Ontario needs energy storage. Why is it holding out on two big projects?

Ontario Energy Minister Todd Smith has decided to withhold approval of two large energy storage projects being marketed as solutions to the province’s looming supply crunch.

The two projects in question are what’s known as pumped storage systems, which both store and create energy by moving water up and down between two reservoirs or lakes and past turbines. One of the proposals is for Marmora and Lake, off Highway 7 between Toronto and Ottawa, built by clean energy veteran Northland Power, while the other is in Meaford, on Georgian Bay, built by fossil fuel giant TC Energy. The basic technology behind both projects is similar, but differences in the environmental landscapes and between the companies driving the projects are affecting how the proposals are being received in potential host communities.

Smith was expected to greenlight both projects on November 30. His decision — or indecision — came more than a month later, on January 9. It was in a letter addressed to the Independent Electricity System Operator, which manages and plans the province’s energy supply. More than once, the operator has criticized the pumped storage proposals, saying alternative solutions, such as batteries, along with emissions-free generation projects like wind and solar, would be cheaper to build but have similar results.

Smith’s letter to the electricity operator expresses broad support for pumped storage, saying it “could play an important role in meeting electricity system needs.” Increasing storage capacity opens the door to more renewable energy projects by helping to keep energy flow consistent even in times of low wind or sunshine and ensuring no nuclear power is wasted. But, he said, after considering the operator’s criticisms, he now wants “additional clarification” about the cost of the projects before giving them a green light.

“I am not prepared to make a final determination at this time on either project,” Smith wrote.

With this delay comes a list of things he wants the companies and operator to explain, including expected social and economic benefits such as jobs, tax revenue and Indigenous participation. Smith also asked TC Energy to turn to the federal government for “additional assistance” to help fund the Meaford project, which will require extensive cleanup of a Department of National Defence site littered with undetonated explosives.

The delay has been met with mixed responses. Environmental advocates believe the system operator’s critique essentially says the projects are unjustified, but that Smith still wants to approve them for political reasons.

“The minister is effectively delaying his decision to allow the proponents to re-do their numbers and to further justify their projects, as well as to see if the federal government will contribute,” Richard Carlson, energy director at Pollution Probe, told The Narwhal in an email.

“Rather than just taking this expert advice and rejecting the projects for now, the minister is instead bending over backwards to try to find a way to approve the projects anyway.”

Adam Scott, energy and environment consultant

Adam Scott, an energy and environment consultant, told The Narwhal he wondered if the minister is “bending policy towards a small handful of powerful incumbent energy corporations” to justify a likely yes.

Others say more time can’t hurt, including Chief Conrad Ritchie of Saugeen First Nation, who is in conversation with TC Energy about a possible equity partnership in the Meaford project. He believes more study is warranted for such big and environmentally significant projects. “This is all due diligence … so everyone can make an informed decision,” he said in an interview. “I expected this.”

“I think the best thing to do is not to rush things,” he added. “Because when you rush, things are overlooked, mistakes happen … This is part of the process to look at everything.”

Here’s what you need to know about pumped storage in Ontario and what Smith’s decision might mean for the province’s energy needs.

Ontario’s electricity operator isn’t sure these pumped storage proposals have ‘net benefits’

Not every energy expert or organization is convinced pumped storage projects, these two in particular, are the clean energy solution Ontario needs right now. This includes the Independent Electricity System Operator, a Crown corporation that makes sure the province has enough energy it needs every day of every week.

In May 2023, the operator made Canada’s biggest bet on energy storage, giving contracts to seven battery projects in the province. It positioned this move as a way to solve Ontario’s two-pronged energy problem: the province doesn’t have enough clean power and it also doesn’t have effective ways to store energy for when it’s needed the most.

Over half of Ontario’s electricity currently comes from nuclear plants. But that will change this year with the shutdown of several nuclear reactors at the Pickering, Ont., plant that produces 14 per cent of the province’s power. Other nuclear plants, in Bowmanville and Bruce County near Saugeen First Nation and Meaford, are already operating at reduced capacity during refurbishments.

