Ontario’s batteries are about to get a bigger job.
The Independent Electricity System Operator has published a proposed market design that would allow battery storage to provide regulation service, the second-by-second balancing that keeps the grid’s frequency close to 60 Hz. The proposal is set out in an October 15 design memo and was reported by ESS News on October 20.
Today, that service is supplied by generators equipped with automatic generation control. The IESO’s case for opening the door is blunt. Its 2026 Annual Planning Outlook concludes that “additional regulation capability is needed in every hour of the year.”
Batteries happen to be very good at exactly that kind of work.
A Fast Service Finally Meets a Fast Resource
Regulation is the most demanding product a grid operator buys. A resource has to follow a signal that moves up and down continuously, correcting small mismatches between supply and demand before they show up as frequency drift.
Thermal and hydro units can do it, but every megawatt they hold back for regulation is a megawatt not available for other duties. Batteries respond in milliseconds and can swing between charging and discharging without the wear and ramp limits of rotating machines.
Under the IESO proposal, batteries registered as dispatchable single model storage resources could offer regulation while also selling energy and operating reserve. The operator would also remove a current restriction that sets a resource’s operating reserve offers to zero whenever it is scheduled for regulation.
That change matters.
It means a battery would not have to choose one service and abandon the others. Stacking products is how storage projects build bankable revenue, and Ontario’s design is moving in that direction.
The Details Show a Market Built Around State of Charge
The memo deals directly with the feature that makes storage different from a generator: a battery can run out of room in either direction.
According to ESS News, the IESO’s scheduling tools would reserve both stored energy and charging headroom for regulation. The day-ahead and pre-dispatch processes would cover one hour of scheduled regulation capacity, while real time would cover 10 minutes.
Several other elements are worth tracking:
- Only transmission-connected batteries qualify in this phase.
- Distribution-connected resources, compressed air and pumped hydro are excluded for now.
- Regulation offers would be due by 9 a.m. Eastern prevailing time ahead of the day-ahead market, with hourly schedules issued by 10 a.m.
- The 100 MW per minute ramp-rate limit for storage would be lifted in hours when a battery is scheduled for regulation.
- A monthly performance factor would measure how closely each resource follows its regulation setpoints.
- The existing bidirectional regulation signal would remain, rather than being split into separate up and down products.
Selection would initially be based on reliability. The IESO said cost-based selection “will continue to be investigated” as regulation supply grows.
Ontario’s Storage Fleet Is Growing Into the Role
The timing reflects how quickly storage is scaling in the province. The IESO expects Ontario to have more than 3,500 MW of battery storage by 2030, following its E-LT1, LT1 and LT2 procurements.
The first capacity window of LT2 procured 640 MW of eight-hour storage in June. That includes a 200 MW/1,600 MWh Neoen project near Dryden in northwestern Ontario, due online in 2030. The 250 MW/1,000 MWh Oneida project, which ESS News describes as Canada’s largest operating battery at the time, began commercial operation in May 2025.
A fleet of that size is a significant balancing asset.
Without a regulation pathway, much of its fastest capability would sit unused in the hours when the grid needs it most. With one, the province can draw on resources it has already contracted to tighten frequency control, rather than relying solely on generators to carry the load.
What Developers and Investors Should Read Into It
For storage developers, the proposal adds a clearer view of where future revenue could come from. Regulation has historically been a premium service in North American markets, and access to it can change how projects are sized, how much headroom they keep, and how operators plan daily cycling.
For investors and lenders, the significance is structural. A defined market role, with published rules on scheduling, performance measurement and ramp limits, makes it easier to model what a battery will actually earn over its life.
There is also a supply chain angle. Every new market role for storage strengthens the domestic demand case for cells, power conversion equipment and integration services, which in turn supports the Canadian manufacturing and materials projects being built to serve it.
How much is a fast megawatt worth?
Ontario is starting to write the rules that will answer that question.
The Rollout Runs Through 2028
Battery regulation is planned for the second phase of the IESO’s Storage and Co-located Hybrid Integration Project, targeted for 2028. The first phase establishes the single storage resource model with state-of-charge management in 2027 to 2028.
The IESO had signalled the work in an August 6 engagement presentation, which said Phase 2 planning and design had started and was expected to complete by the second quarter of 2027. The October memo turns that commitment into a concrete proposal.
Work remains. Designs for settlement, make-whole payments and market power mitigation will follow, with an updated design due in the first quarter of 2027. Stakeholder feedback on the current memo is due October 30.
Those pieces will determine how attractive the service becomes in practice. But the direction is set, and it favours storage.
Ontario spent years buying batteries for capacity. Now it is writing the rules that let them do what they do best.
