Hydro-Québec Faces $1 Billion Cost Surge in U.S. Power Export Projects
Hydro-Québec is facing a financial jolt of its own — the state-owned utility will have to pay about one billion dollars more than initially expected to export electricity to the United States. That’s a jump of roughly 50% from its original budget, according to findings published by La Presse . It’s a story that reflects how the global cost of materials, labor, and infrastructure has been climbing, making the clean energy transition more expensive than anyone thought a few years ago.
To honor its energy supply contracts with New York and New England, Hydro-Québec has been working on massive projects designed to export about 20 terawatt-hours of clean power annually. However, as these projects have moved forward, costs have surged dramatically. The total bill for building the necessary converter stations and power lines — including the Hertel and Appalaches interconnection sites — has ballooned to nearly $2.9 billion, almost a billion over the $1.9 billion initially approved by regulators.
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So, what’s driving this 50% increase? Several factors are at play. The cost of high-voltage converters has almost doubled in four years, steel prices are up nearly 50%, large transformers by 68%, and high-tension cables by a stunning 78%. Delays caused by a referendum in Maine and soaring global demand for undersea cables, especially those used in offshore wind projects, have added even more strain to the budget.
Hydro-Québec officials point out that these cost pressures are not unique to Quebec — energy projects worldwide have been hit by the same inflationary wave since the pandemic. Still, many of Hydro’s ongoing ventures are now expected to exceed initial budgets. Out of thirty active transmission projects, sixteen are already projected to cost more than planned, with an average overrun of around 15%.
Experts warn that these overruns reveal a deeper challenge: the clean energy transition might be far more costly than policymakers anticipated. Pierre-Olivier Pineau, an energy sector expert at HEC Montréal, said that while Hydro-Québec isn’t necessarily at fault, the overall environment for major infrastructure planning has become highly unpredictable. With global uncertainty, high tariffs, and volatile steel prices, it’s a tough landscape for utilities everywhere.
The big question now is — who will pay for all this? The Quebec government has capped residential rate increases at 3%, meaning the extra costs will likely fall on commercial, institutional, and industrial clients. Some analysts warn that this imbalance could become a serious issue within the next decade if project costs continue to rise.
Hydro-Québec has pledged to invest about $200 billion over the next ten years to maintain and expand its energy infrastructure, keeping up with surging demand and environmental goals. But as one expert put it, “we’re just at the beginning of the energy transition — and if these cost trends continue, things might get much more expensive before they get easier.”
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