Illinois Governor Signs Wide-Ranging Energy Legislation Addressing Battery Storage, Nuclear Power, Renewables, and More

Newsletter

On January 8, 2026, Illinois Governor J.B. Pritzker signed the Illinois Clean and Reliable Grid Affordability Act (“CRGA”). CRGA is the most wide-ranging energy legislation passed in Illinois since the 2021 Climate and Equitable Jobs Act (“CEJA”). Spanning more than 1,000 pages, CRGA expands on CEJA in a number of notable respects. For example, CRGA enhances existing incentives for development and operation of Illinois renewable energy projects, vests Illinois regulators with greater oversight over electric resource planning, creates new mechanisms to incentivize the development of battery storage and thermal energy, and lifts a moratorium on new Illinois nuclear power plants.

This is the first in a series of client alerts from Quarles on CRGA. This alert provides an overview of several of CRGA’s key provisions. Subsequent alerts will focus on and contain greater detail concerning CRGA’s various subject areas.

Key CRGA Provisions:

The following CRGA provisions have garnered significant attention following CRGA’s passage by the Illinois General Assembly and leading up to the Governor’s signature.

Battery Storage

CRGA directs the Illinois Power Agency (“IPA”) to develop an energy storage resources procurement plan (“Storage Procurement Plan”) that will be ready for stakeholder review and comment in 2027 and requires the IPA to review and revise the plan at least every two years. Even in advance of the first Storage Procurement Plan, the IPA must conduct an initial energy storage procurement on or about August 26, 2026 (subject to potential modification by the IPA). The IPA’s initial procurement shall be for at least slightly more than 1 GW of energy storage, followed by additional procurements for 3 GW.

Nuclear Power

CRGA eliminates the prohibition on the construction of Illinois nuclear power plants with a nameplate capacity of over 300 MW. CRGA also amends the fee structure that nuclear plant operators must pay for the generation of nuclear waste.

New Authority for Regulators

CRGA directs the Illinois Commerce Commission (“ICC”), the IPA, the Illinois Finance Authority (“IFA”), and the Illinois Environmental Protection Agency to collaborate on development of an Integrated Resource Plan (“IRP”) relating to Illinois electricity load. The IRP must contain, among other items, an evaluation of future electricity resource needs over 5, 10, 15, and 20-year timelines; peak demand and energy usage forecasts; and an analysis of all generation and energy resource options available to meet a range of load forecasts. Ultimate approval of the IRP by the ICC will depend on an evaluation of multiple factors, including: how the IRP addresses resource adequacy, the impact of emissions on environmental justice communities, affordability, and the use of renewable energy and energy storage.

CRGA also directs the ICC and IPA to begin a study process to evaluate the costs and benefits of establishing an Illinois-specific Independent System Operator (“ISO”). The ICC and the IPA must publish the final study no later than December 1, 2026. If the results of the ICC's study show a beneficial impact on Illinois citizens, the ICC and the IPA may conduct an additional study to explore the steps for establishing an Illinois-specific ISO.

Geothermal Energy

CRGA creates a Geothermal Homes and Businesses Program for the IPA to procure renewable energy credits ("RECs") from eligible geothermal heating and cooling systems (including geothermal heat pumps) through June 1, 2035. The program must be included in the Illinois Power Agency’s Long‑Term Plan beginning June 1, 2028, with an allocation of up to $10 million worth of RECs per delivery year. The IPA will set REC pricing methodology and establish categories by project type, size, customer class, and community location.

Thermal Energy Networks

CRGA authorizes the IFA to establish and administer a Thermal Energy Network Revolving Loan and Financial Assistance Program to support pilot projects that develop heating and cooling systems for residential, commercial, and industrial buildings and processes using geothermal energy. Subject to available funding, the IFA may identify and leverage public and private capital; create internal accounts; issue loans, grants, and other financial assistance; and adopt rules and fees to operate the program.

Data Center Air Regulations

CRGA requires diesel- and natural gas-powered backup generators used by data centers to comply with additional emission permitting requirements beyond those generally imposed by state and federal law.

CRGA Provisions Related to Renewable Energy Project Development:
Labor Requirements

CRGA expands the requirement for project developers to enter into Project Labor Agreements (“PLAs”) for solar project construction. A PLA is a “pre-hire collective bargaining agreement” that establishes baseline requirements, including benefits and compensation, for individuals working on renewable project construction. Previously, Illinois statutes mandated PLAs for the IPA’s utility-scale renewables programs. CRGA has expanded the PLA requirement to community solar projects with more than 3 MW of capacity, energy storage projects, and geothermal projects that are 142 tons or larger.

Solar-Specific Provisions

CRGA modifies the IPA’s existing programs for solar project development that have been implemented since CEJA. These changes include:

