INCENTIVE TO COMPETE

2021-24 conservation and demand management framework shifts course

Competitive procurement underpins the Ontario government’s efforts to trim the price-point of energy efficiency spending. A new slate of conservation and demand management (CDM) programs allocates $456 million for commercial, institutional and industrial consumers over a four-year period with $110 million of that earmarked for still unspecified “customer solutions” to be rolled out in 2023 and 2024.

That’s in line with the government’s interest in the outcome of a pending pilot energy efficiency auction to procure 13 megawatts (MW) of permanent demand reduction via a competitive bid process.

Notably, the directive from provincial Energy Minister Greg Rickford setting out the parameters for the 2021-24 CDM framework decrees: “The new CDM framework will leverage competitive procurements and calls for proposals in order to increase competition, improve cost-effectiveness and solicit consumer-based solutions.” It also instructs the Independent Electricity System Operator (IESO) to report on lessons learned from the pilot auction as part of a mid-term review of the framework to be submitted to the Minister by December 31, 2022.

Customer solutions are projected to deliver 325.7 gigawatt-hours (GWh) in energy savings and 44.1 megawatts (MW) of peak demand reduction in each of 2023 and 2024, or about 42% of energy savings and 35% of peak demand reduction anticipated from all business programs in those years. In total, the CDM framework anticipates more than 2,509 GWh of energy savings and nearly 410 MW of peak demand reduction from the commercial, institutional and industrial sectors over the four-year period.

SAVE ON ENERGY CONTINUITY

To begin, many of the commonly obtained Save on Energy incentives from previous iterations of the CDM framework remain on offer.

The largest share of funding — $57.6 million in 2021 and $54.5 million in 2022 — will be channelled to prescriptive retrofit measures, providing a per-unit rebate for the installation of a range of lighting and HVAC products, motors, variable frequency drives and select building equipment such as refrigerators, dryers, thermostats and

ENERGY MANAGER FEEDBACK

By Rebecca Melnyk

After 2022, companies must use their own funds to reimburse embedded energy managers, but will be offered “an enhanced level of technical support and resources.” It’s a move some see as more short-sighted.

“People will point to this as creating savings for the ratepayer,” suggests Rob Detta Colli, Manager of Energy and Sustainability with Crossbridge Condominium Services. “However, it effectively ends a program that has been proven to be one of the cheapest ways to reduce energy usage for the province. Peak consumption in Ontario is still an issue, and the generating stations are not getting any younger.”

Speaking from personal experience, he says that being able to attack energy consumption and peak demand from within his company’s portfolio has not only generated millions of dollars in savings directly to condo owners and benefited the province, but also increased the capability of the entire company.

“Having one energy manager supporting all of the property managers means we’ve got 250 ‘mini’ energy managers out there,” he submits.

The predominant focus on prescriptive retrofits should ease some of the approval delays that came with the option for customized retrofit plans, which was a feature of previous CDM frameworks, but also eliminates the greater saving opportunities from more comprehensive upgrades. Now, three streams are available — lighting; HVAC; and other equipment such as motors and variable frequency drives — and incentive levels are predefined and based on the amount of energy or demand savings of the new equipment.

“The custom track allowed the dollar value of the incentive to be proportionate to the savings. If you showed more savings, you got a larger incentive,” Detta Colli recounts. “The only choice now is a prescriptive system. That should make the application and approval process simpler, but prescriptive incentives tend to provide significantly less funds. It looks like the incentives for lighting will be reduced by 20%.”

controls for beverage vending machines. This will decrease to $39 million in both 2023 and 2024.

Whole-building saving incentives through the energy performance program have been enhanced in the new CDM framework. The incentive for commercial and institutional facilities is now offered for a three-year period. A total of $22 million is budgeted for the program, escalating from $4.4 million in 2021 to $7.2 million by 2024.

It will provide payments of $0.04 cents per kilowatt-hour (kWh) for metered energy savings relative to baseline energy use at the beginning of the contract period, and a new $50 per kilowatt (kW) payment for metered peak demand reduction relative to the baseline. Additionally, enrollees may be eligible for upfront payments to help underwrite energy efficiency investments that will deliver the savings.

Despite escalating allocations for energy management — from $3.5 million in 2021 up to $14 million in each of 2023 and 2024 — funding for embedded energy managers will be diverted to other avenues after 2022.

Until then, companies can still cover the salaries of in-house experts tasked with finding and delivering energy savings via the incentive, which provides up to $150,000 annually based on a formula of $300 per kW of peak demand reduction achieved. Although, at that full rate of earning, fewer than 24 would be covered in 2021, with numbers then growing to 55+ in 2022.

