Canadian Prime Minister Justin Trudeau and Newfoundland and Labrador Premier Andrew Furey have signed an agreement for the financial restructuring of the Lower Churchill Projects, a set of hydroelectric generation and transmission projects.

The projects include the Muskrat Falls Generating Station on the Churchill River in Labrador, the Labrador–Island Link that connects to the island of Newfoundland, and the Labrador Transmission Assets.

The agreement, in principle, provides a sustainable financial base for the projects, including C$2bn ($1.6bn) in federal financing.

Of this, C$1bn ($800m) will be invested in the province’s portion of the Labrador–Island Link, while a C$1bn ($800m) federal loan has been guaranteed for the Muskrat Falls and Labrador Transmission Assets.

Mr Trudeau said: “When we work collaboratively with Newfoundland and Labrador to support these crucial projects, we are investing in the future of people in the province.

“Today’s announcement is an important part of our joint efforts to build back a better, more prosperous future for Newfoundlanders, Labradorians and all Canadians.”

Mr Furey said: “This is an historic moment for Newfoundland and Labrador. It highlights the important work that can be achieved when federal and provincial governments collaborate on shared priorities.”

These projects are intended to serve as a long-term source of clean power for people in the Atlantic region.

They are also expected to support regional electrification and decarbonisation efforts, as well as the country’s plan to address climate change from Newfoundland and Labrador to Nova Scotia and beyond.

Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland said: “Today’s announcement on the Lower Churchill Projects will ensure Newfoundlanders and Labradorians benefit from these new annual transfers and that the province can move forward on its plans to provide clean power to communities across Atlantic Canada.

“These projects are good for [Newfoundland and Labrador] and good for Canada as we build a greener, more innovative and more prosperous economy.”