Canada: An Introduction To Energy Storage In Ontario

Last Updated: March 24 2016
Article by David Stevens

The use of new and existing technologies to store electricity is an increasingly important and visible issue in the energy field. Energy storage has been referred to by many commentators as a "game changer," as it will greatly improve the efficient use of electricity resources (generation, transmission, distribution). At the same time, an increased role for energy storage brings challenges for the electricity grid and the role of local distribution companies.

EnergyInsider plans to write regularly about issues and developments in the energy storage field. This first article on the topic aims to provide a brief "primer."

Benefits of Energy Storage

From batteries to water towers, the extent we rely on energy storage technology may not be obvious. While past use of energy storage has been generally limited to small-scale use, today's energy markets are beginning to use energy storage to face the challenge of providing reliability in supply for a large and constantly changing demand.

Until recently, the general approach to ensure reliability of supply at peak demand was to incorporate energy sources which can start or stop electricity generation on a very quick basis, known as "peaking plants." While this method of meeting demand is functional, it lacks efficiency. Matching immediate generation to immediate demand creates situations where generators are forced to stop generation when they are not needed. Peaking plants have been important as intermittent renewable generation resources have been added to the grid. Energy storage has the potential to reduce the impact of extreme or sudden changes in energy demand and renewable generation availability, which would lessen the need and utilization of peaking plants and lower overall system costs.

Technological advancement has resulted in a push towards various forms of large-scale energy storage that can be used to store excess electricity during periods of low demand in order to assist balancing the grid during periods of high demand. Energy storage can greatly enhance the viability of renewable generation by allowing for the output from that generation to be captured at all times, even where there is no demand. Then, at later times when demand is higher, the stored energy can be contributed to the system. In effect, energy storage would replace peaking plants to contribute capacity during periods of high demand and lessen the operational impact of sudden changes in electricity demand on generators. A useful discussion of the benefits of energy storage, particularly in the context of renewable generation, has been published by the U.S. Department of Energy under the title Energy Storage: The Key to a Reliable, Clean Electricity Supply.

Energy storage can also increase efficiency by using by-product energy that would otherwise be wasted. For instance, the use of thermal storage to utilize waste heat, similar to the process used in combined heat and power plants.

Energy storage can also be used on a smaller scale in homes and businesses to provide back-up power or store excess generation from rooftop solar or even to take advantage of the price spread between peak and off-peak electricity pricing. The most publicized home energy storage product is the Tesla Powerwall, but there are other technology companies developing and starting to offer competing products.

Key Forms of Energy Storage Technologies

On a global scale, interest in energy storage technology is growing. A 2014 report by the International Energy Agency (IEA) detailed the potential of energy storage to be a major component of future energy systems, praising its ability to accommodate commonly perceived limitations of renewable energy sources. The report also highlighted notable developments of major players in the industry, including Canada, China, Germany and the United States. According to the IEA, as of the time of the report, there was approximately 141 GW of global stored energy capacity, over 99% of which is pumped hydroelectric storage. The remaining portion is comprised of technologies that, until recently, have not been put to use for large-scale storage.

The following is a brief description of the most common energy storage technologies. There is also a useful discussion about key forms of energy storage technologies on the Ontario Independent Electricity System Operator (IESO) website, under the heading Energy Storage.


Pumped Hydro-electric – The benefit of pumped hydro-electric energy storage is that it can store massive amounts of energy, so long as there is an elevated reservoir large enough to hold the pumped water. Where there is excess energy on the grid, energy is used to pump water into an elevated reservoir. When the energy needs to be reclaimed, the pumped water is discharged through turbines which generate electricity to be contributed to the grid.

Flywheels – Flywheel technology takes advantage of Newton's first law of motion (objects maintain their inertia until a force acts upon them). Essentially, energy entering a flywheel system is used to speed up the rotation of a heavy weight around an axel. The energy can be withdrawn by using the rotational momentum of the weight to generate electricity or mechanical power. To increase efficiency and reduce energy loss, the spinning weight is kept in a vacuum and uses low friction bearings.

Compressed Air – Compressed air uses off-peak energy to pump air into a containment area such as an underground mine, where it is held until needed. It is then released through a combustion turbine.


Batteries – Chemical storage is most commonly known as solid state battery technology. In solid state batteries, energy is stored on a chemical level by making use of reversible chemical reactions. Solid state battery technology makes use of lithium, nickel or lead ions. Energy is inputted into a system to change the chemical structure of a solid substance, and can be taken out to return the chemical structure to its initial state. Relatively speaking, the time to charge or discharge a solid state battery is slow, which limits the utility of the technology. An alternative type of chemical battery is known as "flow batteries," which make use of electrolytic liquid solutions. These electrolytic liquid solutions contain chemical compounds that go through reversible chemical reactions, either absorbing or releasing energy as they react. The liquid nature of these batteries allows the absorption and discharge to occur at a much higher rate than that of solid state batteries.

Hydrogen Storage – The burning of hydrogen is an extremely clean form of combustion, the only by-products being water and energy. The energy released can be captured through the use of turbine technology. Hydrogen in its combustible form, however, is relatively scarce on Earth, but can be produced through the process of water electrolysis, which uses electricity to split water into hydrogen and oxygen. As such, energy can be "stored" in hydrogen produced through electrolysis and subsequently reclaimed by using the combustion of hydrogen to drive electric turbines.


