Addressing Energy Efficiency and Constraints on the Grid: Discussing IESO Retrofit Incentives with Tam Wagner

September 15, 2023

The Independent Electricity System Operator (IESO) recently announced new energy-saving retrofit incentives. The business conservation program now offers an additional $200 million in funding to support up to 50 per cent of the cost of custom energy-efficiency projects.

Their custom stream allows businesses to install energy-saving equipment that best meets their specific needs and receive an incentive based on overall energy savings rather than choosing from a prescriptive list of equipment with pre-set incentives.

The IESO has also launched two other important enhancements to their Retrofit Program that are designed to support grid reliability as Ontario’s economy continues to drive increasing demand for electricity.

Tam Wagner, Director of Demand Side Management with IESO explained that last year the IESO identified areas where they could address efficiency and constraints on the grid, “we saw some emerging system needs in 2025, on the Ontario electricity grid, and with that the opportunity for energy efficiency programs to help address those needs,” she said. “So, we looked at where some of the gaps in our current programs are and also areas where consumers weren’t already participating in energy efficiency programs. That’s where these new enhancements came about.”

Retrofit for Greenhouses offers incentives for commonly used lighting, controls and other equipment used by this rapidly growing sector.

The Local Initiatives Program offers a double incentive for retrofit projects, with the exception of lighting, in parts of Niagara, Kingston, Southern Huron-Perth, Pembroke and Kenora.

Wagner explained that these areas of the province are where the transmission grid is constrained. These adders are available between April 3 and Oct 3, 2023, with additional local initiatives to be announced in the second half of 2023.

With the Local Initiatives Program, Wagner explained, “there are certain areas where we’re seeing the demand grow and the system is getting strained. We’re doubling the incentive for the various retrofit measure in those areas to help address those local needs.”

Applying for retrofit incentives at Saveonenergy.ca

After you indicate what kind of consumer you are, it will point you to what the various offerings that are available to you, they have programs targeted towards business consumers as well as residential consumers.

The website details the requirements and provides contact information for service providers, who are implementing the programs on behalf of the IESO.

From there, Wagner explained, they will “help you through that application process to understand, as a business owner, what you’re needs are and the complexity of your energy efficiency requirements, and point you to some of our similar programs – if you’re a small business or you’re looking at a more holistic approach, our custom stream is one of the ones we recently announced in responding to what the marketplace was seeking.”

The retrofit program provides a list of approved technologies or measures, the custom stream allows applicants to submit their own projects.

“What we were hearing is that sometimes with some of the industries and businesses is being able to take a step back and be able to provide a host of solutions. The custom stream allows for that customization for the business owner around their processes, what their energy needs are and seeing based on demand savings, what that overall solution may look like and being incentivized to implement the projects in that respect.”

The prescriptive and custom streams are delivered through the same service providers.

The service provider will work with applicants to indicate whether or not their project will be better suited for the prescriptive stream versus the custom stream.

“It is first come first serve, if you’ve got a project, reach out to our service providers and submit that application and we’ll go through the process with you to review what your proposal is.”

“What that looks at is… what’s your current baseline energy consumption today, if you implemented this project, what could you save? And work through that with the consumers.”

The Targeted Greenhouse Program is more aligned with the prescriptive stream of the retrofit program in how it’s delivered.

“What we’ve seen is a significant uptake through the greenhouse sector in our retrofit program, we’re seeing quite a bit, over the past 18-months, increased economic development when it comes to greenhouses.”

Which is why they wanted to offer a specific program for greenhouses.

Southwestern Ontario is one of the areas where they are seeing constraints on the system and given the interest and opportunity of the greenhouse sector, they saw an opportunity to improve efficiency.

“With that program we have measures that are specific to greenhouses, when it comes to lighting and irrigation and the processes that they have that we think is quite responsive as to what their needs are.”

With the programs the IESO has energy savings and peak demand targets they would like to reach. For all four programs, the Local Initiatives Program, custom, targeted greenhouse, and the Peak Perks residential program – “all of those programs we’re looking at being able to save 285 megawatts of peak demand reduction by 2025,” Wagner noted.

“The IESO, as system planner and a system operator, we’re focused on ensuring there’s reliability so there’s electricity for consumers in Ontario when and where they need it. With our Save on Energy Programs in general, the retrofit program being one of them, it helps to ensure that reliability in the future. It supports the electricity grid in Ontario. The other part is, it really helps from a business or consumer perspective, it helps you manage your electricity usage and with that being able to manage your electricity costs, as well. As there’s a greater focus on decarbonization, it allows the consumer to do their part to meet those decarbonization goals.”

There is a competitiveness piece for businesses, as well. When you are spending less on electricity you have less overhead and can invest those savings into growing your business.

It increases comfort in facilities or in your home.

They are looking to launch additional programs in the fall. These current programs were launched in the spring. The peak perks launched last month, and in the fall they are launching a mid-stream lighting round. The latter provides the incentive at the point of sale.

“Currently in our retrofit program we have lighting measures that are eligible – what we’re trying to do (with the mid-stream lighting round) is make that less administratively burdensome for consumers and provide that incentive upfront.”

Building Retrofits

The IESO has launched the Existing Buildings Commissioning Program. When it comes to energy efficiency in existing buildings, “It enables owners of commercial buildings to really improve their overall energy management of those buildings.”

Buildings in Canada make up a significant portion of overall emissions, Wagner noted, “We definitely see a gap there.”

Closing Comments

The current incentive programs we discussed are available until the end of 2024, which is the directive they have from the government.

“We recognize the value that energy efficiency provides,” said Wagner, “both from a grid perspective and to consumers, and especially as we look to decarbonization with IESO Pathways to Decarbonization report released last year.”

The funding certainty goes until 2024, however Wagner said, “the IESO looking to get support to be able to continue these programs going forward, after that,” Wagner said, they are hopeful the government will continue to invest in energy efficiency programs.

“Our advice,” she said, “is to continue to invest in these programs and do so on an enduring basis, as well.”

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