Conservation and Demand Management (CDM) program enhancements

The province is enhancing CDM programs to lower bills for consumers and help meet electricity system needs. The government has accepted the recommendation of the IESO and is increasing the budget for CDM programs to just over one billion dollars over the term of the four-year framework. CDM programs are among the fastest and most cost-effective ways of meeting supply needs and can help ensure Ontario has a reliable, affordable, and clean electricity supply.

The enhancements represent an ongoing government objective to keep Ontario’s electricity grid clean, affordable and reliable.

About Ontario’s CDM Framework

The Ontario government launched the 2021-2024 CDM Framework on January 1, 2021. The framework focuses on cost-effectively meeting the needs of Ontario’s electricity system, including by focusing on the achievement of provincial peak demand reductions, as well as targeted approaches to address regional and/or local electricity system needs.

CDM programs are delivered by the IESO through the Save on Energy brand under the framework. CDM programs address electricity system needs and help consumers reduce their electricity consumption to lower their bills. CDM programs and incentives are available for income-eligible residents, small businesses, large businesses and contractors, and First Nations communities.

Responding to increasing electricity system needs

The government recognizes that electricity CDM programs help customers manage their energy costs, lower overall electricity system demand and are an important contributor to the economy in Ontario.

On April 4, 2022, the Minister of Energy issued a letter to the IESO to request that the IESO examine and report back with options and analysis for cost-effective new or expanded CDM programming through the current 2021-2024 CDM Framework, which would contribute to meeting electricity system needs by reducing demand at peak times both Ontario-wide and in Southwest Ontario.

IESO proposed four new or expanded CDM programs. In order to continue to be responsive to Ontario’s electricity system needs, on the IESO’s advice, the Minister of Energy has issued a Minister’s Directive (approved by Order in Council No. 1314/2022 dated September 29, 2022) to the IESO to amend the existing Minister’s Directive on the 2021-2024 CDM Framework. This Directive authorizes the design, funding, and delivery of four cost-effective new and expanded CDM programs.

About the four new or expanded CDM programs

• A new Residential Demand Response Program for homes with existing central air conditioning and smart thermostats to help deliver peak demand reductions. Households who meet the eligibility criteria could voluntarily enroll in this program to be paid an incentive in return for the IESO being able to reduce their cooling load on a select number of summer afternoons to reduce peak demand. There are an estimated 600,000 smart thermostats installed in Ontario.
• Targeted support for greenhouses in Southwest Ontario, including incentives to install LED lighting, non-lighting measures or behind-the-meter distributed energy resources (DER), such as combined solar generation and battery storage.
• Enhancements to the Save On Energy Retrofit Program for business, municipalities, institutional and industrial consumers to include custom energy-efficiency projects. Examples of potential projects could include chiller and other HVAC upgrades for a local arena, building automation and air handling systems for a hospital, or building envelope upgrades for a local business.
• Enhancements to the Local Initiatives Program to reduce barriers to participation and to add flexibility for incentives for DER solutions.

IESO estimates that enhanced CDM programs, once fully implemented:

• Will cost up to $342 Million over the course of the 2021-2024 CDM Framework.
• Will deliver a total provincial peak demand reduction of 285 megawatts (MW) and annual energy savings of 1.1 terawatt hours (TWh) by 2025.
• Will deliver regional peak demand savings in Southwest Ontario of 225 MW to alleviate constraints and foster allow for additional economic development. For comparison purposes, the LG Stellantis investment proposed for the Windsor area is 150 MW.
• Can be implemented within 6 to 9 months of issuance of Minister’s Directive.

Stakeholder Engagement that informed CDM Program enhancements

In support of this proposal, the IESO conducted reviews of current and past CDM programs and relied on the cost-effective CDM programming options that could be targeted to help meet emerging system needs identified in the 2019 Achievable Potential Study (APS).

The IESO also conducted public stakeholder engagements and targeted engagements with program vendors and delivery partners as part of the MTR. The IESO will work to design and implement these CDM enhancements as soon as possible and as intended.