IESO Publishes Recommendations for Removing Obstacles to Energy Storage in Ontario

On December 19, 2018, the Independent Electricity System Operator (IESO) published a report titled Removing Obstacles for Storage Resources in Ontario. The report explains the work that has been done by the IESO-sponsored Energy Storage Advisory Group, and sets out a number of recommendations towards removing the regulatory barriers facing energy storage resources in Ontario. These recommendations address the concern that the regulatory environment is not evolving and keeping up with changes in technology. As stated in the IESO’s press release, there are challenges with determining how rules that were created before energy storage was contemplated should be interpreted and applied. Changes are needed to encourage and enable the benefits available from energy storage. The IESO’s report looks at changes within its own jurisdiction, but also advocates a collaborative approach, recommending that the Ontario Energy Board (OEB) review and update relevant codes and the Ontario government consider energy storage in existing and future legislation.

The IESO has been closely involved in energy storage development in Ontario for some time. As we have described in previous posts (see here, here and here), the IESO has led and reported on the procurement of a number of different energy storage projects that are now operational across Ontario. The IESO established its Energy Storage Advisory Group (ESAG) in April 2018 “to advise and assist the IESO in evolving policy, rules, processes and tools to better enable the integration of storage resource within the IESO-administered markets.” This group is intended to provide the IESO with important input as its focus shifts to the implementation of energy storage resources in Ontario.

As noted by the IESO, the Removing Obstacles for Storage Resources in Ontario report identifies 12 obstacles and mitigating strategies to address barriers to the fair competition of energy storage in the market. The overall areas of focus, and related recommendations, are set out below:

1. Review and Amend the IESO Market Rules - The IESO should review and amend its Market Rules, where possible, to clarify the participation of storage resources in IESO-administered markets.
2. Review the Ontario Energy Board Codes - The OEB should review its Codes to consider energy storage participation and its regulatory framework, including processes and requirements for connections. Pending a comprehensive review of its Codes, the OEB could provide information on how to interpret the existing requirements in the Codes with respect to energy storage resources.
3. Consider Energy Storage in Ontario Legislation and Regulations - The Government of Ontario should consider the role of energy storage both as part of any new legislation and regulations or amendments to existing legislation and regulation.

Specific recommendations are provided within each of these areas, including suggestions for how IESO Market Rules and OEB rules and ratemaking should be updated.

The IESO indicates that in 2019, the ESAG will focus on creating and implementing a plan to ensure consistent treatment of energy storage facilities and inform IESO Market Rule amendment proposals through discussions of the:

• Integration of storage into wholesale market products and regulation service; and
• Interface between the wholesale market and distribution-connected storage.

The IESO’s report invites the OEB and others to use the ESAG as a forum to continue discussions on barriers related to their mandates, where feasible and appropriate.