Ontario has announced plans to nearly triple its annual investment in energy efficiency and reduce peak electricity demand by 3,000 megawatts, just 6½ years after Premier Doug Ford vowed to put an end to ratepayer-funded efficiency programs for electricity.
The 12-year initiative will provide C$10.8 billion in funding for demand-side management (DSM) programs, or $900 million per year, and reduce electricity system costs by an estimated $23.1 billion over 24 years, for a net saving of $12.2 billion to ratepayers, the province said in a news backgrounder.
A leading analyst said the announcement shows the Ontario government recognizing that energy efficiency is better for the province than new power plants.
“They are doing this because it is a lower cost option than power plants and transmission lines and it saves the entire electricity system money,” said Brendan Haley, senior director of policy strategy at Efficiency Canada. “It’s better than supply-side options because you pay people instead of power plants.”
The announcement covers two new programs and 12 continuing or expanded ones, including two that are specifically earmarked for Indigenous communities. Rebates under the new Home Renovation Savings Program will cover up to 30% of project costs and are meant to be paid within 30 to 60 days of an approved application. They include:
• $600 for home energy assessments;
• $100 per new window and door;
• Up to $8,900 for insulation;
• Up to $250 for air sealing;
• $75 for smart thermostats;
• $500 for heat pump water heater;
• Up to $7,500 for cold climate air source heat pumps;
• Up to $12,000 for ground source heat pumps;
• Up to $5,000 for rooftop solar panels;
• Up to $5,000 for home battery storage systems.
The program will expand later this year to include energy-efficient appliances, including refrigerators and freezers.
“As the demand for electricity continues to rise, we’re giving families and small businesses more ways to save money and energy as we launch the largest energy efficiency program in Canadian history,” Energy and Electrification Minister Stephen Lecce said in a release.
Haley said the $10.9-billion price tag for the program is “an impressive figure… on a par with where other leaders in Canada already are, or are going.” Efficiency Canada had recommended the province set a $900 million budget to align its annual spending with other provincial leaders in electricity DSM. “On a per capita basis, what Ontario is planning is what Nova Scotia is spending right now, and has been for a while, and it’s the increase Quebec has announced.”
So while the total falls short of leading U.S. states, he added, it’s similar to “other major, hefty energy efficiency programs” across Canada.
Ollie Sheldrick-Moyle, clean economy program manager at Clean Energy Canada, said that the “suite of game-changing energy efficiency programs” will “improve the way Ontarians upgrade their homes, making them more comfortable and, ultimately, less expensive to live in,” offering “something for almost every Ontarian looking to save money and energy.” In a release this week, he praised the province for allowing major upgrades like cold-climate heat pumps without requiring homeowners to undertake energy assessments—an approach that other analysts say could make it difficult or impossible to measure energy or emission savings for home retrofits.
Sheldrick-Moyle urged the province to allow point-of-sale rebates for some purchases, rather than requiring cash-strapped households to wait 30 to 60 days for reimbursement, and set the eligibility rules for the program to include young families with higher incomes facing “extraordinary cost of living pressures.”
Haley said the 12-year duration of the program is as important as the dollar figure. Combined with gas DSM programs run by private utility Enbridge and the federal government’s $800-million program| for energy retrofits for lower-income households, it offers stability and certainty for home retrofit businesses that fell into chaos last year when Ottawa cancelled its popular Canada Greener Homes grant program.
“The idea was that the DSM budgets are a good place to look for that stability,” Haley said. Companies’ sense of security “was broken when Doug Ford was first elected, and then it was broken by the boom/bust cycle at the federal level. But a budget over 12 years is the type of stability that really allows the market and tradespeople to understand what’s on the horizon.”
Online trade magazine Electrical Business says Ontario electricians and contractors can look for a “windfall” in the expanded DSM programs. “Today’s announcement will also provide job opportunities […], delivering a boost to small contractors, electricians, and HVAC installers offering energy efficiency renovations and improvements to homeowners,” said Ryan Mallough, vice-president for Ontario legislative affairs at the Canadian Federation of Independent Business.
The province also directed the Independent Electricity System Operator (IESO) to introduce a beneficial electrification initiative [pdf] supporting “energy efficiency measures aimed at using electricity to reduce overall emissions in Ontario.” Haley said the province is mandating the IESO to deploy efficiency measures to save electricity, while requiring Enbridge to use electrification measures to bring down household gas consumption.
“it was kind of an open question whether the natural gas program should support electrification or the electricity program should promote efficiency,” he said. “There’s good reason to have each of the DSM program supporting electrification for different reasons.”
Haley added the scene has changed since 2018, when Ford’s then newly-elected government set out to dismantle the province’s electricity efficiency investments. “Back in 2018, there was this idea that Ontario and the other provinces had more electricity than they knew what to do with. And now provinces across the country are realizing they really need electricity savings,” he said.
After groups like Efficiency Canada responded to the 2018 cutback threat with a sign-on campaign to defend the provincial programs, the government still “ramped down the budgets and got rid of the residential programming,” he recalled. “But because of some of the work the broader energy efficiency community did, electricity efficiency survived in Ontario. And because it survived, it’s ready now to grow and to ramp back up.”
Pollution Probe Energy Director Richard Carlson added on LinkedIn that this week’s announcement “allows for local initiatives by local distribution companies, which will bring back some local programs that were previously supported. It is supposed to be targeted at locations where efficiency could provide the greatest system benefit. Such strategic energy efficiency programs could help reduce costs for areas that are seeing high growth.”
