Ontario Energy Storage Update

Energy Storage Update

By Will Fyfe, Lynn Parsons, James Klein and Roya Baryole on July 31st, 2014Posted in Energy– Renewable, Alternative and Clean, Ontario Power Authority

It has been a busy month for energy storage in Ontario.

New Contracts Awarded:

Five companies have now been selected to provide energy storage services as part of the Independent Electricity System Operator’s (the “IESO”) 35 MW procurement of renewable energy storage capacity. They are Canadian Solar Solutions Inc., Convergent Energy and Power LLC, Dimplex North America LTD, Hecate Energy and Hydrogenics Corp. The IESO’s press release can be found here.

Interestingly, the IESO has explicitly described this round of procurement as a way of testing new storage technologies. This in part explains the structure of the services contract to be entered into by storage providers. As outlined in a previous post, rather than laying the foundation for the long-term financing of a capital intensive project, the procurement allocated a higher point total to proponents that bid shorter contract terms and the form of services contract included several termination rights in favour of the IESO which make the contract difficult to finance.

Promising Procurement Pipeline:

As readers of this blog will know, the Government of Ontario’s Long Term Energy Plan (“LTEP”), calls for a total of 50 MW of storage capacity, 35 MW to be procured by the IESO and the balance of 15 MW to be procured by the OPA. Now that the IESO process is complete, attention will turn to the OPA. While we still do not know exactly what form the OPA procurement will take, we can speculate. If past practice is any guide, it would not follow the IESO’s ancillary service contract model. Instead it would follow a model characterised by long term contracts with a minimum offtake price, similar to the RESOP or Feed-in Tariff programs.

However, given that the IESO and OPA are now slated to merge (as our colleague George Vegh has discussed (here) any predictions about this procurement process should be taken with a grain of salt.

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