But the operator has twice deemed pumped storage an insufficient and costly solution. In November 2021, Smith sent a letter to Lesley Gallinger, the electricity system operator’s president and chief executive officer. In it, the energy minister said he was “aware” the system operator felt the pumped storage proposals were “not forecast to provide sufficient value to Ontario’s electricity consumers.” To start, they would take too long to build. Energy experts say the longer it takes to get renewable energy connected to the grid, the longer communities are dependent on fossil fuels.

Despite this, Smith advised the operator to advance the projects to the next stage of the approval process, saying the companies would have to offer “improved financing” to get the final green light.

The same concerns are reiterated again in Smith’s latest decision. In the January 9 letter to Gallinger, Smith noted the operator believes these projects “do not compare favourably to currently available alternatives, including battery storage or a portfolio of other non-emitting resources” and so neither offers “net benefits” to Ontario’s electricity system or residents.

Still, he asked the operator to look beyond energy needs to see if there are “broader societal and economic benefits” that would justify approval. A report on this is expected in July.

“Rather than just taking this expert advice and rejecting the projects for now, the minister is instead bending over backwards to try to find a way to approve the projects anyway,” Scott, the energy and environment consultant, said in an email.

“Also, in spite of the fact that the province could just procure wind, solar and battery projects at a lower cost, he encourages the companies to ‘engage the Government of Canada on additional assistance’ to bring down the costs. Given the [Independent Electricity System Operator’s] negative assessment, why would it make any more sense to waste federal subsidies on these projects as well?”

TC Energy strikes a positive tone and Northland Power looks for ‘full understanding’

Despite the lack of “final determination” in Smith’s letter, TC Energy is viewing this as a green light, a company spokesperson told The Narwhal. In an email, Sara Beasley said the company is “encouraged that the Ministry of Energy has outlined a clear path forward for continued evaluation of the project.”

Beasley said TC Energy can begin a “formal regulatory process later this year,” including defining the costs and broader social and economic benefits of the project. If all approvals are given, it could begin construction in the latter part of this decade, she said.

In his letter, Smith urged the Independent Electricity System Operator to look at other benefits of the project beyond basic energy storage and production, including the benefit of a local energy solution “in light of current geopolitical issues and ongoing supply chain uncertainties.” Beasley said TC Energy’s Meaford project will be “a made-in-Ontario solution … that will be designed, engineered and built by a domestic supply chain.”

“By relying on Ontario’s domestic construction and hydro industries to advance the project, Ontario is not reliant on uncertain global supply chains,” she added, echoing Smith’s language. She also said the project will create 1,000 unionized jobs during construction, and the company is “committed to hiring and buying local to create well-paying jobs and increase spending in the province.”

The latter is a point of contention in Meaford. Over the last four years, the company’s name has become an easy-to-find Waldo in town, appearing on hockey jerseys, in newspaper ads and on banners at charity runs and fundraisers in bowling clubs and churches. It has even sponsored local environmental initiatives, including the Great Lakes Plastics Cleanup.

In an earlier interview with The Narwhal, Meaford Mayor Ross Kentner said community financial benefits are part of any project. That’s why the town’s council voted in favour of the project, conditional on TC Energy passing government environmental assessments and showing how its plans will protect Georgian Bay.

Neighbouring towns disagree. In November, the Township of the Archipelago passed a resolution stating the project “would cause irreparable harm to the environment and would have significant negative impacts on the local animal, plant, fish and human populations” and “would irreversibly alter and damage the unique ecological, cultural and historical features of the area.” In December, Town of the Blue Mountains supported the same resolution.

A day before Smith’s letter was released, members of Meaford council pushed back against opposition by other towns. According to The Meaford Independent, Deputy Mayor Shirley Keaveney said Archipelago and Blue Mountains did not have enough information to approve the resolutions because TC Energy has not engaged with them. “We are the most heavily impacted community yet no one from either municipality reached out to Meaford for our input or perspective,” she said.

