IESO Recommends Shift to Grid-Scale Storage in Ontario, Relying on Natural Gas Expansions to Ensure Reliability in the Near-Term

October 28, 2022

As part of its plans to acquire 4,000 MW of new electricity supply, the Independent Electricity System Operator (IESO) is recommending to the Minister of Energy that Ontario make a significant investment in battery storage, balanced by natural gas and other forms of non-greenhouse gas emitting generation to ensure reliability and affordability. This new capacity – enough to power a city the size of Toronto – is needed to support economic growth and electrification in the province.

“Our report sets out what is needed to maintain a reliable and affordable system as demand for electricity continues to grow year-over-year,” said Lesley Gallinger, President and CEO of the IESO. “These recommendations are designed to ensure that Ontario remains a magnet for businesses looking to invest while supporting communities as they push ahead with their decarbonization plans.”

The IESO’s Resource Eligibility Interim Report responds to a request from the Minister of Energy to provide recommendations on the eligibility of natural gas projects in ongoing IESO procurements for new electricity capacity. The report makes three key recommendations:

• The IESO should move forward to procure approximately 2,500 MW of energy storage to provide flexibility to the power system, charging up when demand is low and providing electricity to the grid when it is needed most. Most of this new supply would be operational by 2027, representing what could be one of the largest storage fleets in North America.
• These procurements should include other non-emitting forms of supply such as biofuels and renewable/storage hybrids – as they can also help meet peak demands and other changes in system needs.
• In order to mitigate against global supply chain delays and ensure a reliable and affordable electricity system, up to 1,500 MW of natural gas capacity should be added between 2025 and 2027, in large part through upgrades and expansions at existing facilities.

“The IESO should tap into a diverse set of available options to meet projected electricity supply shortfalls mid-decade – including additional energy-efficiency programs and imports,” said Chuck Farmer, Vice-President, Planning, Conservation and Resource Adequacy. “This combined effort would ensure that the grid will be able to support a substantial energy storage fleet which will be essential for the decarbonization of the electricity system.”

The IESO’s recommendations are based on an assessment of the potential readiness of new projects to provide electricity capacity given current global supply chain and project development issues. Like other system operators, the IESO will build greater operational experience with batteries at grid scale while relying on additional natural gas capacity to ensure reliability when system conditions are strained.

Recommendations on the future role of natural gas will be included in the IESO’s Pathways to Decarbonization report to be released later this year.

Key Facts:

• Ontario’s electricity system currently comprises approximately 38,000 MW of capacity, reflecting a diverse mix of supply options that includes nuclear, hydro, natural gas, wind and solar generation.
• Ontario has one of the cleanest electricity systems in North America and emissions from electricity generation account for only three per cent of Ontario’s total emissions.
• Demand for electricity is forecast to grow at 1.7 per cent annually over the next twenty years due to economic growth and decarbonization.

Pre-taped interviews with Lesley Gallinger and Chuck Farmer and b-roll of the IESO’s system control centre are available on request.

A copy of the report can be found on the IESO web site.

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