Illinois Electric Grid Resources

Below is a summary of the August 2024 Power Bureau Report regarding "Cost and Benefit Analysis of Energy Storage Resource Deployment in Illinois (click here for the full report).

Strengthening Illinois' Grid Reliability Through Advanced Energy Storage Solutions

As Illinois continues its transition toward a cleaner, more sustainable energy future, grid reliability has become a central concern. With the state's ambitious renewable energy goals, the challenge of integrating intermittent resources such as wind and solar power into the existing grid infrastructure is becoming increasingly pressing. A recent report titled *"Grid Reliability and Energy Storage in Illinois,"* delves into these issues, offering a comprehensive analysis of the current state of grid reliability and the pivotal role that energy storage can play in ensuring a stable and resilient power system.

The Current State of Grid Reliability in Illinois

Illinois boasts one of the most robust and diverse energy portfolios in the United States. The state is a leader in wind energy production and has made significant strides in solar energy development. However, as the report highlights, the integration of these renewable resources into the grid poses substantial challenges. The primary issue stems from the intermittent nature of wind and solar energy. Unlike traditional fossil fuel-based power plants, which can generate electricity on demand, renewable sources are dependent on weather conditions, leading to fluctuations in power generation.

The report points out that Illinois' grid is already experiencing stress due to these fluctuations, particularly during peak demand periods. The state's grid operators have had to increasingly rely on peaker plants—typically natural gas-fired facilities that can be ramped up quickly to meet demand spikes. While effective in the short term, this approach is neither sustainable nor environmentally friendly, as it undermines the state’s goals of reducing greenhouse gas emissions.

The Role of Energy Storage in Enhancing Grid Reliability

Energy storage is presented in the report as a key solution to the challenges of grid reliability. By storing excess energy generated during periods of low demand and releasing it when demand is high, energy storage systems can smooth out the fluctuations associated with renewable energy sources. This capability is crucial for ensuring that the grid remains stable and reliable as Illinois increases its reliance on renewable energy.

The report details several types of energy storage technologies that could be implemented in Illinois, including:

• Lithium-Ion Batteries: These are currently the most widely used form of energy storage. Lithium-ion batteries are highly efficient and have a relatively long lifespan, making them ideal for grid-scale applications. The report emphasizes that expanding the use of lithium-ion batteries in Illinois could significantly enhance grid reliability by providing fast, flexible response to fluctuations in power supply and demand.

• Pumped Hydro Storage: This is a well-established technology that involves using excess electricity to pump water uphill to a reservoir. When electricity is needed, the water is released to flow downhill through turbines, generating electricity. While Illinois' topography may limit the widespread adoption of this technology, the report suggests that it could still play a role in certain areas of the state.

• Advanced Compressed Air Energy Storage (CAES): CAES systems store energy by compressing air and storing it in underground caverns or other suitable structures. When electricity is needed, the compressed air is released and used to drive turbines. The report identifies several potential sites in Illinois where CAES could be implemented, noting that this technology could complement other storage solutions by providing long-duration storage capacity.

• Flow Batteries: Flow batteries are a newer technology that offers the potential for long-duration energy storage. These batteries store energy in liquid electrolytes contained in external tanks, allowing for more flexible scaling of storage capacity. The report highlights flow batteries as a promising option for Illinois, particularly as the technology continues to advance.

Policy and Regulatory Recommendations

While the technical aspects of energy storage are crucial, the report also underscores the importance of supportive policies and regulatory frameworks to facilitate the deployment of these technologies. Illinois has already made significant progress in this regard with the passage of the Climate and Equitable Jobs Act (CEJA), which sets ambitious targets for renewable energy and carbon reduction. However, the report calls for further action in several key areas:

• Incentives for Energy Storage Deployment: The report recommends the creation of targeted incentives to encourage the development of energy storage projects. These could include tax credits, grants, or other financial mechanisms designed to reduce the upfront costs of storage systems. By lowering the financial barriers to entry, such incentives could accelerate the adoption of energy storage in Illinois.

