Lyall: Powering up homebuilding.
February 26, 2025
Two major announcements in recent months by the Ministry of Energy and Electrification are encouraging moves for Ontario’s homebuilding industry and professionals who work in the renovation sector. Together, the initiatives will significantly reduce the cost of connecting newly built homes to the power grid and boost the province’s renovation industry by encouraging energy-efficient retrofits.
The Affordable Energy Act, which came into effect at the end of 2024, will change the Ontario Energy Board Act, 1998, and give new homebuyers a break by permitting the regulation-making authority to reduce the up-front capital costs of connecting power lines to new homes. These last-mile connections, as they are known, significantly increase the cost of buying a home. The cost of building new infrastructure needed to connect to the grid increases costs for homebuilding and deters buyers. By making this change, the province is bringing down the cost of home ownership.
The amendment reduces upfront capital costs by permitting the revenue horizon for connecting homes to the grid from 25 years up to 40 years, allowing the cost of infrastructure to be spread over a longer period. The old system made it difficult and more expensive to build new homes because no one wanted to take on the risk and extra cost. This is a good move that will cut costs for prospective homeowners.
Recently, the ministry also launched a new Home Renovations Savings Program (HRSP) which is part of a broad-based suite of energy initiatives that will ultimately provide for continued affordable, secure and reliable energy to support Ontario homes and businesses in the years to come. The HRSP is part of a $10.9 billion, 12-year investment in energy efficiency, the largest in Canadian history. The investment is expected to result in $23.1 billion in electricity system benefits and save taxpayers $12.2 billion in electricity system costs by avoiding the build out of new generation. The investment highlights the ongoing commitment of Energy and Electrification Minister Stephen Lecce to help people save on energy and put more money back in the pockets of homeowners. The HRSP launched in January and will offer rebates of up to 30 percent for home energy efficiency renovations and improvements, including new windows, doors, insulation, air sealing, smart thermostats, heat pumps, as well as rooftop solar panels and battery storage for people who want to generate and store energy at home. For contractors and homeowners alike, these programs will help drive the energy-efficient home renovation market, creating new opportunities and boosting productivity across Ontario’s construction sector.
Specifically, the program will offer: $600 for a home energy assessment; $100 per new window and door; up to $8,900 for insulation; up to $250 for air sealing; $75 for a smart thermostat; $500 for a heat pump water heater; up to $7,500 for a cold-climate air-source heat pump; up to $12,000 for a ground-source heat pump; up to $5,000 for rooftop solar panels; and up to $5,000 for battery storage systems. Later this year, the program will expand to include rebates for energy efficient appliances, including refrigerators and freezers. Homeowners who heat their homes by propane and oil are also included in the program.
The HRSP is endorsed by the likes of Mike Holmes, founder and president of the Holmes Group. The Ontario Home Builders’ Association, meanwhile, anticipates the HRSP will help homeowners save money and boost activity in the renovation sector, which accounts for more than 350,000 jobs. In addition, the province continues to support 12 Save on Energy programs, which offers financial incentives to upgrade equipment that will lower energy costs and improve productivity.
By 2036, it is forecasted that the expansion of energy efficiency programs will reduce the province’s peak demand by 3,000 megawatts – the equivalent of taking three million homes off the grid. These measures are critical as the Independent Electricity System Operator has forecasted that Ontario’s electricity demand will increase by 75 percent by 2050 – the equivalent of four and a half cities the size of Toronto. The increased demand is mostly due to Ontario’s rapid population increase, new manufacturing facilities, artificial intelligence data centres which draw a lot of power, and electrification of industry and vehicles.
To alleviate our housing supply crisis, we must find a way to bring down costs and build more homes. The province is nowhere near the targeted number of homes it needs to meet demand. We must pull out all the stops to make this happen. Any initiatives to lower costs and drive energy efficiency in the home renovation market are welcome news and have our full support.
