IESO's Long Lead Time Request For Proposals – Recent Developments And Next Steps

On March 26, 2026, the Independent Electricity System Operator (IESO) held their fourth and potentially last engagement session regarding their much anticipated long lead time request for proposals (the LLT RFP). The webinar follows the release by the IESO of their draft RFP document and draft LLT contract (the LLT Contract) for both the energy streams and the capacity streams (long duration storage) on February 27, 2026.

The LLT RFP is intended for large hydro (LLTe) and specified long duration storage technologies (LLTc) that require a lead-time of five or more years to reach commercial operation. The procurement is intended only for new build resources and will be administered as a single window with separate energy and capacity procurements. This update focuses on the capacity stream. Capitalized terms not defined in this article have the meaning given to them in the LLT RFP.

Recent updates

The March 26 webinar on the LLT RFP was presented as part of the IESO's regular stakeholder engagement sessions. Key takeaways from the IESO's LLT webinar include:

• The LLT Directive from the Minister of Energy and Mines is no longer expected by the end of March, which may delay the expected April launch. The IESO continues to advance preparatory work and will share a revised procurement timeline with stakeholders once timelines are confirmed.
• In response to stakeholder feedback, the IESO has extended the proposal submission deadline from October 1, 2026, to November 26, 2026.
• In response to stakeholder concerns related to the timing of the municipal election, the IESO has released final versions of the Prescribed Form: Evidence of Municipal Support that can be used for the purposes of obtaining support confirmations.
• The IESO intends to update the language in Article 2.3 of the LLT Contracts such that written consent related to a request to proceed with commercial operation between the fifth and seventh anniversary of the contract date (Early Long Lead COD) shall "not unreasonably be withheld" (rather than being at the IESO's "sole and absolute discretion").
• The IESO proposes to introduce incentives (Supply Chain Incentives) that allow proponents to receive a reduction in their Evaluated Proposal Price (up to 3%) based on committed Canadian content percentages, with associated liquidated damages for shortfalls.
• The IESO is targeting to post updated drafts of the LLT RFP and Contract, certain prescribed forms, and the pre-deliverability test intake forms to the website on April 1, 2026.

RFP overview

Those that have participated in previous IESO RFPs will find the format of the LLT RFP familiar. Key components of the LLT RFP are outlined below.

Eligibility

The LLT RFP is open to energy storage that does not use fossil fuels for the generation or delivery of electricity and includes the following long duration technologies:

1. compressed air energy storage (uses pressurized air to store potential energy);
2. pumped hydroelectric storage (the pumping and release of water between two reservoirs of different elevations), ((i) and (ii) referred to as Class I LDES);
3. liquid air energy storage; and
4. pumped thermal energy storage, ((iii) and (iv) referred to as Class II LDES).

Liquid air energy storage uses electricity to compress air until it becomes a liquid and saves the released thermal energy in a high-grade thermal storage mechanism. Pumped thermal storage is a system that converts electricity into heat, which is stored as thermal energy and is later converted back into electricity by means of reversible thermodynamic cycles.

Project eligibility is also effectively but indirectly limited by virtue of team member experience. For both Classes, designated team members must have experience developing, constructing, financing or operating a 'Qualifying Project'. A Qualifying Project is defined as a project greater than 10 MW that has achieved commercial operation in Canada or the United States in the past 15 years. For Class II LDES technologies, the RFP requires that designated team members have experience planning, developing, financing, constructing or operating a 'Same Technology Qualifying Project'. A Same Technology Qualifying Project is a project that uses the same technology as the proposed project and has a nameplate capacity of at least 1 MW and is expected to achieve commercial operation on or before December 31, 2029.

While the latter requirement for Class II LDES technologies is meaningful to prevent less mature technologies from applying, the limitation that Qualifying Projects be based on technology that has achieved commercial operation in the US or Canada in the past 15 years may limit the number of proponents bidding. LDES projects have achieved commercial operation in places with advanced electricity markets such as the UK and Europe and extending Qualifying Projects to such jurisdictions would increase the level of competition.

