ICI: A Critical Tool to Ensure Grid Reliability in Ontario

By Ashish Naik, VP, Corporate Development, Peak Power Energy

Ontario's electricity system is entering one of the most consequential periods in its history. Demand is climbing faster than it has in decades, driven by electrification, data centre expansion, and the re-industrialization of the province's manufacturing base. Reserve margins are tightening. And the system is managing reliability risk not just across summer peaks anymore, but, very soon, year-round.

Against that backdrop, this is exactly the right moment to reinforce one of Ontario's most proven and cost-effective reliability tools: the Industrial Conservation Initiative (ICI).

What the ICI Actually Delivers

The Industrial Conservation Initiative has, over the past decade, delivered something genuinely valuable: ~1500-2,000 MW of dependable, fast-acting peak demand reduction. Large industrial customers, steel mills, auto manufacturers, mining operations, and paper mills reduce load during the five highest-demand hours of the year. In doing so, they lower their own Global Adjustment (GA) allocation and provide a critical buffer for the grid during periods of peak stress.

Nearly two gigawatts is not a marginal number. It is roughly equivalent to two large nuclear generating units. And unlike supply-side alternatives, this capacity is dispatchable and already embedded with private capital (no government or ratepayer investment) in existing industrial operations. No new infrastructure. No development timelines are measured in years. On a cost-per-MW basis, it is among the most efficient reliability resources Ontario has ever deployed.

The mechanism behind it is straightforward. Class A customers pay GA in proportion to their share of the five highest-demand hours. When GA is high, the financial incentive to curtail during those hours is strong. That alignment between industrial economics and grid reliability is exactly what makes the program work so well.

Understanding Recent Changes in Global Adjustment Economics

Global Adjustment has seen some fluctuation in recent periods, including in 2026. For Ontario's largest energy users, that is not an abstract concern. These businesses are simultaneously navigating trade exposure, tariff uncertainty, and intense global competitive pressure. A reliable mechanism to manage peak-hour cost exposure is a meaningful operational and investment planning factor — and one Ontario is genuinely well-positioned to provide through the ICI.

It is worth being clear about the broader context: the current period of GA variability is a transitional dynamic, not a structural change to the program. As Ontario's nuclear refurbishment program advances and system costs grow through the late 2030s, the GA signal is expected to strengthen. The ICI's long-term value proposition is solid.

The near-term priority is maintaining confidence in Ontario's flexibility resources so that the capabilities supporting reliable peak demand reduction continue to be developed, maintained, and available when needed. The IESO has tools to manage variability in ICI response. What broader policy attention can do is ensure that industrial participants and their service providers maintain the operational habits and infrastructure that make peak curtailment reliable.

At Peak Power, we have been engaged in active conversations with industry partners and policymakers about the recent fluctuations of GA. There is growing recognition across the sector that maintaining confidence in demand flexibility and peak-demand reduction will be important as Ontario's electricity needs continue to evolve. This reflects a shared recognition across the sector that proactive planning is needed now to ensure Ontario is not left with a reliability gap.

The Role of Flexibility Resources

Preserving Ontario's existing peak-response capacity fully engaged is significantly more cost-effective than procuring equivalent supply-side alternatives, which take years to develop, permit, site, and commission. The cost of replacement capacity, whether through new supply procurement or increased reliance on imports during peak periods, would be materially higher than the cost of growing flexibility resources through Distributed Energy Resources, Demand Response, and Peak-Demand Reduction.

Growing flexibility resources are in the direct interest of ratepayers and industrial customers alike, and represent the most affordable path to meeting Ontario's electricity needs now and into the future.

A Bridge Solution to Sustain Flexibility Resources

What this moment calls for is a temporary, performance-based mechanism to complement the GA signal during the current period of variability. A well-designed approach would have a few clear characteristics.

It should be tied to demonstrated curtailment during actual system peak events, not program participation in the abstract. It should be structured to ensure transparency, consistency, and accountability for all participants. It should include a defined sunset horizon, structured to step down as GA-driven incentives strengthen as projected. And it should be designed with the full flexibility ecosystem in mind, supporting the role of aggregators, behind-the-meter storage operators, and demand management providers who have built real operational infrastructure around delivering curtailment at scale.

The arithmetic here is not complicated. Ontario already has ~1500-2,000 MW of proven, cost-effective peak-response capacity. A targeted, time-limited complement to the existing GA mechanism keeps that capacity engaged at a fraction of what equivalent supply-side procurement would cost.

The Bigger Picture

Over the coming decade, Ontario's grid is going to need more flexibility, not less. Growing demand, deeper electrification, and the integration of variable renewables all point in the same direction: a system that must dynamically balance supply and demand across more hours, more seasons, and more conditions than it has before.

Demand-side resources are uniquely suited to that challenge. They are fast, distributed, and do not require the development timelines that a new supply does. The ICI, at its best, is a working proof of concept for what an economically rational demand response market can achieve.

Keeping that momentum going through a transitional period is a straightforward reliability and affordability decision. Ontario's large commercial and industrial energy users deserve a policy environment that gives them the tools to compete — and the certainty to plan around them.

Ashish Naik is the Vice President, Corporate Development at Peak Power Energy, a behind-the-meter battery storage company operating across Ontario and northeastern US electricity markets.