Emissions action likely to drive up prices

Quebec Energy Strategy focuses on hydropower, energy efficiency, and new dams as Hydro-Que9bec pursues Churchill Falls deals and the Champlain Hudson Power Express to New York, while nuclear power remains off the agenda.

Key Points

Quebec's plan prioritizes hydropower, efficiency, and new dams, excludes nuclear, and expands exports via CHPE.

✅ Nuclear power shelved; focus on renewables and dams

✅ Hydro-Que9bec pursues Churchill Falls and Gull Island talks

✅ CHPE line to New York advances; export contract with NYSERDA

Quebec Premier François Legault has closed the door on nuclear power, at least for now.

"For the time being, we're not touching it," said Legault when asked about the subject at a press scrum in New York on Tuesday.

The government is looking for new sources of energy as Hydro-Québec begins talks on a $185-billion strategy to wean the province off fossil fuels. In an interview with The Canadian Press at Quebec's official residence in New York, Legault said there are a number of avenues to explore:

• Energy efficiency.
• Negotiations with Newfoundland and Labrador over Churchill Falls and Gull Island.
• Upgrading existing dams and building new ones.

"Nuclear power is not on the agenda," he said.

Yet the premier seemed open to the nuclear question some time ago. In August, Radio-Canada reported that he had raised the idea of nuclear power in front of dozens of MNAs at the National Assembly last April.

Also in August, Hydro-Québec was evaluating the possibility of reopening the Gentilly-2 nuclear power plant, which has been closed since 2012.

Asked about his leader's statement on Tuesday, the Minister of the Economy, Pierre Fitzgibbon, maintained his line: "At the moment, we're looking at everything that's possible because we know that we have a significant deficit in the supply of green energy," he said.

Another step forward for the Quebec-New York line

Premier Legault took part in Tuesday morning's announcement that construction had begun on the New York converter station of the Champlain Hudson Power Express line. New York State Governor Kathy Hochul was present at the announcement.

In November 2021, Hydro-Québec signed a contract with the New York State Energy Research and Development Authority (NYSERDA) to export 10.4 terawatt-hours of electricity to the American metropolis over 25 years, while Ontario declined to renew a deal with Quebec.

At a time when the Quebec government is constantly asserting that more energy will be needed for future economic projects -- particularly the battery industry -- Legault sees no contradiction in selling electricity to the Americans and to neighboring provinces such as NB Power deals to import Hydro-Québec power.

"Whether it's this contract or the contract for companies coming to set up in Quebec, it's out of the surplus we currently have in Quebec. Now, we have dozens of investment project proposals in Quebec where we need additional electricity," he explained.

The line will supply 20 per cent of New York City's electricity needs, despite transmission constraints on Quebec-to-U.S. deliveries. Commissioning is scheduled for May 2026. The spin-offs are estimated at $30 billion, according to the premier.

Will this money be used to finance new dams, such as the La Romaine hydroelectric complex built in recent years?

"It's certain that future projects will cost several tens of billions of dollars. Hydro-Québec has the capacity to borrow. It's a very healthy company. There's no doubt that these revenues will improve Hydro-Québec's image," he said.

Related News

• Electricity Forum News

• Power Generation News

COVID-19 Impact on Global Oil Demand 2020 signals an IEA forecast of declining consumption as travel restrictions curb transport fuels, disrupt energy markets, and shift OPEC and non-OPEC supply dynamics amid economic slowdown.

Key Points

IEA sees first demand drop since 2009 as COVID-19 curbs travel, weakening transport fuels and unsettling energy markets.

✅ IEA base case: 2020 demand at 99.9 mb/d, down 90 kb/d from 2019.

✅ Travel restrictions hit transport fuels; China drives the decline.

✅ Scenarios: low -730 kb/d; high +480 kb/d in 2020.

Global oil demand is expected to decline in 2020 as the impact of the new coronavirus (COVID-19) spreads around the world, constricting travel and broader economic activity, according to the International Energy Agency’s latest oil market forecast.

