A House committee got an overview this week of how data centers are driving up energy demand and threatening potential shortfalls in the second of three planned hearings on the matter.
The fundamental issue is that data centers have created a sudden and massive spike in demand for electricity, and Illinois doesn’t yet have the supply to accommodate it.
“There is more demand pending in the customer connection queue than they traditionally had on the system, period. So that gives you some sense of the magnitude of the challenge that we're facing,” Brian Granahan, director of the Illinois Power Agency, told the House Executive Committee.
Representatives from Ameren and Commonwealth Edison, Illinois’ major electric supply companies, said a majority, though not all, of the large load projects in their queues are data centers, and the expected demand will be significant.
“If all the projects in our pipeline come to be and they all reach their maximum, requested demand will more than double our system peak it took us 120 years to achieve, roughly by 2040,” said Max Leichtman, the director of economic and workforce development at ComEd.
However, he said that projected load will come online over time and likely be in place by 2040 or 2045.
“I think that's important and valuable from the utilities planning perspective because it allows us to build in stages and evaluate,” Leichtman said.
Brad Tietz, Midwest director of state policy for the Data Center Coalition, said data centers are becoming more energy efficient because the technology is still developing.
State is taking some steps to increase supply
Because Illinois has struggled to get more electricity generation to the grid, Granahan said provisions from the 2025 Clean and Reliable Grid Affordability Act, or CRGA, will be crucial to support this new demand. That law gives the IPA more authority to pursue generation.
“Then there's a number of other initiatives from CRGA that either reduce demands, like energy efficiency programs or otherwise make better use of something like rooftop solar or virtual power plant program, and budget changes that allow us to have more latitude to pursue additional generation,” he said.
House Leader Robyn Gabel asked if the state has the tools to build more energy supply.
Granahan said that while IPA is assessing whether the deadline for closing gas and coal plants is viable. It’s also assessing the regulatory and legal barriers for new nuclear power following Gov. JB Pritzker’s executive order aimed at spurring nuclear development after CRGA ended a longstanding moratorium on new plant construction.
But any new supply options would take time to implement.
New wind and solar farms take roughly three to four years to come online after a contract is signed and the state is unlikely to invest in new natural gas production, Granahan said.
The CRGA also creates new “virtual power plant” programs. That program allows homes and businesses with solar panels or wind turbines to pool energy together, acting “virtually” like a power plant despite not physically existing as one. The idea is that the energy stored in residential and business batteries can be contributed to the grid during peak hours. Homes and businesses who contribute to the grid will be paid for their energy.
“The things that can be stood up more quickly tend to be more diffuse solutions,” he said. “And that's why the virtual power plant program is really important because we can stand up these things at smaller scale and manage peak demand through something like rooftop solar coupled with onsite batteries.”
A key provision of the POWER Act, the main proposal for regulating data centers, is a requirement that data center companies invest in renewable energy to power their facilities.
According to advocates, the main incentive of that requirement is that those companies will be allowed to come online faster and potentially beat their competitors.
Data centers also have major monetary costs
Sarah Moskowitz, the director of Citizens Utility Board said the POWER Act’s requirement that data centers be put in their own rate class is another important cost-control measure.
“If the growth continues, we're seeing estimates that in the next 24 years, the costs of serving these facilities could reach between $24 and $37 billion here in the state of Illinois for up to $70 a month in a typical bill,” she said.
To help mitigate costs for customers, Leichtman said ComEd designs rate structures so the customers with high demands are not charged with customers who have smaller demands.
In March, the Illinois Commerce Commission allowed ComEd to increase the amount of money it charges large-load project developers looking to pull from the state’s electric grid.
Eric Whitfield, the director of economic development for Ameren, said his company is looking to do something similar, though it already has some consumer protections.
“Large-load projects do not move forward unless detailed engineering reviews confirm the system can serve them safely,” he said. If a large customer needs new or upgraded infrastructure, Whitfield said, Ameren also requires them to pay for it.
A complicating factor when it comes to price is that Illinois is part of a network of regional transmission organizations, which sets the wholesale price of electricity.
“We have to look beyond Illinois, but we have to start with our policies here,” Rep. Ann Williams, D-Chicago, said. “The bottom line is the cost increase should be isolated to the cost causers. And so how to make that happen is the challenge.”
The final data center hearing, focused on water, will be on Wednesday, April 22.
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