Illinois addresses high energy costs by betting big on battery storage

Electricity prices have increased across much of the country, and Illinois is among the states seeing the largest increases. Over the past five years, prices have risen by about a third on average across the state, and some areas have seen increases of nearly 50 percent. According to the Illinois Commerce Commission, more than 170,000 disconnection notices were sent in June alone, compared to about 46,000 for the same period last year.

In response to skyrocketing utility bills, Illinois lawmakers passed a sweeping energy reform package last week. The Clean and Reliable Grid Affordability Act, or CRGA, should flood the grid with more electricity and bet big on battery storage. In a historic move, lawmakers also lifted the state’s nearly four-decade-old moratorium on the construction of new large-scale nuclear reactors in Illinois. The state Legislature passed a law two years ago making an exception for small modular reactors. Nuclear power already provides more than 50 percent of the state’s energy mix. The state currently relies on a mix of fossil fuels and renewable energy for the remainder of its energy, with solar and wind accounting for about 13% of its energy consumption.

To finance construction, Illinois ratepayers will face a surcharge on their electric bills starting in 2030. An analysis by the Illinois Power Agency, which manages how the state procures its electricity, found that implementing the program would cost about $1 billion but would save consumers more than $13 billion over 20 years.

The bill comes as the state’s power system is in dire straits due to a surge in demand from energy-hungry data centers, a state law promising to phase out the use of fossil fuels for electricity generation and reductions in federal funding for clean energy. State lawmakers passed the bill during the final two days of the October legislative session, and Gov. JB Pritzker pledged to sign the bill.

Illinois is the first state to take significant climate action since President Donald Trump took office, said Andrew Linhares of the Solar Energy Industries Association, a national trade group that advocates for solar power and energy storage.

“This is a response to the attack on clean energy and the attack on Illinois consumers that the One Big Beautiful Bill represents, which will result in higher prices for all Americans,” he said.

President Joe Biden’s signature climate law, the Inflation Reduction Act of 2022, included tax credits and other incentives to help accelerate the transition to cleaner energy sources like wind and solar and put the country on a path to net-zero carbon emissions. Illinois was expected to receive approximately $1 billion from this law. But the federal incentives didn’t last long. Earlier this summer, Congress passed the One Big Beautiful Bill, which ended climate-friendly tax credits. Energy analysts have predicted that losing these tax credits and other incentives in the Inflation Reduction Act will result in up to $250 more in energy costs per year per household.

Trump, who has called climate change a “giant hoax,” earlier this month also canceled nearly $600 million in grants to Illinois aimed at modernizing the state’s power grid and detecting energy leaks. methanea gas that warms the planet. Linhares said the administration’s pro-fossil fuel agenda has scared investors away from clean energy.

The new bill tasks the Illinois Power Agency with developing a plan to incentivize developers to bring 3 gigawatts of additional battery storage capacity to the grid. Batteries are crucial for a grid moving toward renewable energy because they absorb excess electricity during the day when prices are low and save it for later when prices skyrocket.

“This is an incredibly exciting investment in climate progress,” said Jen Walling of the Illinois Environmental Coalition, adding that the bill does much more than fund batteries. It also dedicates funds to home energy efficiency programs, geothermal energy and thermal energy grid pilot projects, and helps expand electric vehicle charging stations. The new legislation also provides new authorities for the state’s utility regulator, the Illinois Commerce Commission, to develop long-range plans for the state’s electricity supply.

Earlier this summer, Meta, the tech giant that owns Facebook, signed a 20-year deal to buy the entire power output of Constellation Energy’s Clinton nuclear plant in central Illinois to power its AI boom starting in 2027. Constellation signed a similar deal last year with Microsoft to restart the Three Mile Island nuclear plant to power its Pennsylvania data centers.

Communities across the country have pointed to the rise of always-on, power-hungry data centers to explain skyrocketing electricity bills in recent years. But a recent study from Lawrence Berkeley National Laboratory found that the cost of data centers can vary from state to state.

“This is a very nuanced situation,” said Ryan Hledik of the Brattle Group, an economic consulting firm that contributed to the study. States like Virginia and North Dakota have seen meteoric data center growth without seeing an increase in rates. The picture is less clear statewide in Illinois, but ComEd, which distributes electricity to the northern half of the state, estimates demand will increase 40 percent by 2040, in part because of the data center boom. It remains to be seen whether this will result in higher residential electricity costs.

Nationally, a key factor pushing rates higher is the growing cost of modernizing the aging distribution system — the power lines, poles, substations and transformers that deliver electricity — and protecting it against natural disasters brought on by climate change. However, the fundamental imbalance between supply and demand remains.

“What we’re seeing is that as utilities or markets run out of spare capacity, new investments are going to have to be made to continue to support load growth,” Hledik said.