A new agreement between Newfoundland and Labrador, Quebec and the Government of Canada sets out the terms for major new clean electricity, transmission and economic development. Here’s what it covers, and what still has to happen.
On August 17, 2026, Newfoundland and Labrador Hydro (NLH), Hydro-Québec (HQ) and Churchill Falls (Labrador) Corporation Limited announced the Definitive Cooperation and Implementation Agreement (DCIA), setting out a new path forward for Churchill Falls, Gull Island and the transmission infrastructure that connects them. The federal government announced support for the projects the same day.
According to Prime Minister Carney, the announced projects represent the largest clean energy investment in North American history at nearly $70 billion. The federal government has committed $10 billion in financing and investment support, including a loan guarantee for Gull Island.
For Canada’s hydropower sector, this is a landmark moment. It puts waterpower squarely at the centre of the country’s plan to meet rising electricity demand, expand the grid and build the next generation of clean energy infrastructure.
It is also, importantly, a starting point rather than a finish line. The DCIA is a framework agreement. The parties have set a target of December 31, 2026 to negotiate and execute the long-form definitive agreements that will give the arrangement legal effect.
Why this matters
Canada’s electricity needs are growing. Population growth, electrification, industrial development and new investment are driving demand across the country, at the same time as Canada looks to expand clean generation, strengthen energy security and support new economic opportunity.
Meeting that challenge will require Canada to build. New generating capacity. New transmission. Modernization of what already exists. And ways to connect abundant clean electricity with the communities, businesses and industries that need it.
The Churchill Falls and Gull Island agreement brings those pieces together in one place. It advances major hydropower development while also opening opportunities for transmission, industrial development and additional clean-energy projects in Labrador.
What the agreement covers
Gull Island
The agreement advances a new hydroelectric generating station at Gull Island on the Churchill River, roughly 100 km southwest of Happy Valley-Goose Bay. Gull Island is planned at up to 2,700 MW, with final installed capacity to be confirmed through detailed engineering and environmental studies.
The project would be owned and operated by a new joint venture entity held 60 per cent by NLH and 40 per cent by Hydro-Québec. Hydro-Québec’s subsidiary, Société d’énergie de la Baie James (SEBJ), would serve as project manager, leading development and construction of the generating facility and the associated 735 kV transmission lines. Hydro-Québec would also make $3.5 billion (NPV) in incentive and development payments to NLH, funding NLH’s equity contribution to the project.
Newfoundland and Labrador holds majority ownership of the asset, while Quebec brings the balance sheet and the megaproject execution capability. It is a practical answer to a question the whole sector is facing: how do you finance and build hydropower at this scale?
Churchill Falls
The existing Churchill Falls generating station will continue to supply electricity to Quebec under new long-term power purchase agreements running to 2077, replacing the 1969 power contract and the 1998 Guaranteed Winter Availability Contract once the definitive agreements are executed.
The agreement also provides for upgrades to all 11 turbine-generator units at Churchill Falls, expected to increase installed capacity by approximately 23.5 per cent, or about 1,275 MW, for a total rated capacity of roughly 6,703 MW.
Transmission
New electricity is only valuable if it can reach customers, which is why transmission is a central part of the announcement rather than an afterthought.
New transmission assets in Labrador will be owned and financed through an NLH subsidiary, with SEBJ leading development. Corresponding transmission assets in Quebec will be owned by Hydro-Québec. The federal government is also committing $1 billion toward a Labrador West transmission line intended to support new mining and industrial development in the Labrador Trough.
Newfoundland and Labrador has secured a portfolio of external market access totalling 985 MW. In practice this works through several mechanisms: volumes NLH can sell to Hydro-Québec at prices referenced to New England, New York and Ontario markets; volumes tied to the Champlain Hudson Power Express and New England Clean Energy Connect contracts; and NLH’s retained 265 MW point-to-point transmission reservation from Labrador to New York through Quebec’s open-access system.
