By JERRY NOWICKI

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,” this 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 regional transmission organizations due to age, economics and emissions limits.”

The warning from the Illinois Power Agency, Illinois Environmental Protection Agency and Illinois Commerce Commission came the same week prices once again rose at a procurement event in the area serving northern Illinois consumers.

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 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.

Warnings of the potential shortfall were contained in the most recent resource adequacy report state regulators are required to file under the Climate and Equitable Jobs Act energy overhaul passed in 2021. The report 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 Gov. Pritzker 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.

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.

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.

Pritzker’s office didn’t directly respond to questions about what data center regulations, if any, will be considered this 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 Illinois Manufacturers’ Association has 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 fuels online.

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.