Article Summary
- A new report by state regulators projects energy shortfalls will begin in northern Illinois by 2029 and the rest of the state by 2031 if lawmakers and grid operators don’t act.
- The shortages would continue to drive up energy costs and force Illinois to import more out-of-state power.
- The report came the same week the grid operator in northern Illinois announced the region’s highest-ever price for “capacity” procurement, which affects about 20% of a consumer’s bill.
- A law awaiting the governor’s signature creates a planning process to ensure grid reliability and determine what new resources are needed to stop the shortages from coming to fruition.
- Part of that process will determine whether Illinois’ goal of forcing fossil fuel operators offline by 2045 remains feasible.
This summary was written by the reporters and editors who worked on this story.
(Capitol News Illinois) –Illinois’ electric grids may soon face power shortages and further price increases as fossil fuel plants go offline and data centers fueling the rise of artificial intelligence demand ever-increasing amounts of power.
That’s the conclusion of a new report by three state agencies that foreshadows an upcoming state grid planning process and a potential legislative fight on how lawmakers will regulate power-hungry data centers, if at all.
The projected shortfalls would begin in the Commonwealth Edison service territory in northern Illinois by 2029 and in the Ameren service area that covers most of downstate Illinois by 2031. They’d continue to worsen and make Illinois more reliant on energy imports without action by state policymakers or grid operators.
“The challenges emerge from a combination of factors at the regional and national scale,” the report noted. “Load growth is accelerating, driven by data centers, transportation demand, and industrial expansion. At the same time, many coal, gas, and oil units are planned to retire across both RTOs (regional transmission organizations) due to age, economics, and emissions limits.”
The warning from the Illinois Power Agency, Illinois Environmental Protection Agency and the Illinois Commerce Commission came the same week that prices once again rose at a procurement event in the area that serves northern Illinois consumers.
Read the report.
Advocates behind recent renewable energy reforms and the governor who says he will sign them argue the report’s findings prove that a plan passed by lawmakers in October was essential to avoiding a potential crisis.
“The state set up a deliberate process to address findings from this resource adequacy study and ensure Illinois continues to lead the country in delivering a clean, reliable, affordable energy future for all,” Gov. JB Pritzker’s office said in a statement.
Critics, including the state’s manufacturers, say the report makes clear that Illinois’ decarbonization policies were overly ambitious.
“We didn’t need a 222-page report to tell us what we already know — Illinois is facing an energy crisis resulting from the forced closure of dispatchable baseload generation and growing demand,” Mark Denzler, president & CEO of the Illinois Manufacturers’ Association, said in a statement.
Grid planning and capacity
Warnings of the potential shortfall were contained in the most recent resource adequacy report that state regulators are required to file under the Climate and Equitable Jobs Act, or CEJA, energy overhaul passed in 2021. The report, published Monday, precedes a “mitigation” planning process to be undertaken by the Illinois Power Agency.
One of the marquee measures in CEJA called for taking all of the state’s fossil fuel generators offline by 2045, but the plan also created the less-heralded resource adequacy process to assess whether that timeline is feasible.
While the resource adequacy report didn’t specifically call for walking back CEJA’s mandatory 2045 fossil fuel plant closure timeline, that possibility could be considered as regulators prepare the mitigation plan and embark on another major grid planning process in 2026.
But even if Illinois delays closure dates, it’s going to need new generators, the report noted.
Another measure the governor has pledged to sign, the Clean and Reliable Grid Affordability Act, aims to add battery generation to the grid while creating other energy efficiency and planning processes.
Gov. JB Pritzker speaks at an industrial-scale battery storage facility at G&W Electric in Bolingbrook, which was installed in 2024. (Capitol News Illinois file photo by Andrew Adams)
CRGA — Illinois’ third major energy and decarbonization bill passed since 2016 — requires the Illinois Commerce Commission to conduct an integrated resource planning process in 2026. The report noted the goal is to “provide a more comprehensive venue for addressing many of the foundational issues” in grid reliability.
Read more: Lawmakers OK sweeping energy reform package that governor pledges to sign
“While this study underscores serious challenges, Illinois has already taken steps to address resource adequacy — a problem the entire country is facing,” Solar Powers Illinois, an advocacy group for the state’s solar industry that backed CRGA, said in a statement. The group added that integrated resource planning will be a “a transparent, data-driven process to evaluate supply and demand, identify risks, and secure cost-effective solutions.”
Problems go beyond Illinois
While Illinois will begin that planning effort next year, the issues facing the state’s grids are not unique. The two multistate, federally regulated regional transmission organizations that serve Illinois — PJM Interconnection in northern Illinois and the Midcontinent Independent System Operator everywhere else — face their own challenges with out-of-state plant closures and growing load demands.
