Canada’s electricity system is entering a phase where keeping power reliable and affordable depends less on building new generation and more on how intelligently demand is managed. Demand response, and especially emerging vehicle-to-grid (V2G) solutions are quickly becoming some of the most important tools to protect grid reliability, control costs and support decarbonization.
Demand for electricity is accelerating from three directions at once: new large loads such as data centres and AI, rapid electrification of buildings and vehicles, and policy pressure to decarbonize. Existing feeders and substations are now seeing sharp peaks driven by synchronized behaviour—heat pumps ramping up on cold evenings, EVs plugging in after work and commercial loads layering on top — all without the luxury of cheap, always on fossil capacity to smooth things out. These challenges are highly localized in time and space, which means simply adding bulk baseload generation does not solve the underlying problem. The core issue is peak demand on existing infrastructure during a relatively small number of hours each year, and that is exactly the problem demand response is designed to address.
The easiest way to understand demand response is to see it as peak pricing and flexibility applied to electricity. Just as hotel rooms or rideshare fares rise when demand spikes, demand response uses prices and incentives to encourage customers to shift or reduce consumption when the grid is under stress. In practical terms, this can mean precooling or preheating buildings, shifting industrial processes by a few hours, or programming appliances and chargers to operate overnight when supply is abundant and low cost. For utilities, this turns previously passive customers into flexible resources that can be dispatched like a virtual power plant, relieving peaks without building new “steel in the ground.”
Electrification is expanding because it saves money for end users and cuts emissions, but it also amplifies the financial impact of peak hours on both utilities and customers. Time of use and other dynamic pricing structures already show how dramatically costs can diverge between off-peak and peak periods, multiplying the value of flexibility for large energy users. For system planners, demand response is often the lowest cost way to meet reliability needs compared with building new peaking plants or accelerating network upgrades. Even modest reductions in peak demand — on the order of a few percent — can translate into disproportionately large systemwide savings by avoiding or deferring capacity investments.
The foundation of modern demand response is the convergence of connected devices, advanced metering and cloud-based control platforms — essentially the practical reality of the Internet of Things. Smart meters, networked thermostats, building management systems, variable speed drives and controllable EV chargers all provide granular visibility into load and the ability to adjust it in near real time. These systems allow utilities and aggregators to send automated dispatch signals to thousands of devices simultaneously, orchestrating lighting, HVAC, pumping and process loads to respond within minutes. The result is a controllable, distributed portfolio of demand side resources that can be measured, verified and paid for like any other capacity product.
Financially, well-designed demand response programs create a shared value proposition. Utilities lower their cost of service by reducing peak procurement, deferring network reinforcements and improving system reliability, while customers receive incentives, lower bills or reduced exposure to volatile spot prices in exchange for flexibility. For commercial and industrial participants, the opportunity is particularly compelling: shifting production schedules, optimizing pumping or compression, or flexing storage and process loads can unlock significant operating savings with limited impact on output. At scale, these programs also deliver measurable emissions benefits by reducing reliance on high emitting peaker plants during the dirtiest hours of operation.
Despite the clear benefits, implementing sophisticated demand response at scale is not trivial. Organizations often struggle with fragmented hardware and software ecosystems, where meters, chargers, batteries and building systems speak different protocols and cannot easily be orchestrated through a single control layer. There is also a cultural and organizational shift required: energy must be treated as a managed commodity, not just a monthly bill. That means investing in measurement, analytics and inhouse or external expertise that can translate kilowatts and kilowatt-hours into understandable financial and operational metrics for decision-makers.
Vehicle-to-grid sits at the frontier of demand response by turning electric vehicles into bidirectional assets rather than simple loads. By enabling chargers and vehicles to both draw from and inject power to the grid, V2G can support local transformers, substations or even feeders during critical hours using energy stored in vehicles that would otherwise sit idle. Pilot projects with buses, school fleets and commercial vehicles are already demonstrating how aggregated V2G can provide peak shaving, backup capacity and even frequency regulation. In a country with Canada’s vehicle ownership levels and low population density, widespread V2G adoption represents a huge untapped reservoir of flexible capacity that can be deployed in urban and semiurban areas without new largescale generation.
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None of this works without robust digital infrastructure and data governance. Utilities need high-resolution metering, interoperable communication standards, secure control channels and settlement systems capable of associating millions of small, distributed actions with specific customers and tariffs. Data platforms and analytics turn raw measurements into actionable insights: identifying where flexibility is most valuable, predicting peaks and optimizing dispatch to minimize cost and risk. Jurisdictions that have invested early in advanced metering infrastructure and open standards are already demonstrating that flexible loads can be integrated into markets at scale and compensated transparently.
To unlock the full potential of demand response and V2G, utilities, regulators, technology providers and large customers need aligned economic and technical frameworks. Program design must balance reliability requirements with customer experience: participation should be voluntary, predictable and financially meaningful, not intrusive or disruptive. On the regulatory side, enabling rules for aggregators, clear measurement and verification protocols, and market products for capacity, reserves and flexibility are all critical. This alignment allows utilities to procure demand side resources with the same confidence as traditional assets while giving private partners and customers a stable pathway to invest in enabling technologies.
Over the next five to ten years, success in demand response for Canadian utilities will be visible in three main ways. First, retail and wholesale electricity prices can remain comparatively stable, even as electrification accelerates and new large loads connect, because peaks are managed with flexible demand rather than expensive new capacity. Second, distribution system planning can routinely treat demand side flexibility, behind-the-meter storage and V2G as core tools alongside traditional upgrades. Third, customers — residential, commercial, industrial and fleet operators — can view participation in demand response as standard practice, embedded into devices, contracts and operational planning rather than as a niche pilot or marketing program. The most cost-effective megawatt over the coming decade may not be one that is generated, but one that is shifted, shaped or shared, and demand response with V2G gives the grid the flexibility it needs to keep Canada’s advantage of clean, reliable and affordable electricity intact in an era of rapid change.
Author
Christopher Ralph
Expert, Electrification & V2G
Key Account Manager, Railway & Sustainable Communities
Norda Stelo