Energy storage in Ontario - Where do we stand?

21 November 2017

Since the release of last Long Term Energy Plan (LTEP), in 2013, the share of wind, solar, and bioenergy capacity in Ontario's supply mix has grown from 9 per cent to over 18 per cent.[1] Increased utilization of renewables, especially when integrated with local generation systems, can avoid or mitigate a host of energy system challenges from climate change to rural access to required transmission grid improvements. But the pricing regime behind storage is complex and not yet entirely settled. Unfortunately, although there is tremendous hope in the market, Ontario's most recent LTEP last month, doesn't add any particular clarity on the topic.

The task of better integrating renewables into existing energy infrastructure is an Ontario-specific problem. New York, California, Quebec, Bermuda, Great Britain, Germany -and a host of other energy jurisdictions where Gowling WLG lawyers are active globally- are facing the same challenges. One of the goals the Canadian government is pursuing is the improvement of remote-area service quality. In metropolitan regions of the country, clients experience less than two hours of service outages each year, whereas rural areas can be without power for up to 20 hours during a 12-month period.[2] While the smart-grid can help detect, locate, and remedy outages more quickly, the frequency regulation that comes with energy storage would be much more seamless.

Although the media spotlight has been focused south of the border, there's much development happening right here in Canada. Eguana Technologies, operating out of Calgary, Alberta, for instance, is leading the charge in the battery-backed solar energy world and already supplying battery systems to places like Germany and Hawaii. However, disincentives at home are stifling demand, and failing to enable full utilization of renewables. "Net-metering" policies for example-where a meter runs in one direction when it is consuming grid-produced electricity and in the other when it is producing more energy than it can consume-does not allow the customer to reap the benefits of renewable generation, since utilities pay solar producers the same retail price they charge for power in Ontario. We were relieved to see clear indications of the Government intentions with regard to net metering and virtual net metering in the LTEP.

Minister Thibeault has hinted at regulatory amendments that would better value energy storage and remove the penalties currently associated with drawing surplus electricity from the grid. While we will need to wait for for a more comprehensive understanding of what a new pricing and regulatory regime would look like, the Minister did suggest amendments to the uplift and global adjustment charges that price electricity storage technology out of the market. These measures, if implemented, will have a significant impact on the way Ontarians produce, consume, and store energy.

Ultimately, this is good news for consumers and producers of renewable energy - and for clean technology innovators. By implementing energy storage technology-friendly policies, and introducing a pricing regime that provides a level playing field, Ontario can reduce system costs, enhance grid reliability, and improve the operation of its larger energy assets. It can also position its industrial and innovation leaders well to gain a foothold in the coming energy system convergence revolution as it occurs. The key enablers to a cleaner, more predictable energy supply is conservation and storage-two areas we hope to hear more about from this government in early 2018.


Thomas J. Timmins is a partner in Gowling WLG's Toronto office and Chair of the firm's Global Renewables Practice.

David Torchetti is an associate in Gowling WLG's Toronto office and a member of the firm's Energy Group.

Joe McDonald is an articling student in Gowling WLG's Toronto office.

[1] "Planning Ontario's Energy Future", (28 September 2017), Ontario Ministry of Energy

[2] "Improving Service Quality", (28 September 2017), Natural Resources Canada

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