N.L., Quebec ink historic MOU worth hundreds of billions
The deal includes plans to develop a 2,250 MW hydroelectric project on the Churchhill River.
Key Takeaways:
- The MOU includes plans for three significant hydroelectric initiatives: the 2,250 MW Gull Island facility, a new 1,100 MW expansion near Churchill Falls, and a 550 MW capacity increase at the existing facility.
- The agreement ensures $1 billion annually for Newfoundland and Labrador starting in 2025 through dividends, water rentals, and energy sales.
- Construction plans emphasize respect for existing agreements with Indigenous communities and require meaningful consultation throughout the project lifecycle.
The Whole Story:
Newfoundland and Labrador and Quebec have signed a significant Memorandum of Understanding (MOU) to expand hydroelectric generation in Labrador, setting the stage for economic and energy benefits across both provinces. The agreement includes new contracts for the Churchill Falls facility and plans for additional projects that will deliver renewable energy for generations.
“Today represents a significant milestone for every Newfoundlander and Labradorian,” said Dr. Andrew Furey, Premier of Newfoundland and Labrador. “Over the life of the agreement, we will generate dividends to the province of more than $200 billion by 2075, have access to nearly four times the electricity we do today to support industrial growth in Labrador, and realize the development of Gull Island without the financial and construction risks.”
Quebec Premier François Legault praised the MOU as a “win-win” agreement.
“This agreement will generate savings of over $200 billion over 50 years,” he said. “It allows us to secure a major energy block for several generations while ensuring a price far lower than the alternatives. It will help us keep electricity rates as low as possible for Quebecers.”
Agreement Highlights
The MOU outlines two primary components:
- New Contracts for Existing Churchill Falls Generation: Hydro-Québec will replace the current contract with payments to Churchill Falls (Labrador) Corporation (CF(L)Co) totaling $33.8 billion in net present value from 2025 to 2075. Energy prices will rise over time, linked to market indices.
- New Generation Projects in Labrador: The agreement includes three major initiatives:
- Gull Island Facility: A 2,250 MW hydroelectric project on the Churchill River.
- Churchill Falls Expansion: A new 1,100 MW facility near the existing site.
- Capacity Increase at Churchill Falls: Adding 550 MW to the current facility.
Hydro-Québec will also pay Newfoundland and Labrador Hydro $3.5 billion as an option payment for co-developing these projects. Combined revenues, including dividends and water rentals, are expected to bring $1 billion annually to Newfoundland and Labrador starting in 2025.
Renewable Energy for the Future
“This memorandum secures access for Quebec to a large quantity of renewable energy for 50 years at the lowest price possible,” said Michael Sabia, CEO of Hydro-Québec.
Energy costs from existing Churchill Falls generation will average 6 cents/kWh, with new developments priced at approximately 11 cents/kWh. The collaboration aims to support decarbonization while driving economic growth in both provinces.
Indigenous Engagement
The agreement emphasizes respect for existing agreements with Indigenous communities and commits to meaningful consultation throughout project development. Both provinces aim to ensure transparency and collaboration at every stage.
Path Forward
The MOU sets the foundation for detailed planning and project analyses, with construction expected to begin following permitting approvals. The existing Churchill Falls contract remains in force until definitive agreements are finalized.
“This agreement allows us to secure a major energy block for several generations,” said Premier Legault, underscoring the historic nature of the partnership.
