|Does Illinois have a renewables mandate?||Yes||A legislative mandate to source 25 percent of the state's energy from renewable resources by 2025. The mandate is placed on all utilities and alternative energy suppliers.|
|Does Illinois have a state mandate or target for storage?||No|
|Does Illinois offer financial incentives for energy storage development?||No|
|Does Illinois have a policy for the strategic deployment of Non-Wires Alternatives or Distributed Energy Resources to defer, mitigate, or obviate need for certain T&D investments?||No|
|Does Illinois have a policy addressing multiple use applications for storage?||No|
|Does Illinois have a policy on utility ownership of storage assets?||No|
|Does Illinois allow or mandate the inclusion of energy storage in utility IRPs?||No|
|Has Illinois modified its permitting or interconnection requirements specific to energy storage?||No|
|Does Illinois allow customer-sited storage to be eligible for net metering compensation?||Pending|
|Has Illinois revised its rate structures to drive adoption of behind-the-meter storage?||No|
|Approximate development of storage capacity in Illinois.||TBD|
If there is one U.S. state that illustrates the conflict within the energy sector of moving from a fossil fuel based market to one based on renewable clean sources—and the struggle between state and federal policy to determine a path forward—it is Illinois.
Through a series of market-changing state legislation, Illinois and its executive leadership have for the last several years been moving steadily toward a clean energy environment that is enabled by a suite of emerging technologies (e.g., advanced smart meters, distributed energy resources, and energy storage). Moreover, stakeholder groups such as the Illinois Clean Jobs Coalition are well mobilized and aggressively advocating for Illinois to become the first state in the continental U.S. to be powered entirely by renewables. However, progress toward that renewables-based, clean energy future now appears to be stagnated by conflicts with federal policy and the state’s participation in the PJM Energy Market. How the current policy disputes plays out will have a direct impact on the future for energy storage in Illinois.
The policy disputes in which Illinois is currently embroiled are complex and need to be thoroughly unpacked to fully appreciate how energy storage may be caught in the crossfire. Some background is necessary, which then leads into an analysis of current state activity to redefine the energy sector in Illinois, along with the reasons why the state-driven plan remains at odds with federal directives.
First, let’s establish some background about Illinois, as it is one of those states offering a dichotomy of characteristics that calls into question its future path toward a clean-energy, storage-centric future. Considering the following:
With these market characteristics in place, appears to be experiencing some significant “growing pains” as it attempts to determine how to frame its energy future. Put another way, Illinois also seems to be caught in the gap between vision and reality. It’s clear that the executive leadership in the state (currently personified by Gov. J.B. Pritzker) envisions a clean-energy future and that vision is supported by the legislative branch as well with multiple bills pending in the Illinois Legislature that would increase the state’s commitment to renewables and clean energy. However, likely due to the ambiguities at the federal level, legislative momentum in the state appears to be diminished.
So what exactly is the conflict between Illinois’ goals and federal policy?
The way that the deregulated market in Illinois has been structured is based on transactions in which individual customers and businesses purchase electricity from “wires only” utilities such as ComEd and Ameren, which in turn purchase electricity through PJM and MISO, respectively. Illinois has also participated in PJM’s capacity market, in which electric suppliers are required to have enough resources to meet customer demand plus a reserve amount.
The wrinkle in this existing set-up is that PJM has proposed two options that would impact the profit opportunities for specific resources bidding into its capacity market. The first option would set a minimum price for certain subsidized power generations (e.g., renewables and nuclear) that would require these resources to bid into the capacity market at prices they would have been bid at if they had not received any state subsidies. The second option is that PJM would allow states to take subsidized generation out of the capacity market altogether, eliminating capacity-guarantee payments that such generation is presently receiving.
Environmentalists have argued that any changes made to PJM’s capacity market that negatively impact payments for renewable and nuclear energy from its capacity market would favor fossil fuels over non-carbon sources of energy. Further, any changes made to how PJM structures transaction fees for the wholesale market would have a direct impact on ComEd, which serves the northern part of Illinois that includes the Chicago metropolitan hub.
The basis of the opposition to such a change is that PJM’s capacity market would become unquestionably biased toward larger power plants (i.e., fossil fuel based generation) and impede Illinois’ ambitious renewable goals. In addition, the changes that PJM is proposing would also have a huge impact on Exelon Corp., the parent of ComEd, as the owner of the multiple nuclear plants in the state. Exelon has argued that any nuclear plant that would be decommissioned would likely be replaced by natural-gas fired plants, which would render the state’s goal of a carbon-free power grid impossible to achieve.