PROGRAM TRANSITION PENDING

As of 2023, companies must use their own resources to remunerate inhouse energy managers, but they will be eligible for what’s described as an “enhanced level of technical support and resources”. The IESO has also promised a stakeholder consultation to get input on companies’ energy management needs.

For 2021-24, the range of incentives for small businesses with fewer than 50 employees will expand from the previous focus — which provided up to $2,000 for lighting upgrades — to include HVAC and refrigeration equipment. However, the overall program budget will shrink from $9.1 million in 2021 and $9.2 million in 2022 to $5.1 million in each of 2023 and 2024.

Funding continues to be available for local programs, which address specific needs within a community or region. The CDM framework allocates $65.6 million for such initiatives during the four-year period with $15.5 million available this year.

In keeping with the Minister’s directive, the IESO states: “Beginning in 2021, the implementation of local programs will leverage competitive mechanisms to provide targeted energy and demand savings for specific areas, while encouraging innovation and energy cost savings.”

This year is also a transitionary year, as proponents who had projects approved by Dec. 31, 2020 under the previous CDM framework will have until Dec. 31, 2021 to complete them and claim their incentives.

Additionally, due to COVID-19-related business shutdowns and supply chain interruptions earlier in 2020, some proponents will still be completing projects approved under the previous government’s program regime, known as the Conservation First Framework. Those must be complete by June 30 of this year. ■

__________________________________________________________________ MORE INFORMATION ABOUT THE 2021-24 CONSERVATION AND DEMAND MANAGEMENT FRAMEWORK CAN BE FOUND ON THE INDEPENDENT ELECTRICITY SYSTEM OPERATOR’S WEBSITE AT WWW.IESO.CA/EN/SECTOR-PARTICIPANTS/ ENERGY-EFFICIENCY/2021-2024-CONSERVATION-AND-DEMANDMANAGEMENT-FRAMEWORK

NEW VOICES FOR COMMERCIAL ELECTRICITY CUSTOMERS

Commercial electricity customers will get more presence among Ontario consumer groups when two new appointees join the Independent Electricity System Operator’s (IESO) stakeholder advisory committee this spring.

Bala Gnanam, Vice President, Energy, Environment and Advocacy, with the Building Owners and Managers Association (BOMA) of Greater Toronto, and Agnieszka Wloch, Vice President, Development, with Minto Communities Canada, have been named to the 17-member committee tasked with providing policylevel advice to the IESO board of directors and senior executive.

The committee meets a minimum of six times annually to receive briefings and provide feedback on IESO activities related to market development, conservation and electricity planning. It is broadly structured to give voice to five categories of stakeholders including electricity generators, transmission and distribution utilities, energy businesses and services, consumers and Ontario communities.

Notably, though, consumers encompass three distinct groups: residential, small business and farm customers on the regulated price plan (RPP); commercial customers; and large industrial users. Gnanam and Wloch will replace the outgoing consumer representatives, Julie Girvan of the Consumers Council of Canada, and Mark Schembri, Vice President, Supermarket Systems and Store Maintenance, with Loblaw Companies Ltd.

Wloch is a licensed architect with more than 16 years’ experience in Minto’s development division, where she has become a specialist in mixed-use development projects and is currently a leadership team member overseeing development management in both the company’s Toronto and Ottawa bases. She holds a Master of Business Administration (MBA) from Western University’s Ivey School of Business and is Vice President of the Simcoe Chapter of the land economics society, Lambda Alpha International.

Gnanam is an engineer with nearly 20 years’ experience in the energy, commercial real estate and manufacturing sectors. He has keen interest in building performance and climate resilience and has Certified Energy Manager (CEM) and Certified Demand Side Manager (CDSM) designations from the Association of Energy Engineers. He is a member of the board of directors of EcoSchools Canada and the Clean Air Partnership.

Stakeholder advisory committee members are appointed from a slate of nominees put forward by “parties having an interest in IESO activities”. They serve two-year terms and are eligible to remain for up to six consecutive terms.

Three other new members will begin terms along with Gnanam and Wloch. They are: Ed Gilbert, Corporate Manager, Aamjiwnaang First Nation, and Tonja Leach, Executive Director of the public policy and research group, Quest, representing Ontario communities; and Amanda Klein, Executive Vice President, Public and Regulatory Affairs, and Chief Legal Officer with Toronto Hydro, representing distributors and transmitters.