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What you need to know

• Hydroelectric power is a renewable energy source that is both flexible and efficient.
• As the largest electricity producer in Canada, Hydro-Québec (HQ) plays a critical role in providing reliable energy, operating 60 hydroelectric generating stations.
• Salient’s AI-driven probabilistic forecasts, with a time horizon up to 52 weeks ahead, provide Hydro-Québec with accurate forecasts to improve load forecasting and water management enabling HQ to maintain reliability while keeping energy prices competitive.

Overview

Hydropower, or hydroelectric power, is one of the most effective renewable energy sources available today to help mitigate climate change. Hydropower offers clean, flexible, and efficient energy, which is critical for supporting the energy transition.

Hydro-Québec (HQ), as Canada’s largest electricity producer and a global leader in hydroelectric power, operates 60 generating stations. Nearly 100% of HQ’s electricity is generated using water, serving customers across Québec and export markets like the U.S. Northeast.

In its Action Plan 2035 – Towards a Decarbonized and Prosperous Québec,  HQ committed to reducing greenhouse gas emissions, meeting the growing demand for electricity, and providing reliable and affordable services to its customers. The action plan emphasizes innovation and a strong focus on supporting Québec's decarbonization and economic prosperity.

HQ's dedication to innovation and continuous improvement led them to partner with Salient. Together, Hydro-Québec and Salient are focused on delivering reliable, competitively priced electricity to businesses and consumers.

‍The Challenge

Weather variability and seasonality significantly affect energy demand, supply, and electricity prices. Renewable energy producers like Hydro-Québec are especially vulnerable to weather-related risks. To manage these risks, accurate load forecasting and hedging strategies are employed, ensuring that energy supply and demand align at the best possible price.

Even a small change in temperature can have a large impact on energy demand, particularly during winter. A one-degree temperature anomaly can lead to a significant increase in electricity consumption, making accurate forecasting crucial for cost-effective energy management.  A rough estimate indicates that a 1% reduction in the Mean Absolute Percentage Error (MAPE) for a utility with a 1GW peak load could result in savings of $500,000 per year from long-term load forecasting and $300,000 per year from short-term load forecasting.

Case Study: Maintaining Reliability and Reducing Costs 

Hydro-Québec's business unit has the mandate to ensure a reliable energy supply while keeping costs low. To achieve this, HQ employs strategies such as establishing cost-effective power purchase contracts, optimizing resource allocation, and purchasing supplemental energy when needed. Hydro-Québec's hedging strategy involves signing contracts to sell electricity at fixed prices about a year in advance allowing it to export power at a higher price than the market price. Every day, the business unit monitors the energy pool, considering factors like demand, weather, and current resource availability.

Salient’s temperature anomaly forecasts have helped HQ anticipate energy demand two to four weeks in advance. Using Salient’s weekly forecasts, HQ can better predict the need for supplemental energy and optimize the timing of purchases.

For instance, in December 2023 and January 2024, HQ leveraged Salient’s forecasts to reduce purchase hours by 7% and cut supplemental energy requirements by around 20%. By accurately predicting milder temperatures, HQ was able to lower electricity consumption and delay energy purchases—significantly reducing costs. Additionally, reducing the uncertainty of weather impacts helps maximize energy volumes that can be sold to neighboring markets.

Salient’s forecasts are also valuable for better water management.  Using more accurate forecasts helps manage reservoir levels and inform decisions on whether to keep water levels high or draw down water. Visibility into future precipitation levels helps ensure system reliability during peak demand and avoid spillage, which results in a loss of potential energy generation. The value of water is $100 / MWhr and  every time there is a spill, the financial impact can be  tens of millions of dollars in losses.

Conclusion: A Path to Sustainable, Affordable Energy

Accurate, reliable probabilistic forecasts are critical for improving load forecasting, optimizing energy production, and making informed purchasing decisions. By incorporating Salient’s forecasts, Hydro-Québec has successfully reduced energy costs while ensuring reliability, demonstrating the value of data-driven decision-making in the energy sector.  According to Pierre-Olivier Caron-Périgny, Head of Forecasting and Optimization of Energy System Management, “There is a lot of value in  using forecasts to optimize the allocation of energy contracts, anticipate volumes that can be sold to neighboring markets, and avoid spillage.” 

Improved forecasting leads to better financial performance, reducing losses and protecting against volatile electricity prices. This is a critical step forward as we work towards a future of sustainable and affordable energy.

Take Action: Join the Clean Energy Revolution

• Learn more about how Hydro-Quebec is taking action towards a decarbonized and prosperous future
• Discover the impact of Salient’s forecasts by requesting a demo.