Annual Report 2020 – Hydro-Québec
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Annual Report 2020 TABLE HYDRO-QUÉBEC IN FIGURES OF CONTENTS 2 KEY FIGURES 4 MESSAGES $2,303 million $3.6 billion Net income in 2020 : 2,303 million dollars. Contribution to the Québec 7 MANAGEMENT TEAM government’s revenue in 2020 : 3.6 billion dollars. 8 REVIEW OF OPERATIONS $3.4 billion 37 FINANCIAL REVIEW Investments in Québec 202.7 TWh in 2020 : 3.4 billion dollars. Net electricity sales, 202.7 terawatthours, including 31.3 terawatthours in exports 102 BOARD OF DIRECTORS including 31.3 TWh in exports 112 GOVERNANCE 7.30 ¢/kWh Residential rate, 7.30 cents per kilowatthour. 122 GENERATING, 96% TRANSMISSION the lowest in North America Public satisfaction index : 96 percent. AND DISTRIBUTION FACILITIES $7.41 million Total donations raised for Centraide : 7.41 million dollars. in the 2020 Hydro-Québec employees’ and pensioners’ COVER fundraising campaign, an amount that has grown A Cree man on his way to the Smokey Hill rapids, steadily over the past six years a traditional cisco fishing site on the Rupert. NOTE Some of the photographs in this document were taken before the pandemic and the implementation of hygiene measures by Hydro-Québec. ANNUAL REPORT 2020 | 2 Our electricity is clean, competitive and abundant It’s a tremendous asset at a time when the Québec economy, like others around the globe, is facing a much-needed energy transition. It’s a Québec resource that plays an important role in keeping the province’s finances sound. This energy is rivaled only by the collective energy of Quebecers By working together, all of us can once again set our sights high and build a better future. ANNUAL REPORT 2020 | 3 A YEAR OF UNPRECEDENTED CHALLENGES In these trying times, it is more important than ever to show solidarity and act with kindness, even while remaining focused on Hydro-Québec’s development and its role as a driver of the vast and ambitious undertaking that is the energy transition. The Board of Directors’ primary role is to support the Management Team so that Hydro-Québec, as a government-owned corporation, can continue to fulfill its leadership role, both today and well into the future. To this end, we ensure that the company’s Strategic Plan, business priorities, performance and relations with customers, employees, communities and the government meet the expectations of Quebecers and our partners beyond our borders. Jacynthe Côté Chair of the Board As soon as the COVID-19 pandemic struck, the Board was fully involved in developing and monitoring the company’s emergency measures, The Board regularly showed support for the company’s resolve to especially those aimed at helping residential and business customers contribute to the decarbonization of northeastern North America, taking affected by the public health crisis. The Board also made sure the a particular interest in the planned New England Clean Energy Connect company took appropriate steps to mitigate the impacts of the (NECEC) transmission line. pandemic on its finances, operations and projects. Throughout these profoundly disruptive months, Management has been able to count on The Board authorized the deployment of energy efficiency initiatives the Board’s full cooperation in matters ranging from occupational health for 2021–2025 with the aim of increasing the proportion of electricity in and safety to project management, including Hydro-Québec’s intention Québec’s energy mix. To help promote electric mobility, we also approved to play a leading role in bolstering the Québec economy and in funding to Québec municipalities for the installation of 4,500 public facilitating greater food self-sufficiency. charging stations. The Board paid close attention to specific issues such as the innovation The recruitment of the new President and Chief Executive Officer was strategy and endorsed a strategic alliance with Québec-based Innergex a high-priority issue for the Board. We’re very happy that Sophie Brochu that will lead to joint projects in the production of renewable energy. agreed to take the helm. It also approved the launch of Hilo’s smart home offering, the establishment of the subsidiary EVLO, which specializes in energy In closing, my fellow directors and I would like to congratulate the entire storage systems, and the company’s first green hydrogen production Hydro-Québec staff for its impressive accomplishments. Once again this project. Together, these initiatives help shape the face of a forward- year, the dedication and know-how of all team members had a looking organization eager to be part of a new era built on tremendous impact. the cornerstones of the energy transition, digitalization, renewable Jacynthe Côté energy and the electrification of Québec. ANNUAL REPORT 2020 | 4 A YEAR THAT WILL REMAIN ETCHED IN OUR MEMORIES FOR A VERY LONG TIME In Québec as in the rest of the world, the pandemic