Leonard Kula, the IESO’s Vice President, Planning, Acquisition and Operations, and Chief Operating Officer, says that energy storage coupled with the increase of distributed energy resources (DERs) connecting to centralized grids is causing system operators around the world to rethink some of their most basic assumptions about grid management. “This is a great opportunity for the energy sector,” says Kula.

By necessity, energy regulators, too, are being prodded to determine how to enable energy storage to provide grid reliability services acquired through competitive mechanisms, and what the right approach to regulation should be.

Energy storage is part of a wider segment of DERs presenting new opportunities for the information and communications technology sector, challenging developers to create new products to support an increasingly decentralized energy system. Already, the electricity sector is seeing examples where distribution-connected energy storage is being paired with artificial intelligence applications and sophisticated control systems to provide various services to both the electricity system and customers.

And it’s making local distribution and transmission companies think carefully about how, and whether, to use it to defer (and potentially forgo) costly new investments in infrastructure.

All this from a technology that less than a decade ago was considered highly experimental.

On a growth curve

According to Bloomberg New Energy Finance, the global energy storage market will double six times between 2016 and 2030, rising to a total of 125 gigawatts. This is similar to the solar industry’s expansion between 2000 and 2015, when solar share, as a percentage of total generation, doubled seven times.

The increase is due in large part to the surge in renewable generation and distributed energy resources, together with increasingly cost-effective technology that allows energy to be stored for future use.

And while historically, most energy storage facilities generate electricity at peak times by using water that is pumped to a reservoir (such as at Ontario’s Sir Adam Beck hydro facility at Niagara Falls), what makes this new breed of energy storage so attractive are the options for where, when, and how energy storage is used.

In on the ground floor, with over 20 facilities under contract

According to Terry Young, the IESO’s Vice President, Policy, Engagement and Innovation, energy storage provides the flexibility the energy system needs to ensure reliability, even as it decentralizes and democratizes.

“Energy storage has been on our radar for quite a while now,” says Young. “From our vantage point, it’s a technology with tremendous upside. It’s challenging the energy sector, ourselves included, to closely examine how reliability is delivered, what the costs are, what services are needed, and the role it should play in the wholesale energy market. We need to understand the benefits, as well as the limitations.”

Building an energy storage portfolio

The IESO took its first steps into the world of energy storage in 2012 when it entered into a contract with two energy storage facilities for six megawatts of “regulation service”. The focus in this initial phase of study is to monitor how the facilities balance supply and demand on a second-by-second basis.

One of the facilities in this initial procurement was NRStor’s two-megawatt Minto facility in Wellington County, Ontario – the first grid-connected commercial flywheel facility in Canada. NRStor, the owner and developer, partnered with Temporal Power to deliver the project. The other project was Renewable Energy Systems Canada – a four-megawatt battery storage facility in Strathroy, Ontario.

Two years later, the IESO expanded its portfolio with two procurements (the Phase 1 and Phase 2 Energy Storage Programs) for an additional 50 megawatts of energy storage capacity to provide grid reliability services. For Phase 1, the IESO contracted with: Canadian Solar Solutions Inc., Convergent Energy and Power LLC,  Hecate Energy,  Powin Energy,  Deltro Energy and Hydrogenics Corp. These facilities have been coming on line over the course of 2018.

“The commissioning of these facilities marks another important moment in the evolution of Ontario’s energy sector,” says Kula. “To fully appreciate their significance, we now have the first fully-dispatchable energy storage facilities in Ontario, other than the Sir Adam Beck facility at Niagara Falls. We also have the first hydrogen power-to-gas facility and the second flywheel facility in our market. These types of energy storage facilities were unheard of ten years ago. Now we’re at a point where energy storage is transforming the way energy can be delivered, and how efficiently it is stored. We are very excited that these facilities are coming on-line and delivering the services we need to operate the power system reliably.”

Leadership for energy storage development

To date, the IESO now has ten energy storage facilities in its market providing various ancillary services such as reactive power and voltage control and regulation services. As these facilities come online, the IESO is monitoring how they perform in the delivery of reliability services. Also, the IESO’s Phase 1 facilities entering into service in 2018 will be part of an ongoing research program that will last for a period of three years. The research program will allow the IESO to see how well these facilities perform over time, and through changing seasons, in terms of availability, reliability, accuracy in responding to dispatch, and overall performance.

In the meantime, to encourage as many industry stakeholders as possible to engage in a dialogue about energy storage, the IESO established the Energy Storage Advisory Group in April 2018, with the following goals:

• Identify potential obstacles to fair competition for energy storage resources and propose solutions
• Address storage related issues and opportunities within the current IESO-administered markets, including tools and operational agreement

“Engaging with key stakeholder groups about how energy storage resources are integrated into the electricity system is crucial,” says Young. “Energy storage has the potential to significantly modernize the sector and drive down costs. We need to figure out how to optimize its use.”