Dave Rhéaume, Hydro Québec - Interview from IEA 11th Annual Global Conference on Energy Efficiency

[00:00:00] Speaker 1: the International Energy Agency Conference on Energy Efficiency taking place here in Montreal, Canada. And I have another wonderful guest with us here. If you could say who you are and who you're representing. [00:00:13] Dave Rayome: Hi, I am Dave Rayome. I'm the Executive Vice President for Hydro-Québec. [00:00:18] Speaker 1: Super. Now, for those viewers that might not know Hydro-Québec, could you give us just a little glimpse into who you are, how long you've been around, what you do? [00:00:28] Dave Rayome: Sure. Hydro-Québec is a state-owned utility. We are responsible for generation, transmission, and distribution of power to Quebecers. We have close to 40,000 megawatts of effective capacity to meet the load of Quebec and neighboring jurisdiction. And we've been around for many, many, many decades. Nationalization of old power plants has occurred 50 years ago. And now we essentially have the monopoly for power in the province of Quebec, Canada. Right. [00:01:08] Speaker 1: So, yeah, I was actually just reading a little bit about Hydro-Québec before I came to Montreal. It's absolutely fascinating that, as you say, the sheer volume of power and electricity that you're actually producing. But you've now got interconnectors going into New England in the United States of America. I think this year you've done it and you've just done, I think, another interconnector into New York. So you're spreading your wings, as it were, down into the eastern seaboard of the United States. This is quite a story, really. [00:01:42] Dave Rayome: Yes, for the viewers, North America is not as well connected as Europe when it comes to the various grids. But actually, Quebec has been selling power to the state of New York for 100 years. It was just at the border. But in the recent years, we've developed two major interconnections, HVDC, new lines, over 1,000 megawatts each to go deliver power to the region of Boston and downtown New York City. We're actually delivering in Queens, New York, clean power to replace oil or gas fuel generation. [00:02:21] Speaker 1: That's very good. And, of course, must align well with New York City, but also New York State's quite good, reasonably good climate targets that they have and, of course, are still maintaining. And so you are part of their success story. [00:02:37] Dave Rayome: We think that one of the things we want to do is we call ourselves the battery of the Northeast with a large reservoir. Most of our generation comes from hydropower with large reservoir. So as jurisdictions like New York are adding wind and solar generation, obviously, there's high generation periods, but also low. So one of the things we want to do with better integration is to say, when you guys have high wind and high solar generation, send us back your power and we'll send it back to you at periods where there is no variable generation sufficient to meet the demand. [00:03:11] Speaker 1: And when you get their power back, do you then feed it into the Quebec grid or do you use that to, say, pump water up to hydro reservoirs and therefore part of the, what you might call long duration energy storage is a technical term, isn't it? [00:03:27] Dave Rayome: We have a great advantage. We don't even need to pump it up. We don't even need to use energy to pump it up. We actually, instead of generating our own hydropower, we keep the water in the reservoir using their energy. And so therefore we have the water, which becomes essentially your battery. It's your storage, really long-term storage over multiple years. We have today something like a reservoir capacity of over 150 terabyte hours of water that is being kept in the reservoir to be able to meet high demand periods. [00:03:58] Speaker 1: That's very interesting because, in fact, what you're saying is that in the United States of America, where you're operating, you make sure that they don't waste their renewables, which otherwise would be wasted. And it gets back into, well, climate action and also for the customers that you have in Quebec. [00:04:18] Dave Rayome: That's exactly it. Like as you invest more in wind and solar, sometimes you have what you call curtailment periods, basically where supply is bigger than demand rather than curtail it and get rid of it. We're buying it. We're giving them money for it. So it's being valued, allows us to keep water in our reservoir to use instead to meet Quebec demand. And when suddenly they have a bigger need for power, that's when we can flow the water to meet the need. [00:04:45] Speaker 1: Yeah. I mean, there's a company in Manchester, England. There aren't that many hydroelectric places left. So they are taking the waste, wind and solar near Manchester in the north of England and converting it into taking the air and compressing the air into a liquid, which then can be released when it's needed to the grid. It expands very quickly, does that liquid air and turns a turbine. But you don't have to bother with all that because you've got the hydro system. Yeah. [00:05:13] Dave Rayome: We have the geology that makes it easier. [00:05:15] Speaker 1: Yeah. So let's talk a little bit about this then. So you're here at the International Energy Agency, Energy Efficiency Conference. What does energy efficiency mean to your company? [00:05:30] Dave Rayome: So three years ago, we've announced a new phase of electrification for Quebec. Our goal is to find