For now PJM’s members are waiting for a final decision from FERC, and have been in a “holding pattern” for a year or more. Therein lies the heart of the conundrum that is stalling clean-energy policy development in Illinois, and creating “collateral damage” (i.e., market stagnation) for energy storage in the state. What places Illinois in a state of limbo is that FERC has not issued a final ruling on PJM’s proposed changes. Since any ruling by FERC would have obvious implications for legislation in Illinois, it is not surprising that Senator Bill Cunningham (D-Chicago), chair of the Illinois Senate’s energy committee and sponsor of the Senate Bill 1781, was quoted as saying, “There's a lot of shifting ground in the energy space right now in Illinois. But given all the complicated policy initiatives facing the Legislature right now, this session, I think it's fair to say energy related concerns have been relegated to the back burner for now.”
If FERC does not allow subsidized resources like wind, solar and nuclear to participate in capacity markets, it is likely that Illinois will re-evaluate its membership in PJM. There would likely be two potential outcomes for Illinois once FERC issues a final ruling on PJM’s proposed changes: assume either full or partial responsibility for its own capacity market. If the first option becomes a reality, Illinois would likely exit from the PJM capacity market and create its own capacity market with oversight from the Illinois Power Agency. If the second option is elected, Illinois’ ability to obtain capacity would be limited to specific resources. With the enormous operational changes that either move would create, it’s no wonder that legislative policy on energy storage is (unfortunately) low on the totem pole for Illinois policymakers at this time.
The uncertainty of Illinois’ path forward due to these issues taking place outside of the state’s boarders has created a gap of state-based energy storage policy in Illinois. While there has been a lot of discussion among policymakers in the state, at present Illinois does not have any rules or regulations that explicitly pertain to energy-storage deployment. Unlike other states that have emerged as leaders in energy storage policy, Illinois has no procurement mandate, no financial incentives provided to energy storage system (ESS) deployments, and utilities in the state are not required to include energy storage in their integrated resource plans.
An assessment by the Energy Storage Association characterized Illinois as having a “good opportunity for storage” even though the state has seen minimal policy action on storage to date. The ESA correlated Illinois’ potential for energy storage development to its participation in regional transmission organizations like PJM and MISO.
At the present time, Illinois has very limited storage capacity. The most recent reports, compiling data from 2017, and published in a report from the Smart Electric Power Alliance in 2018, indicated that only 0.3 MW of storage has been deployed in the state (again, that is from 2017 data—more recent data has not been publicly available).
The state has also struggled to meet its renewable requirements, which were codified in late 2016 through the Future Energy Jobs Act (FEJA), which confirmed the goal of 25-percent renewables by 2025. There is also an interim target of reaching 16-percent renewable energy by 2020. Based on 2017 data, Illinois produced about 7 percent of its electricity from renewable resources, falling far short of where it needs to be in only five years, or even next year.
State regulators at the Illinois Corporation Commission, the state regulatory commission, are considering proceedings that will investigate the value of storage and financial incentives for energy storage deployments. It has also been socialized that Illinois will need to update its interconnection rules and regulations to ensure fair, streamlined and cost-effective access to energy storage solutions. Given that Illinois has completed widescale deployment of AMI, the interconnection rules will need to be updated to address energy storage’s impact on metering, telemetry, and accounting.
Moreover, Illinois can be characterized as a state that is slowly and deliberately defining the landscape for an expected proliferation of renewables and other distributed generation, including energy storage. It’s clear that Illinois wants to lay a solid foundation for grid modernization and increased penetration of renewables and DERs. However, the “slow and steady” approach that Illinois is taking may be overshadowed by other states in the Midwest that are moving more aggressively toward defining storage and clean energy policies (e.g., Minnesota, which has taken substantive steps to create a cost-benefit analysis for storage while committing the state to generating 100 percent of its electricity from clean sources by 2050). Iowa is also making advances that may surpass Illinois’ progress: specifically, Iowa is exploring a tax credit for battery storage to complement the state’s wind and solar generation and is conducting “value of storage” analysis, which Illinois has socialized but as of yet has not pursued.
It's rather like the classic conundrum waiting for the energy storage market to grow and then developing policies in response, or first creating policies that are intended to stimulate greater deployment of storage technologies. At this point, Illinois appears to be taking the former approach, and the concern is that its market will not grow at the pace that is desired until enabling policies are solidified at either the Illinois Legislature or the Illinois Corporation Commission.
The bottom line is that while Illinois has the potential to be a market leader in clean energy, legislative action to enable such a position (which has been the preferred method of revising / re-building developing Illinois’ energy sector) has stagnated.
