Ontario’s Integrated Energy Plan: priorities for the next 25 years

On June 12, the Government of Ontario released Energy for Generations¹, an Integrated Energy Plan (IEP) which provides a 25-year roadmap for powering Ontario’s growth and economic development in accordance with the province’s Affordable Energy Future Vision². Emphasizing affordability, security, reliability and clean energy, the IEP outlines actions and investments across Ontario’s energy system, including nuclear and hydro generation, grid infrastructure, natural gas, hydrogen and carbon capture, energy efficiency and Distributed Energy Resources, Indigenous partnerships, and regional and global trade opportunities.

What you need to know

• The IEP outlines key priorities to support the government's economic growth goals and attract investment to Ontario. This aligns with the addition of “economic growth” to the Ontario Energy Board (OEB) and Independent Electricity System Operator (IESO) mandates set out in the recently proposed Bill 40.
• The IEP confirms the province’s ambitious plans to invest in nuclear and hydroelectric generation projects to meet future energy demands while lowering Ontario’s emissions.
• The IEP affirms that natural gas will remain an important part of the province’s energy mix and directs the OEB and IESO to integrate natural gas into electricity planning using a system-wide approach and multiple demand scenarios to plan for growth and electrification.
• The IEP prioritizes energy efficiency and Distributed Energy Resources (DERs) as a cost-effective means of reducing the amount of new infrastructure that must be built and giving consumers more tools to manage their consumption and participate in the energy system.

Key priorities

Nuclear and hydro generation

Ontario’s electricity system is supplied by a mix of generation sources, with nuclear and hydroelectric power providing nearly 75% of the province’s current electricity needs.

By 2050, Ontario may need up to 17,800 MW of new nuclear energy to meet high electrification demand, on top of the existing installed capacity of around 12,000 MW³. To be ready for this scenario, the province is exploring several projects to expand nuclear power generation, including the refurbishment of existing facilities, building grid-scale small modular reactors (SMRs) at Darlington, expanding Bruce Nuclear Generating Station, and advancing early-stage planning for new large scale nuclear generation at Wesleyville, OPG’s existing site in Port Hope.

Hydroelectric power will also continue to be an important source of clean energy for the province. To this end, the IEP announced the province’s intention to:

• launch the Northern Hydro Program by March 31, 2026 to re-contract the 26 hydroelectric stations larger than 10MW in northern Ontario; and
• advance pre-development work for the proposed 1,000 MW Ontario Pumped Storage Project, developed in partnership by TC Energy and the Saugeen Ojibway Nation.

Transmission

The IEP outlines investments in new transmission infrastructure to meet growing electricity demand and confirms the development of a competitive process for transmitter selection. Current initiatives include:

• Moving forward with the 500 kV Barrie to Sudbury Transmission Line to alleviate north-south transmission bottlenecks. The province is targeting a 2032 in-service date, and the IESO has recommended developing a second 500 kV line as well. Currently, the province is considering whether to direct the OEB to designate Hydro One to develop the two lines through a non-competitive procurement process due to the project’s priority importance.
• Reporting back with a preferred option for a new major transmission line into downtown Toronto by August 31, 2025. The IESO currently has two priority transmission projects in the GTA, one of which is being developed to connect the eventual Darlington SMR Units 2, 3 and 4 to Toronto.
• Furthering transmission in other areas of the province. Most notably, the province is advancing permitting of the Greenstone Transmission Line in northern Ontario. This line, if approved, will be a crucial first step to enabling critical mining projects in the Ring of Fire area.
• Launching a Transmitter Registry of pre-qualified transmitters by August 15, 2025 to support future competitive procurement⁴.

Distribution

Significant capital investment—between $103 billion and $120 billion—will also be required to expand, modernize and fortify the distribution system by investing in infrastructure like substations and transformers, as well as digital grid management tools. To address these challenges, the IEP encourages consolidation among distributors and continued efforts to strengthen utility governance, accountability, performance and operational efficiency.

The IEP remains committed to lowering the costs of connecting to the grid. Draft regulations for transmission-connected customers will be posted for public comment in summer 2025 and could be implemented later in 2025. The province also continues to evaluate possible options for distribution-connected customers that will build off of changes the OEB has made, including recent amendments to the Distribution System Code to support housing development projects, and amendments published on June 16, 2025 which aim to diffuse the cost of grid upgrades across many users instead of laying the investment risk on the first customer⁵.

Energy efficiency and Distributed Energy Resources

Ontario plans to invest $900 million—nearly three times historical annual investment—in electricity efficiency programs over the next twelve years, in order to help consumers save money and reduce peak demand by 3,000 MW and electricity consumption by 18TWh by 2036. This includes launching new initiatives like the Home Renovation Savings Program, which provides incentives for heat pumps, rooftop solar and battery energy storage systems, and building retrofits to improve energy efficiency, all delivered through a one-window approach (SaveOnEnergy.ca) to improve customer experience.

