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Energy Efficiency Auction Pilot in Ontario

2021-05-Newsletter-Post-OntarioIn the Canadian province of Ontario, the utilities have run the “Save on Energy” rebate program for many years. In fact, it was just overhauled and on January 1, 2021 a province wide program was launched by the Independent Electric System Operator of Ontario (IESO).


What is most interesting about the fact that the IESO took over the program is that at the same time the IESO also launched a separate Energy Efficiency Auction Pilot as part of its longer term resource planning.

 

Ontario, like many other parts of North America, is facing a long-term challenge of not having sufficient electric generation in congested areas to meet the anticipated peak summer and winter demand. According to the IESO’s 2020 Annual Planning Outlook, the chart below shows that around late 2024 to early 2025 the IESO may not have enough summer generation to meet electric peak demand in either the slow growth (yellow line) or the faster growth (blue line) scenarios unless they find incremental resources like energy efficiency.

So the IESO came out with another program - the Energy Efficiency Auction Pilot with “aims to procure demand reduction from energy efficiency...during peak demand periods.” This Pilot is intended to complement the existing energy efficiency rebate program by procuring incremental permanent reductions from energy efficiency resources during specific peak hours in both the summer and the winter starting in the winter of 2022-23 and ending in the summer of 2023.   

 

How is the EE Pilot different from the Save On Energy rebate program and why are they doing both? The answers can really come down to three primary points:

  1. Funding source - The IESO EE Pilot designates energy efficiency as an equivalent resource to generation resources. So the money for the Pilot comes from the same budget that funds the building and maintenance of all the other power plants and the pricing is set through an auction process that took place in March. Rebate programs rely on ratepayer funds as the source of the rebates and are subject to political pressures driven by oversight of state legislatures and public utility commissions. 
  2. Short-term vs. long term planning - The IESO EE Pilot is intended to test whether the IESO could reliably use energy efficiency project data to adjust their long-term forecast. If the pilot is successful then energy efficiency could become part of their ongoing capacity auction process like it is in other parts of North America today. Rebate programs are designed for a particular purpose: generate equitable annual energy savings in a cost effective manner relative to the amount of money collected from the ratepayer. The effectiveness of the programs are measured annually and program adjustments are made to focus on certain types of technologies and specific targeted customer groups. 
  3. Participation rules - The IESO EE Pilot takes a much more holistic approach - qualified projects need to be documented to show the impact on peak demand and have to be purchased and installed at some point between May 1, 2021 and November 1, 2022. Most rebate programs have very regimented participation rules that can include detailed applications, qualified product limitations, supporting documentation, site inspections, etc. This structure was designed to ensure that ratepayer money was used appropriately and that the rebate program helped influence the customer to purchase more energy efficient equipment. 

If you are an Ontario customer and would like to participate in this exciting Pilot Program reach out to us at hello@encentivenergy.com. We can help determine if you qualify!

Steve Moritz
Steve Moritz
President & CEO, Encentiv Energy

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