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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, subject to further design work and feedback; the IESO says additional regulation capability is needed throughout the year.
Ontario’s Independent Electricity System Operator (IESO) has proposed allowing transmission-connected batteries to provide regulation service while also participating in the province’s energy and operating reserve markets. The proposal is part of a market-design phase planned for 2028 and would let batteries contribute to the second-by-second balancing that keeps electricity-system frequency near 60 hertz.
Regulation service adjusts supply and demand in real time to keep the grid’s frequency close to its target. The IESO says generators equipped with automatic generation control currently provide the service. Its Oct. 15 design memo says the province’s 2026 Annual Planning Outlook finds that additional regulation capability is needed in every hour of the year.
Under the proposal, batteries registered as dispatchable single model storage resources could offer regulation and still take part in energy and operating reserve markets. The IESO would remove a current restriction that applies to all resources: when a resource is scheduled for regulation, its operating reserve offers must be set to zero for those hours.
To preserve a battery’s ability to respond in both directions, IESO scheduling tools would reserve stored energy and charging capacity around a regulation commitment. That reserve would cover one hour of scheduled regulation capacity in day-ahead and pre-dispatch timeframes, and 10 minutes in real time. The IESO also proposes lifting the 100-megawatt-per-minute ramp-rate limit for storage during hours when a battery is scheduled for regulation, and adding a monthly performance factor based on how closely it follows regulation setpoints.
How Batteries Could Support Grid Balancing
The proposal could give Ontario’s grid operator another source of fast, adjustable capacity as the province adds battery storage. Batteries can charge or discharge in response to system needs, and the proposed rules are designed to let them offer that flexibility without automatically withdrawing from the energy or operating reserve markets.
The change matters as Ontario’s storage fleet grows. The IESO expects the province to have more than 3,500 MW of battery storage by 2030, following its E-LT1, LT1 and LT2 procurements. Allowing eligible batteries to offer regulation could expand the resources available to balance the grid, although the proposal alone does not establish how much regulation capacity batteries will provide or what effect participation will have on costs.
The design also makes state-of-charge management a central operational issue. A battery must retain enough stored energy and available charging room to respond to regulation instructions in either direction. The proposed reservations set out how the IESO would account for that requirement across scheduling timeframes, but detailed settlement and payment rules remain under development.
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A Two-Phase Storage Market Plan
The proposed regulation role is the second phase of the IESO’s Storage and Co-located Hybrid Integration Project. The first phase is planned for 2027 to 2028 and is intended to establish a single storage resource model with state-of-charge management. Battery regulation would follow in the second phase, planned for 2028.
The proposal is limited to transmission-connected batteries. Distribution-connected resources, compressed-air storage and pumped hydro are outside the scope of this phase. The IESO would keep its existing bidirectional regulation signal rather than create separate upward and downward products.
Ontario’s procurement activity provides the near-term context for the design. In June, the first capacity window of the LT2 procurement selected 640 MW of eight-hour storage, including a 200 MW/1,600 MWh Neoen project near Dryden that is due online in 2030. The 250 MW/1,000 MWh Oneida project began commercial operation in May 2025; the source report described it at the time as Canada’s largest operating battery.
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Rules Still Under Review
The IESO has proposed a design, but it has not yet finalized the rules or begun battery regulation participation. Settlement, make-whole payments and market power mitigation are among the design areas still to be addressed, with an updated design due in the first quarter of 2027.
The memo does not establish how many batteries will qualify, how much regulation capacity they will offer, or the eventual costs and payments associated with participation. The IESO says it will continue investigating cost-based selection as regulation supply grows. Its proposed monthly performance factor and energy-reservation approach are also part of a design that remains subject to feedback and further work.
Eligibility is currently limited to transmission-connected batteries. The source material does not say whether the IESO will later consider expanding the scope to distribution-connected storage, compressed air or pumped hydro.
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Feedback and Design Milestones
Stakeholders have until Oct. 30, 2026, to comment on the design memo. The IESO plans to publish an updated design in the first quarter of 2027, including further work on settlement, make-whole payments and market power mitigation.
The first phase of the storage integration project is planned for 2027 to 2028, ahead of the second phase that would introduce battery regulation in 2028. Those dates are planned milestones, not confirmation that the proposed rules are final or that a specific battery will enter the regulation market on a particular date.
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Key Questions
What is Ontario proposing for batteries?
The IESO proposes allowing eligible transmission-connected batteries to provide regulation service while also participating in energy and operating reserve markets. The change is planned for the project’s second phase in 2028.
What does regulation service do?
Regulation service makes frequent adjustments to help balance electricity supply and demand and keep grid frequency close to 60 hertz. The IESO says generators with automatic generation control currently provide it.
How would the proposal manage battery charge?
The IESO proposes reserving stored energy and charging capacity around a battery’s regulation commitment. The planned reservation would cover one hour in day-ahead and pre-dispatch scheduling and 10 minutes in real time.
Which storage resources are eligible?
This phase covers transmission-connected batteries registered as dispatchable single model storage resources. Distribution-connected resources, compressed-air storage and pumped hydro are outside the proposal’s scope.
When will the rules be finalized?
The IESO is seeking feedback by Oct. 30, 2026, and expects an updated design in the first quarter of 2027. Battery regulation is planned for 2028, but final rules and detailed market arrangements are still being developed.
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