The situation remains fluid, creating an extraordinary degree of uncertainty over what the full global impact of the virus will be. In the IEA’s central base case, even as global CO2 emissions flatlined in 2019 according to the IEA, demand this year drops for the first time since 2009 because of the deep contraction in oil consumption in China, and major disruptions to global travel and trade.

“The coronavirus crisis is affecting a wide range of energy markets – including coal-fired electricity generation, gas and renewables – but its impact on oil markets is particularly severe because it is stopping people and goods from moving around, dealing a heavy blow to demand for transport fuels,” said Dr Fatih Birol, the IEA’s Executive Director. “This is especially true in China, the largest energy consumer in the world, which accounted for more than 80% of global oil demand growth last year. While the repercussions of the virus are spreading to other parts of the world, what happens in China will have major implications for global energy and oil markets.”

The IEA now sees global oil demand at 99.9 million barrels a day in 2020, down around 90,000 barrels a day from 2019. This is a sharp downgrade from the IEA’s forecast in February, which predicted global oil demand would grow by 825,000 barrels a day in 2020.

The short-term outlook for the oil market will ultimately depend on how quickly governments move to contain the coronavirus outbreak, how successful their efforts are, and what lingering impact the global health crisis has on economic activity.

To account for the extreme uncertainty facing energy markets, the IEA has developed two other scenarios for how global oil demand could evolve this year. In a more pessimistic low case, global measures fail to contain the virus, and global demand falls by 730,000 barrels a day in 2020. In a more optimistic high case, the virus is contained quickly around the world, and global demand grows by 480,000 barrels a day.

“We are following the situation extremely closely and will provide regular updates to our forecasts as the picture becomes clearer,” Dr Birol said. “The impact of the coronavirus on oil markets may be temporary. But the longer-term challenges facing the world’s suppliers are not going to go away, especially those heavily dependent on oil and gas revenues. As the IEA has repeatedly said, these producer countries need more dynamic and diversified economies in order to navigate the multiple uncertainties that we see today.”

The IEA also published its medium-term outlook examining the key issues in global demand, supply, refining and trade to 2025, as well as the trajectory of the global energy transition now shaping markets. Following a contraction in 2020 and an expected sharp rebound in 2021, yearly growth in global oil demand is set to slow as consumption of transport fuels grows more slowly and as national net-zero pathways, with Canada needing more electricity to reach net-zero influencing power demand, according to the report. Between 2019 and 2025, global oil demand is expected to grow at an average annual rate of just below 1 million barrels a day. Over the period as whole, demand rises by a total of 5.7 million barrels a day, with China and India accounting for about half of the growth.

At the same time, the world’s oil production capacity is expected to rise by 5.9 million barrels a day, with more than three-quarters of it coming from non-OPEC producers, the report forecasts. But production growth in the United States and other non-OPEC countries is set to lose momentum after 2022, amid shifts in Wall Street's energy strategy linked to policy signals, allowing OPEC producers from the Middle East to turn the taps back up to help keep the global oil market in balance.

The medium-term market report, Oil 2020, also considers the impact of clean energy transitions on oil market trends. Demand growth for gasoline and diesel between 2019 and 2025 is forecast to weaken as countries around the world implement policies to improve efficiency and cut carbon dioxide emissions – and as solar power becomes the cheapest electricity in many markets and electric vehicles increase in popularity. The impact of energy transitions on oil supply remains unclear, with many companies prioritising short-cycle projects for the coming years.

“The coronavirus crisis is adding to the uncertainties the global oil industry faces as it contemplates new investments and business strategies,” Dr Birol said. “The pressures on companies are changing, with European oil majors turning electric to diversify. They need to show that they can deliver not just the energy that economies rely on, but also the emissions reductions that the world needs to help tackle our climate challenge.”

