The recently released report by Power Advisory, titled "From Small To Mighty: Unlocking DERs to Meet Ontario’s Electricity Needs," provides a vision for integrating Distributed Energy Resources (DERs) to help meet Ontario’s growing electricity needs. Commissioned by the Ontario Energy Association (OEA) and Energy Storage Canada (ESC), and developed in collaboration with their members, this report outlines a strategic approach to harness the full potential of DERs to provide value to Ontario’s electricity customers, distribution system and bulk system.
Ontario's Energy Landscape and the Need for Change
Ontario's electricity demand is projected to grow significantly, from 151 terawatt-hours (TWh) in 2025 to 263 TWh by 2050. This 75% increase over 25 years is driven by industrial growth, electrification, population growth, and the transition to a low-carbon economy. Current supply procurement processes led by the Independent Electricity System Operator (IESO) focuses on large-scale, transmission-connected, market participant generation, and provides little opportunities to leverage the benefits of DERs.
However, the Ontario government’s electricity (and energy) policy is beginning to evolve, recognizing the value of DERs and that changes are needed to facilitate a greater role for DERs to play in meeting supply needs and empowering customers. Ontario’s Ministry of Energy and Electrification’s policy document, Ontario’s Affordable Energy Future: The Pressing Case for More Power, which sets out the government’s vision for the energy sector, notes “Giving customers more ways to participate in the grid, with a focus on creating new ways for families and businesses to save money while reducing province-wide energy demand, benefits us all. As the grid evolves with the increasing adoption ofDER, the policy framework too must evolve to support customer choice and reduce barriers to all types ofDERinvestments that can support local energy needs and improve the efficient utilization of these resources within the energy system.”
A Vision for DER Integration
DERs, which include renewable generation, energy storage, electric vehicles (EVs), and advanced load management technologies, are smaller-scale devices connected to the distribution grid. These resources can operate either behind-the-meter (BTM) within a customer's premises or front-of-the-meter (FTM) directly connected to the distribution system. DERs offer numerous benefits, including enhanced grid reliability, reduced greenhouse gas emissions, and cost savings for consumers.
The report envisions a future where DERs are widely adopted and deployed, maximizing value for Ontario's electricity customers through affordability, bill savings, and enhanced resilience. Key elements of this vision include:
The "Walk-Jog-Run" Approach
To achieve this vision, the report proposes a phased "walk-jog-run" approach:
LDC-Led DER Procurements: A Strategic Shift
The report strongly advocates for LDC-led DER procurements, emphasizing that LDCs are well-positioned to take on a greater role due to their existing responsibilities and direct relationships with customers. LDCs are ideally suited to lead DER procurements because of their existing responsibilities in settlement, connection, and administration, as well as their direct relationships with customers. They have deep insights into grid capacity, enabling targeted and efficient DER deployment.
Further, LDCs are investing in grid modernization, enhancing their ability to integrate and manage DERs. Their experience with Conservation and Demand Management (CDM) programs and ability to design localized programs further support their role. Additionally, LDC-led initiatives can be more accessible to smaller-scale DER projects, avoiding the complexities of larger-scale procurements. This strategic positioning allows LDCs to effectively drive DER adoption, improve grid reliability, and support Ontario's energy and economic development goals.
Actions for Immediate Implementation
To accelerate DER adoption, the report recommends that the Ontario government issue policy direction to the OEB and IESO to enable LDC-led DER procurements and invest in grid modernization. Key actions include:
Conclusion: A Pathway to a Sustainable Energy Future
The report underscores the critical role of DERs in meeting Ontario's growing electricity needs. By adopting a strategic, phased approach and empowering LDCs to lead DER procurements, Ontario can unlock the full potential of these resources, creating a resilient, flexible, and customer-centric energy system. This vision aligns with Ontario's long-term energy objectives, supporting economic growth, sustainability, and innovation.
Indeed, Ontario’s government has taken further action to enable DERs through a recent directive to the IESO to “explore a new program to secure existing and new distribution-connected generation facilities to help meet regional and system-wide supply needs. Additionally, the IESO should explore considerations for upgrades and/or expansions at existing distribution-connected facilities to help cost-effectively support our growing energy needs.” The IESO is to report back with a program proposal to the Minister of Energy and Electrification by April 30, 2025 with the intention of the government and IESO launching a new program for DERs in early 2026.
Please contact Power Advisory if you have any questions or would like any additional information.