Review of Ontario’s Municipal Energy Plan Grant Program

Context

The Government of Ontario is taking action to ensure the province’s energy systems are affordable, reliable, secure, and clean while supporting economic development opportunities, population and housing growth, and increased electrification.

In June 2025, the government released Energy for Generations, Ontario’s first integrated energy plan. The plan highlights the importance of coordinated energy planning across communities, sectors, and energy sources. The government recognizes municipalities as a partner in integrated energy planning, recognizing that:

• Local decisions on land use, housing, transportation, and economic development directly influence when and where energy infrastructure is needed, and
• Local insights into population growth, major developments, and infrastructure needs are essential for accurate energy demand forecasting and timely, right-sized grid investments.

Municipal energy plans support planning and regulatory decision-making and provide clear, decision-ready inputs (e.g., growth forecasts, demand drivers) that can be incorporated into energy planning processes.

What is the Municipal Energy Plan Program?

The Municipal Energy Plan program is a voluntary, application-based grant program that offers matched funding to municipalities to develop or enhance community energy plans (“municipal energy plans”). Municipal energy plans identify opportunities for community-wide energy efficiency and cost savings, and both inform, and are informed by, land-use, transportation, housing, and economic planning priorities. Community energy planning intends to mobilize actors beyond the municipality, such as utilities, businesses, residents and community organizations, to act and consider community-wide energy use and infrastructure needs. With a municipal energy plan in place, investment priorities are established for when funding is available.

All Ontario municipalities, including upper-tier municipalities, are currently eligible to apply to the municipal energy plan program.

The program has two funding streams:

• Stream 1: Provides funding to municipalities to develop a new Municipal Energy Plan. The province currently offers up to $90,000 per project or 50% of eligible costs incurred for each milestone, whichever is less, for the development of plans. Municipalities have up to two years to complete their plans with an additional year offered for upper tier municipalities. Milestones are pre-determined.
• Stream 2: Provides funding to municipalities to update a pre-existing complete or partial community energy plan or other energy plan. The province offers up to $25,000 or 50% of costs, whichever is less, to update or augment existing plans. Stream 2 applicants must demonstrate how their proposed project is directly related to, and how it augments or enhances their existing plan. Milestones have flexibility, unlike in Stream 1.

Since the program’s inception, 49 applications representing 73 municipalities across Ontario have been approved for funding, corresponding to over $2 million in provincial contributions. Participation has been strongest among larger municipalities, while smaller, rural, and northern communities have participated less frequently. Of the municipalities that have completed a plan under the program, few have sought support for updating or augmenting existing plans through Stream 2. Additionally, public visibility into plan implementation can be limited. These observations point to opportunities to improve the access to and impact of the program.

Opportunities for the Municipal Energy Plan Program

Strengthening integrated energy planning and advancing energy infrastructure development

The government has directed the Ontario Energy Board (OEB) – the province’s energy regulator – and the Independent Electricity System Operator (IESO) – the province’s electricity system operator who is also responsible for regional electricity planning – to take steps to support integrated energy planning. This includes increasing municipal participation in planning processes, and greater coordination across different energy systems and planning processes.

More coordinated energy planning increases informed and cost-effective investment decisions. 

The program review offers an opportunity to strengthen integrated energy planning through municipal energy plans developed under the program, such as by: 

• Connecting community needs to energy planning through engagement and by aligning, for mutual benefit, municipal energy plans with land use, transportation, and housing decisions.
• Empowering municipalities to take part in regional and utility energy planning, and by making available to energy planners better local data such as growth forecasts and identification of high-growth areas, across different energy types (electricity, natural gas and other energy sources).
• Improving coordination and information sharing by making it easier for municipalities, utilities, and regulators to work together using common data, definitions, and tools.

Improving energy resilience and system reliability            

Extreme weather events and energy system outages can affect critical community services. The ability to leverage local energy resources, such as distributed energy resources and district energy systems, can complement the provincial energy system in supporting energy reliability and resilience. 

• The program review will consider how municipal energy plans may help communities understand the impact of climate change and strengthen community energy resilience and economic development.
• This may include identifying critical infrastructure priorities and resilience needs that can inform energy planning and investment decisions.

Advancing economic growth

Municipal land-use planning decisions often inform the timing, location, and pace of residential, commercial, and industrial growth and, consequently, the timing and need for energy infrastructure. The review will consider opportunities to strengthen how the program supports municipalities in planning for economic growth, including:

• Identifying future energy needs tied to housing, transportation, and industrial growth,
• Facilitating electrification, and
• Promoting local energy generation via zoning and/or bylaws, and energy management programs and solutions that can help businesses save money.

Greater municipal leadership and accountability                                    

While some municipalities have resources and capacity to consider local energy infrastructure needs, others, particularly smaller municipalities, may face challenges related to limited staff, time and funding. 

• The review will consider how the program can better support municipal leadership and proactive planning – such as in land use planning that anticipates future uptake of electrification and energy infrastructure.
• The review also offers an opportunity to further define roles, expectations, and accountability for the development and implementation of plans supported under the program.

Increasing the value and impact of the program                                 

Building on the plans completed to date under the program, the review will explore opportunities to enhance the implementation of municipal energy plans, to maximize the overall value and impact of the program. This includes:

• Growing the number of municipalities participating, particularly small communities - to enable the identification of local energy needs and priorities.
• Identifying how to better equip municipalities as they engage in energy planning processes, recognizing differences in capacity.

Discussion questions

The questions below are intended for public feedback. If you are a municipality, we will be reaching out to you separately to seek your responses to a tailored survey. However, if you wish your responses to be part of the public record, you can also respond to this posting.

• How can the program continue to support the development of municipal energy plans that reflect the strengths, circumstances and needs of different communities?

Program Objectives

The government is reviewing the Municipal Energy Plan program to better support communities in advancing energy infrastructure, strengthening integrated energy planning, improving energy system resilience and reliability, and supporting economic growth. 

• What are your views and key considerations with reorienting the program towards these objectives?

Program Input and Outputs

To be effective, municipal energy plans must be evidence based and usable by municipalities, distributors, and energy system planners.

• What plan outputs would be most valuable for supporting effective energy planning and decision-making?
• How can the program support municipalities in getting the right plan inputs?
• Should the program encourage a long-term view of energy and consider all fuels, e.g. uptake of electric vehicles, electrification of space heating, and district energy?

Program Design Elements

Program design elements include, but are not limited to, funding levels, intake and evaluation processes, participation (open or targeted), standardization or tailoring of plan requirements based on municipal features, guidance or knowledge sharing, and reporting. 

• How can the program better support municipalities in developing evidence-based, feasible plans?  
• How can the program support effective engagement and coordination between municipal planners, energy system planners, communities, and businesses?
• What program design changes would most increase the program’s overall value and impact?

Implementation and Success Metrics

• How can the program ensure that plans translate into coordinated actions and investments? How should the success of plans be measured?

Environmental Impact Statement

The review of the program will not result in any direct environmental impacts. Any potential indirect environmental impacts would arise through the implementation of municipal energy plans supported by the program. These impacts, where applicable, would be assessed separately through appropriate municipal or project-level processes and are not part of the program review.

When implemented, these plans may contribute to outcomes such as reduced energy use, increased resilience to climate impacts and extreme weather events, increased adoption of low-carbon energy sources, and associated reductions in greenhouse gas emissions. The program review will consider environmental impacts as part of any future changes to the program.

Next Steps

Feedback received through this consultation will inform the program review and any future program changes. A decision notice will be posted once the review is complete, with a summary of what we heard and next steps.