Are More Incentives Coming for BESS?

2025 Ontario Ministerial Directives to IESO and OEB

When proven but unfamiliar technology is available, adoption often hinges on smart government policy.

Incentives help accelerate the transition by reducing the risks of high upfront capital costs and uncertain ROI. With both environmental and grid pressures mounting, supportive federal and provincial frameworks will play a critical role in ensuring Battery Energy Storage Systems (BESS) gain wider adoption across Ontario’s industrial sector.

Federal Support: The ITC Advantage

At the federal level, Canada has already implemented strong measures. The Clean Technology Investment Tax Credit (ITC) currently offers up to 30% coverage of eligible project costs for clean technologies, including rooftop solar and BESS.

20% base incentive for clean tech solutions
An additional 10% if projects meet prevailing wage and apprenticeship requirements

This federal support significantly reduces upfront capital costs, making projects more attractive for industrial facilities.

Provincial Programs: Where Ontario Stands

Ontario has relied on performance-based programs to drive demand flexibility for Class A industrial facilities (those with an average load of 1 MW or more). Two main mechanisms stand out:

1. ICI / Global Adjustment (GA)

GA charges are among the highest in North America—estimated at $400,000 per MW of contribution to Ontario’s grid peaks.
Facilities are charged based on their share of demand during the province’s top five peak hours each year (Industrial Conservation Initiative).
Current strategies include:
- Avoiding production during peaks
- Curtailing loads where possible
- Installing BESS to discharge during peaks and lower contribution

More details: Global Adjustment explained.

2. Demand Response (DR)

Ontario’s Demand Response (DR) program compensates facilities for being available to reduce demand or discharge stored energy during stress events.

DR revenues average ~$65,000 per MW (4-hour duration) annually, depending on event calls and aggregator participation.

The challenge: Both GA and DR are performance-based, requiring accurate peak predictions and reliable dispatch. That makes ROI uncertain year-to-year—one reason why many facilities hesitate to commit to BESS despite the clear potential.

The Case for Upfront Incentives

Ontario’s current model leaves industrial adopters carrying most of the performance risk. While BESS supports the grid by reducing peak stress, no upfront incentive framework currently exists at the provincial level.

This is why many industry stakeholders are calling for capital-focused incentives that mirror the federal ITC—support that could help Ontario manufacturers deploy storage faster, de-risk their investments, and avoid curtailing production.

What’s Next in Ontario?

Two major policy frameworks provide clues about where provincial incentives could emerge:

1. Electricity Demand Side Management (eDSM) Framework, 2025–2036

The Electricity Demand Side Management (eDSM) Framework is a 12-year, $10.9B platform for energy efficiency and demand management across residential, commercial, and industrial sectors.

Programs include Home Renovation Savings, Peak Perks HVAC incentives, and Save on Energy initiatives.

Stakeholders have requested inclusion of “beneficial electrification measures”—like heat pumps and BESS.

2. Integrated Energy Plan (IEP)

Ontario’s Integrated Energy Plan (IEP) highlights the growing role of Local Distribution Companies (LDCs) as electrification accelerates.

Ministerial directives to the Ontario Energy Board (OEB) and IESO stress:

Grid modernization for resilience, cybersecurity, and severe weather readiness
Greater DER (Distributed Energy Resource) adoption
A review of the Grid Innovation Fund (GIF) by May 31, 2026, focusing on barriers to commercialization and adoption of DERs like BESS

For the directives themselves, see the Ontario Ministry of Energy’s Ministerial Directives to the Energy Sector.

Why This Matters for Ontario Industry

Ontario manufacturers already face some of the highest peak-related charges in North America. Today, BESS provides a pathway to:

But the ROI is still performance-dependent. With new provincial policy directions now underway, there’s a growing possibility that upfront incentives for BESS will arrive in Ontario’s next round of demand-side and grid modernization programs.

Conclusion: Position Your Facility Now to Cut Electricity Costs — Federal Incentives and Manageable Risks Make BESS a High-Reward Strategy

If you’re a Class A facility—or approaching Class A thresholds—this is the moment to prepare.

Collect your interval data
Model your coincident peak exposure
Size for GA + DR participation
Align with federal ITC compliance

By acting now, facilities can capture today’s GA/DR value stack while positioning themselves for future capital-focused provincial incentives.

Next Step with Circuit Energy
Circuit Energy helps Ontario manufacturers assess and implement BESS projects with precision—integrating storage into your existing operations, securing federal ITC benefits, and preparing for future provincial support.