In addition to experience related to Qualifying Projects, a facility has to meet several additional eligibility criteria, including be equal to or greater than 10 MW, provide dispatchable capacity services and be capable of continuously delivering the submitted capacity (the Contract Capacity) for at least eight consecutive hours. The facility must also have a withdrawal capability (i.e. discharge power, MW) that is equal to or greater than the nameplate capacity. Projects that are ≥20 MW must meet the Regulation Service Readiness Requirements, as such term is defined in the RFP.

Although not specified in the RFP document as a criteria for submission, the LLTc Contract states that the project will not be permitted to achieve commercial operation prior to the fifth anniversary of the date the contract is awarded (the Contract Date). As currently drafted, commercial operation between the fifth anniversary and seventh anniversary of the Contract Date (i.e. Early Long COD), shall require the prior written consent of the IESO in its sole and absolute discretion. However in response to stakeholder feedback regarding project financeability, the IESO intends to update the language in section 2.3 of the LLT Contract such that written consent related to a request for an Early Long Lead COD shall "not unreasonably be withheld" (rather than being in the IESO's "sole and absolute discretion").

Local support

As with other IESO procurements, Indigenous and municipal support confirmations will be required at the time the project is bid depending on where the project is located. Projects may not be sited on what the RFP defines as "Specialty Crop Areas." If the project is sited on Prime Agricultural Areas, additional approvals from municipal and provincial government are required. The LLT RFP also places certain requirements on connection points but includes an ability for a project to have multiple connection points.

Supply chain disclosure plan

The requirement for a supply chain disclosure plan (SCDP) is one item that sets the LLT RFP apart from other IESO procurements and marks the first time since the Feed-In-Tariff that a form of domestic content consideration is being included. At the time of proposal submission, all proponents will be required to submit an SCDP that includes: (a) a breakdown of the proponent's Total Project Supply Chain Costs, based on whether the goods (including Construction Materials) and services (including Construction Labour) are expected to be sourced from Canadian Suppliers; and (b) a reporting of the percentage of the proponent's Total Project Supply Chain Costs that are expected to be sourced from Canadian Suppliers, and an explanation for why any particular goods or services not expected to be sourced from Canadian Suppliers have been sourced elsewhere. There is no minimum percentage requirement for the SCDP. If awarded an LLT Contract, the SCDPs of selected proponents will be confidentially shared with the Ministry of Energy and Mines.

For the purposes of the SCDP, goods will be considered to be supplied by a Canadian Supplier if they have been or will be manufactured within Canada. Goods manufactured in Canada from components sourced from outside of Canada will still be considered to be supplied by a Canadian Supplier. Services will be considered to be provided by a Canadian Supplier if the main office of the entity/natural person or the ultimate controlling entity/person has headquarters or a main office located in Canada, or all of the natural persons physically performing the particular services are performing the services in Canada and are ordinarily resident in Canada.

Canadian content

In addition to the SCDP requirements above, the IESO has proposed Supply Chain Incentives that reward proponents who commit to sourcing a minimum percentage of the total cost of their Construction Materials and Construction Labour from Canadian Materials and Canadian Construction Labour Suppliers. Proponents who make such a commitment will be eligible for a reduction in their Evaluated Proposal Price based on the following sliding scale:

• 100% committed Canadian content: 3% reduction
• ≥90% but less than 100%: 2.5% reduction
• ≥80% but less than 90%: 2% reduction
• ≥70% but less than 80%: 1.5% reduction
• ≥60% but less than 70%: 1% reduction
• Less than 60%: 0% reduction

Where this incentive is sought by the proponent, the proponent shall be required to: (i) specify its minimum sourcing percentage commitment in its proposal; and (ii) submit an attestation to the IESO at the time the project reaches commercial operation, confirming that the committed minimum sourcing percentage was achieved.

