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Energy Storage in Canada: Recent Developments in a Fast-Growing Industry

The energy storage market in Canada is poised for exponential growth. Increasing electricity demand to charge electric vehicles, industrial electrification, and the production of hydrogen are just some of the factors that will drive this growth. With the country’s target to reach zero-net emissions by 2050, energy storage is a strategic component in the energy transition and a new economic frontier. Accordingly, opportunities for energy storage development and financing are rising, similar to the heightened interest in the solar technologies a decade ago. Such opportunities are motivated by positive regulatory changes and incentive programs.

Overview of the technology

Energy storage technologies harness and store previously generated energy and then release it as electricity. When certain renewable energy sources, such as solar and wind, cannot meet energy demands because of their intermittent nature, energy storage technologies offer a valuable solution. On a windless or cloudy day, at night or during peaks of electricity demand, stored energy can be delivered to help sustain power supply. Energy storage can also improve the reliability, safety, and security of the electricity grid through enhanced control of fluctuating voltage and frequency.

The most used types of energy storage are pumped hydropower, thermal storage, flywheels, and batteries. While certain technologies, such as pumped hydropower, are mature technologies with a proven track record of implementation and operation, other technologies, such as large-scale battery storage, are more novel. Pumped hydro currently dominates the global energy storage market, accounting for more than 90% of market capacity. However, in recent years, the use of batteries has increased as a result of cheaper production costs and promising greater capacity. Bloomberg New Energy Finance predicts that non-hydro energy storage installations worldwide will reach a cumulative 411GW/1,194GWh by the end of 2030. That is 15 times the 27GW/56GWh of storage at the end of 2021.

Recent milestones in Canada

In addition to 2022’s 30% Clean Technology Investment Tax Credit, the 2023 Federal budget introduced a new 30% Clean Technology Manufacturing Investment Tax Credit and a 15% Clean Electricity Investment Tax Credit. The 30% investment tax credit for clean technology manufacturing is available in respect of certain depreciable property that is used all or substantially all for the manufacturing and processing of clean technologies such as the manufacture of grid-scale energy storage equipment. The 15% Clean Electricity Investment Tax Credit could be claimed for investments in non-emitting electricity generation systems and investments in stationary electricity storage systems that do not use fossil fuels in operation, including batteries, pumped hydroelectric storage, and compressed air storage.

Together with these tax initiatives, the 2023 budget also includes $20 billion toward the Canada Infrastructure Bank to support the building of major clean-electricity and clean-growth infrastructure projects. It also proposes to provide 3 billion over 13 years to recapitalize funding for the Smart Renewables and Electrification Pathways Program (SREP). The SREP aims to reduce greenhouse gas emissions and help Canada’s transition to an electrified economy by funding renewable energy and electrical grid modernization projects.


This spring, the 250MW Oneida Energy Storage Project, the largest battery storage project in the country, moved toward commercial operation as the project partners achieved financial close. The Independent Electricity System Operator (IESO) and the Oneida Energy Storage Project finalized a 20-year energy storage facility agreement to store and reinject clean energy into the IESO-controlled grid.

This spring was also ushered in by an announcement by the IESO on a complement to the Oneida Energy Storage Project. The IESO is offering contracts to seven battery storage facilities located throughout the province to provide 739MW of capacity. This is part of an ongoing effort to procure a cumulative 2500MW of energy storage to support the decarbonization and electrification of Ontario’s grid.

In March 2023, the Volkswagen Group and its battery company PowerCo announced that they will establish their first overseas gigafactory for EV battery manufacturing in St. Thomas, with the start of production planned for 2027. The federal government recently added up to $13 billion in ongoing production subsidies to its initial $700 million capital investment. Volkswagen’s battery manufacturing factory will be the second EV battery factory in Ontario. Last year, automaker Stellantis and South Korean battery-maker LG Energy solution started building a factory in Windsor.

More recently, Evlo Energy Storage Inc. announced, on October 5, 2023, that it will provide the Ontario grid with 15MW energy storage capacity through an equipment supply agreement with solar project developer SolarBank Corporation.


