Calling it an “important milestone” in the evolution of Ontario’s electricity system, Paul Murphy, the president and chief executive of Ontario’s Independent Electricity System Operator, announced Thursday that energy and process storage technologies would be added to the mix of options available to provide regulation services to the province’s grid — that is, keeping supply and demand on the grid in constant balance, second-by-second. To start, the IESO has contracted to add 10 megawatts of regulation services to the mix via a combination of flywheel energy storage, battery storage and “process storage” — the latter being the by-the-second control of many industrial loads as a way to rapidly reduce and ramp up grid demand. It’s sometimes called aggregated demand-response.

It’s a first for Ontario, which until now has relied largely on electricity generation assets, such as natural gas-fired power plants, to provide grid-balancing services. The gradual integration of fast-reacting storage technologies will help reduce our reliance on fossil fuel generation. According to the IESO, “This quick response is becoming increasingly important to facilitate more renewable resources like wind and solar, whose output is variable in nature.”

Through competitive tender, three firms have been contracted to supply this first round of alternative regulation services. Toronto-based Enbala Power Networks will provide 4 megawatts of process storage, which will come from water plants, cold storage facilities, universities, hospitals, and any other industrial, commercial or institutional facilities that have large power loads that can be flexibly used and easily controlled — such as pumps, fans and refrigeration units. For more than a year, Enbala has been supplying its service to PJM Interconnection, which is the regional system operator for 13 U.S. states and one district in the U.S. northeast.

Another 2 megawatts will come through NRStor, which through a partnership with flywheel developer Temporal Power and Ontario Power Generation will integrated flywheel technology into the Ontario grid for the first time. The balance will come from RES Canada, part of renewable energy developer RES Group, which will construct a battery-based storage system in southwestern Ontario (home to many wind farms).

While the numbers are small — 10 megawatts is just a pimple on a elephant’s butt — it finally puts non-hydro storage on the map in Ontario, opening the door for more technologies and approaches, and ultimately many more megawatts and fewer emissions.

The Ontario Smart Grid Forum, a group led by the province’s Independent Electricity System Operator, released today its latest report on smart grid development. The report, titled “Modernizing Ontario’s Electricity System: Next Steps,” documents progress that has been made since the Forum’s first report two years ago and the many smart grid-related activities currently underway. It also makes several recommendations that will help build on the current momentum of development.

The report touches on electric vehicles and related infrastructure, emergence of the smart home, importance of privacy protection, integration of energy storage, challenges of managing an expected deluge of what I like to call “gridformation”, and the overall importance of industry standards. It also attempts to quantify the expected annual investment in smart grid technologies, systems and training over the next five years.

Disclosure: I was contracted by the IESO to prepare this report so am reserving comment. That said, for anyone interested in Ontario’s smart grid activities this report offers a great sense of where the province is coming from, where it’s at, and where it is going on all things related to the smart grid.

I was in Vancouver last week, where the weather was perfect, so I dodged most of the hot, humid heatwave stuff that kept air conditioners blasting in the northeast. But I was watching Ontario’s power demand from afar and was happy to see that the electricity system handled the hot weather quite well. It was, in fact, the first time we got a sense of how well Ontario’s demand-response programs work. Last summer just wasn’t hot enough to give it a proper test run, but we found out last week that demand-response has an important role to play in the province. According to figures from the Independent Electricity System Operator, DR programs were able to reduce electricity use during the four-day heat wave by 3,000 megawatt-hours. Since we’re talking roughly 100 hours, that averages out to about 30 megawatts of capacity spared during the entire period. That’s a misleading figure, however, because the programs would only kick in during peak times. For example, at the height of the heat wave last Tuesday as much as 350 megawatts of load were reduced – the equivalent of a small coal-fired power plant. About 150 megawatts of that came from our Peaksaver program, which allows utilities to slightly reduce air conditioning load from participating customers. Another 200 megawatts came from the DR 3 program, which consists of industrial/commercial electricity users and aggregators that have agreed to reduce load when asked.

The cleanest megawatt is the one not used, and not using it is a hell of a lot cheaper than paying a natural gas peaker plant for peak supply.

Ontario’s Independent Electricity System Operator says it will launch a centralized wind forecasting service in 2010, relieving individual wind-farm operators of the administrative burden and improving the accuracy of wind forecasting in the province. (See draft paper on centralized forecasting released in February). As jurisdictions like Ontario increase their penetration of wind, centralized forecasting is becoming a must. System operators in Germany, New York, California, Texas, the Midwest and Alberta are considering or have already launched centralized wind forecasting services, which are proven to reduce forecasting errors by as much as 5 per cent or more. Unclear is how exactly wind operators will be charged for this service and whether it will be mandatory or voluntary. As part of the Ontario launch, the system operator will be making available a Web-based “Wind Tracker” app that graphically displays hourly wind output from the province’s large-scale wind farms.