• Reforming Market Structures: The current market structures in Illinois do not adequately value the benefits provided by energy storage, particularly in terms of grid reliability and flexibility. The report advocates for reforms that would allow energy storage to participate more fully in energy markets, including capacity, ancillary services, and demand response markets. By creating a level playing field, these reforms could unlock new revenue streams for storage projects and encourage greater investment in the technology.

• Grid Modernization Efforts: The report stresses the need for continued investment in grid modernization to support the integration of energy storage. This includes upgrading transmission and distribution infrastructure, as well as implementing advanced grid management systems that can optimize the use of storage resources. The report also highlights the importance of cybersecurity in ensuring the resilience of the grid in the face of increasing digitalization.

• Stakeholder Collaboration: Achieving the full potential of energy storage in Illinois will require collaboration among a wide range of stakeholders, including utilities, regulators, technology providers, and consumers. The report calls for the establishment of public-private partnerships and other collaborative initiatives to drive the development of energy storage projects. By bringing together diverse perspectives and expertise, these collaborations can help to identify and overcome the challenges associated with deploying storage at scale.

Case Studies and Pilot Projects

The report includes several case studies of successful energy storage projects from other states, offering valuable lessons for Illinois. For example, California's extensive use of lithium-ion batteries to enhance grid reliability during heatwaves is highlighted as a model that Illinois could follow. Similarly, New York's efforts to develop a regulatory framework that supports energy storage deployment are cited as an example of best practice.

In addition to these case studies, the report identifies several pilot projects currently underway in Illinois that could serve as a foundation for broader deployment. These include a utility-scale battery project in the Chicago area and a microgrid project in southern Illinois that integrates energy storage with renewable generation. The report suggests that these projects could be scaled up or replicated in other parts of the state to demonstrate the viability of energy storage solutions.

Economic and Environmental Benefits

Beyond the technical and regulatory considerations, the report also emphasizes the economic and environmental benefits of energy storage. From an economic perspective, energy storage can reduce the need for costly grid upgrades and lower the operational costs of maintaining grid reliability. By reducing reliance on peaker plants and other fossil fuel-based resources, storage can also contribute to lower electricity prices for consumers.

Environmentally, energy storage supports Illinois' goals of reducing greenhouse gas emissions and improving air quality. By enabling greater use of renewable energy, storage can displace fossil fuel generation and reduce emissions of carbon dioxide and other pollutants. The report notes that these environmental benefits are particularly important in disadvantaged communities, which often bear the brunt of pollution from fossil fuel power plants.

Conclusion

The report on grid reliability and energy storage in Illinois paints a clear picture of the challenges and opportunities facing the state as it transitions to a cleaner energy future. While the integration of renewable energy sources into the grid presents significant challenges, energy storage offers a promising solution to enhance grid reliability and resilience.

By adopting the report's recommendations—such as expanding the use of advanced storage technologies, reforming market structures, and investing in grid modernization—Illinois can position itself as a leader in the clean energy transition. With the right policies and investments, energy storage can play a crucial role in ensuring that Illinois' grid remains reliable, resilient, and capable of meeting the state's future energy needs.

As Illinois moves forward, the successful integration of energy storage will be key to realizing the full potential of renewable energy and achieving the state's ambitious climate goals. The path ahead will require collaboration, innovation, and a commitment to building a more sustainable and equitable energy system for all Illinoisans.

See also Energy News Network: Study suggests a big role for grid battery storage as Illinois shutters its coal power plants:

"A major expansion of battery storage may be the most economical and environmentally beneficial way for Illinois to maintain grid reliability as it phases out fossil fuel generation, a new study finds. The analysis, commissioned by the nonprofit Clean Grid Alliance and solar organizations, suggests that batteries are a more realistic path forward than a massive buildout of new generation and transmission infrastructure."

The Illinois Power Agency (IPA) plays a crucial role in ensuring a reliable and affordable energy supply for the residents and businesses of Illinois. As part of its ongoing efforts, the IPA has conducted a comprehensive analysis of the state's energy resources, supply gaps, and resource adequacy outlook. This article delves into the findings of the 2023 Electricity Procurement Plan, examining the outlook and uncertainty of the MISO and PJM regional transmission organizations, as well as the existing resource portfolios and supply gaps for Ameren Illinois, ComEd, and MidAmerican.

