Commercial HVAC controls are expected to return a sizable reduction in Ontario’s peak electricity loads for a relatively small injection of funding. A newly released breakdown of the budget and savings targets for the 2025-2027 electricity demand side management (eDSM) framework confirms that $26 million has been earmarked to roll out a new incentive, beginning next year, which is expected to deliver 230 megawatts (MW) of annual peak demand savings by 2027.

That’s on par with the peak demand reduction projected from the equivalent program for residential and small business customers, known as Peak Perks. Together, the two demand response incentive programs will cost $36 million per year by 2027 and are tapped to deliver 51 per cent of a targeted province-wide 900-MW annual cut in peak demand.

The residential component of the program was launched in 2023 and recently hit a milestone of 200,000 enrollees who have agreed to provide DSM program coordinators access to their air conditioning controls via smart thermostats. Beginning this January, it has been expanded to small business account holders (defined as companies with no more than 50 employees).

“With the success of Peak Perks on the residential side, we’re now introducing small businesses into it,” Tam Wagner, director of demand side with Ontario’s Independent Electricity System Operator (IES)), said in an interview earlier this month. “We’re exploring commercial HVAC demand response also. That’s work that’s underway around how best to be able to yield energy and peak demand savings associated with that.”

The IESO’s summary of planned eDSM programs also includes $30 million for incentives for new commercial and residential construction, which is to be made available in 2027. Otherwise, allocations in the total funding envelope of $1.8 billion will be directed to the suite of programs announced earlier this month.

Commercial, institutional and industrial electricity customers are set to receive the bulk of the available funding and, in turn, register the major share of energy savings. The new rebate for residential electricity or natural gas customers who install designated household products and equipment accounts for 10 per cent ($180 million) of program spending and slightly more than 4 per cent (194 gigawatt-hours) of targeted savings.

Up to $425 million is allotted to the bucket of commercial/institutional retrofit programs, along with $30 million for small business programs. There is also $109 million for industrial energy efficiency and $44 million for energy management programs, which could flow to beneficiaries in the commercial, institutional, multifamily or industrial sectors.

The significant block of funding for local initiatives — $366 million — is more difficult to parse out on a sectoral basis. It’s to be channelled into specialized programs in designated geographic areas where the electricity system is deemed to be under constraint.

As well, there is $90 million in a separate bucket for programs that local distribution companies (LDCs) will administer. This is further divided into $60 million to be directed to “customer engagement in support of province-wide programs” with an additional $30 million to be freed up in 2027 for programs that LDCs could design for their customers.

Commercial-institutional retrofit incentives are expected to underpin about 31 per cent (1,441 gigawatt-hours) of projected energy savings over the three years of the eDSM framework. Local initiatives are expected to be an even bigger contributor, delivering 2,084 gigawatt-hours of savings, while industrial energy efficiency programs are expected to deliver 487 gigawatt-hours of savings.

“All business and residential programs in the 2025–2027 Program Plan are expected to achieve positive cost-benefit benchmarks,” the eDSM summary advises. “Program cost-effectiveness under the plan is assessed using forecasted program participation, program delivery costs and supply-side avoided costs, which estimate the cost of supplying that same amount of energy and capacity from the current and projected electricity generation mix.”

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