CALGARY, Alberta/ MONTREAL, Feb 9 (Reuters) - Canada sees an opportunity in U.S. President Joe Biden's push to achieve a carbon-free electrical grid by 2035: hydropower exports.
With Canadian crude exports taking a hit from Biden's decision to scrap the Keystone XL oil pipeline, Ottawa is increasingly focused on sales of clean energy.
Around 60% of the 4 trillion kilowatt-hours of electricity consumed in the United States in 2019 came from fossil fuels, government data show. Biden's push to convert that to clean energy gives Canada, the world's third-largest producer of hydropower, a window to sell more hydro exports to its southern neighbour.
Canadian Prime Minister Justin Trudeau told Reuters last week the United States is interested in boosting hydro imports. read more In a separate interview Environment Minister Jonathan Wilkinson said combining Canada's clean energy with U.S. wind, solar and geothermal power was a priority for early talks between the two countries.
"We do think that's a big economic opportunity," Wilkinson told Reuters.
A White House spokesman, asked about Canadian hydro exports, said the new administration is "leaving no sources of renewable energy off the table."
Canada generated about 440 billion kilowatt-hours from hydropower in 2020, just over half its maximum installed capacity. Canada's electricity exports to United States dropped in 2019 to a six-year low of 47 billion kilowatt-hours, worth C$1.9 billion ($1.5 billion), influenced by factors like water levels and domestic demand, Canada Energy Regulator specialist Matthew Hansen said.
While a massive U.S. effort to build renewable energy infrastructure might meet Biden's targets, an interconnected grid and sharing resources with neighbouring countries would keep energy more affordable, said Steve Clemmer, director of energy research and analysis with the U.S.-based Union of Concerned Scientists.
"Having the hydro from Canada gives some more flexibility to control costs," Clemmer said.
Hydro Quebec, Canada's largest electricity producer, has already been working to advance two new high-voltage lines to neighbouring New England and New York.
"We share Prime Minister Trudeau's optimism and we are enthused by President Biden's commitment....as we believe HQ can play a major role in our neighbours' decarbonisation efforts, at the lowest cost possible to rate payers," said Hydro Quebec spokeswoman Lynn St-Laurent.
When more renewable energy comes online, power storage facilities that Canada's reservoirs provide to the U.S. grid should become even more valuable, experts said, noting reservoirs can function like giant batteries. When demand is low but the sun is shining or wind is whipping, the power generated can pump water for release later to run a turbine when electricity is needed.
"There's this version of Canadian hydro not only being firm (capacity) but being something like a battery. That's the big picture informing the vision of some policymakers," said Justin Gundlach, senior attorney at the New York University School of Law's Institute for Policy Integrity.
Potential problems include integration of cross-border grids. Local communities often object to efforts to build more high-voltage transmission lines. Another worry: provincial utilities may be leery of long construction times for power projects and lack of finalised U.S. clean energy regulations.
Hydro Quebec's proposed New England Clean Energy Connect project has secured state and federal permits but could face a fall referendum. Opponents, including the Natural Resources Council of Maine, argue it will displace U.S. clean energy projects at a time when Biden is touting domestic production.
"We hope that facts, science and trust in the robust regulatory review of the project will prevail," Hydro Quebec's St-Laurent said, adding other projects would not reduce emissions on the same scale as quickly.
($1 = 1.2751 Canadian dollars)
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