After Smith’s letter this week, Northland Power told The Narwhal in a brief emailed statement that the company is working with Ontario Power Generation “to get a full understanding of the letter and will progress important conversations and work with the ministry and the [Independent Electricity System Operator] to further understand next steps.” Mayor of Marmora and Lake Jan O’Neill told The Narwhal she remains optimistic, but awaits the response to the ministers direction.

What are the Meaford and Marmora projects all about?

Pumped storage has been in use around the world for 116 years. It’s not not new here: Ontario Power Generation’s Sir Adam Beck Pump Generating Station, which diverts water into a massive reservoir above Niagara Falls, was built in 1957.

The systems are popular because they hold energy for a long time. While most types of battery storage only have about a four-hour charge, water pushed into the top reservoir of a pumped storage system will sit there until it’s needed, and generate electricity whenever that water flows down.

“Let’s say in the morning everybody’s getting up, turning on their toaster and coffee-maker, checking their newsfeed, you get this surge of electricity demand,” Northland Power’s former director of business development, John Wright, told The Narwhal in 2022. “We can start generating, letting the water flow down at a controlled level … and the amount of water we let go drives the turbines.”

Northland Power is proposing the pumped storage project in Marmora and Lake. The $2-billion facility is designed to be a closed loop system that would give new life to an old iron-ore mine pit: the same water that naturally fills the huge pit will be pumped up to a higher reservoir to be built out of waste rock, and sent back down through a pipeline repeatedly, never drawing from another body of water.

While there are a few dissenters, community enthusiasm for the project is fairly strong. That support rests on a three-point foundation: first, it won’t interfere with a natural body of water and second, Marmora is an old mining town in need of new economic activity. A strong third point is that Northland Power has significant clean energy cred — it is partnering with the province’s biggest generator, Ontario Power Generation, to bring the project to life.

The project in Meaford is more complicated. For one, it is a $4.3-billion open loop system proposed by power behemoth TC Energy, where water being pumped up into a reservoir will come from Georgian Bay, which would also receive water being sent down to turn underwater turbines.

Because of the disruption to the bay, which is connected to Lake Huron, the community is significantly more divided. A local group based in Meaford, calling itself Save Georgian Bay, is worried about potential effects on the water itself, the animals in and around it and the escarpment where the reservoir would be built.

Complicating matters is that the Meaford site is home to a National Defence training centre covered in an unknown number of undetonated explosives, which could leak heavy metals and toxins if disturbed. For a previous story, the department told The Narwhal via email, “The discussion surrounding the responsibility for [unexploded ordnance] clean-up, with a focus on preventing soil contamination and protecting wildlife both on land and in Georgian Bay, is ongoing [and] will feed into any future agreements that may be put in place should the project move forward.”

The email from a Defence Department spokesperson said, “The commitment of the government of Canada to addressing concerns and mitigating potential impacts remains unwavering.”

Save Georgian Bay members are also wary that the project is being proposed by Calgary-based TC Energy. Its environmental track record includes damage to waterways during construction of the Coastal GasLink pipeline in B.C. Controversy over the pipeline has drawn national attention: while some First Nations along the route have signed agreements with the company, Wet’suwet’en Hereditary Chiefs staunchly oppose the project and land defenders have been arrested more than once.

Last fall, The Narwhal spoke with TC Energy’s director of power and energy solutions, John Mikkelsen, who said the company is committed to having the project unfold in a way that respects the surrounding environment. Mikkelsen said water movement will be unnoticeable and silent and that TC Energy is working on a “comprehensive plan” for construction that will prioritize the health and safety of residents and the escarpment.

Mikkelsen also said that cleanup of the explosives is doable and the company does not anticipate any delay because of past military activity.

As for Indigenous relations, Mikkelsen said TC Energy “will not do this project” without the support of Saugeen First Nation and Chippewas of Nawash First Nation.

Ritchie and Chief Greg Nadjiwon of Chippewas of Nawash told The Narwhal last fall that they continue to consult their people about a possible partnership with the company, which they said included them in planning the project from the beginning. In an interview this week, Ritchie said the communities will soon be examining the results of their own environmental assessment of the lands and water where TC Energy wants to build. “We’re still gathering information and bringing it to people,” he said. “Nothing is set in stone yet.”