At any rate, the report noted, if the grid can’t replace retiring resources in a timely fashion, it would increase grid strain and lead to higher prices at capacity auctions, a cost that would be borne by consumers.
“If regional markets remain short, Illinois will face persistent high capacity prices even if it builds new resources in-state,” the report noted.
PJM serves 67 million customers in 13 states and Washington, D.C., including 4.2 million Commonwealth Edison customers in northern Illinois, making it the largest grid operator in the U.S.
On Wednesday, it announced the results of its most recent auction for “capacity,” which describes payments ratepayers make to power generators to ensure grid reliability. Capacity charges make up roughly 20% of a monthly power bill.
The price per megawatt-day at the most recent PJM auction hit a record of $333.44 for 2027-28, up $4.27 from the previous year but still 11.5 times higher than just three years prior.
The Citizens Utility Board, an Illinois consumer advocacy group, said the news shows the capacity market “is breaking under the weight of data center demand and a dysfunctional interconnection queue.”
PJM’s interconnection queue largely dictates how quickly new generators can come online, and advocates and the governor have long called for reforms. The report noted it has improved since PJM created new processes in 2023.
But it still takes five to seven years to get gas turbines online, while siting and permitting can also cause delays. The report also noted supply chain disruptions, tariffs, and domestic content requirements for tax credit eligibility could also delay wind and solar coming online.
“Without real reforms, in just a few years 67 million electric customers in the PJM footprint could face rolling blackouts and an escalation of power bills that make the current price spikes seem tame,” Moskowitz said in a statement.
Report’s recommendations
As fossil fuel plants in Illinois go offline due to CEJA’s mandates, it could make the state reliant on importing energy from other zones within the regional transmission organizations — even as the RTOs themselves face shortfalls.
Because of that, the state will need new generation “even if Illinois retains a portion of its existing thermal fleet.” To address the potential shortages, Illinois must employ a “diversified resource strategy,” according to the report.
“This includes combining continued growth of new in-state wind and solar supported by IPA procurements and programs, greater use of existing and planned transmission to import power from MISO and PJM when available, and the continued use of fueled thermal generators as reliability assets even as their energy output declines with higher renewable penetration,” the report noted.
Other potential resources cited in the report include “green hydrogen,” nuclear fission reactors, utility-scale solar, onshore wind and four-hour lithium-ion batteries.
The CRGA, which passed the state legislature in October and the governor said he will sign, creates a new incentive structure for energy storage projects similar to how the state funds renewable developments like wind and solar power.
Data centers and advocate response
The advocates behind CRGA say it was passed in large part because lawmakers understood the trends that were outlined in this week’s report. But renewable energy advocates like the Illinois Clean Jobs Coalition and consumer advocates like the CUB say it’s just as essential to regulate power-hungry data centers.
“The next critical step is to pass commonsense guardrails for data centers — the primary driver of the unprecedented energy demand that is saddling Illinois consumers with rising utility bills while dirty energy companies make record profits,” the Clean Jobs Coalition said in a statement.
The influential coalition, which includes union, faith and environmental groups, said it will work with lawmakers “to ensure data center developers, not Illinois consumers, pay for the disproportionate energy burden big tech is bringing to our power grid.”
Pritzker’s office didn’t directly respond to questions about what data center regulations, if any, the governor and lawmakers will consider in the spring.
Illinois has provided tax incentives for data centers since Pritzker signed bipartisan legislation in 2019. According to the state’s 2024 report, 27 data centers had received incentives totaling $983 million in tax breaks and benefits.
The National Resources Defense Council estimated data centers will drive up costs for PJM consumers by another $163 billion through 2033 and increase monthly bills by about $70 by 2028.
The Citizens Utility Board called on PJM to clean up its interconnection queue while urging states to force data centers to reduce operations or use on-site backup battery systems when electricity is in high demand. Advocates also called for the renewal of a proposal requiring data centers to power themselves with renewable energy, which stalled in the spring.
“Data center companies are among the wealthiest in the world, and it is simply unconscionable that customers should pay unbearably high power costs to foot the bill for data center energy guzzling,” Moskowitz said.
The Manufacturers’ Association have long called for a repeal of CEJA’s closure date to reduce uncertainty. The group called for an “all-of-the-above” approach that includes keeping fossil duels online.
“If skyrocketing power bills were not warning enough, this new report is a flashing red sign that Illinois needs to act immediately,” Denzler said in a statement. “With electricity demand only expected to increase, we simply cannot risk the chaos that would be caused by the premature closure of baseload generation plants as required under current law.”
By Jerry Nowicki
Capitol News Illinois
jnowicki@capitolnewsillinois.com
Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.
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