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.”
The case for boosting Illinois’ energy storage market now
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.”
What’s the best way to incentivize grid batteries?
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.
