In 2025, Ontario’s energy system will undergo a significant transition as the Pickering Nuclear Generating Station begins to cease operations. While some units have already been retired, Ontario Power Generation plans to safely shut down all of the remaining reactors by 2026 for refurbishment.

For decades, Pickering has been a vital contributor to Ontario’s electricity grid, providing approximately 10 per cent of the province’s power at its peak. Its closure will leave a substantial gap in the supply of low-emission, reliable electricity, creating new challenges for grid stability and energy planning.

The implications for businesses are substantial, particularly for those reliant on stable and affordable electricity, such as manufacturers, agricultural producers and real estate developers. With reduced nuclear capacity, Ontario will need to increase its reliance on gas-fired generation and renewable energy sources.

While gas-fired plants provide consistent power, they bring higher costs and increased greenhouse gas emissions. Renewables, though cleaner, are subject to intermittency, which can strain grid reliability during peak demand periods.

How businesses can deal with this new landscape

To navigate these changes, businesses must reassess their energy strategies, focusing on both energy procurement and energy efficiency.

Starting with procurement, businesses should consider purchasing forward energy contracts during periods of generation tightness rather than relying solely on the electrical commodity spot market. Additionally, on-site generation solutions, such as solar panels and battery storage, should be evaluated and maintained to ensure they operate at peak efficiency, offering additional resilience by reducing dependency on the grid.

Businesses should also participate in and re-evaluate demand management programs, including Industrial Conservation Initiative peak shaving and demand response initiatives, which may provide financial incentives for shifting energy usage during peak times.

In terms of energy efficiency, it is crucial to ensure that all energy equipment is well-maintained. Upgrading outdated equipment and optimizing processes can help reduce electricity consumption and offset rising costs.

Another area of focus should be minimizing energy waste, such as equipment operating unnecessarily. Conducting frequent walk-throughs to identify and turn off idle equipment can yield immediate savings – what we call "low-hanging fruit" that regenerates year after year.

While these adjustments require careful planning and investment, they can help businesses mitigate risks and capitalize on emerging opportunities as Ontario transitions to a cleaner energy future.

Market prices in Ontario: What the market renewal means for businesses

The introduction of Ontario’s Market Renewal Program (MRP) in 2025 represents one of the most significant overhauls of the province’s electricity market in decades. Designed to improve efficiency and transparency, the program’s cornerstone is the shift to a single-schedule market (SSM), which aligns electricity prices with actual supply costs. While this modernization aims to create long-term benefits for the grid, businesses are likely to experience short-term challenges, including increased price volatility.

Under the SSM, prices will reflect real-time supply and demand conditions, making energy costs more unpredictable. This volatility, combined with the reduced nuclear capacity from plant closures, may lead to significant price spikes during peak demand periods or grid constraints.

Businesses with energy-intensive operations, such as those in manufacturing and agriculture, are particularly vulnerable to these fluctuations, as unpredictable costs can erode profitability and complicate budgeting. Additionally, the Capacity Auction Process, a mechanism to ensure adequate supply, could result in higher procurement costs, further increasing electricity expenses.

For businesses to adapt, proactive measures are essential. Fully understanding your energy usage and monitoring market trends and pricing data will help companies anticipate and respond to fluctuations. Developing an energy procurement strategy for upcoming energy contracts may offer price stability, shielding businesses from the full brunt of volatile spot markets. Investments in energy efficiency upgrades and on-site generation, such as solar power or combined heat and power systems, can help reduce reliance on the grid while managing costs.

While the MRP’s goals of efficiency and competition may eventually deliver grid-wide benefits, businesses must be prepared to navigate a more complex and potentially costlier energy landscape in the near term.

Rising electricity demand in Ontario

Ontario’s electricity system is bracing for a 75 per cent increase in demand by 2050, according to the Independent Electricity System Operator. Key drivers include the adoption of electric vehicles, the growth of energy-intensive industries like artificial intelligence-driven data centres, and the electrification of industrial processes. This rising demand will place pressure on the grid, leading to potential higher electricity prices and reliability challenges for businesses.

For companies, this demand surge means preparing for a future where energy costs are less predictable. Businesses can mitigate risks by investing in energy efficiency upgrades, such as modernized equipment and process optimization, to reduce overall consumption.

Exploring on-site renewable energy solutions, like solar panels or battery storage, can also help offset rising costs while improving resilience to potential grid constraints.

In the face of this significant demand growth, businesses that plan ahead and adopt innovative energy strategies will be better positioned to manage costs and maintain stable operations in Ontario’s evolving electricity landscape.

Potential trade tensions and energy impacts

Ontario’s electricity market may face added uncertainty due to rising trade tensions with the United States. In response to proposed U.S. tariffs on Canadian products, Ontario Premier Doug Ford has suggested restricting electricity exports to states like Michigan, New York and Minnesota. Currently, these exports account for a significant share of Ontario’s energy revenue and help balance grid demand.

For businesses, this development raises concerns about energy pricing volatility as well as potential supply constraints or surpluses. If cross-border electricity trade is disrupted, Ontario may need to rely more heavily on domestic resources, potentially leading to a volatile market. Knowing how to adapt to changing market conditions will be critical for businesses to control and reduce energy costs.

Additionally, sectors that indirectly benefit from stable U.S.-Ontario energy relationships, such as manufacturing and agriculture, will face pressure to find ways to reduce operating costs. Energy consumption is often the first area to target for savings.

Businesses should closely monitor these geopolitical developments and adopt strategies to mitigate the impact of price fluctuations and supply uncertainties. Diversifying energy sources, such as investing in on-site generation or participating in demand response programs, can provide greater stability in an increasingly unpredictable energy market.