IESO plans to introduce its first electricity demand-side management (eDSM) program in 2026, focused on commercial HVAC systems during summer to lower peak demand as load grows in Ontario.

“HVAC loads in the commercial sector presents a significant opportunity for demand response,” the ISO said in a presentation to stakeholders June 24. “Large commercial buildings, including offices, retail spaces and institutional facilities, account for a substantial portion of Ontario’s peak demand, largely driven by HVAC loads during summer cooling season.”

The ISO has numerous energy efficiency programs that mostly are focused on retrofitting buildings, collectively known as Save on Energy. It also allows DR resources to participate in its capacity market. The new program would be part of Save on Energy, and any aggregated loads participating would be barred from bidding into the market.

That’s because capacity resources are expected to perform for at least half the year. (The “summer” half of the capacity year is defined as May 1 to Oct. 31.) However, certain large commercial facilities have capacity value only during the height of summer. The ISO is targeting 100 MW of curtailment in 2026 and 230 MW in 2027 from “resources” such as large retailers, office buildings, shopping centers, universities and municipal premises.

IESO plans to begin registering participants at the beginning of 2026 with a goal of beginning operation June 1 and running until Sept. 30. DR events would last up to three hours on business days only. Participants would be compensated by the end of the year based on the average megawatts curtailed and capacity prices for those four months.

The program is part of a larger eDSM framework funded through Ontario’s Affordable Energy Act of 2024, which granted IESO $10.9 billion for the new program as well as expanding existing Save on Energy programs. As part of the initiative, the ISO also is considering programs to support distributed energy resource installation and additional incentives for new energy-efficient buildings.

IESO has allocated $1.8 billion for the first three years of the framework with goals of 900 MW in peak demand savings and 4.6 TWh in electricity savings.

The ISO used the June 24 presentation to go over aspects of the commercial DR program on which it is seeking feedback from stakeholders. IESO’s Mohammed Yousif highlighted the ISO’s proposed incentive structure: the summer capacity price ($/MW-day) multiplied by 92 (representing the 23 business days in each of the four months), with the resulting figure multiplied by the average demand reduction.

A stakeholder representing the University of Western Ontario, which participates in the capacity market as part of an aggregation, asked how compensation through the program would compare. Noting that “the HVAC program is not meant to compete with the capacity auction,” Yousif said, “I think what we are leaning towards is … for the [program’s] price to be aligned with the [auction] clearing price, but not more.”

Another stakeholder asked why the program was limited to HVAC. “I’m a bit confused … if the intention is to alleviate demand on the grid, why are we limiting it to HVAC loads when a lot of these buildings have good capabilities [such as] light dimming?”

Yousif answered that “there has been a lot of discussion” about widening the scope of the program after the first one or two years.

But others were not satisfied with this, with one saying, “It seems like you’re adding a lot of rules … for something that doesn’t really make any sense. You should just let people openly select their demand response technologies.”

Yousif urged attendees to submit this feedback in writing and again suggested the program could open to other technologies if the ISO sees enough potential.

Feedback is due July 8. IESO will provide its response July 29 and consult with potential aggregators and other commercial customers over August and September, with a goal of issuing rules for the program before the end of October.