A Fair Deal for Distributed Energy: The New Economic Model for Community Power

What Does Ontario’s DER Plan Mean for OREC?

A new report from Ontario’s energy regulators sets the stage for efficient, resilient, and cost-effective community power.

Ontario’s electricity system is at a crossroads—demand is rising, electrification is accelerating, and communities are asking for cleaner, more local ways to power their lives. So when the Independent Electricity System Operator (IESO) and the Ontario Energy Board (OEB) quietly released a major new report on how Ontario should value and compensate distributed energy resources (DERs), we paid close attention.

Because tucked inside this otherwise technical document is something big:

Ontario is preparing to open the door to a more flexible, decentralized, community-powered energy system.

And that has real implications for OREC, our members, and the future of community-owned energy in Ontario.

Let’s break it down.

DERs: From Add-Ons to Essential Infrastructure

The report begins with a clear message: Ontario can’t meet future electricity needs with large projects alone. Distributed energy resources—solar, batteries, EV charging, flexible loads—aren’t just helpful around the edges. They’re essential.

That’s a shift in mindset. DERs used to be seen as boutique or optional. Now they’re recognized as fast, scalable tools that solve real grid challenges, especially at the local level.

At OREC, we’ve been building those solutions for 14 years. And we believe this direction is, in part, the result of years of persistent input from OREC and other distributed energy and renewable energy co-operative (REC) advocates—community voices ensuring that smaller, locally rooted energy solutions aren’t overlooked in provincial planning.

DERs can provide capacity, energy, and ancillary services, depending on their technical characteristics. Recognizing these differing perspectives on enabling DERs is fundamental to finding opportunities for mutual benefit.

Assessment of Ontario’s DER Compensation Mechanisms and Recommendations, August 2025

A New Pathway for Community-Scale Participation

One of the most significant recommendations is the move toward allowing aggregated DERs, including projects smaller than 1 MW, to participate in provincial markets.

Right now, most OREC-sized projects simply aren’t allowed into the room. They’re too small to compete in capacity or ancillary markets—even though collectively, they could.

Under the proposed changes, that could soon shift.

This means:

• Community solar, BESS, and EV-based flexibility projects could earn revenue for grid services, not just energy production.

• OREC could act as a community aggregator, combining many small member-powered assets into a resource big enough to compete.

• Co-operatives, municipalities, and nonprofits could finally gain a fair pathway to participate in Ontario’s energy markets.

This is a fundamental change in who gets to build—and benefit from—Ontario's clean energy future. And community advocates helped push it forward.

Smarter Prices = More Value for Smarter Technologies

The report also points out something DER owners know well: electricity pricing doesn’t always make sense.

Some signals are too blunt, some too distorted, and many simply don’t reflect what's happening on the grid in real time.

The plan pushes Ontario toward:

• clearer peak signals,

• more dynamic pricing options, and

• better alignment between wholesale and retail markets.

This matters because storage, solar-plus-storage, EV smart charging, and demand management get much more valuable when prices send the right cues.

For OREC, this strengthens our path toward community batteries and flexible load programs—tools that thrive under better price signals.

Non-Wires Solutions: A New Frontier for Local Projects

One of the most exciting developments is the emphasis on non-wires solutions (NWS). 'Non-wires solutions' leverage the municipal distribution system instead of the expensive, high-voltage transmission towers and lines that carry electricity from centralized plants—like nuclear—across the province.

LDCs will now be expected to consider DERs as standard practice, not as pilot add-ons. That means community-owned assets have a new entry point into the long-term planning of local grids. Our hope is that this new framework gives LDCs (like Hydro Ottawa) the confidence and direction they need to actively welcome community DERs, not inadvertently slow them down.

Imagine:

• a battery in a constrained neighbourhood avoiding a costly feeder expansion,

• community-owned solar-plus-storage boosting reliability during high-demand periods,

• local demand response programs reducing strain on fast-growing areas.

These aren’t fringe ideas anymore—they’re future procurement pathways. And thanks to sustained advocacy from groups like OREC, they’re finally being taken seriously.

Toward a True “Value Stack” for Community DERs

The report also points to the need for compensation frameworks that recognize the full value of DERs—energy, capacity, local reliability, avoided infrastructure, and more.

This move toward a “value stack” is a major opportunity for community power. It means community-owned projects can finally be paid for all the services they provide, not just the kilowatt-hours generated.

For OREC’s members, that’s a step toward:

• more stable revenue streams,

• more diverse projects, and

• stronger long-term returns.

What This Means for OREC’s Next Chapter

These proposed changes won’t happen overnight. Some require regulatory reform, others new market design, and others long-term collaboration with utilities.

But the direction is clear:

Ontario sees DERs not as a challenge, but as an essential part of a reliable, affordable, low-carbon grid.

And that shift didn’t happen by accident. It’s partly the result of tireless advocacy by OREC, other co-operatives, municipal partners, and DER champions across the province—people insisting that Ontario’s energy transition must include community-based solutions, not just large centralized projects.

For OREC, this means:

• exploring community batteries and member-based flexibility programs,

• preparing to participate in future DER aggregation models,

• deepening partnerships with LDCs for emerging NWS opportunities, and

• continuing to show up in consultations and working groups to ensure community ownership remains part of the story.

We’re entering a new era where the grid is no longer one-way, top-down, or centrally built. It’s becoming local, participatory, and flexible.

In other words, the kind of grid OREC was founded to build.

And we’re excited to lead our members into this next phase of community-powered innovation.

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