Ontario’s energy efficiency budget has been recharged with a pledged 12-year, $10.9-billion spending strategy, including the resumption of incentives for residential electricity customers that were largely cancelled when the current provincial government took office. A new three-year program cycle, beginning this month, also significantly boosts the funds available for commercial, industrial and institutional consumers.
As envisioned, a maximum of $3.2 billion could be available in any one of the four program cycles from 2025 to 2036, with up to 85 per cent of that to be divided among province-wide programs for commercial, industrial, institutional and residential electricity consumers. Other funding envelopes are specifically geared to low-income electricity customers, on-reserve First Nations and various geographically targeted measures to be offered through select local distribution companies (LDCs). There is also an opening for the budget and scope of programming to be readjusted after a scheduled comprehensive review in 2030.
This is a significant jump in spending from the Ontario government’s initial allocation for its 2021-24 conservation and demand management (CDM) framework. At that time, $456 million over four years was earmarked for province-wide programs for the commercial, industrial and institutional sectors — an amount that was then topped up with an extra $342 million to add programs for 2023 and 2024. Just $65.6 million over four years was made available for additional programs for customers of specified LDCs.
Now, the government is preparing for a forecasted 75 per cent increase in provincial electricity demand by 2050, which will be needed to support anticipated population and economic growth and the shift away from fossil-fuel-based heating and transportation. Energy efficiency is viewed as a cost-effective means to take a bite out of the some required investment in new generation and transmission capacity. Stephen Lecce, Ontario’s Minister of Energy and Electrification, cited the recognized formula that $1 put towards energy efficiency yields a $2 avoidance in new generation costs as he laid out instructions for the Independent Electricity System Operator (IESO) last November.
“Electricity efficiency programs are an established part of Ontario’s energy mix and provide continued opportunities for electricity consumers to manage their electricity costs, to help cost-effectively meet system needs and provide economic opportunities for the network of companies involved in the delivery of energy efficiency programs and services,” he wrote in a directive that outlines the programs and associated administrative oversight the IESO will be expected to deliver for the 2025-2036 period. “Programs under the Framework will help support energy affordability and customer choice for homes, competitiveness, productivity and cost management for businesses, as well as the province’s transition to a cleaner energy economy.”
Previously dubbed the CDM framework, the newly unveiled programming cycle has been renamed the electricity demand side management (eDSM) framework and given a tighter three-year run-time before the IESO is routinely scheduled to refresh and reset it. Perhaps most notably, the 2025-2027 eDSM framework will reintroduce incentives for residential customers to replace energy-using appliances/equipment and/or upgrade energy performance in their households.
Thus far, other announced changes affecting non-residential customers include new incentives targeting: cooling loads in data centres; solar photovoltaic generation for distributed energy resources (DER); energy management support in industrial facilities; and smart thermostats for small businesses. As well, the budget for LDCs’ specialized incentives — which could flow to either or both residential and non-residential customers within a particular geographic area — has been set at a minimum of $90 million and potentially as much as $150 million over the three-year period.
“Basically, any programs that were offered in 2024 will continue to be offered in 2025 and beyond. We’ll amp them up to reach more customers and then also continue to enhance them,” says Tam Wagner, the IESO’s director of demand side management. “We’ll continue to explore what new technologies are available, where customer needs are and how they align with what the electricity system’s needs may be. What we’re looking at is not just maintaining the status quo, but continuing to evolve and approve programs.”
Additional commercial rebates and resumed attention to in-house energy managers
The retrofit program, which provides a set rebate amount for designated energy-saving equipment and systems, has now added two new categories of items for commercial/institutional electricity customers and three for industrial customers. All qualified business sector applicants are promised: up to $1,000 per kilowatt (kW) for the installation of a microgeneration solar photovoltaic (PV) system with a capacity of less than 10 kW; $860 per kW for installing small-to-midsize solar PV systems with a capacity of 10 kW to 1 megawatt (1,000 kW); and up to $10,000 per unit for designated high-efficiency air conditioners deployed in computer rooms. Industrial customers can additionally receive up to $250,000 to subsidize the cost of an energy management information system.