Thermal storage consists of the heating of a substance, which will retain its temperature until the heat is needed. The most common forms of thermal storage are residential and commercial water heaters, where electricity is used to heat a tank of water which retains heat until the hot water is needed. On a larger scale, underground reservoirs can be used to store heated or cooled water for later use. Another form of thermal storage makes use of the energy consumption of substances during phase changes (e.g. evaporation). The use of phase changes offers 3 to 15 times the energy density as storage without phase change. Common examples of phase change heat storage, on the small scale, are refrigerants used in air conditioners or refrigerators. On a much larger scale, "molten salt" is being used for energy storage at the almost-completed Crescent Dunes large scale (110MW) solar power facility in Nevada. In that case, the molten salt is used to retain thermal energy collected by solar towers. The molten salt circulates from the tower to a storage tank, where it is then used to produce steam and generate electricity. Excess thermal energy will be stored in the molten salt and can be used later to generate power, including during the evening hours and when direct sunlight is not available.

Ontario's Current Energy Storage Procurement

In 2013, Ontario established a Long-Term Energy Plan (the LTEP) to reinforce its commitment to invest in renewable energy sources. The LTEP called for procurement processes for at least 50MW of stored energy capacity to be initiated by the end of 2014. It is expected that energy storage will ultimately increase the utility of renewable energy sources. In accordance with that goal, the IESO committed to incorporating 50 MW of energy storage capacity into the Ontario energy grid and issued two requests for proposals to develop energy storage facilities, one in 2014 and a second in 2015.

The 2014 RFP resulted in the selection of five projects totaling 34 MW of storage capacity. The projects include the utilization of battery technology (29 MW), hydrogen storage (2 MW), flywheels (2 MW) and thermal storage (1 MW). Ultimately, these storage facilities will fulfill multiple purposes. They will help balance the grid operation (increase efficiency), provide emergency energy supply (reactive support), and contribute to total power capacity of the system (increase supply).

The 2015 RFP resulted in the selection of 9 projects totaling around 17 MW of storage capacity. These projects include three different energy storage technologies: solid battery (four projects, 8 MW); flow battery (four projects, 7 MW); and compressed air (one project, 1.75 MW).

In an April 22, 2015 Directive from Ontario's Minister of Energy, the IESO is instructed to review the outcomes of the 50 MW energy storage procurement and report to the Minister by March 1, 2016 on options for integration of energy storage into Ontario's electricity market and market-based procurements.

The only other notable large-scale energy storage facility in Ontario is a 174 MW pumped hydro-electric facility located in Niagara-on-the-Lake, which existed prior to the IESO's recent procurement initiatives. Additionally, there are ongoing discussions around another pumped hydro-electric facility in Marmora (400 MW).

Role of Capacity Markets

The IESO has also expressed its intentions to develop a better structured bidding auction system for the "capacity market" in Ontario. A capacity market is an energy market comprised of peaking plants, which do not respond to the typical market forces of supply and demand, but rely on fixed rates to ensure there is added supply on the electricity grid when it is needed. The new auctions will not limit the technologies or resources that qualify to bid, such that energy storage projects can participate. More detailed information about the plans for a "capacity market" in Ontario is set out in an earlier post.

Energy storage will certainly play a role in capacity markets. This has already been demonstrated by a project by AES Energy Storage in Southern California. The battery storage project is to operate as a "peaking plant" to provide electricity when electricity demand exceeds maximum electricity generation on the grid (i.e. peak demand periods). Historically, natural gas plants have generally been used to accommodate this excess demand. Further, NextEra Energy, one of the industry's largest entities in the United States, has announced its expected investment of approximately $100 million in energy storage development over the next year, and the technology's potential to knock out the need for peaking plants.

These occurrences are attracting attention, and could be the start to a trend of replacing peaking plants with energy storage facilities, which would significantly alter the composition of capacity markets.

Changes in Regulation

During a time of quickly developing technology and a transition from dependence on non-renewable to renewable energy sources, there are concerns for how the costs of the electricity grid are distributed. As discussed above, energy storage increases the viability and attractiveness of implementing consumer level renewable energy generation and making fuller use of large-scale renewable generation projects (solar and wind). On the other hand, though, this may lead to less utilization of existing transmission and distribution networks.

In 2014, the Ontario Energy Board (OEB)-sponsored "Smart Grid Advisory Committee" issued a "Storage Working Group Report" which aimed to identify regulatory barriers to energy storage in Ontario and provide suggestions to ensure that energy storage services are encouraged and treated equitably, regardless of ownership. The "Storage Working Group Report" reflects a number of principles aimed at ensuring that costs and benefits of energy storage services are properly allocated and recognizing that energy storage may require separate regulatory treatment. While the Report has been presented to the OEB, the IESO and the Ministry of Energy, it is not clear what progress has been made to address the barriers that were identified. In a January 2016 letter from Ontario's Minister of Energy to Premier Wynne, it is indicated that the energy storage "pilot projects" procured by the IESO "will inform ongoing work on resolving regulatory barriers to energy storage, as they will provide valuable information about the technologies' ability to supply grid services and the appropriate commercial arrangements to enable them."

On a smaller scale, there has been a recent change to Ontario's electricity distribution rates that may make local (home and business) energy storage less of a concern for local distribution companies. As described in a prior post, the OEB issued a Board Policy in April 2015 that requires all distributors to move to fixed charges for electricity distribution. This means that a consumer will pay the same distribution charges, regardless of consumption. Theoretically, this means that distributors will not be harmed by more widespread use of household renewable generation and energy storage. On the other hand, this change may make adoption of such technologies less attractive to homeowners. The implementation of the new Board Policy is beginning in 2016, and will not be fully in effect until 2019.

As the energy industry evolves to include more energy storage technologies, we are sure to see further regulatory and other changes. EnergyInsider will write regularly about issues and developments in the energy storage field.

*This article was co-authored with Michael McDonald, an articling student at Aird & Berlis LLP

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

David Stevens
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions