Now the Quebec government has announced that wind energy will become a larger piece of the province’s energy puzzle – as it will for the rest of the planet. One Longueuil-based company, betting big on wind and solar, is well positioned to fill the rising demand, at home and abroad. And that company has risen to the top of Corporate Knights’ 2023 ranking of Canada’s Best 50 Corporate Citizens. 

Three decades of renewable energy

For more than 30 years, Innergex Renewable Energy has developed, owned and operated clean electricity facilities in Quebec. The company was founded in 1990 after the provincial government called for private sector bids to develop small hydro-generation facilities. A decade later, Innergex began scouting out locations for wind turbines in the Gaspé region, partnering with TransCanada Corporation (now TC Energy) on its first wind energy bid.  

Having acquired B.C.’s Alterra Power Corporation in 2018 and Chile’s Energía Llaima in 2023, Innergex is now the largest independent renewable-energy company in both Canada and Chile, with expansion plans in the U.S. and France. Today, the $870.5-million company has a gross installed capacity of 4,244 megawatts (MW) of wind, solar and hydro – that’s more installed renewable capacity than the entire province of Ontario. And it plans to double that by 2025.

The ambitious energy transition plans of both the U.S. and Canada will require a lot of new clean energy. The U.S. government has committed to reducing greenhouse gas emissions by 50 to 52% by 2030 from 2005 levels, and Canada is aiming for a 40 to 45% reduction. Innergex CEO Michel Letellier plans to take advantage of these greening trade winds. 

“There are few gains to be expected from hydroelectricity,” says Letellier at his Longueuil office on the South Shore of Montreal. Although a third of its facilities rely on hydroelectricity, Innergex plans for a diversified future. “The best sites for dams are occupied. And we won’t get more than 1.5%, maybe 2%, additional output from [existing hydro facilities]. In Quebec, wind power is the most promising.” 

Decarbonization, energy security and independence will translate into growth for renewable-energy producers, confirms Anne Perreault, senior portfolio manager at Desjardins Global Asset Management. “Investors like that Innergex is diversified [solar, wind, hydro and batteries] and operates in several countries. But they have questions about financing growth. Currently, 84% of the credit line is used. So partnerships will need to be formed.”

A solid partner: Hydro-Québec

Since February 2020, Innergex has had a solid partner: Hydro-Québec. The Crown corporation (which topped the Best 50 ranking three of the last four years) paid $661 million in exchange for a 19.9% stake and committed to investing $500 million in joint projects. “The absence of reference shareholders made us too vulnerable to predators. We needed a shareholder who, without necessarily holding a majority stake in the capital of a company, has a stake large enough to influence its decisions,” says Letellier. “Every public company wants to maximize shareholder value. However, in our industry, value is not measured per quarter. We look at the long term. Hydro-Québec protects us from stormy weather.” 

So far, this strategic alliance has resulted in one joint venture: acquiring the 60 MW Curtis Palmer portfolio of run-of-river hydroelectric plants in New York State. “We definitely want to establish other partnerships with Hydro-Québec, both in the U.S. and Quebec,” Letellier says.

On both sides of the U.S.-Canada border the future looks bright: governments are adopting policies and tax credits to encourage the rapid deployment of renewable-energy projects. Through the U.S. Inflation Reduction Act and budget measures announced in Canada, governments have trumpeted new incentives for renewables. But tax credits are only part of the equation to transition to renewable energy; transmission lines are critical to move the electricity generated to where it’s in demand. 

“Our biggest challenge, in Canada and the U.S., is the interconnectedness of projects. All the developers aim for the same locations, creating bottlenecks. We desperately need more pipes,” says Letellier, referring to the need for more transition lines. The U.S. Midwest, for example, could be a Klondike for solar and wind power, but the majority of potential customers are in urban areas on the coasts. 

No renewable-energy company will reach its targets without greater distribution capacity, Letellier explains. “Who will build those new transmission lines? Public utility companies? Private sector? This complex ownership structure and construction costs explain the lack of lines.” 

Agreements with 31 Indigenous communities

Also critical to renewable-energy projects are community relationships. Innergex prides itself on its close ties with the communities that live near its projects. Things have changed since the big hydro projects of the 1970s, says Fred Vicaire, CEO of Mi’gmawei Mawiomi Business Corporation, Innergex’s Indigenous partner in Mesgi’g Ugju’s’n wind farm, in Gaspésie. “For many decades, we were just a box to check for companies to say, ‘We can do the project, we consulted with First Nations, and we will give them some royalties.’ We don’t want royalties from companies installing infrastructure in our territory. We want to own the projects 50/50 and get operating revenue from them.” 

