Canada Pledges Up to C$10 Billion for New Churchill Falls Clean Energy Deal
Canada has committed up to C$10 billion in financing to support a major new energy agreement between Quebec and Newfoundland and Labrador, a deal designed to replace the long-disputed 1969 Churchill Falls contract.
Announced in St. John’s on August 17 by Prime Minister Mark Carney alongside Newfoundland and Labrador Premier Tony Wakeham and Quebec Premier Christine Fréchette, the tentative agreement marks a major reset in one of Canada’s most controversial hydroelectric arrangements.
The original Churchill Falls contract has been a source of frustration in Newfoundland and Labrador for decades, largely because Quebec benefited from very low-cost power while Newfoundland and Labrador received limited returns from one of the country’s largest hydroelectric assets. The new framework aims to end that dispute and create a broader clean energy partnership between the two provinces.
Under the proposed deal, the 1969 agreement between Hydro-Québec and Newfoundland and Labrador Hydro would be terminated and replaced. It would also supersede the memorandum of understanding signed by the two provinces in December 2024.
Ottawa’s financial support is expected to help move forward several large-scale energy projects. About half of the federal financing would go to Newfoundland and Labrador. The funds are intended to support upgrades at Churchill Falls, the development of the 2,700 MW Gull Island hydroelectric project, and new transmission infrastructure needed to move electricity to markets.
The agreement also includes plans for a 2,000 MW onshore wind development program. The federal government could take up to a 40% equity stake in that wind initiative, with the Innu of Labrador participating as co-investors.
Altogether, Ottawa estimates the full construction program could approach C$70 billion. The plan is projected to create roughly 14,000 MW of clean energy capacity, support about 23,000 construction jobs, and contribute around C$31 billion to Canada’s GDP through the early 2040s.
A key part of the new arrangement is the pricing structure for power sold to Hydro-Québec. Beginning in 2027, Hydro-Québec would pay 1.8 cents per kilowatt hour. That rate would rise over time, reaching an effective average of 7.4 cents per kilowatt hour through 2077.
Newfoundland and Labrador would also gain 985 MW of transmission access through Quebec, an important provision that could help the province export more electricity and strengthen its role in Canada’s clean energy future.
However, not every proposed project made it into the final framework. A separate Churchill Falls expansion has been dropped from the agreement for now, with only a feasibility study remaining on the table.
Despite the scale of the announcement, several important details remain unresolved. Opposition leaders John Hogan and Jim Dinn have said they are still reviewing the terms of the deal. The agreement may also face political scrutiny in Newfoundland and Labrador, where a provincial review earlier this year found that the previous memorandum of understanding was not in the public interest.
Premier Wakeham had previously promised voters a referendum on the earlier proposal, raising questions about how the new version will be assessed by the public and the legislature.
If finalized, the new Churchill Falls agreement could become one of the largest clean energy deals in North America. It would reshape the relationship between Quebec and Newfoundland and Labrador, open the door to major hydroelectric and wind development, and position Atlantic Canada as a larger player in the growing demand for low-carbon electricity.