Related News

• Electricity Forum News

• Climate Change News

Florida Hurricane Irma Power Outages strain the grid as utilities plan rebuilds; FPL and Duke Energy deploy crews to restore transmission lines, substations, and service amid flooding, storm surge, and widespread disruptions statewide.

Key Points

Large-scale post-storm power losses in Florida requiring grid rebuilds, thousands of crews, and phased restoration.

✅ Utilities prioritize plants, transmission, substations, then critical facilities

✅ 50,000-60,000 workers mobilized; bucket trucks wait for safe winds

✅ Remote rerouting and hardening aid faster restoration amid flooding

Parts of Florida could be without electricity for more than a week, as damage from Hurricane Irma will require a complete rebuild of portions of the electricity grid, utility executives said on Monday.

Irma has knocked out power to 6.5 million Florida electricity customers, or nearly two-thirds of the state, since making landfall this weekend. In major areas such as Miami-Dade, 74 percent of the county was without power, according to Florida's division of emergency management.

Getting that power back online may require the help of 50,000 to 60,000 workers from all over the United States and Canadian power crews as well, according to Southern Company CEO and Chairman Thomas Fanning. He is also co-chair of the Electricity Subsector Coordinating Council, which coordinates the utility industry and government response to disasters and cyberthreats.

While it is not uncommon for severe storms to down power lines and damage utility poles, Irma's heavy winds and rain batted some of the state's infrastructure to the ground, Fanning said.

"'Restore' may not capture the full sense of where we are. For the very hard impacted areas, I think you're in a 'rebuild' area," he told CNBC's "Squawk Box."

"That's a big deal. People need to understand this is going to take perhaps weeks, not days, in some areas," Fanning said.

Parts of northern Florida, including Jacksonville, experienced heavy flooding, which will temporarily prevent crews from accessing some areas.

Duke Energy, which serves 1.8 million customers in parts of central and northwestern Florida, is trying to restore service to 1.2 million residences and businesses.

Florida Power & Light Company, which provides power to an estimated 4.9 million accounts across the state, had about 3.5 million customers without electricity as of Monday afternoon, said Rob Gould, vice president and chief communications officer at FPL.

The initial damage assessments suggest power can be restored to parts of the state's east coast in just days, but some of the west coast will require rebuilding that could stretch out for weeks, Gould told CNBC's "Power Lunch."

"This is not a typical restoration that you're going to see. We actually for the first time in our company history have our entire 27,000-square-mile, 35-county territory under assault by Irma," he said.

FPL said it would first repair any damage to power plants, transmission lines and substations as part of its massive response to Irma, then prioritize critical facilities such as hospitals and water treatment plants. The electricity company would then turn its attention to areas that are home to supermarkets, gas stations and other community services.

Florida utilities invested billions into their systems after devastating hurricane seasons in 2004 and 2005 in order to make them more resilient and easier to restore after a storm. Irma, which ranked among the most powerful storms in the Atlantic, has nevertheless tested those systems.

The upgrades have allowed FPL to automatically reroute power and address about 1.5 million outages, Gould said. The company strategically placed 19,500 restoration workers before the storm hit, but it cannot use bucket trucks to fix power lines until winds die down, he said.

Some parts of Florida's distribution system — the lines that deliver electricity from power plants to businesses and residences — run underground. However, the state's long coastline and the associated danger of storm surge and seawater incursion make it impractical to run lines beneath the surface in some areas.

Duke Energy has equipped 28 percent of its system with smart grid technology to reroute power remotely, according to Harry Sideris, Duke's state president for Florida. He said the company would continue to build out that capability in the future.

Duke deployed more than 9,000 linesmen and support crew members to Irma-struck areas, but cannot yet say how long some customers will be without power.

Separately, Gulf Power crews reported restoring service to more than 32,000 customers.

"At this time we do not know the exact restoration times. However, we're looking at a week or longer from the first look at the widespread damage that we had," Sideris told CNBC's "Closing Bell."