has undermined public health, obliterated much of what was considered normal, wreaked havoc on the economy and radically altered ways of doing things. As unsettling as it was, this ordeal also brought out Quebecers’ remarkable strength of character and sense of empathy. The women and men of Hydro-Québec were part of the collective impetus. Rising above unprecedented circumstances, uncertainties and the challenge of working under new operating constraints implemented to protect employee health and safety, our technical crews went above and beyond to ensure continuity of the electricity service so vital to Sophie Brochu all Quebecers. And overnight, approximately 10,000 of our personnel President and Chief Executive Officer switched to working from home, a true leap forward made possible by the exceptional know-how of our information and communications support both the growth of Québec’s economy and the acceleration of technologies teams. Seated at the kitchen table, sometimes with the energy transition in northeastern North America. children on their laps, those employees made sure they were there for all our customers. Our new rate option for greenhouse growers is one example of this resolve: we’re putting our clean energy to good use by promoting food In a matter of days, we brought in a series of measures to support the self-sufficiency in Québec. We estimate that our electricity sales to this people of Québec: most urgently, to offer more flexible payment terms industry could triple over the next decade. That would mean avoiding for those grappling with financial difficulties, as well as peace of mind 48,000 tonnes of greenhouse gas emissions, the equivalent of taking in the form of a moratorium on service interruptions for non-payment. 14,000 vehicles off Québec roads. Not surprisingly, the public health crisis and economic slowdown With its abundance of competitively priced, clean power, Québec is weighed heavily on our 2020 financial results. Hydro-Québec posted certainly one of the places in the world best positioned to make green net income of $2,303 million, down 21% from the previous year. hydrogen—which promises to be an important vector in the global energy We will nevertheless pay the Québec government a dividend of transition—a viable option. This energy source is expected to develop $1,727 million—a tangible contribution to the provincial coffers, and gradually over the next two decades. In a clear sign of our ambition in one that will be greatly needed to relaunch the economy once this this regard, we announced that we will build and operate an electrolysis crisis is over. plant in Varennes, near Montréal. It will have a capacity of some 90 MW, It’s impossible to predict the exact repercussions of the pandemic on making it one of the world’s most powerful electrolyzers. The facility will our financial performance in the medium or long term. That said, we’re supply green hydrogen and oxygen to the planned Recyclage Carbone determined to bounce back quickly, and to help all our fellow citizens do Varennes plant, which will offer an alternative to landfilling the same. With our sights firmly set on the horizon, we’ll take action to non-recyclable waste materials by converting them into biofuels. ANNUAL REPORT 2020 | 5 Another key vector in the energy transition is energy storage. The battery While we’ll no doubt remember 2020 as the year of the pandemic for expertise we’ve acquired in the last 20 years puts us in a favorable a long time to come, we will also remember how we succeeded in position in this promising sector. EVLO, a new subsidiary launched at overcoming huge challenges. The advances achieved by Hydro-Québec the end of the year, designs, sells and operates energy storage systems are made possible thanks to the dedication of the women and men who to meet a wide range of needs, such as increasing the availability of strive every day to provide top-quality services. I thank them for the work renewable electricity generated from intermittent sources like solar and they do, for their desire to excel and for the caring they show toward the wind power. society we’re privileged to serve. In 2020, our subsidiary Hilo also took off, providing a turnkey smart Sophie Brochu energy service that helps our residential customers optimize their consumption. By choosing our smart home products, customers can save up to 15% on their energy bill. When it comes to exports of our green energy to neighboring markets, great strides have been made in recent months. The transmission line that will carry close to 10 TWh of clean electricity annually to Maine and Massachusetts has received the necessary approvals for construction on the U.S. side. In New York, the state’s Department of Public Service officially recognized large hydropower as clean energy, opening up the possibility of offering our energy services under the solicitation launched in early 2021.