The January 2025 extension and expansion of the IESO’s Save on Energy Retrofit Program provides a significant opportunity for commercial real estate landlords in Ontario to implement rooftop solar programs. This program –formerly only available in Ottawa – is now available across the province.
The program offers an $860 / kW AC incentive to install rooftop solar PV under a load displacement framework (i.e. no energy flows back onto the grid), providing a meaningful rebate on the total cost of installing solar.
Real estate owners can capitalize on this incentive in two ways:
1. Do It Yourself – invest in the hard and soft costs of the solar system and claim the incentive to offset costs. Landlord and tenant benefit from on-site power and landlord recovers capital over the payback period.
2. Energy-as-a-Service (“EaaS”) – AltCrest Energy invests in the solar system, claims the incentive, and flows back the cost of energy to the landlord and tenant under a Power Purchase Agreement (“PPA”) at a rate significantly lower than the prevailing grid. The landlord saves all upfront capital and time, along with benefiting from operating cost savings, a hedge against future energy increases, meeting sustainability objectives, and attracting leading tenants.
Further details on the program are provided in the sections below.
Save ON Energy Retrofit Program
As Ontario’s energy demands continue to grow, managing grid constraints has become a top priority. To address this challenge, on January 7th, 2025, the provincial government announced the expansion of the Save on Energy Retrofit Program.
A key component of this initiative is the $860 / kW AC incentive for businesses installing behind-the-meter solar systems in a load displacement context. This program is designed to alleviate strain on the electricity grid by encouraging businesses to generate and consume their own power.
Grid Capacity Shortfalls
Ontario’s electricity grid is under increasing pressure as the province faces rapid population growth, net-zero-driven electrification, and rising energy demands from data centers and other energy-intensive industries. As more homes, businesses, and vehicles transition to electric power, the strain on grid infrastructure is becoming severe.
The province is tasked with procuring billions of dollars in new generation capacity to meet this growing demand; however, large-scale powerplants may not be built quickly enough to keep pace. In response, demand response programs are being implemented to reduce reliance on provincial infrastructure by encouraging more efficient energy use. Notable examples include the Industrial Conservation Initiative (ICI) / Class A power rates, which incentivize large consumers to lower their electricity usage during peak times.
Behind-the-Meter Solar: A Low Barrier Solution
Solar production naturally aligns with the grid's highest demand periods, which are primarily driven by cooling needs on hot, sunny days. By generating electricity on-site during times of peak grid strain, behind-the-meter solar systems help reduce peak loads and minimize reliance on costly peaking plants.
One of the biggest challenges in electricity network planning is ensuring the system has enough capacity to meet peak demand, even though many resources remain idle during off-peak hours. To address this, the IESO offers strong incentives to large energy users to smooth their demand profiles. By compensating these consumers to reduce their peak usage, the province can avoid the need to invest in additional large-scale power plants, optimizing the energy generation mix and reducing costs.
Save on Energy DER Incentive Program Explained
The Solar Photovoltaic Distributed Energy Resources (“DER”) stream within the Save on Energy Retrofit program was originally launched in select high-strain regions such as Ottawa and Southwestern Ontario as a means of reducing peak demands on the grid.
As of January 7th, 2025 it has been expanded province-wide. Through this program, applicants can receive up to $860 per kW AC of installed solar PV capacity with the benefit capping at system up to 1 MW AC ($860,000). Larger systems can apply and receive the incentive but the incentive will be capped.
This incentive can cover as much as 40% of the system's capital costs, making solar adoption significantly more affordable. To qualify, the solar system must be fully behind-the-meter with no electricity flowing back to the grid. However, it can still connect directly to the property’s main switchboard, offering significant flexibility.
Energy-as-a-Service & Save on Energy
Energy-as-a-Service(“EaaS”) is an arrangement whereby a third party installs and pays for the hard and soft costs associated with the solar system in exchange for a long-term energy PPA. The Save on Energy program aligns perfectly with the EaaS model, enabling businesses to adopt solar energy without upfront costs.
EaaS providers can leverage the program’s $860 / kW AC incentive to significantly lower capital costs, allowing the benefits to be flowed through via a much lower PPA rate to the energy purchaser (landlord and tenant).
Next Steps
AltCrest Energy is a leading renewable energy developer supporting the Canadian real estate industry’s transition to net-zero. We would be pleased to complete a free feasibility study evaluating the technical and commercial benefits of implementing rooftop solar PV at your project.