  • Increase in Community Solar Project Size: CRGA modifies the statutory definition of a “community renewable generation project” to increase the maximum nameplate capacity to 10,000 kW AC (previously 5,000 kW AC). 
  • Post-Award Renegotiations for Utility-Scale Contracts: CRGA provides that for projects entered into the IPA program via competitive procurements occurring prior to January 1, 2025, the IPA may permit a one-time renegotiation before the project hits its commercial operation date, by bilateral negotiation among the IPA, the utility buyer, and the winning bidder, limited to select terms (e.g., project map/real estate footprint, generator locations, or a reduction in REC quantities, but not REC price). If agreement is reached, the ICC will order the utility to execute an amendment drafted by the IPA. The IPA must provide the amendment within 15 business days of the order, and the utility must execute within 7 calendar days of delivery.
  • Co-Location Rules for Large Distributed Generation (“DG”) and Traditional Community Solar: CRGA codifies some co-location standards for Large DG and Traditional Community Solar projects. These standards include:
    • Large DG: Projects are considered co-located when located on a single parcel. Projects on adjacent parcels can also result in co-location where there is common ownership, control, or affiliation in pre‑development, development, construction, or management. The total aggregate nameplate capacity of co-located Large DG projects cannot exceed 5,000 kW AC. An Approved Vendor must submit an affidavit attesting that the project is not affiliated with any other Large DG project in a manner that would cause the aggregate to exceed this limit.
  • Traditional Community Solar: Projects on a single parcel or on adjacent parcels are considered co-located absent a demonstration that the projects are unaffiliated. Separate legal formation does not preclude a finding of affiliation. The total aggregate nameplate capacity of co-located community solar projects cannot exceed 10,000 kW (increased from 5,000 kW). An agency determination of co-location will depend on factors such as whether the parcels were subdivided within five years before the application, or projects that pre‑developed before construction by the same or an affiliated entity.
  • Equity Eligible Contractor/Person Participation and Control: CRGA directs the IPA to deploy mechanisms, including differentiated REC prices, exceptions, exemptions, and other measures, to ensure a meaningful share of contract value flows to Equity Eligible Contractors and Equity Eligible Persons who actively control and manage their businesses.
  • Floating Block Authority: To avoid intra-year availability gaps for REC offerings, CRGA provides that the IPA may establish a floating block of REC capacity and reallocate unused capacity across categories to address waitlists, with redistribution applied to subsequent-year capacity and priced at the new year’s REC price.
  • Small Distributed Generation (“DG”) Contracts—Payment Structure: Starting on CRGA’s effective date, and including the remainder of program year 2026–2027, 50% of the REC contract value for Small DG is paid at interconnection and energization verification, with the balance paid proportionally over six years.
  • Consumer Protection Requirements: CRGA directs the IPA to set additional program requirements and minimum contract terms for entities marketing, selling, installing, and financing DG and community solar subscriptions to prevent misleading or abusive practices.
  • Approved Vendor Bonding for Harmed Customers: CRGA provides that the IPA may require Approved Vendors, as part of the application and annual recertification process, to provide a security bond in an amount the IPA deems reasonable for the benefit of customers harmed by violations of IPA requirements or other applicable laws or regulations. The IPA may exempt certain vendor categories or require enhanced bonds for Approved Vendors it deems higher risk.
  • Restrictions on Pass-Through REC Payment Models for Distributed Generation: CRGA permits the IPA to partially or fully restrict sales or financing arrangements that promise customers a pass-through of REC payments received by an Approved Vendor. If not fully restricted, the IPA may require escrow so REC payments first go to an escrow agent for distribution to customers and Approved Vendors according to the promised allocation. Upfront discounting remains unaffected.
Interconnection Monitor

CRGA enables the ICC’s Office of Retail Market Development (“ORMD”) to take a more active role in monitoring interconnection issues. For example, ORMD may employ, designate, or retain an Ombudsperson to oversee electric utility compliance with interconnection-related standards and obligations. The Ombudsperson may request, and utilities must promptly provide, records and information regarding pending, successful, and terminated interconnections, and may require a transparent, itemized breakdown of non‑binding interconnection cost estimates (e.g., equipment by type/model, labor, O&M, engineering/design, permitting, easements/rights‑of‑way, and direct/indirect overhead). ORMD may also establish an informal interconnection dispute resolution process that is separate from existing processes.

CRGA’s Public Utility-Related Provisions:
Energy Efficiency

CRGA modifies the Energy Efficiency (“EE”) programs of electric and gas investor owned utilities (“IOUs”). For electric IOUs, the key change is the removal of the cumulative, persistent annual savings goals. CRGA instead directs ComEd and Ameren to hit a 2% annual savings goal in 2027 and 2029, respectively. On the gas side, CRGA allows large IOUs that do not already have an EE program to engage in a voluntary gas EE program. Existing gas EE programs remain unchanged. CRGA increases a gas IOU’s spending of EE from 2% of revenue from eligible customers to up to 5%, subject to ICC approval.

Virtual Power Plant Program

CRGA mandates that each electric public utility must file an initial virtual power plant (“VPP”) tariff by June 1, 2026, for ICC approval. CRGA establishes a two‑stage VPP framework: a short‑term and a long‑term program.

Under the short‑term program, beginning no later than June 30, 2026, all customer classes can receive the distributed storage rebate by participating in a scheduled‑dispatch VPP. All community renewable generation projects paired with distributed energy resources must participate. Compensation is set by the ICC, with a floor of $10 per kW of average dispatch.

The long‑term program begins no later than December 31, 2028, and opens VPP participation to a broader set of eligible devices (including behind‑the‑meter storage, smart thermostats, and EV batteries). Customers may enroll through aggregators or directly with their utility. Compensation is provided via upfront enrollment and performance payments under an approved rider, with an initial five‑year term. Community solar projects paired with distributed energy resources may participate under this long‑term framework.

Time-of-Use

CRGA requires large electric utilities to implement time-of-use ("TOU") pricing to help customers shift usage to lower‑cost hours. Each utility must file, within 120 days of CRGA’s effective date, at least one market‑based rate tariff for eligible retail customers that uses three-time blocks: (i) a peak block reflecting the average consecutive highest daily system demand hours; (ii) an off‑peak block reflecting the next highest demand hours; and (iii) a super‑off‑peak block covering all remaining hours.

For more information on how CRGA may benefit or affect your business, contact the following Quarles attorneys:

Follow Quarles

Subscribe Media Contact
Back to Main Content

We use cookies to provide you with the best user experience on our website and to analyze statistics related to our website. To understand more about how we use cookies, or for instructions to change your preference and browser settings, please see our Privacy Notice. Please note that if you choose to reject cookies, doing so may impair some of our website's functionality.