about 10,000 megawatts of effective load. So significant amount of investments. We're talking about $200 billion to be able to help electrify Quebec. Obviously, electric cars, industries. We want to generate wealth but also reduce GHG emissions. One of the things we had to start thinking more about is to say, well, does it really make sense to make such big investments to generate more before actually working at being efficient at consumption? Quebec has really, really low energy prices. We're selling today a kilowatt hour for about $0.08 Canadian. So that would be $0.05, $0.06 or maybe $0.04. Yeah. $0.04. [00:06:23] Speaker 1: U.S. dollars. Yeah. Yeah. [00:06:24] Dave Rayome: So really, really cheap. So we felt that we had a lot of work in front of us to help Quebecers, both residential, commercial, industrial, consume better because any energy we can save allows us to not have to generate more, do less transmission. So it's really a win-win when it comes to saving energy. Consumers save money and we don't need to invest as much in order to meet the demand. [00:06:49] Speaker 1: Okay. Is that this program LogisVert? LogisVert. LogisVert. Yeah. Yeah. [00:06:55] Dave Rayome: So Green Homes. Yeah. Let's do it this way. Is the program for residential customers. Basically, we're providing subsidies when it comes to heat pumps, changing your windows, like making sure that your building is more efficient. But we have similar programs for commercial and industrial use. [00:07:13] Speaker 1: So you raise a good point there because I think sometimes the public out there don't realize it. But the fact is that, you know, there is an increasing, increasing, increasing demand for electricity and power, right? Almost, it seems unstoppable in the world. And we need to move very quickly and very nimbly, don't we, to make sure that doesn't overwhelm our ability to fight climate change. [00:07:35] Dave Rayome: 100%. The demand comes, I'd say, mostly from four different sectors in Canada. One is obviously electric cars. Yeah. I mean, we're buying gallons of fuel on a regular basis. If you want this to be electric, that generates a lot of, that needs a lot of power. Buildings, they're still, Quebec is actually a very electrified system, but there's still significant amount of gas and even oil for heating. Data, we talk about data centers somehow, but there's an increasing need of energy for data, but also industrial use. Today, you may have a boiler that is gas that will be electric soon. So, we need to have the available renewable power to be able to meet that demand. [00:08:16] Speaker 1: Yeah, yeah. And you have, do you have industrial heat pumps coming into the market here? [00:08:20] Dave Rayome: And not as fast as we would, like right now, we're more getting electric boilers. So, and that's actually what the issue of efficiency is, is there's very affordable, cheap technologies that are not that efficient, that are readily available. How do you entice consumers to go for the better efficiency and the longer-term investment rather than go for the cheap investment at the start? [00:08:45] Speaker 1: I was reading something. There's a document out from the International Energy Agency on energy efficiency, multiple benefits for industry and businesses. In fact, it's just, that's what it looks like. There we go. I was reading that the other day, bedtime reading. And it makes the point that, it was talking about consumers actually, saying that somebody, I think it was in France, or it might have been in the UK, they found that many consumers would take out big loans to buy a car. But when faced with installing a heat pump, where they had to maybe borrow some money, they just weren't sure. And the heat pump was obviously cheaper than the car, so they take out a big loan for a car, but not for a heat pump. So, I mean, there's all this kind of behavioral stuff as well that goes with people's decisions that they make, you know. [00:09:33] Dave Rayome: Well, it's a challenge to make it exciting to invest and especially take a loan for energy efficiency. Like, the assets you're buying are not especially sexy. They're not really cool to show off to your friends. But it's such a great investment. And that's why we need to make it easier for them to do. Yeah. Winters. [00:09:54] Speaker 1: The wintertime. You've got a cold climate. We do. Okay. There's still lots of snow on Mont-Saint-Anne, hopefully. Yeah, good. So, space heating is a big area of opportunity for energy efficiency. Is that correct? [00:10:10] Dave Rayome: Yeah. In a climate like ours, it's definitely the most energy-intensive use is heating your homes. And when you compare it to the rest of the world, we do have fairly good isolation when it comes to homes. But it's still not really, really efficient. Quebec was one of the first jurisdictions in the world to electrify its home heating. And what it means is a lot of baseboard heating, so much less efficient than heat pumps productivity can provide today. So, we need to shift the way people think about their homes in terms of getting that efficiency in there. [00:10:51] Speaker 1: And, of course, the equipment is always getting more energy efficient all the time. But people install things. And, yeah, how to keep up with the efficiency improvements of the equipment, balancing the costs of installing that sooner than later. I mean, this must be a complex equation. [00:11:10] Dave Rayome: You can have baseboard heatings for $50 to heat a room. So, it's a very low capital