FPL said on Monday it was doing final checks before bringing back nuclear reactors that were powered down as Hurricane Irma hit Florida.

"We are in the process now of doing final checks on a few of them; we will be bringing those up," FPL President and CEO Eric Silagy told reporters.

Related News

• Electricity Forum News

• Utility Operations News

US Electricity Demand Outlook examines EIA forecasts, GDP decoupling, energy efficiency, electrification, electric vehicles, grid load growth, and weather variability to frame long term demand trends and utility planning scenarios.

Key Points

An analysis of EIA projections showing demand decoupling from GDP, with EV adoption and efficiency shaping future grid load.

✅ EIA lowers load growth; demand decouples from GDP.

✅ Efficiency and sector shifts depress kWh sales.

✅ EV adoption could revive load and capacity needs.

Electricity producers and distributors are in an unusual business. The product they provide is available to all customers instantaneously, literally at the flip of a switch. But the large amount of equipment, both hardware and software to do this takes years to design, site and install.

From a long range planning perspective, just as important as a good engineering design is an accurate sales projections. For the US electric utility industry the most authoritative electricity demand projec-tions come from the Department of Energy’s Energy Information Administration (EIA). EIA's compre-hensive reports combine econometric analysis with judgment calls on social and economic trends like the adoption rate of new technologies that could affect future electricity demand, things like LED light-ing and battery powered cars, and the rise of renewables overtaking coal in generation.

Before the Great Recession almost a decade ago, the EIA projected annual growth in US electricity production at roughly 1.5 percent per year. After the Great Recession began, the EIA lowered its projections of US electricity consumption growth to below 1 percent. Actual growth has been closer to zero. While the EIA did not antici-pate the last recession or its aftermath, we cannot fault them on that.

After the event, though, the EIA also trimmed its estimates of economic growth. For the 2015-2030 period it now predicts 2.1 percent economic and 0.3 percent electricity growth, down from previously projections of 2.7 percent and 1.3 percent respectively. (See Figures 1 and 2.)

Table 1. EIA electric generation projections by year of forecast (kWh billions)

Table 2. EIA forecast of GDP by year of forecast (billion 2009 $)

Back in 2007, the EIA figured that every one percent increase in economic activity required a 0.48 percent in-crease in electric generation to support it. By 2017, the EIA calculated that a 1 percent growth in economic activity now only required a 0.14 percent increase in electric output. What accounts for such a downgrade or disconnect between electricity usage and economic growth? And what factors might turn the numbers 
around?

First, the US economy lost energy intensive heavy industry like smelting, steel mills and refineries; patterns in China's electricity sector highlight how industrial shifts can reshape power demand. A more service oriented economy (think health care) relies more heavily on the movement of data or information and uses far less power than a manufacturing-oriented economy.

A small volcano in Argentina is about to fuel the next tech boom – and a little known company is going to be right at the center. Early investors stand to gain incredible profits and you can too. Read the report.

Second, internet shopping has hurt so-called "brick and mortar" retailers. Despite the departure of heavy industry, in years past a burgeoning US commercial sector increased its demand and usage of electricity to offset the industrial decline. But not anymore. Energy efficiency measures as well as per-haps greater concern about global warming and greenhouse gas emissions and have cut into electricity sales. “Do more with less” has the right ring to it.

But there may be other components to the ongoing decline in electricity usage. Academic studies show that electricity usage seems to increase with income along an S curve, and flattens out after a certain income level. That is, if you earn $1 billion per year you do not (or cannot) use ten times a much electricity as someone earning only $100 million.

But people at typical, middle income levels increase or decrease electricity usage when incomes rise or fall. The squeeze on middle income families was discussed often in the late presidential campaign. In recent decades an increasing percentage of income has gone to a small percentage of the population at the top of the income scale. This trend probably accounts for some weakness in residential sales. This suggests that government policy addressing income inequality would also boost electricity sales.

