How Are Emergency Activations Paid By The IESO?

More activations drive more revenue for Ontario’s Demand Response participants

Large power consumers in Ontario are being called on more frequently to reduce energy consumption when grid conditions are tight. Since May 2025, Ontario’s Independent Electricity System Operator (IESO) has issued 17 Demand Response (DR) activations, an 8.5 times increase from the year prior and a sharp contrast to the zero activations recorded between 2021 and 2023.

Many large power consumers participate in the energy market as DR resources and are paid to be available to curtail load drawn from the electricity grid under certain extraordinary scenarios, such as system emergencies or when market prices approach the price cap in Ontario. Historically, participants have expected only two annual test activations, to demonstrate their curtailment ability, but have rarely experienced actual activations. That is no longer the case.

This shift reflects a combination of increased market strain and broader structural changes in Ontario’s electricity market. It also strengthens what facilities can earn from this program, as participants are compensated for each activation – the more activations, the more participants can earn from the electricity market.

Increase in Activations

Historically, emergency DR activations in Ontario were rare or exclusively occurred during summer peak demand periods, but this norm is changing.

In this past year alone, the number of activations has risen significantly, with both summer and winter events now occurring:

*IESO, Capacity Auction Enhancements, January 29, 2026

More Activations = More Revenue

More frequent activations means that participants can earn even more from this program.

When activated, participants are compensated based on their offer price submitted for that day (up to a maximum of $1,999.99/MWh), less the corresponding Ontario Energy Market Price (OEMP) for each hour of activation.

Emergency Activation Payments ($/MWh) = $1,999.99 – OEMP

The difference between these two values represents the additional compensation a participant can earn for each megawatt curtailed during an hour of activation.

Example: July 28, 2025 Emergency Activation

The table below illustrates a four-hour activation that took place on July 28, 2025 from 16:00 to 20:00. This shows the Emergency Activation Payments payable to a facility curtailing 1 MW during each hour of activation, based on the corresponding OEMP.

July 28, 2025 – Four-Hour Emergency Activation

Total payment for a facility curtailing 1 MW over a four-hour activation:

$1,747.19 + $1,747.23 + $1,752.25 + $1,754.66 = $7,001.33

Total payment per activation: $7,001.33 per MW.

Annual Revenue Impact

Assuming an expected activation frequency of 5 events per year with similar activation payment:

$7,001.33 × 5 = $35,006.65

Facilities could earn approximately $35,000 per MW-year in Emergency Activation revenue. When combined with $171,964/MW-year* earned through availability payments, total program value approaches:

~ $207,000 per MW-year

*Reflects Summer 2026 and Winter 2026-2027 Clearing Prices

Increased activations reflect the increased value of Demand Response as an electricity system resource. As these activations become more frequent, Demand Response participants have the potential to earn significantly more from their participation.

Why Activations are Increasing

Demand response activations in Ontario have been rising due to a combination of structural market changes, weather-driven demand and tightening system conditions. Together they are changing how and how often demand response is being activated.

Market Renewal Program (MRP)

The implementation of the MRP has fundamentally changed how resources are scheduled and dispatched in Ontario. The introduction of locational pricing a two-market system has required the IESO to build a new set of tools. The IESO relies on a more automated, market-based approach to Demand Response scheduling through the Dispatch Scheduling Optimizer (DSO). The DSO evaluates available supply and demand resources and selects the lowest-cost option available to meet system requirements.

Weather

Weather continues to play a major role. Last summer was one of the hottest in recent Ontario history, and this winter’s polar vortex placed additional strain on the system. While summer peaks have traditionally driven demand response activations, winter reliability concerns are growing as extreme cold weather patterns are changing and electrification of heating increases overall demand.

System Constraints

Grid supply conditions have also tightened. Recent nuclear refurbishments and planned nuclear retirements reduce the availability of low-cost baseload generation, and electricity demand across Ontario continues to grow due to industrial expansion and electrification. With a greater reliance on higher-cost generation and less excess supply, along with more demand volatility, the system is operating closer to its limits more often. When that happens, flexible resources like demand response become more valuable and are called upon more frequently. And as market prices rise under tight system conditions, the likelihood of economic activation also increases.

Conclusion

Demand response in Ontario is becoming more valuable for participants and system operators. With more frequent extreme weather, tighter supply conditions and changes in how the market dispatches resources, activations are increasing; and so is the revenue opportunity for participants.

Workbench Energy helps large curtailers participate in Demand Response directly with the IESO maximizing revenue and flexibility for your organization.

Contact us today for a no-cost demand response assessment to determine if going direct is right for your organization.