Latest Ontario electricity announcement again proves the shift to clean energy is market-driven

TORONTO — Gurprasad Gurumurthy, Senior Analyst at the Pembina Institute’s Electricity program, made the following statement in response to Ontario’s latest capacity procurement results, in which battery storage projects won every contract, outcompeting natural gas peaker plants:

“Today marks another win for affordability, energy security, and reliability in Ontario’s electricity system – and another proof point that the switch towards clean energy is no longer about climate policies, but is fundamentally market-driven.

“Though some voices in Canada, particularly in recent weeks, continue to argue that natural gas-fired power is still needed in very large quantities to manage peak electricity demand, Ontario’s results are proving that increasingly batteries can do the job at a fraction of the cost of gas. By storing up low-cost renewable energy and discharging it when it is needed most, batteries provide a more cost-effective option than grid operators having to exclusively rely on powering up gas-fired peaker plants at times of high demand. In fact, Ontario is already home to two of Canada’s largest battery storage projects - Oneida Energy Storage and Hagersville Energy Storage - which are already making a positive difference for grid stability in the province.

“The results of today’s competitive auction will allow the province to build on that success – and begin to show the rest of Canada what a modern, flexible energy system can look like in practice. It also opens up more opportunities for Ontario to take the lead on building a made-in-Canada battery supply chain that will attract investment and create skilled jobs.

"In addition to affordability benefits, the addition of more batteries will further reduce Ontario’s exposure to the volatility of fossil fuel imports, keeping money in the province, rather than paying US producers of natural gas. When paired with locally-produced wind and solar power, batteries further bolster Ontario’s energy security – because nobody can block access to the sun, or apply a tariff to the wind.

“This announcement follows a major procurement conducted earlier this spring – when solar and wind won every contract. Taken together, these results send a clear message: when the playing field is level, renewables and batteries rise to the top and deliver reliable power at lower cost and on faster timelines.

“At the same time, these outcomes raise questions about the federal government’s recent announcements on the Clean Electricity Regulations, which make room for new gas generation in provinces like Alberta. Ontario’s experience should demonstrate to grid operators elsewhere in the country that diversifying the energy mix away from an over-reliance on gas – to cheaper, cleaner solutions – is the smart move. The Government of Ontario and the Independent Electricity System Operator, in running a technology-agnostic procurement process, should be commended for assembling the building blocks for the affordable and secure energy system of the future.”

Quick facts

Three battery storage projects won the contracts in this capacity round, totaling 640 MW – enough to power approximately 640,000 homes during periods of peak electricity demand. All projects also come with at least 50% Indigenous equity ownership and strong municipal support.
Already home to two of Canada’s largest battery storage projects, Oneida and Hagersville Energy Storage, this recent procurement brings Ontario’s total battery capacity to over 3500 MW.
Ontario has now invested nearly $14bn in the battery manufacturing supply chain – joining other jurisdictions like Texas and Australia who are deploying batteries and renewables at remarkable pace and scale.
Over the past decade, lithium-ion battery costs have dropped 90%, with prices projected to continue decreasing.
In August 2024, the Ontario government and IESO launched the LT2, representing the largest competitive energy procurement in the province’s history. In the first energy round, all 14 selected projects were either solar or wind.