The Mesgi’g Ugju’s’n (MU) wind farm, located on public land in the regional county municipality of Avignon in Quebec’s Gaspé Peninsula, is indeed a 50/50 partnership between the three Mi’gmaq communities (Gesgapegiag, Gespeg and Listuguj) and Innergex. The first phase of MU is a 150 MW project. The second phase will add 102 MW.

Innergex has signed agreements with 31 Indigenous communities. “They go beyond financial terms,” says Vicaire. “These agreements take into account our way of life, including respect for hunting territories and lands used for traditional medicinal plants, for example.” 

There are agreements, and there are agreements, cautions the Innergex CEO. “Unfortunately, over the years, too many renewable-energy companies have lacked transparency, negotiating with two different financial models: one designed for First Nations, showing no profitability, and one for the board and shareholders, which was profitable. An unequal relationship dating back to the fur trade era.” 

“Since the early days, Innergex has believed in the three Ps: people, planet, profit,” he adds. “Every company aims for a return, but we’ve always believed it should be reasonable and never at the expense of the other two Ps.” 

Partnerships can be challenging, especially when the partners don’t have access to the same equity. For the first phase of the MU wind farm, Innergex brought in more equity, says Vicaire. But the second phase “is different,” he says. “We have access to the First Nations Finance Authority. It finances projects at rates below prime, as municipalities would for large infrastructure projects.” 

The green and the greening

Innergex’s relationships with Indigenous communities contribute to a strong “S” in the company’s ESG ratings. They also helped secure its spot at the top of the Best 50 ranking. As a pure-play renewable-energy business, the company scored top marks on sustainable revenue and sustainable investment, which were both at 100%. It also scored in the top quartile on energy productivity and carbon productivity.

Like Premier Legault, Letellier sees batteries in his future. He says that the next frontier for renewables is energy storage – keeping electricity flowing when the wind doesn’t blow and the sun doesn’t shine. Becoming an expert in deploying energy-storage technologies is part of Innergex’s strategic plan for 2020 to 2025. One battery project is already operational near the Yonne wind farm in France. Two others are under development in the Atacama Desert in northern Chile. 

“We need all the help we can get to manage consumption,” Letellier says. “And it is clear that one day not so far away, every house will have its battery.”

Diane Bérard is an independent-solutions journalist based in Quebec. 

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The provincially owned utility is pursuing two of the continent’s largest decarbonization projects, that would supply hydropower to Massachusetts and New York City, displacing natural gas in those markets. In both cases, the transmission projects needed to complete the deals have run into local opposition that could derail Hydro-Québec’s export plans.

It’s also participating in talks on a project called the Atlantic Loop. The regional grid would bring hydropower to the Maritimes to displace coal-fired power and avoid the need for new natural gas plants to complement growing supplies of wind power.

If all parties can agree, new transmission lines would flow electricity from Quebec to the south and the east to provide baseload power and to back up intermittent generation of renewables. They would, in turn, allow American and Atlantic Canadian producers of renewable energy to sell to Quebec when there is a surplus of wind power.

However, even as it looks to increase electricity trade with its neighbours, Hydro-Québec faces a huge challenge in serving as the linchpin for the province’s ambitious decarbonization plans, which could result in as much as 50% more electricity demand in 2050.

The utility’s original focus was on selling hydroelectric power to Quebecers and keeping rates low for the province’s industrial and residential consumers. While that core mandate remains, Hydro-Québec chief executive Sophie Brochu says, the corporation is now determined to advance regional co-operation in decarbonization while investing more heavily in energy efficiency, wind power, and new, smarter grid technology.

The “North Star” for all electricity systems operators and utilities in North America is to deliver the low-carbon energy transition at the lowest cost possible to their customers, Brochu says.
“We have a responsibility to, obviously, serve our respective markets,” she said. “We [also] have a collective responsibility to see how we can work in common with our respective infrastructures and means of production to access this North Star.”

For the third year, Hydro-Québec ranked first among the Corporate Knights Best 50 Corporate Citizens in Canada. Its ranking was based not only on the low-carbon nature of its immense electricity business, but on water productivity, taxes paid, CEO-to-average-worker pay, executive and board gender diversity, and clean revenue.

