Illinois Legislature Passes New Law on Electric Transmission Line Projects, Illinois’ First Battery Storage Procurement, and Prevailing Wage Requirements

The Electric Transmission Systems Construction Standards Act requires Illinois electric utilities and construction contractors working on transmission line projects to pay prevailing wage for the construction, installation, maintenance, and repair of the electric grid. It also requires these employers to fulfill employee training, safety requirements, and set diversity goals.

In this post, we summarize a new law waiting for signature on Governor JB Pritzker’s desk and preview some of the energy bills up for consideration during this year’s legislative session.

The Electric Transmission Systems Construction Standards Act

The new law launches a workshop process for Illinois’ first procurement of energy storage resources from energy storage projects and creates new tax incentives for energy storage and high voltage converter station projects. The bill supports utility-scale battery storage projects in several ways. It creates a workshop process to establish the ground rules for Illinois’ first procurement of up to 1,500 megawatts (MW) of energy storage resources from stand-alone energy storage projects. Additional amendments are needed to establish the funding mechanism for energy storage project incentives and empower the Illinois Power Agency Act to conduct the procurements.

The new bill creates tax incentives for both (1) new battery storage projects with at least 20 MW of storage capacity and at least 40 MWh storage capability and (2) for new high voltage direct current converter station projects. Under the bill, these projects are “public works” that may qualify as High Impact Businesses (HIBs), giving project sponsors the opportunity to apply for certain Illinois income and sales and use tax incentives. HIBs are required to comply with certain requirements, including that these projects pay the prevailing rate of wages to laborers that perform onsite construction work.

Next, the new bill adds flexibility to Illinois’ renewable energy portfolio standard (RPS) program. Under the bill, the Illinois Power Agency (IPA) may procure RECs from repowered wind turbines and retooled hydroelectric dams. The law also specifies that IPA shall procure at least 55% of its RPS RECs from solar and should try to procure the rest from wind and hydro but provides flexibility by allowing the IPA to adjust these requirements through the long-term renewable resources plan development process.

Last, the bill adds assurance for developers and their financing parties when entering IPA REC contracts. The new language provides that if funds from REC procurements are insufficient for utilities to fully pay amounts due to sellers of RECs under existing REC contracts, utilities must use unspent zero emission credit funds. If the utilities’ unspent zero emission credit funds are insufficient, then utilities are nonetheless required to remit full payment to sellers provided that the full costs are recoverable by the utility in accordance with the law. 

Pending Bills Address Transmission, RECs, Renewable Project Siting, Prevailing Wage, and More

The General Assembly is considering a wide variety of bills impacting the renewable development space. One category of bills would allow the Illinois Power Agency to procure RECs from new sources, such as geothermal, offshore wind, high voltage direct current transmission, and energy storage.

Another group of bills would impact permitting conditions for wind and solar facilities. One bill significantly empowers counties, including by giving them more power to block or delay wind and solar projects and requiring National Pollution Discharge Elimination System permits before most county approvals may be granted. Others would empower counties in other ways, such as by allowing them to deny permits for projects without a project labor agreement, or to consider public comment in permitting. Other legislators have taken the opposite approach: circumventing local control of permitting by proposing a right to install small-scale solar or requiring counties to create an automated, instantaneous online solar permitting system. 

Other bills seek to repeal Illinois’ 2023 renewable energy siting law (which we covered here), require an end-of-life plan for wind and solar projects, give municipalities more veto power over renewable projects, require surety bonds of $2 million or higher for solar installers, and even require wind turbines within 40 miles of a weather radar station issuing an inclement weather alert to turn off during winter storms. We don’t expect these bills to gain much traction, given the General Assembly’s recent priorities.

A third category of bills focuses on mitigating impact to agricultural land. One bill would charge developers, including renewable energy developers, a conversion fee of $700-$900 per acre, depending on the amount of acreage removed, for agricultural land developed to other uses. Another bill would extend agriculture mitigation agreement requirements to battery energy storage projects. A third bill would prohibit siting commercial solar energy facilities on property with a soil crop productivity index greater than 110.

We will continue to monitor developments in Illinois impacting power producers and project developers. Please contact a member of our Energy & Cleantech and Environmental teams if you would like to learn more about Illinois’ HIB designation or renewable energy credit procurement programs.