Electricity bills could rise for data centres in Quebec

Two consultants commissioned by Hydro-Québec estimate that electricity demand from data centres is expected to more than double between 2024 and 2030, primarily due to the growing artificial intelligence industry.

Analysts from the energy and climate consulting firm Dunsky shared these projections during a public hearing to review Hydro-Québec’s proposal to increase rates charged to data centers.

The Régie de l’énergie, Quebec’s energy regulatory agency, is currently reviewing this potential rate increase.

Hydro-Québec commissioned Dunsky to analyze how various North American jurisdictions have responded to the sharp rise in energy demand from data centers.

Alexis Renaud-Bezot, one of the analysts, stated that energy consumption by data centers in North America could increase by 133 per cent between 2024 and 2030.

He stated during the hearings that we are facing a growth in energy demand that is much greater than what we have seen over the past two decades. He added that a large portion of this growth is related to data centers.

He noted that those used to train AI models can vary in size, ranging from 20 megawatts to several thousand megawatts.

He explained that other jurisdictions had raised rates for data centers to minimize the impact on residential customers.

What this increase entails

The changes proposed by Hydro-Québec would double the rates currently paid by data centers as large electricity consumers. As a result, they would pay an average of 13 cents per kilowatt-hour, rather than the 6.82 cents they currently pay, according to the state-owned utility.

With the average cost of electricity generation rising to about 12 cents per kilowatt-hour, Hydro-Québec argued at the start of the hearings that it wanted to ensure it would not continue to sell electricity at a discount to data centers, which would leave other consumers to pay the difference.

Hydro-Québec stated that the data centers that would be subject to the new rate currently consume 190 megawatts at peak, and that this level could reach 1,000 megawatts by 2035.

According to the firm’s analysis, even with the rate increase, Hydro-Québec’s electricity would remain less expensive for data centers compared to neighboring regions, but that is not the case.

Data centers could find cheaper alternatives in Ontario and New Brunswick, as well as in certain parts of the United States.

Renaud-Bezot stated that dozens of new rates had been created in North America specifically to target data centers.

He asked himself the following question: What is the purpose of creating such rates? He answered that the goal was to minimize or avoid the impact on other consumers.

He also highlighted growing concerns about the impact of data centers on energy costs, local resources, and the environment.

He noted that there had been little public resistance in Quebec so far, but that it was likely to emerge soon.

Lawyers representing industry players who oppose the proposal questioned the consultants about the validity of their comparisons between Quebec’s energy markets and those elsewhere in North America, noting that Hydro-Québec holds a monopoly as an electricity supplier.

Marie-Pierre Boudreau, who represents the Data Center Coalition, pointed out that there is no choice of energy providers in Quebec.

Hydro-Québec is also proposing to raise rates for cryptocurrency mining and trading to an average of 19.5 cents per kilowatt-hour.

The first part of these hearings is scheduled to conclude on Friday. Representatives from Google and a coalition of environmental groups are set to present their views on this proposed rate increase in December.

–This report by La Presse Canadienne was translated by CityNews