Virtual Power Plants cut costs & boost resilience—why not in Ontario?

A Virtual Power Plant (VPP) is a network of distributed energy resources (like solar panels, batteries, and smart appliances) that are combined and managed as a single, flexible unit to balance electricity supply and demand (photo: powermag.com)

Ontario's electricity demand is poised to surge over the next two decades, driven by the mass electrification of HVAC systems, transportation, and industrial operations. As this demand grows, so too will the costs associated with electricity transmission and distribution. The challenge? Rising transmission costs, driven by long supply lines from centralized generation, are outpacing all other energy costs.

The solution lies in localizing energy production and storage. OREC (the Ottawa Renewable Energy Cooperative) envisions enabling local distribution companies (LDCs) to harness the power of Virtual Power Plants (VPPs) – systems that integrate Distributed Energy Resources (DERs) from customer sites to balance supply and demand. These VPPs would provide peak shaving, load-following, and ancillary services, especially in regions where demand is outpacing supply.

Across Ontario, citizens are increasingly investing in electric vehicles (EVs), heat pumps, solar panels, and battery storage to ensure personal energy resilience and save on costs. However, these individual assets can also contribute to regional and even system-wide benefits when pooled together. In essence, they form a "community electricity sponge," absorbing excess power when it is cheap and releasing it back into the grid when it is needed most.

From water heaters to EVs and HVAC systems, networked DERs can respond dynamically to grid signals, adjusting energy consumption based on demand. Similarly, batteries, whether paired with solar or not, can store energy and feed it back into the grid when peak demand hits. On-site solar, including net-metering and legacy micro-FIT/FIT projects, already contributes to grid stability, particularly during peak summer months when air conditioning drives up consumption.

This model isn’t new – Virtual Power Plants have been successfully operating globally for years. The UK’s Octopus Energy, Texas-based Renew Home, and California’s Ohm Connect have demonstrated how decentralized, citizen-driven energy systems can enhance grid reliability and reduce costs. In fact, Canada’s Pension Plan Investment Board (CPPIB) has recently bet on Octopus Energy's potential to transform the renewable energy landscape.

Ontario is primed for a similar transition. The province is home to more than 30,000 micro-FIT projects (totaling 300 MW) and over 2,000 FIT contracts (4,600 MW). These systems, which have been funded by Ontario’s citizens, are connected to the grid and will soon begin to come off contract starting in 2029. Many of these systems still have 5 to 20 years of potential generation capacity remaining, making them ideal building blocks for VPPs.

At OREC, we’re working to empower Ontarians to play a key role in this energy revolution. Through our OREx Community eXchange and OREC Talks seminars, we’re building a network where members can share information, learn about DER technologies, and stay informed on energy regulations. This platform lays the foundation for an informed and engaged population ready to deploy their assets for both personal and public benefit.

By properly harnessing citizen-funded DERs, we can make Ontario’s distribution grid more resilient, affordable, and adaptable. The public has already made significant investments in these technologies, and they should stand to benefit from optimizing them to support grid stability. Small-scale, home-based systems can be integrated with larger community-scale projects, creating a more diversified, effective VPP.

Together, we can help shape Ontario’s energy future—one that is more sustainable, community-driven, and economically efficient.