In mid-2024, DOB Energy published my five-part Canadian energy storage series.

The series provided a macro view of energy storage in Canada and its potential to support power grids in the country, covered developments in Ontario and Alberta, the two leading provinces, profiled a short and long duration project, and focused on the pivotal role Indigenous communities are playing in many energy storage projects.

For this update article, DOB Energy interviewed Justin Rangooni, president and CEO of industry group Energy Storage Canada (ESC).

The big picture

“The current state of energy storage [in Canada] is one of momentum,” Rangooni said. “We’ve seen incredible growth in the sector over the last several years. Just a few years ago, the sector was still advocating to decision-makers that energy storage was more than small, demonstration-scale projects. Today, Ontario alone is on track to procure over 3 GW of utility-scale storage, and Alberta has surpassed 100 MW.”

Across the country, commercial and industrial customers are investing in storage to enhance reliability, manage extreme weather conditions, and optimize their energy use, he added. Growth is being driven by electrification, the system’s need for flexibility, technological advancements, and falling costs.

“By 2050, Canada’s total storage capacity could range between 20 GW and 40 GW, encompassing both short-duration [up to ten hours] and long-duration technologies [over ten hours],” Rangooni said, based on research commissioned by ESC, with short-duration energy storage (SDES) expected to account for about three-quarters of the total (see Figure 1 below).

The broad 20-40 GW forecast reflects multiple uncertainties across Canada’s energy transition, he said, because “a lot can change over a 25-year-plus horizon.”

Key sensitivities for ESC’s energy storage outlook include:

• Electrification pace - Rapid EV, heating, and industrial electrification can dramatically increase storage needs.
• Policy and procurement choices - Ambitious procurement schedules and market reforms push outcomes higher; conservative approaches lower them.
• Technology and cost evolution - How quickly long-duration energy storage (LDES) technologies mature and scale will affect capacity growth.
• Fuel mix and retirements - The pace of coal and gas retirements, or life extensions, shifts firming capacity requirements.

“These are gigawatt-scale variables,” Rangooni said. “The wide range reflects how dynamic the next few decades will be.”

The provincial picture

Ontario and Alberta may have the most procured energy storage, as well as the largest potential, given growing electricity demand in these provinces from a relatively high base and the need to replace or repurpose substantial amounts of gas-fired generation by 2035.

But energy storage opportunities exist in every province, with some other provinces rapidly advancing their own strategies for energy storage, according to Rangooni (see Table 1).

“We’re seeing national momentum,” he said. “British Columbia and Nova Scotia, for example, are setting ambitious targets, while Manitoba, Québec, and Atlantic Canada are integrating storage into long-term planning.”

Despite this, the playing field is somewhat distorted in Canada, as provinces that have abundant natural storage by virtue of large reservoirs associated with hydropower projects, such as British Columbia, Manitoba and Quebec, simply do not need to procure as much alternative storage to meet their future decarbonization needs. But even these provinces need energy storage resources to serve locally constrained power systems and support system stability.

It’s important to note that Rangooni remains optimistic about energy storage in Alberta, despite the province currently undergoing a major market transformation through its Restructured Energy Market (REM) review, which is redefining how the province plans to meet its future energy needs.

“ESC was an active participant ensuring the singular voice of energy storage was heard,” he said. “If the recent directions are implemented – including a Fast Frequency Response (FFR) procurement of up to 1,000 MW – we are very optimistic about the province’s future for energy storage.”

Short versus long duration

To date, procurements for energy storage in Canada have been for short duration, especially battery energy storage systems (BESS). But Rangooni expects this to change over time, with ESC having a “very favourable” view for LDES in the longer term, as suggested above.

The biggest reasons for SDES’s recent dominance are its speed and flexibility, according to Rangooni.

“Short-duration battery systems are modular, fast to deploy, and can respond quickly to procurement opportunities,” he said.

In addition, falling costs, proven technology, and the ability to serve multiple grid functions — from energy arbitrage to frequency response — make short-duration projects economically attractive now, Rangooni added.

“Much of the near-term flexibility needed for ramping and intra-day balancing is best served by short-duration assets,” he said. “LDES will play an increasingly important role as those needs evolve.”

On that note, LDES is useful for balancing intermittent renewable sources of power, even for days or seasons at a time. But capital costs for long duration projects are high, while their revenue potential are negatively impacted by their relatively infrequent release of stored power compared to short duration storage projects.

“As technology advances and costs decline, utilities and system operators will have a full menu of energy storage options to meet their needs,” Rangooni added.

Gravity energy storage, such as pumped hydro, is the original form of LDES, but several new forms are under technological development including pumped thermal energy storage, liquid air energy storage and clean hydrogen storage.

However, LDES requires a distinct policy and market approach, according to Rangooni. Key factors include:

• Clear revenue streams and procurement mechanisms - Multi-day capacity products, firming contracts, or targeted RFPs for LDES are essential to create bankable cash flows. Ontario’s targeted procurements for longer-duration resources offer a model.
• Market design and price signals - Markets must explicitly value duration, firm capacity, seasonal shifting, and reliability.
• Capital and financing supports - Grants, loan guarantees, Indigenous finance programs, and policy risk-mitigation tools help address higher CAPEX and longer construction timelines.
• Permitting and transmission planning – Co-ordinated site selection, environmental approvals, and transmission upgrades are critical to deployment.

“When policymakers combine targeted procurements, market reforms that value multi-day services, and financial de-risking instruments, LDES pipelines will accelerate,” Rangooni said.

Indigenous equity participation

Indigenous equity participation has already played an important role in energy storage projects in Canada, and Rangooni expects it to continue to do so in the future — including for LDES projects — for several reasons. These include:

• Economic reconciliation and opportunity - Governments are supporting Indigenous equity participation through programs, loan guarantees, and procurement preferences.
• Local benefits and community energy needs - Storage projects can replace diesel generation, improve reliability, and create local employment.
• Project risk mitigation and social license - Indigenous partnerships build trust, streamline permitting, and reduce reputational risk.

Energy storage is already delivering measurable economic and social benefits, especially in Ontario, with the province “setting a global benchmark for [Indigenous] community participation,” he said.

Over the past three years, the Independent Electricity System Operator (IESO) — the provincial Crown corporation responsible for managing and planning Ontario’s power grid — has procured 2,813 MW of SDES through two major rounds, with Indigenous participation at high levels for each:

• LT1 Procurement - all but one of the 10 projects totaling 1,883 MW with ≥50% Indigenous equity.
• Expedited LT1 - all but six of the 15 projects totaling 930 MW with ≥50% Indigenous equity.

In addition, the IESO procured an additional 250 MW through bilateral negotiations for the Oneida Battery Storage Project, with Six Nations of the Grand River Development Corporation (SNGRDC) a minority owner and one of the project’s original developers.

“Indigenous ownership has been transformative, creating multi-decade revenue streams for [Indigenous] communities,” Rangooni said. “These projects show that clean energy and reconciliation go hand in hand.”

There is also “tremendous opportunity” for Indigenous equity participation for future LDES projects, according to Rangooni.

“LDES projects offer similar, and in many cases deeper, opportunities [than SDES projects],” he said. “They’re often located near traditional territories, require larger capital investments, and deliver long-term revenue streams.”

For example, “each 500 MW of long-duration capacity generates roughly 670 direct construction jobs, 2,000 indirect full-time equivalents, and $1.4 billion in GDP during build-out,” Rangooni said.

And the benefits go beyond economics, according to Rangooni.

 “Multi-day or seasonal storage can strengthen community resilience and help displace diesel generation in remote areas, aligning perfectly with Indigenous energy priorities,” he said.