Illinois Legislature Authorizes State’s First Procurement for Energy Storage Resources

At a high level, the new program will create state-administered auctions where project developers sell credits reflecting the energy storage their projects provide. These credits provide financial support to develop energy storage resources.

Earlier this year, we covered Illinois’ enactment of the Electric Transmission Systems Construction Standard Act and the Illinois Commerce Commission (ICC) staff’s subsequent energy storage procurement recommendations. In this alert, we summarize CRGA’s provisions creating Illinois’ first procurement program for energy storage credits. (Full 1,021 page bill text here. For the energy storage procurement program see pages 285–86, 402–15, 791–92, 806–09).

Energy Storage Procurement in CRGA

As Illinois faces increased electricity demand and federal incentives for certain renewable energy projects dwindle, the Illinois General Assembly has responded by creating incentives for the deployment of energy storage systems. CRGA tasks the Illinois Power Agency (IPA) with conducting procurements for energy storage credits, with a goal of bringing 3 gigawatts of storage online by December 31, 2030. Governor JB Pritzker has pledged to sign CRGA into law.

The IPA’s initial procurement is slated to occur within 90 days after CRGA’s effective date of June 1, 2026. The initial procurement will solicit the following.

• At least 1,038 megawatts of cost-effective, stand-alone energy storage that can achieve commercial operation by December 31, 2029, unless the IPA proposes an alternative date. The IPA may propose alternative dates due to delays in interconnection, permitting, or other circumstances.

• Resources connected to either the Midcontinent Independent System Operator (MISO) or PJM Interconnection grid systems. The initial procurement targets 450 megawatts connected to the MISO grid and 588 megawatts connected to the PJM grid.

• Procurement of “stand-alone” resources, meaning resources that are separately metered and operate independently from generation resources. These stand-alone resources do not require co-location with energy generation assets.

• Resources that are “cost-effective.” The IPA will develop confidential price benchmarks, considering development, technology, financing, and other costs. To be “cost-effective,” a bidder’s price must not exceed the IPA’s confidential price benchmarks.

• Procurement modeled on a 20-year, standardized indexed storage credit contract (we outlined the model agreements recommended by ICC staff here). The contracts will also include a provision entitling bidders to full, prompt, and uninterrupted payment from utilities that are authorized to recover their costs.

The IPA will conduct additional procurement rounds in 2027 and 2028 to attempt to reach the three-gigawatt procurement goal. Beginning in 2027, the IPA must also publish an energy storage system resources procurement plan and revise the plan every two years. In future procurements, the IPA may consider alternative contract structures or distribution of resources between PJM and MISO. Other provisions of the bill specify the steps to be taken should there be funding shortfalls.

Additional Procurement Standards

CRGA establishes additional requirements for bidders.

• Bidders must demonstrate experience in developing energy projects to commercial readiness.

• Project developers must comply with prevailing wage and project labor agreement requirements.

• Projects whose costs are recovered through regulated utility rates are not eligible.

• An interconnection agreement is required before bidders receive payment for credits.

The firm’s Energy & Cleantech and Environmental teams will continue to monitor legal developments related to the energy transition. Stay tuned for further updates.