100,000 Ontario Households Form Canada’s Biggest Virtual Power Plant

Primary Author: Compiled by Mitchell Beer
Houses - Hilde Melby/wikimedia commons

Feb. 9, 2024

Ontario’s Independent Electricity System Operator (IESO) has signed up more than 100,000 households in six months for an electricity demand management program that is now Canada’s biggest virtual power plant, and North America’s fastest-growing.

Participants in the Save on Energy Peak Perks program “help the grid with their smart thermostats by participating in brief, time-limited thermostat adjustments of up to 2°C during periods of peak electricity demand between June 1 and September 30 on weekday afternoons or in early evenings,” the IESO explains in a release. In exchange, each household receives a C$75 virtual prepaid credit card for signing up, and another $20 for each additional year they stay with the program.

Peak Perks only began in June, 2023, but it has already been activated six times, saving up to 54 megawatts of peak demand for an hour in early December. The spot relief is important when the grid faces maximum demand, allowing the IESO to postpone or hold off drawing generation from expensive, increasingly gas-fired peak power plants. A similar approach to peak shaving could also have eased or prevented the grid emergency that Alberta faced last month when a cold snap hit and demand soared while two gas-fired power plants were offline.

With more than 100,000 households now onboard, the Ontario program can now deliver a demand reduction of up to 90 MW, and that total will only increase as more smart thermostat owners sign up, the IESO says.

“We are so pleased that Ontario residents are taking an active role in energy efficiency through Peak Perks,” said Tam Wagner, the IESO’s director of demand side management. “Demand side management is a critical resource that can make a significant contribution to the reliability of the province’s electricity grid, especially on hot summer days when air conditioning use is at its highest.”

“The scale and speed of enrollment proves that electricity providers and customers can partner on initiatives that provide mutual benefit,” said Erika Diamond, senior vice president of customer solutions at EnergyHub, the IESO’s service provider for the Peak Perks program. “The IESO has built a resource that will continue to grow and play a key role in keeping the grid reliable and accelerating decarbonization as demand for electricity in the province increases.”

Diamond told Utility Dive the program benefited from the large population base of Canada’s most populous province, and from the efficiency of operating through a provincial agency that already had access to customers’ utility account numbers and meter data. The IESO also runs a separate smart meter installation program that increased the number of households that could join the VPP.

“Running virtual power plants through independent system operators rather than though individual utilities probably would boost enrollment elsewhere in North America,” Utility Dive writes, citing Diamond. “But it likely wouldn’t be possible in the U.S., where [independent system operators] rarely interface directly with consumers.”

Late last year, the Rocky Mountain Institute (RMI) said VPPs had hit an “inflection point”, and “could play a central role in meeting grid and societal needs” over the next decade. The Snowmass, Colorado-based energy futures think tank said the latent energy potential from electric vehicles, home batteries, and solar arrays, as well as smart thermostats, could provide the same energy services as a traditional power plant, offering grid operators more flexibility to meet growing (and fluctuating) demand. Utilities are also testing software that connects heat pumps to VPPs.

Citing RMI, EnergyHub says virtual power plants could reduce peak demand in the U.S. by 60 gigawatts in 2030 and more than 200 GW by 2050, reducing power sector investment needs by US$35 billion in 2030. In September, the U.S. Department of Energy reported that VPPs could cut peak demand by 80 to 160 GW, or up to 20%, and save the country’s grid $10 billion per year.

In a release, EnergyHub says it works with more than 60 utilities across North America to manage more than 1.7 GW of flexible capacity. In recent months, the Brooklyn-based software company has announced a partnership with Tesla to build the largest VPP in the northeastern U.S., as well as a separate deal with GE Vernova to advance grid management of distributed energy resources (DERs).

[Top photo: Hilde Melby/wikimedia commons]