Too Smart to Ignore: How flexible demand can help build a cleaner, more cost-effective electricity system

The report argues that flexible demand—the ability to shift or reduce electricity use during peak periods—can significantly lower system costs and defer expensive infrastructure upgrades in Canada. While some provinces like Ontario, Quebec, and British Columbia are implementing demand-side management (DSM) programs, the report finds that these resources remain under-deployed due to outdated regulatory frameworks, misaligned financial incentives for utilities and consumers, and a tendency for planners to treat DSM as a passive load reduction rather than an active grid resource.

• Canadian electricity demand is projected to grow significantly by 2050, with the Canadian Climate Institute estimating a 1.6 to 2.1 times increase on a net zero pathway, and Electricity Canada projecting a rise from approximately 600 TWh to over 1200 TWh per year.
• Peak demand is increasing across several Canadian jurisdictions, with Ontario projecting a growth from ~23 GW in 2026 to ~37 GW by 2050, and Alberta projecting growth of 31 per cent to 63 per cent over the next 20 years.
• Flexible demand can reduce overall system costs by employing peak shaving (reducing use during high-demand periods) and load shifting (moving use to off-peak times), which can be deployed more rapidly than new generation or transmission infrastructure.
• Virtual Power Plants (VPPs) can act as coordinated units of distributed energy resources to provide grid services without new physical infrastructure; U.S. studies suggest VPPs could reduce peak demand by 60 GW by 2030 and 200 GW by 2050.
• Several Canadian provinces have implemented specific DSM initiatives: Ontario's Peak Perks program achieved a maximum one-hour peak reduction of 187 MW in summer 2024; Quebec's Hilo service and rate schemes contributed 2,330 MW of flexible capacity in 2024–2025; and BC Hydro targets 400 MW of capacity savings from demand response and time-of-use rates by 2030.
• A primary barrier to adoption is that regulated utilities in Canada typically earn returns on capital expenditures (infrastructure), while DSM programs are often treated as operating expenses, reducing the financial incentive for utilities to invest in flexibility.
• Demand-side resources are frequently undervalued in integrated resource planning (IRP) and treated as passive load reductions rather than active grid resources, leading to under-deployment despite evidence that they can be more cost-effective than gas peakers.
• Technical challenges include a lack of interoperability standards for devices like smart thermostats and EV chargers, and the fact that the grid was originally designed for one-way flow from centralized plants to users.

APA

Vanderhoof, A. (2026). Too Smart to Ignore: How flexible demand can help build a cleaner, more cost-effective electricity system. Canadian Climate Institute. https://climateinstitute.ca/wp-content/uploads/2026/01/Too-smart-to-ignore-flexible-demand-electricity-system.pdf

Chicago

Vanderhoof, Alex. Too Smart to Ignore: How flexible demand can help build a cleaner, more cost-effective electricity system. Canadian Climate Institute, 2026. https://climateinstitute.ca/wp-content/uploads/2026/01/Too-smart-to-ignore-flexible-demand-electricity-system.pdf.

Wikipedia

{{cite report |last1=Vanderhoof |first1=Alex |title=Too Smart to Ignore: How flexible demand can help build a cleaner, more cost-effective electricity system |publisher=Canadian Climate Institute |date=January 2026 |url=https://climateinstitute.ca/wp-content/uploads/2026/01/Too-smart-to-ignore-flexible-demand-electricity-system.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{vanderhoof2026too, author = {Vanderhoof, Alex}, title = {{Too Smart to Ignore: How flexible demand can help build a cleaner, more cost-effective electricity system}}, institution = {Canadian Climate Institute}, year = {2026}, month = jan, url = {https://climateinstitute.ca/wp-content/uploads/2026/01/Too-smart-to-ignore-flexible-demand-electricity-system.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }