Back
Illinois’s ambitious clean energy transition, which mandates a phaseout of fossil-fuel power by 2045, depends on adding large amounts of energy storage to the grid. This is especially true now with the proliferation of data centers. Utility-scale battery installations will be key to ensuring that renewables — along with the state’s existing nuclear fleet — can meet electricity demand.
That’s why energy companies and advocates are racing to get legislation passed that incentivizes the addition of battery storage on the grid, before the state legislative session ends May 31.
On May 1, a state regulatory commission released a report outlining its recommendations for a summer procurement of grid-connected battery storage by the Illinois Power Agency, which procures power on behalf of utilities ComEd and Ameren.
Clean energy industry leaders and advocates have been pushing for storage incentives for years and were disappointed that such provisions were not included in the 2021 Climate and Equitable Jobs Act.
In a January lame-duck session, the legislature passed a narrow bill that ordered the Illinois Commerce Commission — which regulates utilities — to hold stakeholder workshops to study grid storage capacity needs and possible incentive structures. The resulting report is meant to inform legislation that backers hope will pass this spring and lead to the storage procurement this summer.
In the report, the commission noted that energy storage would reduce prices, increase grid reliability and resilience, avoid costly grid upgrades and power plant construction, facilitate renewable energy deployment, and create “macroeconomic benefits” like jobs and investment in local infrastructure.
Jeff Danielson, vice president of advocacy for the Clean Grid Alliance, whose members include renewable power and battery storage developers, said the plans are long overdue.
“Wind and solar are important, but for the grid itself to be holistically sustainable requires battery storage,” Danielson said. “Battery storage has value. It’s time for Illinois to add this tool in its toolbox for a sustainable grid.”
The report recommends that the Illinois Power Agency do an initial procurement for 1,038 megawatts of grid-connected storage this summer — a total that the commission says should include 588 MW in the PJM Interconnection regional transmission organization’s territory in northern Illinois and 450 MW in the territory managed by the Midcontinent Independent System Operator. Additional procurements by the end of 2026 should incentivize the construction of 3 gigawatts of storage to be in operation by 2030, the report says. And it calls for setting a second target for additional storage beyond 2030.
Advocates and industry groups said they are generally happy with the proposals, though energy storage and renewable industry leaders were asking for a 1,500-MW initial procurement and up to 15 GW of storage by 2035. The commission’s draft report had called for only 840 MW in an initial procurement, but after hearing public comments, it upped the amount in the final version. The industry also wants incentives for both stand-alone storage and storage paired with renewable energy, but the commission’s report recommends that the initial procurement only be for stand-alone batteries.
“It’s now up to lawmakers to meet the moment and provide both a short-term and long-term solution to high utility bills,” said Danielson. “Energy storage is the right answer, at the right time, for the right reasons.”
It’s crucial that legislation pass this year since storage developers are seeing increasing demand nationwide and deciding where to invest, said Samarth Medakkar, Illinois lead for Advanced Energy United, an industry group whose members include renewable and storage companies.
There are already gigawatts of proposed battery storage projects in Illinois that are waiting for approval from the Midcontinent Independent System Operator to interconnect to the grid. Those projects need funding to progress and meet deadlines set by the grid operator to stay in the queue, Medakkar explained.
“There’s competition — developers are looking at Illinois as a market, but they’re looking at other states as a market too,” Medakkar said. “We need to make these as least risky as possible. Procurement would give them confidence to make the payments to stay on course in the queue. We can send a signal to developers that if you make these nonrefundable payments, we will have a market for energy storage and you can bid your project into this market.”
A letter from storage and renewable developers to the chief of the Commerce Commission’s Public Utilities Bureau, offering comments on the draft report, noted that storage projects take seven to 10 years to develop, so the state needs to act soon to procure the grid battery capacity it wants online beyond the 2030 date discussed in the study.
“Developers across the country are facing a challenging federal environment, including newly announced tariffs,” the letter says. “As a result, many developers are now prioritizing their limited capital across fewer projects — focusing on states with established and supportive markets, and divesting from states that are not as far along.”
