Renewable energy proponents have emerged as the favoured bidders in the recently completed first phase of Ontario’s effort to add 7,500 megawatts (MW) of electricity resources to the provincial power grid by 2034. Thus far, 16 project developers have been chosen through two parallel request for proposal (RFP) processes for generation and storage, representing 1,115 MW of new supply and 640 MW of capacity to offset peak demand that is expected to be operational by May 1, 2030.
First Nations or their business corporations hold at least a 50 per cent equity stake in all 16 projects — reflective of preferred scoring built into the procurement process if Indigenous partners have at least a 10 per cent ownership interest in projects located on their treaty lands or asserted traditional territory. That’s in keeping with the provincial government’s stated intention to align its ambitions to expand the electricity generation and transmission network with economic reconciliation.
Ontario’s Independent Electricity System Operator (IESO) will continue to administer subsequent RFP processes at intervals to the end of this decade until the targeted 7,500 MW has been procured. Under the provincial government’s directions, that’s to be “technology-agnostic” and prioritize cost-competitiveness, along with requirements for upfront support from host municipalities and some specified prohibitions on projects in agricultural areas.
“Ontario’s Integrated Energy Plan is focused on keeping power flowing and costs down, with shorter term renewables, storage and natural gas bridging the gap as we expand nuclear and hydro over the medium term,” Stephen Lecce, Ontario’s Minister of Energy and Mines, noted when the energy supply proponents were announced earlier this spring.
However, natural gas didn’t make it into the initial mix, which is heavily weighted to solar resources. Twelve solar projects are set to collectively deliver 915 MW of supply at an average fixed price of $88.84 per megawatt-hour (MW-h) or 8.884 cents per kilowatt-hour (kWh), while power from the sole 200-MW wind project is contracted at $94.95/MWh (9.495 cents/kWh).
Both are discounts on the legacy renewable generation in Ontario’s supply mix that was contracted under the feed-in-tariff rates in the nascent era of wind and solar power production — with rates of 11.5 cents/kWh for wind power and 18 to 30 cents/kWh for solar generation, depending on timing and specifications of the contract.
The three energy storage projects have been contracted at an average fixed capacity rate of $563.48 per megawatt per business day, which represents the rate that storage operators receive for making supply available during a window of peak hours in the business day. This is lower than the average rates contracted in two earlier energy storage procurements, occurring in 2023 and 2024, and is also well below the rates that participants registered in the IESO’s capacity auction will receive this summer and through the winter of 2026/27.
The latter mechanism establishes rates for two six-month periods (summer and winter) through an annual bidding process in which prospective participants indicate the price at which they would be willing to provide capacity (whether through generation, imports/exports, load curtailment or storage). Those bids are then stacked in ascending value until they reach the volume of capacity the system operator has targeted. The top piece of the stack — i.e. the costliest bid required to complete the procurement — becomes the clearing price, or the fixed capacity rate for all auction participants who have bid at our below that price.
The IESO’s most recent capacity auction, in Dec. 2025, yielded clearing prices of $645.24/MW-day for the summer of 2026 and $725.31/MW-day for winter 2026-27 — a dramatic jump from clearing prices of $332.39/MW-day in summer 2025 and $139.00/MW-day in winter 2025-26. Energy industry analysts tie that to tightening supply and growing demand exerting pressure on the market.
As it scales up, energy storage is also expected to give system operators greater flexibility of quickly dispatchable loads compared to start-up time and costs for gas-fired peaking plants.
“The switch towards clean energy is no longer about climate policies, but is fundamentally market-driven,” asserts Gurprasad Gurumurthy, a senior analyst at the energy think tank, Pembina Institute. “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.”
“Energy storage and renewable energy continue to succeed in competitive procurements with meaningful Indigenous partnerships to deliver the reliability the province needs,” concurs Eric Muller, the Canadian Renewable Energy Association’s director of policy in Ontario.