Studies for additional projects
The agreement also commits the parties to feasibility studies for two further developments: a 2,000 MW wind project in Newfoundland and Labrador, in which the federal government has signalled an equity position of up to 40 per cent and co-investment opportunities with the Innu of Labrador; and a potential expansion of Churchill Falls through a new powerhouse adjacent to the existing facility.
These are studies at this stage, not commitments to build.
What does the 14,000 MW figure mean?
The 14,000 MW figure refers to the potential clean, renewable electricity associated with the full package of projects announced by the federal government, including existing capacity at Churchill Falls. Together with the existing capacity at Churchill Falls, the existing and proposed developments are equivalent to almost triple the current generation capacity of Churchill Falls.
Hydropower is the largest component: the Gull Island project plus the Churchill Falls upgrades. The broader package also includes the proposed wind development and associated transmission.
Hydro-Québec has separately described the agreement as providing access to more than 10,000 MW of potential electricity from Labrador, consisting of firm supply plus volumes associated with projects still under study.
Why hydropower is central to this story
Hydropower is already Canada’s largest source of electricity, providing more than half the country’s supply. It offers large-scale, reliable generation and can provide flexibility that complements other renewable resources.
As electricity demand grows, Canada will need to expand every source of clean electricity available to it. That means building new generation, modernizing existing assets and investing in the transmission needed to connect that power to where it is needed.
Churchill Falls and Gull Island demonstrate what hydropower can contribute at that scale. They also highlight the importance of long-term planning, responsible development, Indigenous partnership, regulatory certainty and transmission infrastructure in turning Canada’s clean-energy potential into projects that can actually be built.
What this means for each party
For Newfoundland and Labrador, the agreement creates the ability to retain more power for use within the province while also opening access to external markets. The province would be able to retain up to 2,350 MW from Churchill Falls and Gull Island, rising to 2,750 MW if the wind project proceeds, with flexibility over whether that power supports provincial industrial development or is sold. Those volumes phase in over time as the development projects come into service, rather than arriving all at once.
For Quebec, the agreement is primarily about long-term supply security. Hydro-Québec has said the agreement will help meet Quebec’s electricity needs for the next 50 years, providing access to more than 10,000 MW of potential electricity from Labrador at a competitive cost, with supply from Churchill Falls guaranteed to 2077 and additional access from Gull Island and other potential developments.
For Canada, the agreement demonstrates the value of interprovincial cooperation. Electricity demand is growing across the country while the resources to meet it are distributed unevenly, which makes cooperation and transmission increasingly important. It also shows that major energy projects generate benefits well beyond the communities where the electricity is produced, from construction employment and procurement to industrial investment and stronger supply.
The projects are expected to support approximately 23,000 jobs and contribute an estimated $31 billion to Canada’s GDP through the early 2040s.
Indigenous participation
Meaningful Indigenous participation will help form the foundation of this agreement’s long-term success, and the agreement itself reflects that. Completion of the development projects is expressly subject to consultation and engagement with Indigenous communities in accordance with applicable law and existing obligations, including the New Dawn Agreement between Newfoundland and Labrador, NLH and Innu Nation. Assignment of the Lower Churchill Innu Impacts and Benefits Agreement to the Gull Island project entity is a condition that must be satisfied before the definitive agreements can be signed.
The agreement’s procurement and benefits principles carry forward IBA commitments through a hiring protocol that gives effect to Innu Nation commitments first, followed by qualified residents of Labrador, then Newfoundland and Labrador. Hydro-Québec has confirmed a minimum of 4 million engineering and project management person-hours in the province, and construction and assembly person-hours in Newfoundland and Labrador at the greater of 85 per cent of total person-hours or 20 million hours.
Consultation and consent questions remain live on both sides of the Labrador-Quebec boundary, and further engagement is ahead. Newfoundland and Labrador has begun discussions with Innu Nation about participation as full partners. Hydro-Québec has said it will continue dialogue with Indigenous and local communities in Quebec and Labrador.
