Energy storage sector ramps up in Ontario

The acceleration of electricity storage in Ontario

The deployment of battery storage as a vital component of the energy system is gaining increasing traction in Canada, particularly in Ontario, with opportunities for participation in the storage sector becoming more abundant.

The ability of battery storage to address the intermittent nature of wind and solar generation means that it is increasingly coming into its own as a vital and versatile component of the provision of reliable electricity service. A large-scale battery can store electricity on days when wind and solar energy are available and then dispatch that energy back into the electricity system when needed to supply load or balance the electricity grid. In Canada, within the federal and provincial levels of government, energy regulators, system planners, utilities providers and investors are increasingly recognizing the value of storage as a tool to increase the flexibility and stability of the transmission grid, and to assist in addressing climate change by reducing the need for new peaking facilities.

The versatility of storage has led to substantial government focus on investment, incentives and legislative and regulatory frameworks designed to ensure that barriers to the deployment of storage are addressed and minimized. These initiatives vary from jurisdiction to jurisdiction in Canada, depending on provincial regulatory structure and the varying generation resources of the individual electricity systems. Provinces such as British Columbia and Québec already have abundant natural storage by virtue of the large reservoirs associated with their hydroelectric facilities which are able to act as huge storage batteries, whereas areas of Canada without such predominant hydroelectric resources are deploying battery storage in a variety of different ways.

Federal government contributions to the development of battery storage

The Canadian federal government has contributed substantial direct funding to certain projects to facilitate energy storage across the country. It has also supported increases in storage through the auspices of the Canada Infrastructure Bank, which provides support to projects through direct investment or through partnerships with project proponents. One example is the Oneida Energy Storage Project in Ontario, in which the federal government is providing substantial partial funding along with monies from the Canada Infrastructure bank.

“The governments of Canada and Ontario are working together to build the largest battery storage project in the country. The 250-megawatt (MW) Oneida Energy storage project is being developed in partnership with the Six Nations of the Grand River Development Corporation, Northland Power, NRStor and Aecon Group. The federal government is today providing a further $50 million in funding; the Canada Infrastructure Bank has played a key role supporting project development and is collaborating with the Oneida Energy storage project on an investment agreement.”¹

The federal government also announced a 15 percent Clean Electricity Investment Tax Credit in the March 2023 Federal Budget for eligible investments, including stationary electricity storage systems.²

Storage developments in Ontario

As noted above, in Ontario and elsewhere, government entities, system planners and regulators are addressing the need for funding and for regulatory structures that address the value of storage. In the sector’s infancy in Ontario, there were fewer regulatory supports in place for storage. Granting the necessary licence to operate storage was not straightforward due to the lack of a statutory definition of ‘storage’ in the governing legislation. The dual nature of storage, which can act both as a load on the system and as a source of generation meant that the available statutory definitions for facilities were not easily applied to storage. The Ontario Energy Board acted as an early mover on addressing these regulatory issues by granting the licences necessary to operate in Ontario based on the generation characteristics of storage assets.

The Ontario Independent Electricity System Operator (IESO) has also been actively addressing the unique attributes of storage. In its “Pathways to Decarbonization report,” which looks at further decarbonizing the natural gas and electricity systems, it indicates that storage will certainly be part of the energy supply mix going forward.³ Following that report, the Ontario Government directed the IESO to procure 4000 MW of new storage and generation resources.⁴ The press release associated with this procurement stated:

“This procurement is expected to involve at least 1,500 MW of energy storage and represent the largest battery procurement in Canada’s history.”⁵

In May 2023, IESO announced it is moving forward with the procurement of seven new energy storage projects to provide 739 MW of capacity expected to connect to the grid by 2026.

In addition to its other advantages, the addition of very significant storage as part of the energy mix in Ontario has also afforded the opportunity to advance reconciliation efforts with Indigenous communities by facilitating meaningful participation in clean energy projects:

“The majority of these selected proposals have partnered with Indigenous communities, with five of the seven having at least 50 per cent economic interest from these communities. These projects complement the recent agreement for the 250 MW Oneida Energy Storage Facility and conclude the first of two stages within the procurement.”⁶

More procurements are in the offing, as the IESO indicated in its May 2023 announcement that it will also seek further energy storage supply in a procurement to begin later this year. This has also been evidenced by the recent report of the Electrification and Energy Transition Panel, a body established by the Government of Ontario to provide recommendations to help Ontario prepare for electrification and the energy transition, which references energy storage as an integral component of the future energy mix⁷.

Conclusion

The contribution of energy storage to the furtherance of Canada’s climate change goals is increasingly well understood by governments, system operators, utilities and investors. Given the increase in regulatory clarity and the large procurements already moving forward in various areas of Canada, there will doubtless be increasing opportunities in this area in the months and years ahead.