The Churchill Falls Agreement and Québec’s New Energy Reality

On August 17, the governments of Québec, Newfoundland and Labrador, and Canada announced a new agreement in principle involving Hydro-Québec and Newfoundland and Labrador Hydro for the future of Churchill Falls.

The agreement revisits and considerably expands the deal first negotiated under former Québec premier François Legault in 2024. It includes the continued use and expansion of the existing Churchill Falls generating station, the development of the Gull Island hydroelectric project, additional transmission infrastructure and potentially new wind generation in Labrador. 

Together, the projects could eventually represent approximately 14,000 MW of renewable generation capacity, with Hydro-Québec expected to have access to roughly 10,000 MW. The overall investment is estimated at close to $70 billion, with the federal government providing $10 billion in financing. 

The timing is attracting attention. The announcement comes less than two weeks before Québec’s election campaign is expected to officially begin on August 27, ahead of the October 5 general election. A deal of this magnitude was inevitably going to become part of the pre-election debate. But there is a much bigger issue at play. 

Québec is entering a period in which it will need considerably more energy. Electricity demand is rising, industry needs additional capacity, transportation and buildings are being electrified, and governments want to attract new mining, manufacturing and technology investments. 

Prime Minister Mark Carney’s government is making the same connection at the federal level. Alongside the Churchill Falls announcement, Ottawa referred the Labrador Trough Clean Power, Critical Minerals and Infrastructure Corridor to the Major Projects Office. The objective is to accelerate the energy, mining, transportation and other infrastructure needed to develop one of Canada’s most important resource regions. 

That approach matters. Energy cannot be treated separately from economic development anymore. There is little point in approving major mines, factories or industrial projects if the energy and infrastructure required to operate them are not available. 

Churchill Falls is therefore enormously important. But even 10,000 MW of additional power for Québec does not change the basic reality: no single project or energy source will be enough. 

Québec will need more hydroelectricity and wind power, but also solar, bioenergy, natural gas and nuclear power. The challenge is simply too large to take viable options off the table. 

That also makes Québec’s position on natural gas increasingly difficult to ignore. The province is prepared to invest massively to secure additional energy from outside its borders while dragging its feet on developing its own natural gas resources. As energy requirements continue to grow, that contradiction will inevitably become harder to avoid. 

The agreement remains an agreement in principle, with further negotiations and consultations required before its planned ratification by March 31, 2027.For a long time, Québec’s energy debate was shaped by abundance. The next one will be about whether we can build enough, quickly enough.