CALGARY — A new report Demand as a Utility Resource from the Pembina Institute finds that demand-side management (DSM) programs are widely used across electricity systems to reduce peak demand and manage overall system costs by influencing electricity consumption — and will be increasingly important as electricity demand grows and grids evolve.
DSM programs typically include energy productivity and demand response, as well as other demand-side energy resources that help electricity systems meet customer demand more efficiently.
As electrification accelerates across homes, transportation, and industry, electricity use is expected to double over the next two decades, while peak demand is projected to rise by 19-35 per cent in both summer and winter over the next 10 years. New energy demand is also coming from sources like data centres supporting AI, cloud computing and digital services. This growth is placing increased pressure on electricity systems and raising concerns about affordability and reliability. To meet this challenge, utilities need access to every available resource. Generating and managing energy on the customer side of the meter offers one more tool to utilities and their customers.
The report assesses and compares DSM frameworks across four jurisdictions — Ontario, Wisconsin, California and Texas — and examines Alberta as a baseline case, as its regulatory frameworks currently restricts DSM. The assessment considers legislative authority, institutional arrangements, governance structures, and regulatory frameworks to understand how jurisdictions legislate, support and evaluate DSM.
It finds that DSM programs are established through legislation or ministerial direction, which defines program objectives and establishes the institutions responsible for program delivery, oversight, and funding. While institutional arrangements vary across jurisdictions — including centralized program administrators, utility-led delivery and hybrid models — regulatory oversight and program evaluation are core components in all cases.
In these jurisdictions, DSM programs have delivered reduced electricity consumption, lower peak demand, avoided infrastructure investments, and utility bill savings across customer classes.
The findings highlight the opportunity to expand demand-side solutions as a core part of electricity system planning across Canada.
To help advance and operationalize these findings, last month the Pembina Institute launched its Customer Energy Solutions (CES) program — a new national initiative focused on how to expand energy efficiency, load flexibility, and distributed energy resources as core components of Canada's electricity system.
Building on the report's findings, the CES program will support governments, regulators, and utilities in integrating demand-side resources into planning and investment decisions — from reducing energy use through greater efficiency, to managing demand through load flexibility, to integrating distributed energy resources such as rooftop solar, behind-the-meter storage and EV charging.
Together, these solutions reduce peak loads, defer costly infrastructure investments, improve reliability and support economic growth.
This research is funded through Alberta Ecotrust Foundation’s Deep Energy Retrofit Accelerator program. Alberta Ecotrust funded this research to identify and minimize barriers to retrofits, aiming to reduce emissions from existing buildings in Alberta and make retrofits more attainable.
Quotes
“Canada’s National Electricity Strategy and provincial government utility mandates, including Alberta, call for increased demand-side management. We urge utilities, regulators and governments to act quickly to turn this vision into reality – by prioritizing better data, and flexible, customer-focused solutions.”
— Monica Curtis, Senior Director, Communities & Decarbonization, Pembina Institute
“Canada’s next stage of economic and population growth depends on reliable, affordable, clean electricity. We don’t just need more electricity – we need to use what we have more effectively. By modernizing how the electricity system plans, values and integrates demand-side resources, we can reduce costs while strengthening reliability.”
— Kari Hyde, Director, Customer Energy Solutions, Pembina Institute
"Demand-side management is a proven and cost-effective tool for managing the pressures of rapidly evolving electricity systems, which is why it’s been a central focus of the Energy Futures Lab’s Alberta’s Electricity Future initiative. We were honoured to contribute to this report, which we see as critical in presenting the evidence that can support governments, regulators, and utilities across Alberta to put these practical tools to work at scale."
— Maureen Kolla, Director, Alberta’s Electricity Future, Energy Futures Lab
Quick facts
- Alberta could save over $1 billion annually through avoided energy costs and deferred electricity infrastructure investments.
- Demand‑side management (DSM) in Alberta could generate $11.1 billion in net economic benefits between 2019 and 2038, with a total resource cost‑benefit ratio of 2.3.
- DSM delivers strong returns for ratepayers, with Ontario’s programs generating up to $2.32 in utility system benefits for every $1 invested.
- Customer energy solutions can significantly reduce peak demand, with analysis showing that up to 10% of B.C.’s peak electricity demand could be managed using EV batteries, heat pumps, and smart thermostats.
- Federal support for grid modernization can help unlock these types of economic and affordability benefits for communities across Canada.
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Contact
Sarah Snowdon
Senior Comms Lead, Pembina Institute
647-797-9329