Québec economy minister flagged battery‐making for electric vehicles as a top economic priority. The cities of Bécancour, Shawinigan, and Trois-Rivières form the Energy Transition Valley and are projected to become an important hub for battery materials and battery manufacture in North America. A lithium conversion facility is in active development by Nemaska Lithium in Bécancour and will serve to supply Ford with 13,000 tons of lithium hydroxide annually for 11 years, from 2026 onwards. On August 17, 2023, Ford Motor Company, SK On, and South Korea’s EcoProBM announced that they also chose Bécancour to build a cathode manufacturing facility. The Government of Canada is providing a conditional contribution of $322 million through the Strategic Innovation Fund, and the Government of Québec is providing a partially forgivable loan of $322 million through Investissement Québec.

The two governments are also awarding more than $200 million to Ultium CAM, a limited partnership between General Motors (GM) and POSCO Future M, for its own cathode materials plant in Bécancour. This production will be used to manufacture batteries for GM’s Ultium battery program, which aims to produce one million electric vehicles a year by 2025.

Last year, it was announced that Réseau Allégé Québec Inc., a subsidiary of Compact Power, Inc. d/b/a Lightergy™, secured land in the city of Shawinigan pursuant to a purchase offer dated May 16, 2022. Réseau Allégé Québec Inc. aims to build a research center and a facility for the manufacture of advanced energy storage battery cells and systems.

On September 28, 2023, Swedish manufacturer Northvolt has announced that it will build a lithium-ion battery gigafactory near Montreal. The factory, named Northvolt Six, will have an annual battery cell manufacturing capacity of up to 60GWh, which is enough to power approximately one million electric vehicles per year. The federal government has committed up to $4.6 billion in production incentives to secure the deal, of which one third is to be paid by the Québec government.

The Northvolt announcement follows another announcement by Volta Energy Solutions on September 5, 2023. Volta Energy Solutions, which is positioned to become the world’s largest producer of copper foil for the EV battery industry, is establishing a copper foil plant in the city of Granby.


On November 3, 2022, the Alberta Utilities Commission approved TransAlta’s application to construct and operate a storage system, designated as the WaterCharger Battery Storage Facility. The project will charge lithium-ion batteries from the hydroelectric facility at the Ghost reservoir, located 15 kilometers west of the town of Cochrane. It will provide the grid with up to 180MW of electricity, making it one of the largest storage facilities of its kind in the province.

WaterCharger follows another project by TransAlta, called WindCharger. WindCharger is Alberta’s first grid-scale battery project that began commercial operation in October 2020, and consists of a 10MW battery storage system connected to a wind farm. Additionally, with the connection of four of Enfinite’s eReserve projects over the course of 2023, Alberta boasts six operational battery storage facilities capable of providing up to 210MWh of energy storage capacity to the grid.

While there are nearly 50 energy storage projects currently listed within the Alberta Electric System Operator (AESO)’s projects list, the development of a 600MW portfolio of five solar-plus-storage projects by Westbridge Renewable Energy Corp. is underway. The interest in solar-plus-storage projects is also manifested in the federal investment of over $160 million in Alberta-based solar power projects that will deploy 163MW of new solar generation and 48MW of battery storage capacity.

However, the Alberta government recently decided to pause the approvals of new renewable power generation projects until February 2024. Albeit temporary, this decision may slow the development of hybrid energy storage projects that form part of newly proposed renewable generation projects. While the pause period is in effect, the Alberta Utilities Commission will continue to process applications, but will not issue approvals until the pause period expires.


A 2022 report titled Energy Storage: A Key Pathway to Net Zero in Canada, commissioned by Energy Storage Canada, identified the need for a minimum of 8 to 12GW of installed storage capacity for Canada to reach its 2035 goal of a net-zero emitting electricity grid. While the recent milestones are promising, nationally installed capacity severely remains below projected needs. While regulatory frameworks can be expected to become more and more supportive of new storage initiatives, including both projects and research, efforts to establish more storage infrastructure that brings together both public and private actors will come to fruition. Federal and provincial governments appear to be willing to play their part in the energy transition and in the development of energy storage facilities nationwide. We previously wrote about this booming storage industry, and we continue to monitor its development and accompany its players in present and future projects. If you have any questions regarding topics raised in this article, please do not hesitate to contact us.

Energy renewables



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