Global Business Reports
MONTREAL – On its surface, Quebec’s energy industry can seem one-dimensional. The province is a powerhouse of hydroelectricity led by a crown corporation, Hydro-Quebec, with a staunch commitment to environmentalism. The relatively simple structure, however, leaves Quebec’s hydropower vulnerable to depressions in commodity prices from competing resources such as shale gas, which is an emerging force in Canadian energy. In the face of such a challenge, Quebecois firms are securing a sustainable future through a variety of innovative strategies aimed at transforming the nature of the playing field at home. The integration of key technologies being developed in partnership with other industries has the potential to create new value chains to service a provincial energy market that seeks to grow by changing the way that consumers harness and use electricity.
As the local giant, Hydro-Quebec sets the direction and tone of the Quebecois power sector’s evolution over time. The company has placed a considerable amount of faith in lithium battery technology as a point of innovation. Having acquired the intellectual property for a technology called lithium iron phosphate, first discovered at the University of Texas, Hydro-Quebec is looking to use the material to revolutionize its power storage capabilities. Lithium iron phosphate has similar lightness and energy capacity to lithium ion, but the iron phosphate adds greater stability.
In a bid to increase the efficiency of the material’s usage, Hydro-Quebec has partnered with Grafoid, a company aimed at cost-effective graphene production from graphite mined in northern Quebec. Graphite, especially when transformed into graphene, is a highly effective thermal conductor that minimizes heat loss in energy storage. In spite of its reputation as a ‘wonder material’, graphene has thus far been unable to become a standard in the global marketplace because of its notoriously high production costs. However, with the help of its partner firm Focus Graphite, Grafoid is the only company in the world that has managed to produce the material in an affordable manner. Its location in Quebec was serendipitous for Hydro-Quebec, and set the stage for a joint venture that produced major breakthroughs in pairing graphene with lithium iron phosphate within the first six months of research. As both companies are waiting for appropriate patents to be filed before announcing results, the rest of Quebec’s energy sector is watching closely.
Hydro-Quebec’s experience with Grafoid may be a harbinger of many more backward linkages to come in Quebec’s lithium space. One of North America’s first major lithium producers, Canada Lithium, began extraction at a site in La Corne, Quebec this summer. Hydro-Quebec’s CEO, Thierry Vandal, is confident that the province can develop more production capacity for lithium over the next few years. To add a further link in the value chain, another firm, Nemaska Lithium, has set up a showcase processing plant in Salaberry-de-Valleyfield, near Montreal. The plant will seek to transform raw concentrate into lithium hydroxide and carbonate for specialty uses. If investors can be persuaded to give their blessing, Quebec could see the development of a comprehensive, cross-industry production cycle that keeps lithium in the province from mine to plant and beyond.
Quebec’s strong tradition of environmentalism could be the key to ensuring that power capacity harnessed by new lithium battery technologies is put to good use. As the province moves toward less reliance on fossil fuels, increasing demands for urban mobility in Montreal and Quebec city can be fed by electric transportation in the near future. To that end, Hydro-Quebec and 33 commercial partners have recently installed approximately 200 electric vehicle recharge points at various city retail shopping centres. Recharge points are connected to an electric circuit that Hydro-Quebec’s shareholders hope will eventually provide the backbone for urban transport. Hydro-Quebec’s plan has been to purchase these and future charge outlets, with commercial partners paying for installation and providing convenient parking spaces. If successful, the scheme can provide an important source of demand for additional electricity output capacity.
The rise of shale gas shows no sign of abating, and Quebec will certainly face a low commodity price environment in the years ahead. The province will have to continue to seek new sources of demand for its hydropower. Upcoming expansion milestones, such as the completion of transmission lines linking Hydro-Quebec to new customers in the northeastern United States, will achieve these ends, albeit at a significant short-term cost. The real keys to the province’s success will be to continue its mission to create value through efficiency in its storage component, and to reinvigorate demand at home by redefining the terms of Quebecois power consumption. Hydro-Quebec’s ambitions for innovation in lithium battery technology, as well as the backward and forward linkages that spring from them, constitute an important first step.