Save on Energy Incentives and Programs for SME Businesses in Ontario

The Ontario provincial government offers various grants and incentives to households and businesses located within the province to invest in energy efficient equipment through the Save on Energy program. This article will cover the current grants and incentive programs geared towards Small and Medium Enterprises (SMEs).

The current Save on Energy business incentive programs are: (1) The Energy Retrofit Program, (2) the Energy Performance Program, and (3) the Industrial Energy Efficiency Program.

The Save on Energy program has been around since 2011 and has provided energy-efficiency opportunities and resources to more than 250,000 homes and businesses in all sectors across Ontario to help them better manage their electricity use, saving nearly 16 terawatt-hours (TWh) of electricity since being introduced.

Energy Retrofit Program

This program offering provides incentives for retrofitting your businesses old equipment to be more energy efficient. This program offers retrofits under the following streams: (1) Lighting, (2) HVAC, and (3) Manufacturing and other equipment.

Amount of Funding:

This program provides up to 50% of a project’s eligible costs to a maximum of $1,000,000 per project.

Program Eligibility:

Retrofit incentives are available to owners or lessees of:

• Commercial spaces or buildings, such as offices, retail and grocery stores, restaurants, hotels, and warehouses;
• Industrial facilities in sectors such as food and beverage, automotive, plastics, steel, mining, paper, and chemical industries;
• Institutional buildings including hospitals, universities, and municipal facilities;
• Multi-family buildings, such as apartments (including social housing) or condominiums; and
• Agricultural facilities including dairy, swine and poultry farms, greenhouses, and nurseries.

Eligible Projects:

Projects eligible for the retrofit program are generally those that provide sustainable, measurable, and verifiable reductions in peak electricity demand and electricity consumption.

Examples of eligible projects include:

• Lighting retrofits
• Lighting controls
• HVAC redesign
• Chiller replacement
• Variable-speed drive installations

When to Apply for the Energy Retrofit Program:

All program applications must be submitted and approved by December 31, 2024. Projects that have been approved for funding must be completed by no later than December 31, 2025.

Learn more about the Energy Retrofit Program.

Industrial Energy Efficiency Program

This program provides funding for large Ontario businesses in the industrial sector to carry out large projects that reduce the amount of energy required to operate.

Amount of Funding

This program covers up to 75% of eligible project costs to a maximum of $5,000,000 in financial incentives for each approved large, complex industrial energy-efficiency project. 

Eligible Businesses:

• Owners and/or operators of an industrial facility located in Ontario; or
• Third-party applicants with the authority to implement a project at an industrial facility located in Ontario.

Eligible Projects:

All projects eligible to receive funding through the Industrial Energy Efficiency Program must meet the following criteria:

• Involve an energy-efficiency improvement applied to, or in support of, an industrial process;
• Propose a minimum electricity savings of 2,000 MWh per year (which must represent a reduction of at least 15 per cent of the baseline electricity use of the relevant industrial process); and
• Use technology that is commercially available and not excluded by the program eligibility rules.

When to apply for the Industrial Energy Efficiency Program

The second round of funding for this program will begin accepting applications on October 1, 2022, and closes on August 15, 2023. Approved projects in the second round of applications will be awarded in late 2023. Future intakes of this program are expected to be announced at a later date.

Learn more about the Industrial Energy Efficiency Program.

Energy Performance Program

This program provides financial incentives through a multi-year, pay-for-performance incentive structure for lasting operational and maintenance energy efficiency measures and equipment retrofits. This program offers a one-time payment for pre-project energy usage, and a Pay-for-Performance Period during the eligible timeline of the project.

Pre-Project Funding:

Receive a one-time advance payment based on your anticipated Performance Incentive, calculated as follows:  Baseline Energy Consumption * 2.5% * $0.04/kWh.

Project Funding:

Your Performance Incentives must be calculated for each Pay-for-Performance Period as follows: 

• Energy Incentive Rate of $0.04/kWh multiplied by the Electricity Savings; and 
• Peak Demand Incentive Rate of $50/kW multiplied by the Peak Demand Savings. 

When to Apply for the Energy Performance Program

All applications must be approved by December 31, 2024.

Learn more about the Energy Performance Program.

Get to more about Canadian government funding programs by downloading a free copy of our Navigating the Funding Process slide deck to learn more about applying for funding in-house, research support, and technical writing support.