Frequently asked questions
- Is the agreement final? Not yet. The DCIA sets out the parties’ agreed material terms and commits them to negotiate long-form definitive agreements, which they aim to complete by December 31, 2026. Most of the DCIA is expressly non-binding, and the existing 1969 contract and related agreements remain in effect until the new power purchase agreements are executed.
- Is the 14,000 MW all hydropower? No. The figure refers to the broader clean energy package, which includes hydropower, wind and associated transmission and infrastructure. Churchill Falls and Gull Island are the largest part of the hydropower opportunity but do not account for the full 14,000 MW.
- Does 14,000 MW mean all that electricity arrives at once? No. These are major infrastructure projects that will take years to develop and build, and the volume allocations phase in over decades. Some elements are firm commitments; others remain subject to study, development and approvals.
- Is Gull Island definitely being built? The agreement significantly advances Gull Island, but substantial work remains: engineering, financing, regulatory and environmental processes, Indigenous engagement and participation, transmission development and construction. The agreement is also explicit about this. Hydro-Québec holds development exclusivity for an initial seven years, extendable to twelve, and the agreement sets out defined circumstances in which either party may not proceed, including macroeconomic conditions, cost escalation and demand outlook. If Hydro-Québec does not proceed, its interest in the project entity reverts to NLH. Several conditions must also be met before the definitive agreements can be signed, including confirmation of existing permits, assignment of the IBA, and federal support in a form satisfactory to both utilities.
- Is all the electricity going to Quebec? No. Newfoundland and Labrador retains electricity for its own use and has secured mechanisms to sell power into external markets. The precise allocation varies by project and source.
- Will this mean higher electricity costs? The agreement involves significant long-term investment in new generation and transmission, and the economics of those investments will depend on project costs, financing, construction timelines and future electricity demand. Hydro-Québec has said the agreement will provide access to Labrador power at a competitive cost relative to alternatives. More broadly, meeting Canada’s growing electricity needs will require a mix of new generation, existing asset upgrades, transmission and energy efficiency. The challenge is to build that system in a way that keeps electricity reliable and affordable while supporting economic growth.
- Why does transmission matter so much? Because generation without transmission cannot deliver its full value. New transmission connects new supply with customers, enables exports and supports industrial development. The Labrador West transmission project is a clear example, intended to open up mining and industrial opportunity in the Labrador Trough.
- Can hydropower meet all of Canada’s future electricity demand? No. Canada will need a diverse system. Hydropower, wind, solar, nuclear, storage and energy efficiency all have roles to play. The larger challenge is ensuring Canada builds enough clean electricity, and enough transmission and distribution, to deliver it.
What happens next
The agreement is a milestone. Implementation is the work.
That means negotiating and executing the definitive agreements by the end of 2026, advancing project planning and engineering, securing financing, completing regulatory and permitting processes, developing transmission, and continuing Indigenous engagement and participation. The federal government has committed to using its Major Projects Office to coordinate and accelerate federal financing, regulatory and permitting requirements.
Timelines and political calendars in both provinces will shape how quickly that work proceeds. The goal is straightforward: turn the opportunity into infrastructure that can be built, connected and put to work.
A landmark moment
The Churchill Falls and Gull Island agreement represents a significant opportunity for Canada’s energy future. It reflects the value of long-term partnership between provinces and utilities in advancing major energy infrastructure and creating lasting benefits.
The agreement can help expand clean electricity supply, strengthen energy security, support the businesses and industries that need reliable power to grow, and unlock greater economic value from Canada’s clean-energy resources.
Canada has one of the world’s greatest hydropower resources. The opportunity now is to put that advantage to work, responsibly, collaboratively and at the scale Canada needs.
The agreement is a landmark moment. Now, the work is to build.