investment solution. But at the same time, that is not very efficient. Part of the challenge we have specifically in Quebec is most homes don't have central systems. So, you can't just replace one asset to say, oh, I'm going to change my low efficiency by a high efficiency asset and it's going to heat the whole home. It's not the case because today you have just regular baseboards in every room. So, we're working a lot with splitboards like heat pumps that have like one or two heads that will send hot air in the home to really improve the efficiency. Just with adding a heat pump, a regular family can save 20% of their power bill. [00:12:00] Speaker 1: Are you also, just out of curiosity, I mean, we were talking about heat waves in Europe and it's been pretty hot here as well, I think, in the last few days. Are you seeing the air conditioning, people putting in more air conditioning to deal with that? And does that mean a challenge as well for demand? [00:12:16] Dave Rayome: Actually, for us, it's an opportunity because if you're in a home and you see health or comfort issues and you want to invest in an air conditioning system, that's where we make it like a no-brainer to say, well, don't buy just an air conditioning. Buy a heat pump, we'll cover the difference. And then you'll have the comfort you wanted in the summer, but then you'll have the savings in the winter by having the ability of the heat pump to provide you heat. [00:12:41] Speaker 1: Energy efficiency comes into play both at the supply side and the demand side. What can utilities like Hydro-Quebec do to encourage its customers to adopt more energy efficiency measures? Is it this one we were talking about, like support through these loans and things like that? [00:13:04] Dave Rayome: It's support through subsidies, but it's more than that. Part of the challenge I think we need to recognize in the industry is if I'm going out there in the north and building a dam and you're a customer who wants to buy an electric car, you don't need to do anything. You're buying your car, you're happy, you're excited, and you expect me to provide you a service. And that's the way it's always worked. Now, suddenly, we need to work together if it's about energy efficiency. I need to convince you to do something. You can't just ask for the service. Even if you would say, oh, I'll participate. Well, you need to find a supplier. You'll need to open your door to have somebody come in and make a hole in your wall, which may cause some hassles. So, a big part we need to do a better job is to create the ecosystem, find the suppliers, find the installators, make sure that the code for building is efficient and makes it easy for you to access these technologies. And unlike the past, so we can't have you be passive. We need to find a way for you to want to join in the movement and say, hey, I want to help. I don't want to lose money by helping. I want to make money, but I'm willing to put in some efforts. And that's a big change versus the way the utility model has always worked, where we generate, we transmit, we distribute, and you just receive and you pay the bill. Now, it's a collaboration. [00:14:28] Speaker 1: I suppose, finally, one of the things I wanted to ask you was, is there any downside to hydro? Because it sounds like it's such a perfect story, right? I mean, I know in the tropics that there's sometimes emissions of methane that comes out of the rotting materials, but that's many a tropics problem rather than a northern American or northern European problem. Is it? [00:14:52] Dave Rayome: Well, I mean, any large-scale infrastructure has impacts on the territory. So even though it is arguably the best source of renewable power, it still has some impacts, which is also why we need to do energy efficiency. Because rather than just build more and more and more, how do we make sure that we get the most out of them? It also has a significant impact on the way of living of the people around there. You are having an impact on the hydrology. It is affecting the way, for example, ice gets formed on the rivers because you're spitting a lot of water, especially in the winter, because that's when we have high need for power. So these are complex projects from civil engineering and from a technical impact on nature that have to be taken very, very seriously and are challenging to develop, in addition to the fact that they're usually very far from where people live. So you have to build transmission through a large territory in order to get the power to market. [00:15:51] Speaker 1: Yeah, but you're not in Canada in the situation where you are sharing your water much with other countries, are you? It's not like a USA-Mexico situation and things like that. [00:16:03] Dave Rayome: No, in our case, the water is really at the north. So that's not one of the challenges we have. [00:16:09] Speaker 1: Okay, well, look, thank you very much indeed. It was very interesting to hear about, yeah, I heard about the company and Hydro Quebec. And I think for our viewers in different countries around the world, it's always interesting to get a glimpse into what happens in another country like Canada, and in this case, the province of Quebec. So congratulations. [00:16:29] Dave Rayome: Well, thanks for visiting us and thanks for keeping the message out there. There's so much to do and we've got to do it together. Thank you very much. And we don't have time. We don't have time. Let's act now. Thank you very much indeed. Thank you. Thank you.