Charting the course for regulatory clarity and consumer value in Ontario’s energy transition

The Ontario Energy Board (OEB) has released Framework for Energy Innovation: Setting a Path Forward for DER Integration.                                                           

In the report, the OEB sets out its policies and next steps regarding the integration of Distributed Energy Resources (DERs) in the province’s electricity distribution systems. DERs generally refer to resources such as battery storage, rooftop solar panels and electric vehicles (EVs) paired with smart chargers.

The OEB expects electricity distributors to begin evolving their planning and operations to cost-effectively integrate DERs and use them to meet system needs, while maintaining reliable service for their customers. The expectations and policy guidance in the report should enable electricity distributors, as well as other energy sector participants (such as DER solution providers) and customers, to take action in response to the energy transition.

The energy transition can be thought of as a global shift towards net zero greenhouse gas emissions and a more sustainable, renewable energy future that includes greater innovation and customer choice.

To help level the playing field with traditional wires investments, electricity distributors can apply for incentives in their rate applications to use DERs owned by third parties to meet system needs. Guidance for incentive applications will be issued by March 31, 2023.

The OEB will adopt a Benefit Cost Analysis Framework that identifies the full energy system benefits and costs of DER solutions, and allows the distribution system and broader energy system benefits to be considered in rate applications. The OEB will launch an initiative to develop the components of the framework, with the first phase of that work – to develop guidance, methodologies and tools for distribution system impacts – to be complete by the end of March 2024.

Framework for Energy Innovation: Setting a Path Forward for DER Integration takes into account input from a broad range of stakeholders, including a working group that comprised representatives of residential, commercial, industrial and Indigenous customers, electricity and natural gas distributors, DER solution providers, EV owners, environmental groups and the Independent Electricity System Operator.

“The release of this report marks a significant step in the OEB’s journey to address the energy transition. By collaborating with stakeholders, together we can facilitate innovation that provides value to Ontario’s energy consumers and solve energy challenges effectively.”

– Susanna Zagar, CEO of the OEB.

The OEB launched the Framework for Energy Innovation consultation to clarify the regulatory treatment of innovative and cost-effective solutions, including DERs, and facilitate their adoption in ways that enhance value for consumers.

The likelihood of widespread adoption of DERs could have significant implications for how distribution systems are used, as well as the potential activities of electricity distributors. The OEB is prepared to provide further guidance, when needed, as the energy transition unfolds.