The IEP acknowledges that Distributed Energy Resources (DERs) such as local generation, batteries, smart home technologies, and electric vehicles, have the potential to reduce costs, enhance resilience, and enable consumers to participate in the energy system but regulatory changes are needed to realize their value. To encourage investment and support the adoption of DERs, the IESO will develop a Local Generation Program to competitively secure small-scale electricity generation sources. The OEB will continue its efforts to improve DER valuation, compensation and connection processes, and will explore new cost-recovery models for DER investments with multiple beneficiaries.

Natural gas, hydrogen and carbon capture

The IEP presents Ontario’s Natural Gas Policy Statement, stating that natural gas will remain a key part of the province’s energy mix to drive economic growth and support resiliency, reliability and affordability as Ontario pursues clean energy and emission reductions through efficiency and electrification. It also recognizes the potential role of hydrogen and carbon capture in reducing emissions in industries where electrification is not currently possible. Both are currently in the exploratory stages, with legislative or regulatory support to come, including the recently proposed Geologic Carbon Storage Act. If carbon capture advances, it will require developing a CO² pipeline network to transport carbon from its point of capture to either sequester it or capture it for use in other industrial or agricultural processes.

The IEP affirms the province’s support for a national energy corridor, including support for developing new natural gas and oil pipelines through Ontario.

Integrated planning

The plan sets forth several priorities with respect to integrated planning:

• Gas-electric coordination forum. The OEB will establish a forum to enhance electricity planning and facilitate the involvement of gas distributors. This forum will focus on data sharing by using consistent assumptions for demand projections. The forum will report on its outcomes by September 30, 2026.
• Demand scenarios. The IESO will model various electricity demand scenarios, including high and low demand scenarios, with comprehensive assessment of associated risks and uncertainties. The different scenarios will be informed by current trends and policies in areas that may impact electric and natural gas, such as the electrification of transportation. Natural gas and electricity distributors are directed to incorporate multiple demand scenarios in their planning processes and will be encouraged—or required, in some cases—to use these models for applications filed after April 1, 2027.
• Planning processes. The OEB and IESO will update regional and bulk planning processes to improve responsiveness for electricity demand growth. This will include creating a Major Project Identification Committee to act as an “early warning system” to identify projects that could impact electricity demand, and consulting with transmitters and local distribution companies to identify transmission and distribution bottlenecks. The IESO is required to report on identified changes in these processes by December 31, 2025.

Indigenous partnerships

The IESO is tasked with ensuring funding for Indigenous communities to support their input into procurement design processes and participation in related engagements. Newly announced programs to support and enhance meaningful Indigenous participation include:

• Tripling maximum loan guarantees for the Indigenous Opportunities Financing Program, which provides loans to Indigenous communities to invest in energy projects as equity partners, from $1 billion to $3 billion. Project eligibility is also being expanded to included hydrogen, RNG, oil, and gas. Critical mining and resource development are also now eligible for the program.
• Increasing the IESO’s Indigenous Energy Support Program from $15 million to $25 million annually to support the development of Indigenous-led energy projects. Emerging technologies including battery storage are now eligible for the program.
• Creating a new $500,000 annual funding stream for each off-grid First Nation to support transmission connection and reduce diesel reliance.
• Exploring opportunities with Hydro One to expand First Nations communities served by single phase power lines to three-phase lines, as well as other possible solutions such as microgrids to improve reliability and enhance opportunities for local economic development.

Trade opportunities

The IESO is tasked with engaging neighbouring Canadian jurisdictions to evaluate interest in electricity trade and potential new interconnections by October 31, 2025⁶. The IEP also says that Ontario is looking to expand exports to the south “pending normalized trade relations” with the United States. Given that the New York State Independent System Operator and the Midcontinent Independent System Operator are projecting coming capacity gaps as older fossil fuel plants are phased out, there may be increased market demand for Ontario’s clean energy exports in the coming years⁷. Further export opportunities are highlighted, including Canada’s global leadership in both SMR construction and medical isotope production⁸.

Implementation

Minister Directives were issued to the IESO and OEB to implement these plans and monitor their progress against established timelines over the next 18 months⁹. Among other things, the IESO and OEB are responsible for improving planning and coordination and assessing their regulatory processes to enhance the pace and efficiency of project development. The OEB and IESO must report on these opportunities by the end of the year.

The IEP highlights the recently introduced Special Economic Zones Act, 2025, a part of the recently passed Bill 5¹⁰. Like the federal Bill C-5, the legislation aims to streamline the approval process in specific areas for economically important projects. Under this Act, the Minister of Economic Development, Job Creation and Trade has the power to designate Special Economic Zones in which vetted projects may receive expedited permitting and project implementation by exempting them from certain provincial or municipal law or regulation that will be prescribed in later regulations. Ontario is planning on launching a “One Team” coordination initiative, in which designated critical projects are placed on an accelerated project permitting and approval timeline.