Illinois Governor J.B. Pritzker (D) is one of a handful of gubernatorial candidates who campaigned and were elected in 2018 based largely on a clean-energy platform. During his first month in office, Gov. Pritzker joined governors in Michigan, Minnesota and Wisconsin in backing the U.S. Climate Alliance, a coalition of states committed to the terms of the Paris climate accord. Pritzker has said that the approach toward developing clean energy policy in Illinois will be “gradual,” with an emphasis placed on bringing jobs back to coal-mining communities that are already seeing reductions in workforce due to the move toward non-carbon resources.
Despite this public support for a regional and global alliance, Illinois has not established any 100-pecent clean energy mandate through either legislation or regulatory decision. Illinois is not alone in this respect. As of October 2019 no Midwestern state legislature has passed new legislation establishing a commitment to 100 percent clean energy.
Following on the transformative legislation in 2011 that provided incentives and requirements to jumpstart the AMI and energy efficiency markets in Illinois are a handful of competing energy bills that remain alive but potentially on hold within the Illinois Legislation. The outcome (i.e., which bill or bills ultimately become law) has the potential to rewrite Illinois’ energy law and direct the electricity mix in the state that will be likely to dominate for the next decade.
Requires the electric utilities to file a tariff for the billing and collection of a Coal to Solar Energy Storage Initiative Charge on each kilowatt-hour of electricity delivered to its delivery services customers within its service territory at specified rates and to deposit a percentage of its collections in the Coal to Solar and Energy Storage Incentive and Plant Transition Fund.
As of October 2019 there has not been any significant regulatory activity in Illinois that directly impacts the energy storage marketplace. The Illinois Commerce Commission held a policy session on energy storage in June 2019. The conversation is focused on benefits, barriers and future of energy storage within the state. It is presumed that regulatory action on energy storage would follow the passage of one of the legislative measures summarized above.
Leadership at Commonwealth Edison (ComEd) have publicly stated that they see a significant role for energy storage on Illinois’ electric grid if the state is going to realize its aggressive renewables goals. “At the end of the day, if we’re going to handle the intermittency of a lot of renewable resources, storage is going to be a big component of it,” ComEd CEO Joe Dominguez was quoted as saying.
ComEd has five energy storage pilots that are live or in the planning phase. The pilots range from a 25-kw community energy storage system in Beecher, Illinois, to a 2-MW battery system in Zion. The latter project has been publicly promoted as being capable of deferring expensive substation and feeder upgrades. In addition, ComEd is working with Lockheed Martin to supply a GridStar energy storage system for the creation of a microgrid, which the ICC had already approved to be built in the Chicago neighborhood of Bronzeville. Once built, this pilot project will be the first utility-operated microgrid in the U.S.
Ameren Missouri, a unit of Ameren Corp., filed plans with the Missouri Public Service Commission to build three solar + storage facilities across Missouri. In addition, Ameren is investing in a new microgrid, which operates when connected to a larger electrical grid but can also operated independently. Ameren Missouri is investing nearly $68 million in these solar + storage facilities as part of the company’s smart energy plan, which includes thousands of electric projects designed to create a smarter, stronger, more reliable energy grid and introduce new sources of renewable energy, all while keeping rates stable and predictable. The solar + storage installations are scheduled to be completed in 2020.
While these initiatives are important and demonstrate a long-term commitment to energy storage development among the state’s two investor-owned utilities, it is unfortunate that policy within Illinois does not presently allow for energy storage to be included in renewables requirements.
The ICC is presently holding investigations, inquiries and hearings to learn about the value of energy storage resources and the role they can play in the regional market. To move the market in Illinois forward, there are several areas for policy development that would seem to be necessary:
Also, since Illinois is already one of the leaders in applying performance-based ratemaking (PBR) principles to reliability and quality of service along with energy efficiency, it would be a natural extension to evaluate how these principles can be applied to DERs generally and/or energy storage specifically. PRB, which is not a new concept and has been applied in various regulatory jurisdictions, utilizes utility performance metrics and earnings adjustments to align financial incentives with state policy goals. The Energy Infrastructure Modernization Act of 2011 created new metrics and associated rewards for reliability and then the FEJA took this methodology a step further by applying PBR to energy efficiency. It is perfectly conceivable that the ICC could take additional steps to develop new metrics and earnings adjustments specific to renewables, DERs or energy storage to incentivize utility leadership in ESS development. Categories of utility performance could include peak demand reduction, system efficiency, customer engagement, and accelerated deployment of DERs or integration of renewables with DERs.
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