I. MISO Resource Adequacy Outlook and Uncertainty

The Midcontinent Independent System Operator (MISO) manages the transmission grid and electricity market in the Midwest, including Illinois. According to the IPA's analysis, the resource adequacy outlook for MISO in Illinois appears favorable for the near future. MISO's commitment to maintaining the reliability of the grid has resulted in a diverse mix of energy resources, including fossil fuels, nuclear power, and an increasing share of renewable energy.

However, the report also highlights certain uncertainties that may affect resource adequacy in the longer term. As the energy landscape continues to evolve, uncertainties in future natural gas prices, technological advancements in renewable energy, and potential shifts in federal policies could impact the balance between demand and supply in the region. To address these uncertainties, the IPA recommends strategic planning and continuous monitoring of energy market developments.

II. PJM Resource Adequacy Outlook and Uncertainty

PJM Interconnection is another regional transmission organization that has a significant influence on Illinois' energy system. As per the IPA's findings, PJM's resource adequacy outlook for Illinois remains stable in the short to medium term. PJM's vast footprint covers a large portion of the Eastern United States, allowing for a diverse array of energy resources to contribute to the region's electricity supply.

While the near-term outlook appears positive, the IPA's report identifies potential uncertainties that may pose challenges to resource adequacy in the future. These uncertainties include the retirement of aging power plants, changing electricity demand patterns, and the integration of intermittent renewable energy sources. The IPA emphasizes the importance of proactive planning and investment in flexible energy resources to maintain a reliable grid.

III. Ameren Illinois Existing Resource Portfolio and Supply Gap

Ameren Illinois, one of the major utilities in the state, has a diverse existing resource portfolio that includes coal, natural gas, nuclear, and renewable energy sources. According to the IPA's analysis, Ameren Illinois is currently well-equipped to meet the energy demand in its service territory. The utility's commitment to modernization and investment in renewable energy projects has helped diversify its resource mix and reduce its carbon footprint.

Despite Ameren Illinois' commendable efforts, the report identifies a potential supply gap in the coming years. This gap is primarily driven by the anticipated retirement of some of the utility's older coal-fired power plants and the need for additional capacity to meet the growing electricity demand. To address this issue, the IPA recommends continued investment in renewable energy and energy efficiency measures, along with strategic procurement of additional capacity through competitive processes.

IV. ComEd Existing Resource Portfolio and Supply Gap

As the largest electric utility in Illinois, ComEd serves a significant portion of the state's population, including the greater Chicago metropolitan area. The IPA's analysis reveals that ComEd's existing resource portfolio is relatively diverse, consisting of nuclear, natural gas, coal, and renewable energy sources. The utility's focus on renewable energy initiatives and grid modernization efforts has contributed to its sustainability goals.

However, similar to Ameren Illinois, ComEd also faces a potential supply gap in the future. The projected retirement of certain coal and natural gas plants, combined with an increase in electricity demand, poses challenges to maintaining resource adequacy. The IPA suggests that ComEd further accelerate its transition to renewable energy, invest in energy storage technologies, and explore demand response programs to manage peak electricity demand efficiently.

V. MidAmerican Existing Resource Portfolio and Supply Gap

MidAmerican Energy is an essential player in the Illinois energy landscape, serving both residential and commercial customers. The utility's existing resource portfolio predominantly comprises natural gas, coal, and renewable energy sources, with significant investments in wind power.

The IPA's analysis indicates that MidAmerican is currently well-positioned to meet its customers' energy needs. The utility's extensive renewable energy projects have bolstered its capacity to produce clean electricity. However, the report also highlights a potential supply gap in the future, primarily due to the scheduled retirement of aging coal plants and increasing electricity demand.

To bridge this supply gap, the IPA advises MidAmerican to continue its pursuit of renewable energy expansion, explore energy storage options, and explore opportunities for demand-side management programs.