Population growth affects demand for electricity as well as the economy as a whole. The EIA has made few changes in its projections, showing 0.7 percent per year population growth in 2015- 2030 in both the 2007 and 2017 forecasts. Recent studies, however, have shown a drop in the birth rate to record lows. More troubling, from a national health perspective is that the average age of death may have stopped rising. Those two factors point to lower population growth, especially if the government also restricts immi-gration. Thus, the US may be approaching a period of rather modest population growth.

All of the above factors point to minimal sales growth for electricity producers in the US--perhaps even lower than the seemingly conservative EIA estimates. But the cloud on the horizon has a silver lining in the shape of an electric car. Both the United Kingdom and France have set dates to end of production of automobiles with internal combustion engines. Several European car makers have declared that 20 percent of their output will be electric vehicles by the early 2020s. If we adopt automobiles powered by electricity and not gasoline or diesel, electricity sales would increase by one third. For the power indus-try, electric vehicles represent the next big thing.

We don’t pretend to know how electric car sales will progress. But assume vehicle turnover rates re-main at the current 7 percent per year and electric cars account for 5 percent of sales in the first five years (as op-posed to 1 percent now), 20 percent in the next five years and 50 percent in the third five year period. Wildly optimistic assumptions? Maybe. By 2030, electric cars would constitute 28 percent of the vehicle fleet. They would add about 10 percent to kilowatt hour sales by that date, assuming that battery efficiencies do not improved by then. Those added sales would require increased electric generation output, with low-emissions sources expected to cover almost all the growth globally. They would also raise long term growth rates for 2015-2030 from the present 0.3 percent to 1.0 percent. The slow upturn in demand should give the electric companies time to gear up so to speak.

In the meantime, weather will continue to play a big role in electricity consumption. Record heat-induced demand peaks are being set here in the US even as surging global demand puts power systems under strain worldwide.

Can we discern a pattern in weather conditions 15 years out? Maybe we can, but that is one topic we don’t expect a government agency to tackle in public right now. Meantime, weather will affect sales more than anything else and we cannot predict the weather. Or can we?

Related News

• Electricity Forum News

• Power Generation News

Iran-Iraq Electricity Cooperation advances with power grid synchronization, cross-border energy trade, 400-kV transmission lines, and education partnerships, boosting grid reliability, infrastructure investment, and electricity exports between Tehran and Baghdad for improved supply and stability.

Key Points

A bilateral initiative to synchronize grids, expand networks, and sustain electricity exports, improving reliability.

✅ 400-kV Amarah-Karkheh line enables synchronized operations.

✅ Extends electricity export contracts to meet Iraq demand.

✅ Enhances grid reliability, training, and infrastructure investment.

Aradakanian has focused his one-day visit to Iraq on discussions pertaining to promoting bilateral collaboration between the two neighboring nations in the field of electricity, grid development deals and synchronizing power grid between Tehran and Baghdad, cooperating in education, and expansion of power networks.

He is also scheduled to meet with Iraqi top officials in a bid to boost cooperation in the relevant fields.

Back in December 2019, Ardakanian announced that Iran will continue exports of electricity to Iraq by renewing earlier contract as it is supplying about 40% of Iraq's power today.

"Iran has signed a 3-year-long cooperation agreement with Iraq to help the country's power industry in different aspects. The documents states at its end that we will export electricity to Iraq as far as they need," Ardakanian told FNA on December 9, 2019.

The contract to "export Iran's electricity" to Iraq will be extended, he added.

Ardakanian also said that Iran and Iraq's power grids have become synchronized in a move that supports Iran's regional power hub plans since a month ago.

In 2004 Iran started selling electricity to Iraq. Iran electricity exports to the western neighbor are at its highest level of 1,361 megawatts per day now, as the country weighs summer power sufficiency ahead of peak demand.

