New regulation regarding the 450 MW block of wind energy in Quebec 

publication 

November 2013

Energy Bulletin

The Regulation respecting a 450-megawatt block of wind energy1 was published by the Quebec Government on November 13, 2013. It provides for the general specifications and requirements that must be met by companies who wish to tender on the 450 MW wind energy projects, for which a portion of 300MW will be reserved for the Bas-Saint-Laurent and Gaspésie-Îles-de-la-Madeleine regions. This Regulation is accompanied with Order in Council no. 1150-2013,2 which specifies the provincial and regional content rules applicable for the projects.

Key points

  • A total of 450 MW will be open to wind power suppliers for the purpose of a tender solicitation by Hydro-Québec, within the following time frames:
    • 100 megawatts no later than December 1, 2016
    • 350 megawatts no later than December 1, 2017
  • The price per kWh has been set at 9.0¢ in 2014 dollars, adjusted on a yearly basis according to the Consumer Price Index (CPI), which represents a significant decrease compared to previous tender solicitations released by the Government.
  • Hydro-Québec will have to publish a call for tenders by December 31, 2013.
  • As with previous wind power calls for tenders, the Government has set local and regional content rules to the effect that certain percentages of the "global costs" of a project must result in economic spin-offs in Quebec in terms of jobs and investments.
  • The Government of Quebec has set local and regional percentages similar to those it has fixed in the past:
    • A minimum of 60% of the global costs of the wind farm, including costs related to the installation of wind turbines, must be incurred in Quebec. Extra points will be awarded in the selection process to tenderers who can propose higher percentages.
    • For regional costs (MRC of Matanie and Gaspésie–Îles-de-la-Madeleine), 35% of manufacturing expenses and investments will need to be spent by the tenderer, excluding wind turbine installation costs.
  • In addition to cost percentages, the Quebec Government has added that the local environment must hold a participation of 50% or more in terms of project control.
  • To this effect, a resolution must be adopted by the local environment approving the wind power supplier's project, which may be composed of a regional county municipality, a local municipality, a Native community, an intermunicipal board or a cooperative the majority of whose members have their domicile in the administrative region where the project will take place.
  • In addition, successful project promoters will have to pay an annual sum of $5,000 per MW to the regional county municipality (MRC), municipality or First Nation Community where such MWs are installed.
  • In the choosing of the winning tenderer, Hydro-Québec will give significant weight on strategic components, including electric converters, generators, control system, braking systems and speed multipliers, in a way to promote innovation by inciting wind turbine manufacturers associated with the promoter to produce strategic components whose value added exceeds that of wind turbine parts currently being manufactured in Quebec.
  • Additional guidance and further rules will be provided by the call for tenders documents to be released this month or within the next one.

1 O.C. 1149-2013.
2 http://www2.publicationsduquebec.gouv.qc.ca/dynamicSearch/telecharge.php?type=1&file=60581.pdf (Only available in French)

A cautionary note

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2013