On March 12, 2014, the IESO issued an RFP to procure 35 MW of
energy storage resources. This procurement follows on the
commitment made by the government in the long-term energy plan and
the Minister of Energy's more recent request to the IESO and
the OPA. The Minister requested that the IESO and OPA design a
process to procure 50 MW of energy storage by the end of 2014 and
conduct an independent study assessing the value of energy storage
for Ontario as well as review the regulatory barriers to
storage's participation in the Ontario electricity
The IESO and the OPA collaborated in designing a framework for the procurement of 50 MW of
storage, which they submitted to the Minister at the end of
January. The recent RFP relates to Phase I which will be led
by the IESO and which will seek to procure up to 35 MW of
regulation service and/or reactive support and voltage control from
grid energy storage facility operators. Phase II will be
launched later this year and will procure the balance of the 50
MW. This second phase will be led by the OPA and will focus on
meeting future capacity needs and may include considerations for
This procurement, which signals Ontario's intent to become a
leader in the growing energy storage space ― the sector
reportedly attracted over $1 billion in investment in the last two
years and is projected to grow to $30 billion over the next decade
― is notable in several respects. First, the IESO
designed the procurement to facilitate participation by a diverse
portfolio of storage technologies. The IESO has stated that a
principal objective of the procurement is to test and learn about
various services that storage can provide, the value of these
investments in operations and how they can best be integrated into
Ontario's electricity market. The IESO is procuring
storage to provide ancillary services, but the procurement has been
designed to allow storage technologies to demonstrate other
attributes including: shifting energy from low demand periods to
high demand periods; adding MW capacity to the system; aiding in
electricity ramp (up or down); aiding in utilizing surplus baseload
generation more effectively; aiding and managing transmission
constraints; providing contingency response and energy reserves;
and, smoothing/firming out the output of intermittent generation
resources. As such, while the IESO has provided some examples
of potential storage technologies ― i.e., pumped hydro,
compressed air energy storage, stationary batteries, flywheels and
thermo energy ― the procurement does not limit the types of
storage technologies that may participate.
Another notable feature of the procurement process is that it is
being designed so that procured storage resources can be
subsequently integrated into the IESO market. The IESO has
cautioned that contract structure should not distort the effective
integration of storage resources into the market. Therefore,
contract terms will be relatively short and contracts will be
designed so that contract revenues can be replaced with market
Finally, the procurement timeline is relatively short. The
deadline for submitting proposals is April 28, 2014 and the IESO
anticipates selecting providers by June 1, with contracts to
be concluded by June 30, 2014. A more detailed RFP timeline
can be accessed on the IESO's website.
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