report of April 2008.²⁰

Finally, Hydro-Québec analyzed the benefits of adapting the operating rules of hydropower reservoirs according to future hydrological regimes. Through a case study, the company found that, by 2050, without adaptation electricity output could drop by up to 14% due to higher unproductive water spills compared to the reference case. However, adapting operating rules could prevent production losses and even increase output by up to 15%.²¹

STRATEGIES TO MANAGE CLIMATE CHANGE UNCERTAINTY

To increase the level of confidence in its projections, Hydro-Québec has appraised the sensitivity of its hydro-climatic simulations to different greenhouse gas (GHG) emission scenarios, climate models, hydrological models and methodologies to conduct impact analyzes. This ‘multi-method’ approach has shown that the choice of climate model influences hydro-climatic simulations much more than the choice of GHG emission scenario or hydrological models (for the 2050 time horizon).

Hydro-Québec has consequently revised its set of future runoff projections for all the watersheds in its service area, drawing upon a combination of climate and hydrological models and emissions scenarios. The results of this work are presented in Figure 3.

BENEFITS AND/OR CHALLENGES

Although it is difficult to quantify the economic benefits of assessing climate change impacts and adopting adaptation measures, Hydro-Québec finds them considerable. Hydro-Québec believes that some benefits have already been realized through the integration of climate change impacts and adaptation knowledge into planning, design, and operational decisions, such as in the Equipment and Distribution divisions. This position justifies Hydro-Québec’s considerable investment in research on climate change, business impacts, and adaptation since 2001.

PERSPECTIVES ON GOVERNMENT ROLES

The Québec government has played a central role in Hydro-Québec’s climate change adaptation journey through the financing of Ouranos. The federal government has also helped indirectly by supporting academic research of relevance to Hydro-Québec’s projects or operations.^f

Moving forward with adaptation strategies, Hydro-Québec feels that government intervention is needed in relation to cross-boundary water management (between Canadian provinces and between Canada and the U.S.). For instance, Hydro-Québec has considerable margins of manoeuvre to manage climate change impacts on water resources in Québec, however limitations exist for water bodies that are shared with another province or the U.S. (as it is the case with the Saint Lawrence and Richelieu Rivers that are shared with the U.S.). The creation of cross-boundary water management commissions where climate change impacts and adaptation is discussed could be helpful in the future to facilitate adaptation action by utilities.

[c] For example, during the public hearing of Hydro-Québec in 2006 in front of the Permanent Commission for the Economy and Labour about Hydro-Québec’s Strategic Plan for 2006-2010, climate change impact considerations were discussed (Assemblée nationale 2006).
[d] Higher cooling requirements during summer are not expected to compensate reduced heating demand.
[e] See the environmental impact assessment for the La Romaine hydroelectric complex (Hydro-Québec 2008).
[f] For an example, see Minville et al. 2009.
[12] Silver and Roy 2010
[13] Gagnon, Locat, and Pelletier 1998
[14] Québec government 2000
[15] Lecomte, Pang, and Russell 1998
[16] Lecomte, Pang, and Russell 1998
[17] Hydro-Québec 1998
[18] Lasserre and Descroix 2005
[19] Comité Provincial d’Examen (COMEX) 2006
[20] Environmental Protection Operations Division of Environment Canada 2008
[21] Silver and Roy 2010