The new Amarah-Karkheh 400-KV transmission line stretching over 73 kilometers, is now synchronized to provide electricity to both countries, reflecting regional power export trends as well. It also paves the way for increasing export to power-hungry Iraq in the near future.

With synchronization of the two grids, the quality of electricity in Iraq will improve as the country explores nuclear power options to tackle shortages.

According to official data, 82% of Iraq's electricity is generated by thermal power plants that use gas as feedstock, while Iran is converting thermal plants to combined cycle to save energy. This is expected to reach 84% by 2027.

Related News

• Electricity Forum News

• Power Generation News

Ontario electricity pricing consultations will gather business input on OEB rate design, Industrial Conservation Initiative, dynamic pricing, global adjustment, and system costs through online feedback and sector-specific in-person sessions province-wide.

Key Points

Consultations gathering business input on rates, programs, and OEB policy to improve fairness and reduce system costs.

✅ Consults on ICI, GA, dynamic pricing structures

✅ Seeks views on OEB C&I rate design changes

✅ In-person sessions across key industrial sectors

The Ontario government has announced plans to hold consultations to seek input from businesses about industrial electricity pricing and programs. This will be done through Ontario's online consultations directory and though in-person sector-specific consultation sessions across the province. The in-person sessions will be held in all areas of Ontario, and will target "key industries," including automotive and the build-out of electric vehicle charging stations infrastructure, forestry, mining, agriculture, steel, manufacturing and chemicals.

On April 1, 2019, the Ontario government published a consultation notice for this process, confirming that it is looking for input on "electricity rate design, existing tax-based incentives, reducing system costs and regulatory and delivery costs," including related proposals such as the hydrogen rate reduction proposal under discussion. The consultation process includes a list of nine questions for respondents (and presumably participants in the in-person sessions) to address. These include questions about:

The benefits of the Industrial Conservation Initiative (described below), including how it could be changed to improve fairness and industrial competitiveness, and how it could complement programs like the Hydrogen Innovation Fund that support industrial innovation.

Dynamic pricing structures that allow for lower rates in return for responding to price signals versus a flat rate structure that potentially costs more, but is more stable and predictable, as Ontario's energy storage expansion accelerates.

Interest in an all-in commodity contract with an electricity retailer, even if it involves a risk premium.

Interested parties are invited to submit their comments before May 31, 2019.

The government's consultation announcement follows recent developments in the Ontario Energy Board's (OEB) review of electricity ratemaking for commercial and industrial customers, and intertie projects such as the Lake Erie Connector that could affect market dynamics.

In December 2018, the OEB published a paper from its Market Surveillance Panel (MSP) examining the Industrial Conservation Initiative (ICI), and potential alternative approaches. The ICI is a program that allows qualifying large industrial customers to base their global adjustment (GA) payments on their consumption during five peak demand hours in a year. Customers who find ways to reduce consumption at those times, perhaps through DERs and enabling energy storage options, will reduce their electricity costs. This shifts GA costs to other customers. The MSP found that the ICI does not fairly allocate costs to those who cause them and/or benefit from them, and recommends that a better approach should be developed.

In February 2019, the OEB released its Staff Report to the Board on Rate Design for Commercial and Industrial Electricity Customers, setting out recommendations for new rate designs for electricity commercial and industrial (C&I) rate classes as Ontario increasingly turns to battery storage to meet rising demand. As described in an earlier post, the Staff Report includes recommendations to: (i) establish a fixed distribution charge for commercial customers with demands under 10 kW; (ii) implement a demand charge (rather than the current volumetric charge) for C&I customers with demands between 10kW and 50kW; and (iii) introduce a "capacity reserve charge" for customers with load displacement generation to replace stand-by charges and provide for recognition of the benefits of this generation on the system. The OEB held a stakeholder information session in mid-March on this initiative, and interested parties are now filing submissions in response to the Staff Report.

Whether and how the OEB's processes will fit together with the government's consultation process remains to be seen.

Related News

• Electricity Forum News

• EV Infrastructure News