Brochu herself is the personification of both Hydro-Québec’s progress and its deep connections with the province’s business culture. When she took over in 2020, she became Hydro-Québec’s first female CEO. The appointment interrupted the sabbatical she had planned for herself when she resigned after serving 12 years as chief executive officer at Montreal-based Énergir, the former Gaz Métro.

Keeping the home fires clean-burning

In March, Hydro-Québec released its strategic plan for 2022 to 2026. It laid out the challenges ahead and warned that pricing structures would have to change to encourage energy efficiency and conservation. In other words,  if Hydro-Québec is to succeed in its ambition of becoming the renewable “battery” for a large swath of North America’s northeast, it would have to restructure its rates, especially at peak hours, to get Quebecers to stop wasting so much power.

Between 2020 and 2029, it projected that Quebec’s own demand for clean power would increase by 20 terawatt-hours (TWh), or roughly 10% of current levels. By 2050, decarbonization efforts – including a dramatic increase in electric vehicles – would result in an increase of 100 TWh, or a 50% rise.

Brochu says they expect to meet that 2029 demand through an aggressive energy-efficiency program; the refurbishment of existing hydro facilities; and growth in wind power, including as much as 3,000 megawatts of capacity provided by a recently announced partnership between Hydro-Québec, Énergir and Borealis.

Even with that higher demand in Quebec, the utility is pursuing deals to increase exports by some 20 TWh annually to the United States under firm contracts. (By way of comparison, Nova Scotia’s power demand was 10 TWh in 2019.)

Eyeing expansion to the south

American politicians and systems planners – and a number of power sector analysts – are looking to Quebec to provide relatively low-cost, low-carbon power to help drive states’ own decarbonization plans. Hydro-Québec is moving on two separate deals: the 9.45 TWh New England Clean Energy Connect, to serve Massachusetts, and the New York City–bound Champlain Hudson Power Express, with a capacity of 10.5 TWh. The US$4.5-billion New York project was approved by state regulators in April, but further legal fights are possible.

A study from the Massachusetts Institute of Technology in 2020 concluded that increased reliance on hydropower from Quebec provides the most cost-effective route to decarbonization for northeastern states, especially when coupled with a bidirectional trade in which the Canadian province purchases surplus renewable power when generation is high but demand is low.

In the longer-term, Quebec could serve a battery function, recharging its reservoirs when there is a surplus of renewable power and flowing hydropower when intermittent renewables cannot fill demand, the author of the MIT study, Emil Dimanchev, said in an email.

Brochu says Hydro-Québec is eager to expand the combined benefits of wind and hydro. However, the current agreements with Massachusetts and New York are for a set capacity, which would flow regardless of the availability of wind power.

Proposals for Quebec to expand power exports to Ontario have long failed to materialize, in part because Hydro-Québec wants to sell firm capacity and its neighbour wants a more flexible purchase of energy to backstop renewables. The Quebec utility could face a better reception in the United States if it “reframed” the New England and New York projects “along the lines of the battery concept by bundling new transmission with large-scale renewable expansion in the U.S.,” Dimanchev says.

Opposition to U.S. expansion plans brewing

As it is, Hydro-Québec is facing tough opposition to the massive transmission projects needed to complete the American deals.

In Maine, voters rejected a US$1-billion transmission plan to bring power from Quebec in a referendum last November. Hydro-Québec’s contractor is continuing with some site preparations as the utility and its partners seek a court ruling that would allow completion.

Several groups unsuccessfully opposed the New York transmission line that would be buried under the Hudson River. They include the environmental group Riverkeeper, which submitted a brief arguing that Quebec’s hydropower is not as low-carbon as Hydro-Québec claims and that the utility is disregarding Indigenous concerns.

Damming and flooding large areas can indeed cause the release of methane and carbon dioxide as vegetation dies off. Hydro-Québec argued that the Riverkeeper analysts cherry-picked data, in part by focusing on near-term effects, while for the life of the project, its hydropower has among the lowest carbon intensity in the world.

The Riverkeeper submission included statements from a handful of Indigenous representatives, who complained that Hydro-Québec’s hydropower has damaged their traditional territory.

Brochu acknowledges that Hydro-Québec has had longstanding problems in acknowledging and addressing Indigenous concerns but says the utility is working to address its faults.

“Things need to improve, and we are improving them,” she says, while adding that there are many different perspectives within the Indigenous communities. Brochu recently participated in a ceremony marking Hydro-Québec’s commitment to bring power to the village of Kitcisakik, the last Indigenous community that was unconnected to the grid. “It is as thrilling to bring power to Kitcisakik as it is to [bring it to] Queens in New York,” she says.

