This story is part of The Energy Mix’s partnership with Small Change Fund.

Knapsack gas-fired power plant, Germany. (Oliver Tjaden/flickr)

Ontario’s decision to award three new contracts for 640 megawatts (MW) of battery storage capacity—and reject new natural gas plants that were also in the running—shows that gas can no longer win a competitive bid against the less expensive, lower-carbon option, a clean energy advocate says.

Keith Brooks, program director at Environmental Defence Canada, was reacting after the province announced results of the capacity auction under its LT2 procurement, described in a Ministry of Energy and Mines release as “a transparent, competitive, and technology-agnostic procurement that will secure the lowest-cost power for ratepayers from a wide range of potential available technologies.” The three winning bids, all with 50% Indigenous participation, included [pdf]:

• The 300-MW Napanee Battery Energy Storage System (BESS) Phase 2 in the Town of Greater Napanee, co-owned by the Mississaugas of Scugog Island First Nation;

• The 190-MW Eagle Lake Power Reserve in the District of Kenora, co-owned by Neoen Ontario and the Eagle Lake First Nation;

• The 150-MW Simcoe Battery Project in Norfolk County, with 50% ownership divided between the Six Nations of the Grand River and Mississaugas of the Credit First Nation.

Ontario’s Independent Electricity System Operator said the announcement marked the end of the first round of energy and capacity contracts under the LT2 process. In the first round in April, 2026, all 14 contracts went to solar and wind projects.

With battery costs in Ontario falling from more than $1,100 per megawatt per business day in 2023 to an average cost of $563.48 in Friday’s announcement, “gas plants aren’t competitive anymore,” Brooks told the Toronto Star. “If there’s a level playing field, clean energy and batteries win every time.”

On LinkedIn, Brooks said batteries prevailed in the LT2 capacity auction even though the province was putting a thumb on the scale for new gas plants.

“This was in a procurement where gas plants were given bonus points just for being gas, and projects were given extra points for being able to provide power for 12 hours continuously—which was another attempt to give gas plants the leg up,” he explained, since the battery projects all offered an eight-hour run time. “And it’s not as though the gas folks didn’t try. We tracked over 1000 megawatts of proposed gas plants that were out seeking municipal resolutions that they needed to get contracts—and they got the resolutions they needed, but they didn’t get offered contracts.”

Those results showed that, “despite a very obvious ideological distaste for renewable energy, the economics are so compelling now that this government was forced to go in that direction,” Brooks told the Star.

At a media conference Friday to announce the new contracts, Sam Oosterhoff, Ontario’s associate minister of energy-intensive industries, bragged that “we have secured the lowest-cost electricity capacity procurement in Ontario’s history.” He added that power users “need to know that on the very hottest of days in the summer, the very coldest of days of the winter, the power will be there when and where we need it.”

“Does that mean gas won’t be needed anymore? No. But clearly the landscape has shifted dramatically,” declared Philippe Dunsky, president of Dunsky Climate + Energy Advisors, who chaired the federal government’s Canada Electricity Advisory Council in 2023-24. “Clean power is now the most affordable power for Ontario’s consumers. For most of the rest of the world, too.”

A Canadian Gas Association spokesperson told the Star that gas is still “highly competitive”, providing “affordable home heating, reliable electricity generation, and the flexibility needed to support a growing and increasingly complex energy system.”

But in this procurement, “the result speaks for itself,” Oliver Sheldrick, clean energy program manager at Clean Energy Canada, said in a release. “In an open, technology-agnostic competition, where batteries faced off against any resource able to deliver dependable capacity, battery storage won every contract.”

“Though some voices in Canada, particularly in recent weeks, continue to argue that natural gas-fired power is still needed in very large quantities to manage peak electricity demand, Ontario’s results are proving that increasingly batteries can do the job at a fraction of the cost of gas,” added Gurprasad Gurumurthy, senior analyst in the Pembina Institute’s electricity program.

On LinkedIn, analysts said the Ontario procurement had implications for other provincial grids that have some catching up to do as battery prices plummet.

In British Columbia, the current Integrated Resource Plan for BC Hydro anticipates a price of $577 to $769 per megawatt-business day for a four-hour battery delivered in 2034, says Polaris Strategy + Insight Principal Dan Woynillowicz—four years after Ontario is to take delivery of its eight-hour batteries at a lower cost. The B.C. price range “seems high, especially if one considers the likelihood of continued cost declines,” he writes. And “BC Hydro hasn’t included eight-hour storage in its resource options database.”

Solar Nova Scotia President David Brushett adds that Ontario’s costs fell 36%, from $881 to $563 per megawatt per business day, between 2023 and 2026.

“Most integrated resource plans across Canada are still carrying battery cost assumptions from 2022–2023 vintage data, often borrowed from U.S. studies and adjusted with generic learning curves,” he says. “Ontario has now produced something better, a real, competitive, Canadian market price,” creating an opportunity for utilities and regulators in other provinces to “treat the LT2 result as the new reference point for storage costs in their IRPs.”

Canadian Renewable Energy Association (CanREA) President and CEO Vittoria Bellissimo said other provinces may well be taking note. “As home to Canada’s largest battery energy storage projects, other jurisdictions are watching and learning from Ontario,” she said in a release.

Environmental Defence’s Brooks said the implications of the Ontario procurement go beyond cost savings.

“This is also a win for energy security at a critical moment,” he said in a release. “Right now, roughly 70% of Ontario’s gas supply comes from the United States, creating vulnerability to price shocks and supply disruptions exactly when Canada is attempting to increase economic sovereignty. Batteries reduce the need for gas, gas peaker plants in particular, allowing for higher levels of renewables penetration.”

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