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Ontario’s Independent Electricity System Operator has proposed allowing transmission-connected batteries to provide regulation service while also participating in energy and operating reserve markets. The change is planned for 2028; design details remain under review, with feedback due Oct. 30 and an updated design expected in the first quarter of 2027.
Ontario’s Independent Electricity System Operator (IESO) has proposed letting transmission-connected batteries provide regulation service while also selling energy and operating reserve, a market role planned for 2028. The service helps balance electricity supply and demand from moment to moment, and the operator says its planning outlook points to a need for more regulation capability throughout the year.
Regulation is the second-by-second adjustment that helps keep the power system’s frequency near 60 hertz. The IESO’s Oct. 15 design memo says generators equipped with automatic generation control currently provide the service. Under the proposal, batteries registered as dispatchable single model storage resources could receive regulation schedules and continue participating in the energy and operating reserve markets.
The IESO would remove a restriction that currently applies to all resources: operating reserve offers must be set to zero during hours when a resource is scheduled for regulation. Battery scheduling tools would also reserve both stored energy and available charging capacity so batteries can respond in either direction. The reservation would cover one hour of regulation capacity in day-ahead and pre-dispatch scheduling, and 10 minutes in real time.
Battery operators would submit regulation offers by 9 a.m. Eastern prevailing time before the day-ahead market and receive hourly schedules by 10 a.m. Selection would be based on reliability. The proposal would lift the existing 100-megawatt-per-minute ramp-rate limit for storage during hours when a battery is scheduled for regulation, and add a monthly performance factor tied to how closely it follows regulation setpoints. The IESO would retain its existing bidirectional regulation signal rather than create separate up and down products.
How Batteries Could Support Grid Balancing
The proposal could give Ontario’s growing battery fleet another way to contribute to grid operations, beyond shifting energy and providing operating reserves. Regulation requires resources to adjust output or consumption in response to system needs; batteries’ ability to charge and discharge makes them potential participants, provided scheduling accounts for their state of charge and room to charge.
Allowing a battery to provide regulation while remaining active in other markets would also change how the IESO schedules and compensates participating resources. The proposal outlines operational rules, but the detailed settlement, make-whole payment and market power mitigation designs are still to come. Those rules will shape how revenues and costs are handled and are needed to understand the full commercial impact for storage operators.
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Ontario’s Staged Storage Market Changes
The regulation proposal is part of the IESO’s Storage and Co-located Hybrid Integration Project. Its first phase, planned for 2027 to 2028, is intended to establish a single storage resource model with state-of-charge management. Battery regulation is planned for the second phase in 2028, so the proposal depends on the earlier market changes being put in place.
The IESO expects Ontario to have more than 3,500 MW of battery storage by 2030, following its E-LT1, LT1 and LT2 procurements. In June, the first capacity window of LT2 procured 640 MW of eight-hour storage, including a 200 MW/1,600 MWh Neoen project near Dryden scheduled to come online in 2030. The 250 MW/1,000 MWh Oneida project began commercial operation in May 2025 and was described in the source report as Canada’s largest operating battery at that time.
The proposed eligibility is narrower than the province’s broader storage pipeline: only transmission-connected batteries are included in this phase. Distribution-connected resources, compressed-air storage and pumped-hydro storage are outside its scope.
Market Rules Still Under Development
The proposal is not a final market rule. Feedback is due Oct. 30, and the IESO plans to issue an updated design in the first quarter of 2027. The source material does not specify how comments may change the design or provide a final implementation schedule beyond the planned 2028 phase.
Important commercial and operational details remain unresolved. The IESO says cost-based selection will continue to be investigated as regulation supply grows; settlement, make-whole payment and market power mitigation designs are also pending. The proposal does not establish the eventual payment levels, expected revenues for batteries, or how many projects will qualify and participate.
Feedback and Revised Design Ahead
Market participants can submit feedback on the design memo by Oct. 30. The IESO has scheduled an updated design for the first quarter of 2027, which is expected to address the next stage of market design, including settlement and related rules. The battery regulation role remains planned for phase two in 2028, following the first phase’s storage model and state-of-charge management work.
Key Questions
What regulation service would batteries provide?
They would make rapid adjustments to help balance electricity supply and demand and keep system frequency near 60 hertz. The IESO currently says generators with automatic generation control provide this service.
Could a battery provide regulation and sell energy at the same time?
Under the proposal, eligible batteries could provide regulation while also participating in the energy and operating reserve markets. Scheduling would reserve stored energy and charging room around the regulation commitment.
Which storage projects are eligible under this phase?
The proposal covers transmission-connected batteries registered as dispatchable single model storage resources. Distribution-connected resources, compressed-air storage and pumped hydro are outside the phase’s scope.
When could the new market role begin?
The IESO plans to introduce battery regulation in the project’s second phase in 2028. An updated design is due in the first quarter of 2027, after feedback on the current memo closes Oct. 30.
Are payment rules and battery revenues settled?
No. The IESO plans further work on settlement, make-whole payments and market power mitigation. The proposal does not establish final payment levels or forecast what participating batteries could earn.
Source: rss
