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Illinois could start turning homes and businesses into “virtual power plants” with solar-powered batteries aiding the grid, under a bill that has been gaining momentum in the state legislature.
In Puerto Rico, Vermont, California, Texas, and other states, virtual power plants have helped the grid survive spikes in demand, avoiding outages or the need to fire up gas-fueled peaker plants, and saving consumers money.
Illinois is among the areas expecting electricity demand to grow rapidly because of new data centers; meanwhile, the state is mandated to phase out fossil-fuel generation by 2045, and residential and commercial solar have boomed thanks to state incentive programs. If those solar arrays were paired with batteries, they could provide crucial clean power to the grid during high demand.
HB 4120, an ambitious bill that Illinois lawmakers may consider during an October veto session, would create a basic virtual power plant (VPP) program while mandating that the state’s two largest utilities — ComEd and Ameren — propose their own VPP programs by 2027.
The bill’s plan would offer a rebate to customers who purchase a battery, if they agree to let the battery be tapped for several hours a day during the summer months, when air conditioners drive up electricity use.
The Illinois proposal is less nuanced and comprehensive than VPP programs in other states. For example, in Vermont, Green Mountain Power subsidizes the purchase of batteries, which the utility can then tap while also controlling customers’ smart thermostats, EV chargers, and water heaters whenever the grid is stressed.
But stakeholders in the solar and energy storage industry say Illinois’ proposal is an important first step, opening the door for more ambitious VPP services.
“A utility may want a program to address ‘emergency calls’ to reduce peak load, or deal with a winter peaking issue, or address locational capacity constraints,” said Amy Heart, senior vice president of public policy at Sunrun, a national company that has invested heavily in Illinois solar and that runs VPPs in Puerto Rico, California, and other places. “There is an official pathway and timeline for all of this.”
Energy players in Illinois have been talking seriously about VPPs for several years, during negotiations over what has now become HB 4120. The legislation would incentivize the construction of large-scale energy storage in Illinois, through procurement by the state power agency. VPPs, meanwhile, would provide a decentralized form of storage.
Under the bill’s VPP program, residential customers would get a rebate of $300 per kilowatt-hour on the capacity of the battery they purchase, and then receive at least $10 per kilowatt during scheduled dispatches from 4 p.m. to 6 p.m. on weekdays in June, July, August, and September for a five-year period. “It’s sort of a ‘set-it and forget-it’ program,” said Heart.
Illinois residents already receive a rebate for the same amount when they purchase a battery, but with the new rules, consumers would need to participate in the VPP program to qualify.
All community solar projects with storage would be required to participate in the VPP program, dispatching from 4 p.m. to 7 p.m.
ComEd, which serves northern Illinois, and Ameren, which serves most of the rest of the state, could petition the Illinois Commerce Commission for permission to tap the batteries on a different schedule, for no more than two or three hours a day over 80 days each year.
The basic program would not help with peak demand during unscheduled times — like unexpectedly hot fall weather. But at least utilities would be guaranteed power during the scheduled peaks, said Heart.
“People wanted to move quickly,” on getting a VPP program in the legislation, she added. “You avoid delays [caused by] trying to make this perfect. Industry is talking about how we need stability; nonprofits, ratepayer advocates, utilities, [and] labor are all talking about why we need these investments.”
Illinois, like many states, has demand-response programs that are often considered part of virtual power plants, helping people reduce their energy use during peak demand. And ComEd has already proposed a VPP program to state regulators.
But legislation is crucial for VPPs to really take off, to ensure that programs “feature robust participation, innovation by aggregators, and a wide range of benefits,” said Samarth Medakkar, policy principal for Advanced Energy United, a national trade association of power, transportation, and software companies focused on clean energy.
Illinois’ bill would permit third-party aggregators to manage VPP deployment, a common setup in other states wherein a company, like Virtual Peaker in Vermont, coordinates battery deployment and demand response for the customer and utility.
ComEd and Ameren would be required to file reports by the end of 2028 detailing how many people have enrolled in the VPP program and its effects on energy supply.
By the end of 2027, the companies would have to file proposals for their own VPP programs, which the state regulatory commission must approve by the close of 2028. Those programs would need to include higher incentives for low- to moderate-income customers, “community-driven” community solar projects, and areas targeted for equity investments in Illinois’ existing energy laws.
“VPPs have a huge potential in a state like Illinois, where there are already many capable devices — like smart thermostats and solar systems which can pair with storage — increasing in number at a rate we can accelerate,” said Medakkar.
An analysis conducted by clean-energy think tank RMI found that VPPs could meet most of the expected new demand in Illinois, providing a crucial bridge while more clean-power generation and transmission lines are built.
The report notes that the state will need around 3.9 gigawatts of new generation or energy savings by 2029, as demand grows and old fossil-fueled plants retire.
VPPs could satisfy about three-quarters of that need, the analysis says, if they account for 10% of electricity used during peak demand times by tapping batteries and dialing down customers’ energy consumption.
Plus, it takes much less time to set up a VPP than to build a new traditional power plant. “VPPs can be deployed in as little as six months, nearly three years quicker than the median deployment timelines for utility-scale batteries and natural gas plants,” notes the RMI report, which was produced for Advanced Energy United to inform the legislative process.
The analysis determined that VPPs would save the average Illinois customer $34 a year by reducing the amount of expensive capacity that utilities would have to purchase in the auctions run by regional grid operators. ComEd’s customers especially are seeing their bills skyrocket due to record-high capacity costs in the PJM regional market.
“There’s great untapped potential in demand-response and VPP-type products,” said Sarah Moskowitz, executive director of the Citizens Utility Board, which advocates for Illinois’ electric and gas customers. “It’s disappointing we haven’t seen more opportunities of this sort take root here. But maybe now, with the spiraling energy prices, policymakers will finally see that these are programs that can bring real benefit not just to those who directly participate but to everybody.”
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