If a proponent cannot demonstrate that they met their committed percentage, liquidated damages may apply. For shortfalls of 5% or less, the rate is CA$1,000 multiplied by the Maximum Contract Capacity multiplied by the Canadian Content Shortfall percentage (times 100). For shortfalls greater than 5%, the rate increases to CA$2,500 multiplied by the Maximum Contract Capacity multiplied by the Canadian Content Shortfall percentage (times 100). Liquidated damages related to Canadian Content are capped at a maximum of CA$5 million.

Rated criteria points

If the proponent passes the mandatory requirements, it is eligible to be awarded points (Rated Criteria Points) based on certain parameters for a maximum of 9 points. Indigenous participation in the project can garner up to 6 Rated Criteria Points:

Indigenous Participation Level (IPL) is measured by the amount of economic interest held by Indigenous Communities (defined therein). Economic interest is meant to represent a risk of profit and loss in the proponent (e.g. non-voting preferred shares) but is not required to be associated with voting or control of the proponent. Indigenous Communities that hold more than a 10% economic interest in the proponent at the time the bid is submitted will make up the Initial IPL. Additional Rated Criteria Points (between 1 – 3) are awarded if the project site is also located in the territory of the Indigenous Community(ies) that form part of the Initial IPL and will increase with the corresponding amount of economic interest held by such communities in the project SPV.

In addition to Indigenous participation, a proponent will also be awarded Rated Criteria Points (up to 3) depending on the duration of capability to continuously deliver capacity to a connection point during the hours of 7 AM to 11 PM EST on business days. Points are awarded as follows: 3 pts for 12 hours; 1.5 pts for 10 hours and 0 points for 8 hours.

Proposal security

Proposal security equal to twenty thousand dollars (CA$20,000) per MW of the maximum contract capacity, subject to a minimum total amount of three-hundred thousand dollars (CA$300,000) and a maximum of fifteen million dollars (CA$15,000,000), is due at the time the proposal is submitted. The proposal security will only be returned if the proponent is not selected for a contract award.

Contract award

Proposals cannot be amended after they have been submitted. Once submitted, unless withdrawn prior to the bid submission deadline, proposals are irrevocable for a period of approximately 180 days from the bid submission deadline. If a proponent is awarded a contract, it will have 20 business days to accept such contract. Failure to accept the contract will result in the proponent forfeiting the proposal security in its entirety.

The IESO will award contracts to proponents with eligible projects based on the 'Evaluated Proposal Price', which is based on the submitted bid price ($/MW-Business Day) multiplied by a ratio representing the allocated rated criteria points over nine, which ratio will have a 15% impact on the Evaluated Proposal Price. However, the IESO will automatically reject all proposals in which the bid price exceeds the reserve price (the Reserve Price). The Reserve Price is a confidential price threshold determined by the IESO and documented with a fairness advisor prior to the proposal submission deadline whose purpose is to encourage competitive outcomes.

The contracts will have a term of 40 years and projects are expected to operate during the term mostly uninterrupted. A copy of the draft contract can be found on the IESO's website.

Next steps

The IESO still requires a directive from the Minister of Energy and Mines to officially launch the RFP process; however, the directive is no longer expected by the end of March, which may delay the expected April launch. The IESO is targeting to post updated drafts of the RFP and Contracts, certain prescribed forms, and the pre-deliverability test intake forms to the website on April 1, 2026. The IESO is also targeting to post the Deliverability Testing Methodology document to the website by mid-April 2026. Feedback on the IESO's latest webinar is due by April 15, 2026. Following a short comment and addenda period, a proponent's deadline for registration is set for August 13, 2026. In response to stakeholder feedback, the IESO has extended the proposal submission deadline to November 26, 2026. Although the target date for notification to selected proponents can shift, the RFP currently identifies March 30, 2027, as the contract award date.

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