The commission’s report proposes incentivizing storage through a market for indexed storage credits, structured similarly to the state’s renewable energy credit program that has fueled a boom in solar power and, to a lesser degree, wind power. Under this design, the developer or owner of the storage is essentially allowed to sell credits for funds awarded by the state and collected from utility customers.
New York is the only other state with a storage credit market, according to experts. If Illinois passes legislation and launches the program this summer, it will be rolling out around the same time as the nascent program in New York, scheduled to hold its first procurement by the end of June. In other states, grid storage is supported through a structure known as tolling agreements, wherein utilities or other companies build and operate battery installations on the grid, and utility customers are essentially charged for their use.
In both models, residents pay for the new storage through their electric bills — just as they pay for renewables under Illinois’ existing renewable energy credit program. The Commerce Commission found that 3 GW of storage incentivized through credits would cost utility customers between 39 cents and $1.69 per month, though storage would also lead to bill savings by avoiding costlier investments in generation.
Danielson said battery storage developers prefer a tolling structure since it is a much more common and potentially more effective practice. It would be “pretty odd” if Illinois did not offer that option, he said, though ultimately, companies are eager to get legislation passed in whatever way possible.
“We’re not making a judgment about which one’s better. It just needs to be a choice,” Danielson said.
James Gignac, Midwest policy director of the Union of Concerned Scientists, said clean energy advocates are on the same page.
“I would be hopeful we can identify a way to use tolling agreements because the more options we can offer to the market, that means we’ll be getting more companies interested in proposing projects,” Gignac said. “That’s good for consumers and provides more competition. We may learn that the indexed storage credit approach is producing a certain type of project, and a tolling agreement could be offered to attract a different size of facility or different use case.”
Danielson noted that California, New York, and Texas have the largest amounts of on-grid storage in the country, and Illinois could be poised to join them.
“One thing those three states have in common is density of businesses and people,” Danielson said. “There is no good reason why Illinois should be lagging these other states in terms of these projects being built.”
The battery storage workshops this spring were “eerily similar to what we just did” in the leadup to CEJA, Illinois’ 2021 climate law, he continued. “For five years, these ideas have been studied and bantered about. Now demand is higher for sustainable power, the technology is better, [and] the costs are lower, which means Illinois leadership matters now more than ever.”
One subject of debate is whether the storage incentives should include the same focus on equity that has characterized Illinois’s existing clean energy laws – CEJA and the Future Energy Jobs Act before that. Workforce training and solar deployment programs created by these laws prioritize people and communities impacted by fossil-fuel power plants, the criminal justice system, and other indicators of inequity. The commission’s draft report recommended that storage procurement exclude such equity provisions, in part because battery storage-related jobs include dangerous, high-voltage conditions.
Members of the Illinois Clean Jobs Coalition objected, noting that solar and wind jobs also involve high voltage. In comments to the commission on behalf of clean energy groups, Gignac stated that solar and wind developers can request waivers under the state law if they can’t find equity-qualifying candidates for certain jobs; meanwhile, there is “no evidence” that equity-eligible employees and contractors would be unqualified for storage development.
The final recommendations encourage the same equity standards for storage development as for renewables, a change lauded by advocates.
“This will help ensure that Illinois is advancing equitable workforce opportunities in battery storage facilities alongside other clean energy technologies such as wind and solar,” said Gignac.
Clean energy advocates and industry representatives plan to encourage lawmakers to amend or introduce legislation based on the findings in the Commerce Commission’s report, they said
The Illinois Clean Jobs Coalition, which helped pass CEJA, is pushing for a new energy omnibus bill this legislative session. Members said they are hoping to work with industry to add storage-related language. Meanwhile, renewable and storage industry stakeholders are backing a bill that would require the Illinois Power Agency to procure energy storage totaling 15 GW online by 2035, and require utilities to charge customers to fund it. The bill would allow both credit and tolling incentive structures.
Samira Hanessian, energy policy director of the Illinois Environmental Council, said she is “cautiously optimistic” about a bill incentivizing storage passing this legislative session.
“I’m feeling a lot more positive around how storage is now coming up in most conversations with legislators and in our coordination spaces,” Hanessian said. “To me it’s become a very real policy issue that we are on track to address this session.”
.svg)