Conclusion

The Illinois Power Agency's 2023 Electricity Procurement Plan presents a comprehensive assessment of the state's energy landscape, resource adequacy outlook, and supply gaps for major utilities. While the short-term outlook appears positive for both MISO and PJM, uncertainties in the energy market warrant strategic planning and investment in flexible resources. For individual utilities like Ameren Illinois, ComEd, and MidAmerican, proactive measures, such as accelerating the adoption of renewable energy, investing in energy storage technologies, and implementing demand response programs, will be vital to ensure a reliable and sustainable energy future for Illinois. By leveraging a diverse mix of energy resources and embracing innovation, the state can confidently navigate the evolving energy landscape and deliver long-term benefits to its residents and businesses.

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• Illinois Power Agency 2023 Electricity Procurement Plan; see also IPA 2019 Electricity Procurement Plan, Section 5.2.1, pages 50-52 ("In an order issued on June 29 2018, FERC ruled that an important component of PJM’s RPM, the Minimum Offer Price Rule (“MOPR”), was unjust and unreasonable because it does not address the impact of subsidized existing resources on the capacity market. FERC noted that resources that receive out‐of‐market payments in PJM’s capacity markets cause price suppression.")

Illinois House Bill 3445 provided right of first refusal to Ameren Illinois regarding installation new transmission lines in downstate Illinois. Most of the openly debated legislative action on HB3445 came at the end of the spring legislative session (Capitol News Illinois, May 30, 2023), and is consistent with legislative measures being debated in other states (RTO Insider, Mar. 1, 2023). However, the Illinois Governor issued an amendatory veto with specific recommendations for changes to the legislation (Governor's Message, Aug. 16, 2023; RTO Insider, Aug. 17, 2023), which will be considered in the fall 2023 legislative session.

A key to the ongoing legislative debate may center on the federal regulatory comment addressing a similar 2022 ROFR proposal at the federal level, which is highlighted by the Governor in the amendatory veto message and is summarized here, see Comment of the United States Department of Justice and Federal Trade Commission to Building for the Future Through Electric Regional Transmission Planning and Cost Allocation and Generator Interconnection, FERC Docket No. RM21-17-000 (Aug. 17, 2022):

• The United States Department of Justice (DOJ) and the Federal Trade Commission (FTC) recognize the need for more investment in transmission facilities to serve consumers reliably and economically. A more integrated transmission system would promote resiliency and competition, benefiting consumers through access to lower-cost power and a broader range of generation resources.

• The agencies express concern about the reinstatement of a federal right of first refusal (ROFR). They believe that with a ROFR, consumers might lose the benefits that competition can offer, such as lower rates, improved service, and increased innovation.

• The agencies emphasize the importance of competition in the American economy. President Biden's Executive Order on Promoting Competition in the American Economy highlights the Federal Energy Regulatory Commission's (FERC) role in protecting conditions of fair competition.

• The agencies have significant concerns about the proposed ROFR, especially considering the expected massive investments required for transmission in the coming years.

• The Notice of Proposed Rulemaking (NOPR) identifies several reasons for the lack of regional and interregional development, including insufficient forward-looking regional transmission planning processes, failure to incorporate known determinants of transmission needs, and failure to accurately identify the benefits and beneficiaries of regional transmission facilities.

• The NOPR suggests that the Commission’s Order No. 1000 nonincumbent transmission developer reforms might be discouraging investment in regional transmission facilities. Incumbent transmission providers might have incentives that don't encourage them to develop transmission facilities that benefit more than just their local retail distribution service territory.

• The Agencies (DOJ and FTC) point out that the distortion in investment priorities has multiple causes, including the existence of ROFRs for local facilities, which gives incumbents incentives to invest in those facilities rather than regional facilities subject to competition.

• The Agencies emphasize that competitive processes have significantly reduced the costs of regional transmission development when implemented. They encourage FERC to reconsider its proposal to use a ROFR, conditional or otherwise, to address the regional and interregional transmission challenge.

• The DOJ and FTC have a history of promoting competition in wholesale electricity markets and believe that competition in these markets produces significant benefits for consumers.

