Illinois needs batteries. Will a new incentive program help?
Illinois’ new battery incentive program secured 600 MW of storage—below its 988 MW target—after an inaugural auction, signaling early progress but highlighting hurdles in meeting 2030 goals amid high demand.
Illinois passed a 2023 law requiring 3 GW of batteries by 2030 to support its clean energy transition and meet rising demand from data centers. In August, the Illinois Power Agency ran an auction offering incentives for battery developers, aiming for 588 MW in ComEd’s northern territory and 988 MW overall. The results fell short, with only 80 MW awarded in ComEd’s service area and 520 MW in Ameren Illinois’ territory, totaling 600 MW statewide. Advocates called the outcome a ‘strong start’ despite disappointment in northern Illinois, noting the deals will multiply the state’s current 102 MW of storage capacity.
The indexed storage credit mechanism, part of the Clean and Reliable Grid Affordability Act, guarantees developers a minimum revenue level by compensating them if wholesale prices fall below their bids. Utilities use customer funds to cover shortfalls, while developers return excess revenue if prices exceed their bids. The model aims to reduce financial risk for developers while encouraging competitive bidding to lower costs. Experts say the structure is working, as multiple projects participated, but adjustments may be needed to expand participation.
Advocates and agency officials are reviewing feedback to improve future procurements, with changes expected for the 2027 and 2028 rounds. Key adjustments may include allowing paired solar-storage projects, which are increasingly common, and re-evaluating deployment priorities. The first auction’s strict rules, including a focus on stand-alone storage, may have limited participation and could be relaxed to attract more developers.
Regional grid delays through PJM Interconnection’s interconnection queue pose a major barrier to meeting Illinois’ 2030 deadline. Brett Sproul of Advanced Energy United noted uncertainty over connection timelines has caused some developers to hesitate, despite potential project pipelines. The state’s restructured energy market, where generators compete for contracts, requires incentive programs like indexed credits to attract investment, unlike vertically integrated markets where utilities can directly plan for storage.