Quebec Ink

Quebec Ink: As Hydro-Québec expands into cleantech, entrepreneurs cry foul

The Energy Technology Laboratory in Shawinigan, Que. Hydro-Québec
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MONTREAL — Quebec is green.

In these parts, it is less a statement than an article of faith, one repeated by politicians, luminaries and Quebecers themselves, who, if polls are to be believed, consistently outflank their rest-of-Canada brethren when it comes to ecological bona fides. Even former U.S. vice-president Al Gore bought in, calling Quebec the “environmental conscience of Canada” during one of his righteous rips through the province.

At the headwaters of all this alleged greenery is Hydro-Québec. The 36.9 renewable, emissions-free gigawatts springing from the public utility’s 668 dams at once keep Quebec’s lights on and fuel that abiding article of faith. As such, Hydro-Québec is more than a mere public utility. It is a symbol of environmental might.

But what happens when that symbol turns against you?

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Talking Point

As the continent’s foremost producer of renewable energy, Hydro-Québec can do no wrong in its home province. Yet some say the success of its Hilo service has come at the expense of many Quebec cleantech startups.

Martin Fassier says he was unfortunate enough to find out. In 2014, he co-founded CaSA Energy, a cleantech startup based east of Montreal. Though CaSA makes an app-controlled, Wi-Fi-enabled thermostat, one of the first of its kind designed for baseboard and convection heaters, CaSA’s real raison d’être is its proprietary technology that uses AI to manage demand-side electrical-grid management. 

CaSA enables its users to modulate their energy use over the course of the entire day, essentially flattening peak demand curves. As a result, utilities don’t have to produce extra capacity to satiate diabetic spikes in demand. Consumers save money by purchasing power at off-peak hours and, say, storing that electricity as heat in their hot water tanks. The environment, meanwhile, benefits from lower GHG emissions—or, in the case of hydroelectricity, avoiding the demonstrably damaging prospect of having to build more dams.

This made-in-Quebec win-win-win proposal is also marketable. In 2015, CaSA became a corporate research partner with CanmetEnergy, the federal government’s clean-energy R&D organization. Two years later, BC Hydro used CaSA’s thermostats and technology in its peak-time conservation trial. Last year, CaSA partnered with Yukon’s electricity utility, and is set to announce a partnership with an American utility on the West Coast.

Hydro-Québec was decidedly more frosty to CaSA. In fact, Fassier says the public utility was downright cutthroat. The reason, he told me when I reached him last week, was simple: Hydro-Québec, whose sole shareholder is the Quebec government, was developing a competing product, and didn’t appreciate the competition.

“Hydro-Québec went to one of our shareholders, a critical partner, and essentially told them, ‘We know what CaSA is doing, we will do ours, it will be better, and if you want to be a part of it, you need to either drop your ownership or kill the company,’” Fassier told me. “This is not interpretation. This is not being subjective. This is literally word-for-word stuff that has been shared with me.” 

Hydro-Québec’s competing product came in the fall of 2019. Hilo, according to the company spiel, is a “brand of personalized products and services that will make it easy for customers to manage their energy use more efficiently and more intelligently.” This includes a familiar-sounding app-controlled, Wi-Fi-enabled thermostat designed for baseboard and convection heaters. 

What’s more, Hilo availed itself of the services of Institut de recherche d’Hydro-Québec (IREQ), the utility’s research arm, during its development. IREQ has an annual budget of $130 million. To date, Casa Energy has raised roughly $3 million from CaSA’s associates and angel investors.

“It is infuriating, as a business owner and a taxpayer, because Hilo is spending nonsense money to achieve goals that we had already achieved, having tens of thousands of users and equipment already out in the field,” Fassier told me. 

In bringing Hilo to market, Hydro-Québec didn’t only bigfoot CaSA Energy. Sinopé Technologies has manufactured smart thermostats since 2011. Apparently, the company knew what it was doing, as Hydro-Québec tried to purchase it in November 2018. “We were at the due-diligence stage, but we ultimately declined to sell,” Sinopé founder François Houde told me. “The moment we said no, we were on a blacklist.”

The utility wouldn’t comment on its negotiations with CaSA and Sinopé. “Over the past few years, Hydro-Québec has held discussions with various Québec-based thermostat manufacturers with the goal of improving its energy efficiency offer to customers. Like all our business dealings, those discussions are confidential,” HQ spokesperson Cedrix Bouchard said.

Hydro-Québec doesn’t only have a monopoly of virtue. I spoke to another executive at a Quebec-based cleantech company, who didn’t want to be identified because he doesn’t like being on blacklists. He likened the province’s cleantech space to a “green mafia” dominated by dozens of government institutions (like the province’s green fund) and government-funded investment entities like Investissement Québec. The capo of this green mafia is Hydro-Québec, on which the entire sectorrelies for power and legitimacy.

Once launched, Hilo became part of Hydro-Québec’s green mantra. Hilo customers could reduce their energy consumption, thereby letting the utility sell more of its bounty to neighbours to the west and south and replacing the carbon-spewing stuff in, say, New York with Quebec’s “blue energy surplus.” Hilo has since branched out into smart-home services, along with a power-assisted version of Montreal’s ubiquitous Bixi bicycles.

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CaSA’s lot hasn’t been nearly as sunny. The company restructured at the beginning of the year, and has since laid off 25 people. The company that helped birth the smart-thermostat segment in Quebec isn’t sure it will be able to survive here. 

“The shareholders have it in their head that Hydro-Québec wants to kill the company,” Fassier said.

Martin Patriquin is The Logic’s Quebec correspondent. He joined in 2019 after 10 years as Quebec bureau chief for Maclean’s. A National Magazine Award winner, he has written for The New York Times, The Guardian, The Walrus, Vice, BuzzFeed and The Globe and Mail, among others. He is also a panelist on CBC’s “Power & Politics.” @MartinPatriquin