Hydro-Québec is also working with a Mohawk community that wants to invest as partners in a transmission line that traverses their traditional territory on its way to New York. However, Hydro-Québec faces myriad lawsuits and other challenges from Indigenous groups stemming from its long history of damming rivers across the province and in Labrador dating as far back as the development of Churchill Falls in the 1960s and ’70s.

The Indigenous complaints have so far not derailed Hydro-Québec’s export plans.

Pierre-Olivier Pineau, an energy expert at the HEC business school in Montreal, says rejection of Quebec power would only hurt American consumers. At the same time, the loss of export sales would mean less supply pressure and lower prices at home, he says.

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After 30 years in the energy sector, including most recently as president and CEO at Énergir (formerly Gaz Métro), Brochu had planned to split her time between studying in Paris and teaching in Montreal. But it was the start of the global pandemic, and Brochu felt a civic duty to help her community in the best way she knew how.

“I don’t know much, but I know energy, and Hydro-Québec is a formidable organization,” she says. “For me, the call to go was very strong.”

It helped that Hydro-Québec was a sustainability leader and, Brochu believes, “a place where you can move the needle.”

She’s quick to point out that she wasn’t hired to “save” the organization. “Hydro-Québec doesn’t need a saviour, but this is where I can contribute. And I’m glad I did,” says Brochu, who started her position as president and CEO in April 2020.

She sees the utility playing a crucial role in advancing sustainability by providing renewable energy and working closely with communities, including Indigenous Peoples, and increasing gender and racial diversity across the workforce. “Every decision we make is constantly balanced through several filters, and we need to make sure those filters are the right ones from the ESG [environmental, social and governance] perspective,” she says.

The ongoing focus on sustainability earned Hydro-Québec top spot on the Corporate Knights 2021 Best 50 Corporate Citizens in Canada list, up from fifth place last year. Hydro-Québec also placed first in 2018, and came second in 2019.

For the latest award, the utility received top-quartile scores (75% or higher) in areas such as water productivity, cash taxes paid, executive and board gender diversity, clean investment and clean revenue (based on hydro, solar, wind and biomass generation and transmission revenue). Clean revenue may be a given since nearly 100% of its power is renewable, “but we need to keep it giving,” she says.

What’s critical, Brochu says, is how the organization invests its money, including in other renewables such as wind and solar, and in future means of decarbonization like green hydrogen. To take stock of its clean investment and revenue, Brochu created a vice-president position to map innovation across the supply and delivery chains and provide a benchmark for the organization to improve upon.

“When people tell you ‘you’re a leader,’ it forces you to keep doing the best you can.”
— Sophie Brochu, CEO, Hydro-Québec

The investment includes helping Quebecers with what Brochu describes as the “real-life energy transition” – for example, support with important customer questions such as: How do I plan and manage the recharge of a large electric fleet? What investment will be required above the cost of the vehicles? And, how will it affect my electricity bill?

The utility recently launched the Collective Energy initiative to consult Quebecers and get them involved in identifying and carrying out key projects that will benefit communities across the province. It asks Quebecers to reflect on three key areas: the green economy, sustainable mobility and responsible energy use.

“We are listening to what’s missing in the energy transition ecosystem to make real life happen and then investing in that,” Brochu says.

In terms of diversity, Brochu has added more women to the management team and about two-thirds of the board are women, but she’s also pushing to increase the number of women in roles across the organization. Today, about 30% of Hydro-Québec’s nearly 20,000 employees are women. “You need gender diversity and, ideally, parity to thrive,” she says.

More diversity also includes hiring more Indigenous people at Hydro-Québec, both in corporate roles and in communities where they are represented. A big part of Brochu’s mandate is also to improve the public utility’s relationship with Indigenous communities across the province. “Today Hydro-Québec is better than we were 10 years ago or five years ago, but my goal is that 2021 will mark the new era of the way we interact with our Indigenous communities,” she says.

“The whole idea is to be sophisticated enough to be nationally ambitious but regionally tactical, and very, very smart,” Brochu says of the company’s sustainability journey. “There’s so much to do … but I believe we’ll get there.”

Hydro-Québec’s current goals are driven by its Sustainable Development Plan for 2020 through 2024, which includes three pillars: governance, community and the environment. The plan lays out 12 strategies linked to specific improvement targets and performance indicators. Hydro-Québec also has a target to be carbon-neutral across its operations by 2030.

