Update October 2024: The 2025–2036 Electricity Energy Efficiency Framework is now open for comment on the Environmental Registry of Ontario
As Ontario targets the construction of 1.5 million homes over the next ten years, there is a one-time opportunity to make these homes as efficient as possible. Integrating energy efficiency measures into new construction will be critical for making housing affordable. By prioritizing efficiency in new construction, Ontario can save money before it is spent, lower emissions, and promote a healthier built environment.
Conservation and Demand Management, or “CDM,” is often in the weeds of energy policy. But it’s actually a simple concept with a huge payoff.
CDM, as outlined in this 2020 directive to the IESO, focuses on decreasing peak demand for electricity and overall consumption from the grid. This encompasses various strategies, including using energy-efficient appliances and technologies to achieve the same output with reduced electricity usage, and on-site electricity generation. Examples are Ontario’s Peak Perks program or basic energy efficiency incentives for small businesses. TAF would like to see measures like above-code insulation and airtightness, and ground-source heat pumps incentivized for new construction under the new program framework. Together, according to the IESOs Achievable Potential Study (2022), maximizing the achievable potential would generate $6.2 billion in net benefits for Ontario.
Minister Smith’s 2022 directive to the IESO underscores that “energy efficiency programs can cost-effectively reduce demand and offset the need for additional supply, as economic growth and decarbonization efforts contribute to electricity demand growth across the province.”
CDM programs have proven to be reliable and cost-saving over and over, but Ontario’s existing programs have been underfunded in past years and currently exclude new construction.
This highlights a significant gap in provincial programming. Ontario’s population is projected to grow by two million by the end of the decade, and heating and cooling loads in new homes and buildings are projected to be the largest driver of energy demand in the coming decade. Embedding CDM measures into new construction will be key to cost-effectively meeting Ontario’s growing energy needs.
Historic evidence from Ontario demonstrates the outstanding value for money of investing in CDM for new construction, with a reported $5 in savings per dollar invested. CDM can also defer or eliminate the need for investments in new energy infrastructure, contributing to grid stability and resource optimization of our existing system. In fact, until its elimination in 2019, Ontario’s High Performance New Construction CDM program was the most cost-effective CDM program in Ontario (based on 2016-2018 verified results using Program Administrator Cost test). Put simply, it is far more cost effective to build a new home or building to be energy efficient than to retrofit it later down the road.
Where funding to encourage the adoption of energy efficient technologies is available, it is in high demand, as illustrated by recent news about the Canada Greener Homes grant nearing its $2.6 billion budget a year earlier than anticipated due to an overwhelming number of applicants.
Other provinces are also prioritizing CDM in the face of rapid urban development. For example, in British Columbia, incentives offered through the BetterBuildings and BetterHomes programs encourage the construction of new, high-performance homes and commercial buildings that use high-efficiency electricity.
The province must take the lead in enabling CDM. That’s why we are calling on the provincial government to expand CDM programming and extend it to new construction in our 2024 Ontario budget recommendations. We recommend prioritizing thermal efficiency and incentives for energy efficient practices like heat pumps.
Submit your comments on Ontario’s formal CDM framework before November 3, 2024. (Updated October 2024)