In late October 2023, the main sponsor of the ROFR legislation admitted that while a compromise would not be finalized before the end of fall legislative session, proponents planned for another push in the 2024 spring legisative session that may also include new provisions for the addition of ComEd territory to the Ameren territory as well as exclusion of a sunset for a more permanent regulatory framework (click here for press release statements in support).

In February 2024, ROFR legislation was filed by the Chair of the House Public Utilities Committee, House Bill 5234, which continued to receive opposition from environmental and consumer groups regarding potential negative consumer impact, Source, and will ultimately be first tested and subject to Democratic political leadership through the House Executive Committee, with a sheduled commitee deadline of April 5th.

What is the role of the Midcontinent Independent System Operator (MISO) in Illinois' energy system?

MISO is responsible for managing the transmission of electricity in the Midwest, including Illinois. It ensures the reliable and efficient delivery of electricity, manages the regional grid, and coordinates electricity markets to meet demand across the MISO footprint, which includes Illinois.

How does MISO impact electricity prices in Illinois?

MISO operates a wholesale electricity market where power generators compete to sell their electricity. This competitive market helps determine the price of electricity in Illinois. MISO's role in coordinating this market helps ensure fair prices and encourages efficient use of resources, which can have an impact on electricity prices for consumers in Illinois.

Does MISO have any influence on renewable energy development in Illinois?

Yes, MISO plays a role in integrating renewable energy into the electricity grid in Illinois. It facilitates the connection of renewable energy projects, such as wind and solar farms, to the transmission system. MISO also provides market mechanisms that incentivize the participation of renewable energy resources, promoting their development and integration into the energy mix.

How does MISO contribute to the reliability of Illinois' energy supply?

MISO actively manages the transmission grid to ensure the reliable delivery of electricity in Illinois. It monitors the flow of electricity, balances supply and demand, and coordinates with utilities to maintain system stability. MISO's comprehensive planning and operational practices help minimize disruptions and maintain a reliable energy supply for Illinois residents and businesses.

What is the role of the PJM regional transmission organization in Illinois' energy system?

PJM is responsible for managing the electricity transmission grid in a vast region, which includes Illinois. It ensures the reliable and efficient delivery of electricity, oversees the wholesale electricity market, and facilitates the integration of various energy resources within its footprint.

How does PJM impact electricity prices in Illinois?

PJM operates a competitive wholesale electricity market, where power generators offer their electricity for sale. This market-based approach helps determine the price of electricity in Illinois. PJM's role in managing this market promotes fair competition and can influence electricity prices for consumers in the state.

How does PJM contribute to the reliability of Illinois' energy supply?

PJM operates a robust transmission network, constantly monitoring and balancing electricity supply and demand. PJM's comprehensive planning and coordination efforts ensure the stable and secure delivery of electricity to consumers and businesses in Illinois.

ComEd, short for Commonwealth Edison, is the largest electric utility company in Illinois, responsible for delivering electricity to 4 million customers across northern Illinois, or 70 percent of the state’s population.

How are utility rates set for Illinois customers of ComEd?

The Illinois Commerce Commission (ICC) is the regulatory authority responsible for overseeing and approving ComEd's rates.

• Cost of Service: ComEd begins the rate-setting process by evaluating the cost of providing electricity to its customers. This includes the expenses associated with power generation, transmission, distribution, and customer services. The company also considers factors like infrastructure investments, maintenance, and employee salaries.

• Rate Filing: After assessing its costs, ComEd files a rate proposal with the ICC, outlining the rate adjustments they are seeking. This proposal includes detailed information on the company's financial performance and the expected revenue requirements to cover operating costs and investments.

• Public Hearings: The ICC conducts public hearings to allow ComEd customers and other stakeholders to voice their opinions and concerns about the proposed rate changes. This ensures transparency and public participation in the rate-setting process.

• ICC Review and Decision: The ICC thoroughly reviews ComEd's rate proposal, taking into account the public feedback and considering the best interests of the consumers. The commission may accept, reject, or modify the proposed rate changes before reaching a final decision.

