Tag: Credits

As long-distance transmission line capacity emerges as a bottleneck for Illinois’ clean energy transition, state lawmakers and advocates are drafting legislation to establish state incentives for power line projects.

One proposal under consideration would allow independent transmission developers to access subsidies through the state’s Renewable Energy Credit (RECs) program, the same mechanism that has fueled the state’s solar boom.

“Merchant transmission developers are essentially building a road — generators pay to put their electricity on that road and send it to customers,” said James Gignac, Midwest senior policy manager for the Union of Concerned Scientists, a member of the coalition working with legislators on an energy bill building on 2017’s Climate & Equitable Jobs Act, or CEJA.

The Illinois legislation being prepared for this spring’s session would create another source of revenue for such projects, lowering the cost burden on wind and solar developers looking for a more direct route to power customers. Unlike projects funded by utility ratepayers, merchant lines do not need to go through the lengthy planning and financing process overseen by regional grid operators such as MISO and PJM.

“These [high voltage, direct current] lines can serve a different purpose,” Gignac said. “It’s an overlay or additional feature of the transmission system. They can provide important benefits that supplement the [regional transmission organization] plan.”

A regional need 

CEJA mandates that almost all of the state’s fossil fuel generation cease by 2045. Especially with the boom in data centers, some are worried Illinois won’t be able to meet its energy needs with renewables and nuclear if coal and gas plants close.   

“Transmission is a huge part of the equation, it will be important in helping us take inefficient coal and gas plants off-line, and it will help bring on extraordinary amounts of clean energy,” said Christine Nannicelli, Sierra Club Beyond Coal senior campaign representative. 

In December, MISO, which manages the grid for most of Illinois and a large part of the central U.S. spanning from the Dakotas to the Gulf Coast, approved a batch of 24 long-distance transmission projects on top of 18 interregional transmission lines approved in 2022. But these lines will likely take a decade or more to build, given lengthy bureaucratic processes. 

Merchant lines can be constructed much more quickly, as they do not need to be studied and deemed necessary through the regional transmission organization process. They just need to be interconnected to the regional grid system, as well as receive certain approvals in the states they pass through. Illinois advocates have also proposed that legislation designate merchant lines as public utilities, giving them an easier path to eminent domain powers. 

Merchant lines including the Grain Belt Express, which would stretch from Kansas through Missouri to the Illinois-Indiana border, have faced opposition from landowners concerned about the routes and eminent domain. Merchant lines also introduce competition for utility companies, which have pushed for legislation in various states to limit such competition. 

Some advocates argue competition can be good for ratepayers and the environment. Merchant lines could bring renewable power into Illinois from other states, and also make it easier for new renewables to be built in Illinois and connected to the grid. There can be long delays for new wind and solar farms to get approval to be connected to the MISO grid. These renewables could connect to merchant lines without delay. 

Grain Belt Express developer Invenergy, based in Chicago, is among the backers of a transmission incentive bill. 

Another merchant transmission line seeking to deliver power to Illinois is SOO Green, a proposed 350-mile underground cable between Iowa and Illinois following a railroad right-of-way. 

Both projects would facilitate sharing power between MISO and PJM grids, a necessity especially as extreme weather events increase, experts say. Last May, the two organizations for the first time agreed to coordinate on their long-range planning, 

The Clean Grid Alliance, a national organization, advocates for grid expansion both through the regional transmission organizations’ planning processes, and through merchant lines. The alliance supported a proposal during the last Illinois legislative session that would have created RECs for merchant transmission. Clean Grid Alliance vice president of advocacy Jeff Danielson said he does not know of any other states that have created RECs for this purpose. 

“We encourage states to help in any way possible to get the electric interstate superhighway built,” said Danielson. “It really is up to the states to secure their own economic future around a resilient and commerce-friendly grid. Whether it’s a REC concept, direct power purchase agreements, permitting reform, we encourage all of it. We literally need to build the transmission everywhere all at once.” 

Financial lift 

Since projects like Grain Belt Express and SOO Green cover multiple states, it may seem unfair for one state to carry more of the financial burden by offering subsidies. But Danielson said that may be necessary to tip the balance and make sure transmission gets built; and other states should follow Illinois’s lead. 

“There’s the idea it will just get built,” without state action, Danielson said. “But it won’t, it hasn’t. Merchant lines are incredibly difficult to build. A governor has to understand the value to his state, his colleagues in other states have to understand this is what’s going to drive economic growth. Every time they’re in a meeting they should be saying, ‘We have to get to yes.’ It’s a shared opportunity and shared responsibility.” 

A March 2024 study by the Illinois Power Agency estimated that credits for the SOO Green line would cost ratepayers $430 million per year, while reducing utility bills to save them $178 million per year. The line would also add $414 million in economic benefit to the state’s economy, the agency found. 

The Laborers’ International Union of North America is among the labor unions supporting a transmission-incentives bill. The union’s Midwest governmental affairs director, Sean Stott, noted that Invenergy’s Grain Belt Express, for example, is projected to create 1,500 construction jobs in central Illinois. 

“They’ve made a commitment to employing residents of central Illinois to do that work, including members of the Laborers union,” he said. “Any time you do that, you’ll have money in the pockets of workers. It would definitely generate a significant amount of economic activity in the local community.” 

He doesn’t think union members would resent the additional charges on electric bills to fund transmission incentives. 

“There are no free lunches in life, there would be a small charge, however they would receive by virtue of an influx of lower-cost power, downward pressure on their electric bills,” he said. 

The Illinois Manufacturers’ Association also supports such legislation. 

“We’ve seen warnings for the last couple years both in PJM and MISO of potential brown-outs,” said association president Mark Denzler. “When there are challenges, the first folks they ask to reduce load are industries. Transmission projects are one place where the state has the ability to work on making sure we have reliability.” 

The legislation might also include a component known as “next generation highways,” allowing transmission lines to be co-located with highways, a situation currently prohibited under Illinois law. Minnesota last year passed similar legislation.

“We want to at least allow utilities the option to consider that,” said Gignac. “It’s something states can do, allowing some flexibility in the location of transmission lines.” 

Danielson framed the relationship to highways as symbolic on a larger level. 

“We have never thought about our grid in an integrated interstate commerce way like we thought about the highway system in the 1950s, and we really need to,” he said. “Because resilience to weather events and connecting economies through clean energy and 24-7 internet commerce are going to be the reasons Midwest states and the U.S. in general are going to be an economic leader in the future.” 

Related