Eligibility for the solar PV incentive will be contingent on whether the system can be connected to the electricity grid to augment distributed energy resources (DER). Generation systems with a capacity greater than 1 MW would also qualify for the incentive, but it would be capped at a maximum of $850,000.
“The solar PV incentive was (previously) offered in the Ottawa area under the local initiatives program and we saw a lot of interest and uptake there,” Wagner reports. “We’re now offering that measure province-wide for businesses to be able to offset their energy use through the installation of solar.”
The new incentive for industrial energy management information systems draws on federal funding through Natural Resources Canada’s (NRCan) initiative to promote decarbonization in industrial and manufacturing facilities. The same pot of NRCan funds also underpins a promised expansion of the IESO’s energy management program that is to include a resumption of support for remuneration of in-house energy managers.
The latter highly popular element was phased out of the 2021-2024 CDM framework at the halfway mark, then replaced with group training, coaching and networking facilitation for various groups of participants aligned with different industry subsectors. Findings from the IESO’s commissioned program review, released last fall, reveal somewhat uneven engagement in the first year of the new approach. It points to “many passive participants” who, evaluators conclude, were either intimidated by other group members’ perceived greater expertise and/or guarded about sharing information with contemporaries from competitive companies and organizations. Evaluators also recommended reinstating funding for in-house energy managers, and the IESO committed to consider the recommendation in future program development.
“That is absolutely on our radar,” Wagner confirms. “We’ve been able to reintroduce the energy manager program to the industrial space, but we are considering it and stay tuned for more information about a similar (wider) reintroduction.”
Small businesses with fewer than 50 employees will now be encouraged to participate in demand response through the expansion of an incentive program initially introduced for residential electricity customers in 2023. It offers $75, via a prepaid virtual Mastercard, for first-time enrollment of Wi-Fi-enabled thermostats associated with central air conditioning, a rooftop unit or a heat pump that is part of a central air conditioning system. Enrollees can subsequently receive $20 for each additional year they continue in the program.
“We’re exploring commercial HVAC demand response also,” Wagner advises. “That’s work that’s underway around how best to be able to yield energy and peak demand savings associated with that.”
Multifamily incentives scattered across residential, business and income-qualified programs
More details about the new program for residential energy efficiency improvements are promised for later this month. For now, it has been revealed that it will be jointly administered with Enbridge Gas and rebate amounts have been outlined for 10 upgrade measures, including energy assessment, windows and doors, insulation, air sealing, hot water heaters, heat pumps, solar panels and battery energy storage. That list will be expanded to include energy-efficient appliances, including refrigerators and freezers, later this year.
“Generally, rebates could offset up to 30 per cent of the cost of new upgrades,” states background information from the Ontario government. “Rebates will be paid within 30 to 60 days of an approved application.”
Condominium corporations and multifamily rental landlords may also be eligible for some of these new incentives. In other cases, the commercial retrofit or custom track programs may be deemed a better fit.
“Multifamily res sometimes straddles the residential and business programs,” Wagner acknowledges. “We are not trying to force them into one program or the other. We want to understand what the needs are and how we can evolve our programs to be responsive.”
Condo corporations and landlords of sub-metered multifamily buildings may want to provide residents with information about options for electricity account holders who qualify for the energy affordability program. They may be eligible for free installation of a range of energy efficiency improvements, covering everything from LED lightbulbs and clothes drying racks to window air conditioners and refrigerators and freezers, if their annual income falls within designated thresholds prorated to the number of household members. Other electricity customers with higher, but still modest incomes may be eligible for a free energy saving kit, which contains items such as LED lightbulbs and night lights, weather stripping, block heater timers and water-efficient showerheads and faucet aerators.
