Demand Response Market

Following the release of the IESO’s December 2025 Capacity Auction results, we’re seeing a significant shift in the value of Ontario’s Demand Response (DR) market.

The new value for a 1 MW participant in Ontario is $171,300/MW – up from $65,000/MW – representing a 163% increase.

How the Program Works
With Demand Response, customers commit to a specific curtailment amount (e.g., 500 kW). It’s important to note that customers must meet their full contracted curtailment to receive the financial benefit. For example, if they commit to 500 kW but only curtail 450 kW, they won’t receive the payment.

Key Advantages
The program offers more predictability than Class A Global Adjustment:

• Only 2 scheduled capacity events per year Customers receive advance notice of these events – no need to predict when peaks will occur
• Additional emergency events may arise (which can coincide with ICI peak alerts), offering opportunities to earn above the contracted $171,300/MW rate

Another key difference is that we pay customers directly, rather than showing savings on their utility invoice.

Ideal Candidate Profile
This program works best for larger customers who can establish a reliable curtailment baseline. We recommend targeting accounts with:

• At least 1,500,000 kWh/year consumption (similar to Class A minimum thresholds)
• Single-site operations (no amalgamation between sites)
• Operational flexibility to curtail during scheduled events

Given this substantial value increase, we encourage you to reach out to larger volume customers who have the operational capability and willingness to participate in curtailment events.

 

Ontario Demand Response Value Shatters Records

 

The results of the December 2025 IESO Capacity Auction are in, and the message is clear: flexible capacity is more valuable than ever. Driven by tightening supply and major nuclear refurbishments, the clearing prices for the May 2026 – April 2027 season have reached historic highs. If you have been on the sidelines of Demand Response (DR), now is the time to act. The 2026 Numbers at a Glance Annual Value: Revenue potential has jumped to $171,319 per MW-year. Historic Increase: This represents a 130% surge over previous $75,000/MW levels. Winter Premium: For the first time in Ontario history, winter prices ($725.31/MW-day) have exceeded summer prices, signaling extreme grid stress during cold-weather months. Why the Surge? The retirement of the Pickering “B” units at the end of 2026 will remove over 2,000 MW of baseload supply from the grid. A reduction in available imports from New York and Quebec has forced the IESO to pay a premium for local, dependable capacity. Rapid electrification (EVs and heating) is shifting Ontario toward a “dual-peak” system, making winter reliability just as critical as summer cooling. The Bottom Line This 130% increase in revenue potential is a massive opportunity for industrial facilities to turn their operational flexibility into a significant bottom-line We have  additional capacity to onboard customers for the 2026 season, but spots are limited. Reach out Today  to secure your position at these record-breaking rates, by contacting bharucha@xcela.ca .