Ontario’s electricity market is undergoing a historic transformation with the Independent Electricity System Operator’s (IESO) Market Renewal Program (MRP), set to launch on May 1, 2025. This initiative is not just an incremental update—it represents a fundamental overhaul designed to improve efficiency, transparency, and cost-effectiveness in how electricity is supplied, scheduled, and priced. With projected benefits of $700 million in the first decade, the MRP is reshaping the market landscape, creating new challenges and opportunities for large energy consumers.
As one of the largest electricity consumers in Ontario, your business must be ahead of these changes to mitigate risk and capture new value streams. In this article, we break down the key elements of the MRP and what it means for your operations.
What is the Market Renewal Program?
The Market Renewal Program (MRP) is a multi-year initiative designed to modernize Ontario’s electricity market through new tools, processes, and pricing mechanisms. The primary objectives of the MRP include:
- Enhancing grid reliability through improved market efficiency.
- Optimizing price signals to encourage efficient energy consumption and investment.
- Enabling greater participation of Distributed Energy Resources (DERs), demand-side management, and storage solutions.
For large energy consumers, this means greater opportunities to optimize energy costs, participate in new market structures, and leverage demand-side flexibility to gain a competitive advantage.
Why Should Large Energy Consumers Care?
The MRP is designed to address long-standing inefficiencies in Ontario’s electricity market. Here’s why it matters to large energy users:
Lower Energy Costs – With projected consumer savings of $700 million over ten years, businesses with energy flexibility can directly benefit from more accurate market signals.
Better Price Transparency – The shift to Locational Marginal Pricing (LMP) ensures electricity prices truly reflect system conditions, reducing inefficiencies and out-of-market payments.
New Revenue Streams – Demand response, energy storage, and flexible load participation will see expanded opportunities within the new Day-Ahead Market (DAM) and Capacity Auction Enhancements.
Improved Reliability – Optimized scheduling and real-time commitment enhancements reduce volatility and strengthen system reliability, leading to fewer disruptions and cost spikes.
Key Components of the Market Renewal Program
- Day-Ahead Market
- Allows participants to buy and sell electricity a day in advance, ensuring more accurate pricing and improved planning.
- Reduces exposure to real-time price volatility, benefiting businesses that can adjust energy usage in response to market signals.
- Enhanced Real-Time Unit Commitment (ERUC)
- More efficient dispatch of generation resources closer to real-time operations.
- Increases reliability by ensuring system resources are scheduled based on actual grid conditions.
- Single Schedule Market (SSM)
- Eliminates the inefficient two-schedule pricing system, replacing it with a locational marginal pricing
- Ensures prices better reflect the true cost of electricity at specific locations in the province.
- Capacity Auction Enhancements
- Expands access to the Capacity Auction, enabling a more competitive procurement process for capacity resources.
- Encourages broader participation from demand response (DR), energy storage, and other flexible resources.
What This Means for Market Participants
For Energy Traders
- The shift to SSM with LMP provides clearer price signals, enabling more sophisticated trading strategies.
- Ontario Zonal Pricing (OZP) replaces the Hourly Ontario Energy Price (HOEP), requiring traders to adapt to a new pricing framework.
For Power Producers
- Improved market signals allow generators to optimize their commitments, increasing operational efficiency and potential earnings.
- Greater competition and transparency may impact revenue streams for traditional generators, requiring new strategic approaches.
For Large Commercial & Industrial Customers
- Businesses with load flexibility can shift operations to capitalize on price fluctuations, reducing costs and unlocking new revenue streams.
- Demand response participants, through their aggregators, can bid into the Day-Ahead Market, securing revenue ahead of real-time operations.
- Companies with on-site storage and DERs can leverage energy arbitrage opportunities, managing costs through strategic energy storage and dispatch.
How Rodan Energy Can Help
Rodan Energy Solutions is at the forefront of Ontario’s evolving energy market, offering expert guidance and strategic solutions to help businesses maximize value and mitigate risks under the new MRP framework.
- Daily & Monthly Settlement Verification – Ensuring accurate financial tracking and cost optimization.
- Capacity Auction Participation – Unlocking new revenue opportunities through strategic participation in Ontario’s capacity market.
- Metering & Reporting – Providing precise data analytics for smarter energy management and decision-making.
- Demand Response & Energy Storage Optimization – Helping large consumers monetize their flexible load and on-site energy assets.
- Strategic Market Positioning – Identifying optimal procurement strategies to reduce costs and increase market competitiveness.
Conclusion
The Market Renewal Program represents a transformational shift in Ontario’s electricity market, redefining how energy is priced, scheduled, and consumed. Large energy consumers who proactively adapt to these changes can position themselves for long-term cost savings and competitive advantages.
Are you prepared for Ontario’s new energy market? Connect with Rodan Energy Solutions today to develop a customized strategy that optimizes your energy portfolio and maximizes value under the MRP framework.
