Innovation and Electricity Regulation Initiative (IERI)

The Innovation and Electricity Regulation Initiative (IERI) works with stakeholders to identify and address regulatory barriers that affect the scale-up of downstream energy innovation in Canada.

Established in 2020 under Natural Resources Canada’s Clean Technology Regulatory Review Roadmap, IERI leads the Office of Energy Research and Development (OERD)’s efforts to advance factors of economic regulation that support grid modernization and the energy transition. The team analyzes Canada’s regulatory landscape for energy infrastructure, identifies challenges to innovation, and collaborates with partners to shape programs that advance innovative energy solutions. IERI enhances federal programs to help transform Canada’s energy sector, integrate new technologies, and accelerate grid modernization across diverse provincial and territorial regulatory contexts.

Why we are looking at regulatory innovation

As Canada moves through its energy transition, the focus is not only on building new infrastructure. Equally important is updating the systems and regulations that govern how energy infrastructure is planned and operated, especially at the distribution level of the networks connected to homes and buildings in our communities. After nearly 25 years of investing in grid modernization research and demonstrations, NRCan has learned that energy innovation cannot scale without regulatory frameworks that enable new technologies, modern planning approaches, and updated approaches to grid operations. Provinces and territories play a central role in this transition. They regulate the energy systems that shape how Distributed Energy Resources (DERs), microgrids, demand response, district energy, and other innovative technologies are planned, approved, cost-recovered, and integrated into the system.

The IERI team conducted analyses of resources and capacity for innovation regarding economic regulation of energy infrastructure across provinces and territories. It found that nuancing the more capital-intensive supports with supports for developing innovation capacity within regulatory systems can accelerate transition efforts and amplify the benefits of innovation. Further, it found that the approach needs to be flexible and meet jurisdictions where they are, as each region faces different constraints and capacities. Sustained funding and technical expertise for this sort of capacity development has been found to help jurisdictions develop tailor regulatory solutions that improve reliability, enhance affordability, and adopt successful innovation more quickly, advancing progress toward Canada’s energy goals.

The work of IERI supports:

utilities to improve the design of innovation projects such that they respond to requirements under economic regulation, and facilitate innovative energy technology adoption

provincial and territorial partners as they strengthen planning and regulatory processes for a modernized grid

federal programming to be reflexive of challenges under economic regulation, particularly as it relates to energy affordability. This includes projects that advance regulatory experimentation, cross-jurisdictional learning and the generation of evidence to inform decision-making within the regulatory system

Funding

IERI is a part of the design and implementation of key OERD innovation program calls, including the Energy Innovation Program – Smart Grids. This Call for Proposals had two streams:

Regulatory Innovation Capacity Building

Closed

This stream supports innovation in the economic regulation of Canada’s electricity systems. It enables provincial, territorial, and utility-led regulatory experimentation and capacity building required to modernize planning and regulatory processes. The IERI team is the technical lead for this stream.

Smart Grid Demonstration

Closed

This stream supports key technological, market, and regulatory innovations that address barriers to scaling pilot projects into grid-wide deployments. It funds utility-led Distributed Energy Resources (DERs), microgrids, Demand Response (DR), and Vehicle-to-Grid (V2G) projects to advance grid modernization. The IERI team supports design, delivery, and regulatory learning for this stream.

Engagement

The IERI team engages nationally with stakeholders to ensure programs and research reflect sector realities and opportunities.

Engagement mechanisms include:

  • Request for Information (RFI - 2023) that gathered stakeholder input on accelerating electrification and grid modernization, enabling regulatory change, supporting innovation through federal funding, and addressing disproportionate policy impacts

  • Working groups and communities of practice

  • Targeted conversations with utilities, regulators, governments, think tanks, Indigenous partners, academia, and private sector actors

Research

Ongoing research provides insights on regulatory developments and emerging trends affecting energy innovation.

Key research areas include:

  • Regulatory scans across provinces and territories

  • Mechanisms for regulatory experimentation

  • Analysis on grid modernization advancements

  • Lessons learned from utility innovation

  • Energy equity considerations in regulation

  • Northern and remote energy contexts

Past research

The Utility Innovation Paper research analyzed smart grid projects funded between 2018 and 2023 to understand how utility-led innovation is shaping Canada’s energy system. The purpose was to assess what worked, what challenges emerged, and how these projects contributed to affordability, system reliability, distributed energy resource integration, and clean energy adoption. The review found clear benefits, including better use of existing assets, improved cybersecurity practices, reduced Greenhouse Gas (GHG) emissions, and greater operational flexibility. These outcomes provide valuable evidence for refining federal programs and informing future policy and regulatory approaches that support innovation at scale.

In the spotlight

February 17, 2026 – Canada invests to advance Indigenous leadership and participation in the energy transition through the Ontario Energy Board’s Innovation Sandbox Challenge: Empowering Indigenous Innovation and Leadership. Funded under the Energy Innovation Program, the project will support innovators in developing and testing new approaches that improve Indigenous participation in decarbonization, decentralization, democratization, and digitalization.

January 29, 2026 – Canada invests to advance regulatory innovation for co-operative ownership and governance in Canadian energy grids with Community Energy Cooperative Canada. Funded under the Energy Innovation Program, the project aims to accelerate renewable energy co-operatives in Canada by developing regulatory roadmaps and conducting policy analysis to promote community-owned energy, resilience, economic benefits, and regulatory innovation for a sustainable future.

January 12, 2026 – Canada invests to build a more affordable, reliable energy future with four Alberta projects funded under the Energy Innovation Program. These projects are advancing regulatory innovation, grid modernization, rates, thermal energy networks, and demand-side management to improve winter reliability, energy security, affordability, and Canada’s economic competitiveness.

These four projects are managed under the IERI Team’s Regulatory Innovation Capacity Building Program.

Resources

Past events

Studies and reports

Government initiatives and summaries

Findings from sector engagement

Contact us

For any questions, please contact the Innovation and Electricity Regulation Initiative Team at: ieri-iire@nrcan-rncan.gc.ca.

 
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