Peak Shaving

Ontario rewards peak shaving through a mechanism that does not exist in most jurisdictions, and many eligible facilities are not using it. Five hours a year decide a twelve-month bill. This page explains exactly how that works and what it takes to capture it.

Two different bills, and only one of them rewards a battery

Ontario commercial and industrial electricity has two components worth understanding: the commodity, and the Global Adjustment. For most large consumers, Global Adjustment is the larger of the two.

How you are billed for it depends on your class.

• Class B. You pay Global Adjustment as a rate on every kilowatt-hour you consume. Consuming less helps proportionally. Shifting when you consume does nothing.
• Class A. You pay a share of the province’s entire Global Adjustment pot, and your share is set by how much power you were drawing during the five highest-demand hours in Ontario that year.

That second mechanism is the Industrial Conservation Initiative, and it is what gives a battery a value here that it does not have in most jurisdictions. Under Class A, five hours determine your bill for the following twelve months.

How the peak demand factor actually works

The IESO identifies the five hours during the base period in which the greatest volume of electricity was dispatched province-wide. Your peak demand factor is your total demand across those five coincident peaks, divided by the total system demand across the same five system peaks.

If you accounted for 1% of provincial demand during those five hours, you pay 1% of Ontario’s Global Adjustment costs for the next period. The base period runs May 1 through April 30, and the resulting factor is applied to the following July 1 to June 30 adjustment period.

The consequence is unusual enough to state plainly: for an eligible Class A participant, reducing grid draw across those five specific hours can reduce the Global Adjustment allocation for an entire following year. Hydro One publishes a worked Class A against Class B comparison on its Industrial Conservation Initiative page, and it is worth reading the current version rather than a figure carried forward from an older project.

Are you eligible for Class A?

Eligibility is based on average monthly peak demand during the base period:

• 500 kW to 1 MW. You may opt in, with a NAICS code declaration.
• 1 MW to 5 MW. You may opt in, without the NAICS restriction.
• 5 MW and above. You are enrolled automatically, and may opt out.

If you are sitting just under 500 kW, this is worth modelling anyway, because the threshold has moved before, and a growing facility can cross it.

The five hours are only known afterwards

The five peak hours are only known with certainty after the fact. Capturing the value means predicting which hours will be the annual peaks and discharging through them, typically on the hottest afternoons of July and August, and occasionally in January.

In practice facilities respond to forecast peak alerts and discharge on perhaps fifteen to forty occasions a year to be confident of catching all five. This matters enormously for sizing, because it changes the duty cycle from “five events” to “forty events”, and that is a different battery, a different warranty and a different price.

A quote built on five discharges a year is describing a different duty from the one the programme actually requires. Ask any supplier what cycle count their warranty assumes, and check it against the dispatch plan rather than the peak count.

Sizing a peak shaving system

Three numbers, from one year of interval data:

• Power (kW). How much load you need to remove during a peak hour. This is set by your coincident demand during historical peak hours, not your maximum demand.
• Energy (kWh). How long you must hold it. Peak alert windows commonly run two to four hours, so a 1 MW reduction over a 3-hour window needs roughly 3 MWh of usable energy.
• Annual cycles. Realistically 15–40 for a Class A peak shaving duty, plus anything else you stack on top.

Our peak shaving calculator will give you a defensible first estimate from a single utility bill in about three minutes. It is deliberately conservative; if the numbers work there, they will work in a detailed model.

Stacking value beyond Global Adjustment

A battery sized for five peak events is idle for most of the year. The same asset can also:

• Reduce monthly demand charges on your distribution bill, which is a separate saving from Global Adjustment.
• Offset generator runtime for facilities with diesel backup. See the generator offset calculator.
• Improve power quality on weak feeders, which for some process loads is the saving that actually gets signed off.
• Provide ride-through for short outages, reducing scrap and restart costs.

Most viable Ontario projects we see are stacking at least two of these. A single-purpose peak shaving battery is a harder case than it needs to be.

Safety, permitting and what has changed

NFPA 855 is the installation standard for stationary energy storage and it is referenced in most Canadian project reviews. It does not automatically govern your installation. The Ontario Building Code, the Ontario Electrical Safety Code, the Ontario Fire Code, municipal requirements, your insurer, the project specification and the authority having jurisdiction all bear on which requirements apply and which edition is used.

Confirm that basis with the AHJ before equipment and layout are fixed. Then expect three items to sit in project scope: a site-specific hazard mitigation analysis, fire-test evidence naming the standard edition, test level and sample configuration, and emergency response planning coordinated with the local fire service.

Ask for evidence covering the configuration you are actually buying rather than a similar product line. Certification applies to named configurations, and a certificate proves that something specific was evaluated, not that your site was.

How BX approaches Ontario peak shaving

BX Energy Systems designs and integrates containerized LFP storage for Ontario commercial and industrial sites, from a few hundred kilowatts to multi-megawatt utility-scale blocks. We will tell you if your load shape does not justify a system. That answer is cheaper for both of us than a project that under-delivers.

Book a 15-minute sizing call

Common questions

How much can peak shaving actually save?

It depends entirely on your coincident demand during the five system peaks and on the Global Adjustment rate for the period, which is why we will not quote you a percentage. Note also that since the IESO’s 2025 Market Renewal Program the relationship between wholesale prices and Global Adjustment has changed, so a business case built from an older GA chart can overstate the opportunity. Your number comes from your own interval data and current rates, and the calculator will get you close.

What if we miss one of the five peak hours?

Your peak demand factor is calculated across all five, so missing one raises your allocation proportionally rather than eliminating the benefit. This is precisely why facilities discharge on far more than five occasions a year.

Do we need to be Class A for this to work?

For the Global Adjustment mechanism, yes. Class B customers can still reduce distribution demand charges with storage, but the large prize is Class A. If you are between 500 kW and 1 MW, opting in is a decision worth modelling carefully.

How long does an Ontario project take?

Equipment is rarely the constraint. Utility approval, AHJ fire-safety review and site civil work set the schedule. Starting a year ahead of the summer peak season is realistic; starting in June is not.

What size battery do we need?

Load-dependent, but a useful rule of thumb is that you need to hold your target reduction for the full alert window, commonly two to four hours. Start with the calculator, then send us the interval data.