Consultants for Hydro-Québec defend proposal to double energy costs for data centres

Two consultants, hired by Hydro-Québec, anticipate that demand for energy from data centres will more than double between 2024 and 2030, largely due to the expanding AI industry. The analysts from Dunsky, an energy and climate consulting firm, presented this at a public hearing examining Hydro-Québec's proposal to raise rates for data centres. Quebec's energy regulator, the Régie de l'énergie, is assessing the potential rate hike.

Alexis Renaud-Bezot, one of the analysts, stated that energy consumption from data centres in North America could rise by 133 per cent over the given period. These data centres, used to train AI models, range in size from 20 megawatts to thousands of megawatts. The proposed changes would increase rates for data centres of five megawatts or larger to an average of 13 cents per kilowatt hour, up from the current 6.82 cents per kilowatt hour.

Hydro-Québec's rationale is to prevent other customers from bearing the cost of energy sold at a discount to data centres. The utility predicts that data centres would consume 190 MW at peak capacity, potentially increasing to 1,000 MW by 2035. Despite the higher rate, Hydro-Québec's energy would still be cheaper for data centres than in most neighboring regions, although not all.

Renaud-Bezot noted that numerous new energy rates have been established in North America for data centres, primarily to ensure that these rates do not negatively impact other consumers. He also addressed social concerns about data centres' impact on energy costs, local resources, and the environment. While social opposition has not been significant in Quebec thus far, Renaud-Bezot suggested it is on the horizon.

Opposing lawyers questioned the relevance of the consultants' comparisons between Quebec's energy market and other North American jurisdictions. They pointed out Hydro-Québec's monopoly as the sole electricity supplier in Quebec. Marie-Pierre Boudreau, who represents a data centre coalition, highlighted the limited options for data centres regarding energy providers. The hearing is set to conclude on Friday, with representatives from Google and environmental groups scheduled to present their views in December.