• Rate Implementation: Once the ICC approves the new rates, ComEd implements them, and customers will see the changes reflected in their electricity bills. Typically, new rates take effect over a specific period, such as a year, before the next rate review cycle.

As the largest electric AND natural gas utility in Illinois, Ameren Illinois is responsible for delivering energy to millions of customers over 43,700 square miles, or about three-quarters of the state. Ameren Illinois own and operate about 4,500 miles of electric transmission lines, 46,000 miles of distribution lines, 18,200 miles of natural gas transmission and distribution mains and 12 underground natural gas storage fields with a total capacity of approximately 24 billion cubic feet.

How are utility rates set for Illinois customers of Ameren Illinois?

Similar to ComEd, Ameren Illinois' rates are regulated by the Illinois Commerce Commission (ICC).

• Cost Analysis: Ameren Illinois conducts a comprehensive analysis of its costs, considering factors like power generation, transmission, distribution, maintenance, and operational expenses. They also account for capital investments in infrastructure to ensure the reliability and safety of the electrical grid.

• Rate Filing: After determining their cost of service, Ameren Illinois submits a rate proposal to the ICC, detailing the rate adjustments they are seeking and the reasons behind them. This proposal outlines how the proposed rates will cover their expenses and support the delivery of reliable energy services.

• Public Input: As with ComEd, Ameren Illinois' rate proposals are subject to public hearings organized by the ICC. These hearings provide an opportunity for customers and stakeholders to voice their opinions and concerns about the proposed rate changes.

• ICC Evaluation: The ICC reviews Ameren Illinois' rate proposal and takes into account the feedback from the public hearings. The commission scrutinizes the proposed rates to ensure they are fair, reasonable, and justified based on the utility's costs and investments.

• Rate Approval and Implementation: Following the evaluation, the ICC makes its decision, either approving, modifying, or rejecting the proposed rate changes. Once approved, Ameren Illinois implements the new rates, and customers will see the updated rates reflected in their electricity bills.

What is the 2023 Illinois legislation regarding right of first refusal?

Illinois House Bill 3445 provided right of first refusal to Ameren Illinois regarding installation new transmission lines in downstate Illinois. Most of the openly debated legislative action on HB3445 came at the end of the spring legislative session (Capitol News Illinois, May 30, 2023), and is consistent with legislative measures being debated in other states (RTO Insider, Mar. 1, 2023). However, the Illinois Governor issued an amendatory veto with specific recommendations for changes to the legislation (Governor's Message, Aug. 16, 2023; RTO Insider, Aug. 17, 2023), which will be considered in the fall 2023 legislative session.

What is the right of first refusal in relation to the installation of new transmission lines?

The right of first refusal is a contractual provision that grants an entity or organization the opportunity to match or better the terms offered by a third party when it comes to installing new transmission lines. It allows the entity with the right of first refusal to have the first opportunity to undertake the project before it is offered to others.

How does the right of first refusal benefit the entity or organization involved?

The right of first refusal provides the entity or organization with a valuable advantage by giving them priority access to the installation of new transmission lines. It allows them to control and expand their existing transmission infrastructure, ensuring they have the opportunity to develop and maintain their network in a strategic manner.

Can the entity with the right of first refusal decline the opportunity to install new transmission lines?

Yes, the entity with the right of first refusal can choose to decline the opportunity. The right of first refusal is not an obligation to undertake the project but rather a privilege that enables them to assess the terms and decide whether it aligns with their interests, resources, and long-term plans.

What happens if the entity with the right of first refusal declines the opportunity?

If the entity with the right of first refusal declines the opportunity to install new transmission lines, the right typically passes to the next eligible entity or organization according to the predetermined order of priority. This ensures that the installation project is not delayed or impeded by the refusal of the initial entity.

Are there any legal considerations or requirements associated with the right of first refusal for transmission line installations?

Yes, the right of first refusal is typically governed by contractual agreements and may vary depending on the jurisdiction and specific circumstances. It is important for the terms of the right of first refusal to be clearly defined and legally enforceable to avoid disputes. Legal advice and consultation are recommended to ensure compliance with applicable laws and regulations when establishing and exercising the right of first refusal.