To Brochu, it’s more than a target – it’s a mandate, as a renewable energy provider. “The challenge of an organization like ours is to say, ‘There are areas where we can’t fail, we have to be reliable.’”

So while most people see Hydro-Québec’s role as simply providing reliable power, Brochu believes the mandate is broader: to help Quebecers transition to the low-carbon economy and be a leading corporate citizen. Despite topping the 2021 list of the Best 50 Corporate Citizens in Canada, and regularly appearing in the top five in recent years, Brochu believes the utility needs to continuously improve.

“When people tell you ‘you’re a leader,’ it’s great. Then the work starts,” she says. “It forces you to keep doing the best you can, understanding that nothing can be taken for granted.”

Brenda Bouw is a freelance writer  and editor based in Vancouver.

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“A few years ago, they were shy of putting the logo on them,” says Éric Martel, president and CEO of the public utility, which manages the generation, transmission and distribution of electricity in Québec.

Hydro-Québec has been working to improve its corporate culture in recent years, the results of which have helped it earn the top spot on the Corporate Knights’ 2018 Best 50 Corporate Citizens in Canada list. Hydro-Québec was fourth on the list in 2017.

Recharging corporate culture

Since he took over the top job in July 2015, Martel has been on a mission to improve customer satisfaction and employee engagement, with a goal to make Hydro-Québec a more attractive place to work, as well as to boost its reputation in the community.

Martel says the organization had some “serious challenges” around customer satisfaction when he came on board. At that time, 82 per cent of customers said they were satisfied with the public utility. “My concern there was that it meant about one person out of five wasn’t satisfied, which is a lot,” he says. “Maybe we’re a monopoly, but it’s a privilege… and we should be the best one in customer service.”

Employee morale was also low, with less than two-thirds of employees saying they felt engaged, according to internal surveys.

Martel went across the province with an aim to meet nearly every employee, while also improving customer service through extended hours and increasing communication and transparency around its decisions, including rate increases.

“When you do a cultural transformation like this, you need to set the tone from the start,” he says.

The strategy appears to be working. In 2017, 92 per cent of customers said they were satisfied, up from 82 per cent in 2015, according to Hydro-Québec surveys. Employee engagement increased to 76 per cent in 2017, up from 62 per cent in 2014.

Developing diversity

Martel also continued with Hydro-Québec’s goal to boost diversity across the organization. Today, about 7.3 per cent of its approximately 19,700 employees are Indigenous or members of visible or ethnic minorities. That’s up from about 2.9 per cent a decade ago.

“We still have a long way to go to be more representative,” he says. “I think it makes us stronger. It’s opening up the talent pool… and will make us a better company years from now.”

The board and senior management are also diverse: Half the combined team of 16 executives are women. Among the organization’s top 162 managers, 52 are women, or 32 per cent, which is up from 25 per cent of the 152 top managers in 2013.

“When we do our succession planning, this is always the discussion: How do we make sure that we give women the opportunity to grow within the organization, based on their potential?” Martel says.

Going greener

While the company is largely green – 99.5 per cent of its production is renewable from hydroelectricity – Martel says its goal is to hit 100 per cent, but there’s no specific timeline. The remaining 0.5 per cent is due to the fuel-power electricity generation that’s required in more remote locations that are off the grid.

In the meantime, the company is working on some energy-efficiency alternatives, including a microgrid project underway in Lac-Mégantic, the Québec town devastated by a rail disaster in July 2013. Hydro-Québec is building a microgrid in the municipality’s new downtown that will include about 30 residential and commercial buildings. It will feature up to 1,000 solar panels (300 kW installed capacity), batteries able to store 300 kWh of energy, smart homes and buildings equipped with consumption management systems and charging stations for electric vehicles.

Martel describes it as a lab for the organization to test the integration of technology and power, which can then be used in other regions.

“They had the will to do it,” Martel says of Lac-Mégantic’s participation. Plus, it was a good opportunity, given the community is rebuilding after the train tragedy.

Boosting brand loyalty

While Martel says Hydro-Québec is on the right track to improving its overall corporate social responsibility, his goal is to make continuous improvements in areas ranging from customer satisfaction, employee morale, diversity and energy efficiency.

“I’d like the population of Québec to be proud of what we are doing externally and for our employees to be extremely proud of working here.”

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