OEB-IESO Joint Targeted Call

AI was used for this analysis for the purposes of editing and rephrasing. The tool used was Microsoft Copilot, and all results were validated by OEB Staff.

On June 18, 2021, the OEB and Independent Electricity System Operator (IESO) announced a partnership between the OEB's Innovation Sandbox and the IESO's Grid Innovation Fund to support pilot projects seeking to test the capabilities of distributed energy resources (DERs) in providing grid services at both the local and provincial levels. The following lessons learned are based on insights and observations reported by project proponents whose projects have now concluded. Drawing on final project reports and ongoing engagement, the OEB, in collaboration with the IESO, has synthesized these findings to identify common themes related to the implementation, operation and integration of DERs.

While individual project experiences varied, the lessons outlined below reflect consistent patterns reported by proponents across multiple pilots. The OEB presents these as key findings that may inform future policy development, program design and the broader integration of DERs into Ontario's electricity system.

 

Key Findings

1. Local flexibility has the potential to be operationally feasible across Ontario

Project proponents reported that local flexibility (i.e., the ability of an energy source to change its consumption, generation or storage behaviour when needed) can be successfully mobilized using existing utility tools, assets and operational processes. Pilots implemented by Essex Powerlines, Toronto Hydro and BluWave-ai showed that local flexibility markets and dispatch can function effectively without fully integrated DER management systems or real-time control platforms.

Through a phased implementation approach, this could help utilities gain operational experience and demonstrate value before committing to more complex, capital-intensive solutions.

2. Non-technical barriers constrained early project performance

Proponents consistently reported that non-technical challenges limited the amount of flexibility that projects were able to deliver, particularly during early project phases. Common issues included participant recruitment and onboarding, site readiness, metering limitations and unfamiliarity with market concepts and dispatch processes.

These barriers highlight the importance of establishing clear and consistent flexibility services and participation rules. Doing so could simplify recruitment and onboarding, making it easier for participants to engage and successfully deliver flexibility services.

3. DER aggregation may enhance reliability, performance, and market access

Across pilots, proponents identified aggregation (i.e., the use of multiple DERs) as an enabler for improving reliability and allowing smaller resources to participate. Aggregation allows distributed assets that would not individually meet minimum size thresholds for direct market participation to collectively deliver grid services.

Aggregation is a key tool for enabling large numbers of DERs to participate in and support the electricity system. It also supports broader industry initiatives aimed at increasing the role of these resources in grid operations, including the IESO's Enabling Resources Program, a multi-year initiative that updates Ontario's electricity market rules, systems, and processes to enable energy storage, hybrid facilities, and aggregated DERs to participate more effectively in providing grid services.

4. Institutional alignment and co-ordination remain critical

Project proponents highlighted the need for improved co-ordination across institutional roles and systems. Key issues included:

• the need for standardized telemetry, application programming interfaces and data exchange protocols;
• clarity around distributor-led measurement and verification and baseline methodologies;
• improved transmission-distribution co-ordination and two-way information sharing; and
• clearer definition of the distributor's role (facilitator versus market participant)

Proponents report that resolving these issues will be critical to enabling scalable DER participation and will require co-ordinated action across ongoing initiatives, particularly the IESO’s Enabling Resources Program and the OEB's Distribution System Operator Roadmap.

5. No single DER technology optimizes all performance criteria

Proponents reported that no single DER type was able to simultaneously optimize cost, speed of response, and reliability.

This reinforces the need for frameworks that can effectively manage a diverse range of DERs and maximize the benefits they provide. Future market and program designs should reflect diverse resource characteristics, including varying response speeds, durations and reliability profiles as appropriate.

6. Baselines and metering approaches require modernization

Across projects, proponents identified that historical site load baselines used to estimate normal electricity consumption do not always reflect the operating characteristics of modern DERs, particularly behind-the-meter storage and flexible demand resources.

Proponents report that updated approaches to baselining and metering will be necessary to accurately measure DER performance. This supports ongoing efforts to modernize telemetry requirements and establish proportional measurement and verification standards aligned with resource scale and system risk.

7. DER value must be tied to specific distribution system needs

Proponents emphasized that DER value is maximized when linked to clearly defined and verifiable distribution system constraints. Generic or system-wide flexibility claims were found to risk overstating benefits.

This reinforces the importance of integrating DERs, including non-wires solutions, into distribution system planning processes where it is cost-effective, while developing robust transmission-distribution protocols to ensure coordination and interoperability. These findings are consistent with recent OEB policy direction on innovation and newly enhanced incentive mechanisms such as the Non-Wires Solution Incentives (Margin on Payments).

Conclusion

While the pilot projects have now concluded, the OEB and IESO remain committed to unlocking the value of DERs within Ontario's electricity system. Each project has published a final report which you can find below detailing its approach, results and lessons learned.

The insights generated through these pilots provide a foundation for future policy development and program design. As sector initiatives continue to advance, these will help inform the evolution of DER integration and support the transition toward a more flexible and efficient electricity system.

Read the March 30, 2022, April 14, 2022, and April 22, 2022, news releases and the Joint Targeted Call Interim Report for more information.

Projects

Enel X Canada Essex Powerlines Toronto Hydro BluWave-ai
Disclaimer: These projects are supported by the financial contribution of the Independent Electricity System Operator (IESO), through its Grid Innovation Fund. However, the views, opinions and learnings expressed in these reports are solely those of the projects.

Read the final reports here for more information.