Canary Media reports that Illinois lawmakers are considering a bill (HB 4120) that would establish a basic virtual power plant (VPP) program and require the state's two largest utilities to propose their own VPP programs by 2027. United's Samarth Medakkar spoke to the benefits of VPPs in lowering electricity costs and reducing strain on the grid during times of peak demand.
Illinois could start turning homes and businesses into “virtual power plants” with solar-powered batteries aiding the grid, under a bill that has been gaining momentum in the state legislature.
In Puerto Rico, Vermont, California, Texas, and other states, virtual power plants have helped the grid survive spikes in demand, avoiding outages or the need to fire up gas-fueled peaker plants, and saving consumers money.
Illinois is among the areas expecting electricity demand to grow rapidly because of new data centers; meanwhile, the state is mandated to phase out fossil-fuel generation by 2045, and residential and commercial solar have boomed thanks to state incentive programs. If those solar arrays were paired with batteries, they could provide crucial clean power to the grid during high demand.
HB 4120, an ambitious bill that Illinois lawmakers may consider during an October veto session, would create a basic virtual power plant (VPP) program while mandating that the state’s two largest utilities — ComEd and Ameren — propose their own VPP programs by 2027.
The bill’s plan would offer a rebate to customers who purchase a battery, if they agree to let the battery be tapped for several hours a day during the summer months, when air conditioners drive up electricity use.
The Illinois proposal is less nuanced and comprehensive than VPP programs in other states. For example, in Vermont, Green Mountain Power subsidizes the purchase of batteries, which the utility can then tap while also controlling customers’ smart thermostats, EV chargers, and water heaters whenever the grid is stressed.
But stakeholders in the solar and energy storage industry say Illinois’ proposal is an important first step, opening the door for more ambitious VPP services.
“A utility may want a program to address ‘emergency calls’ to reduce peak load, or deal with a winter peaking issue, or address locational capacity constraints,” said Amy Heart, senior vice president of public policy at Sunrun, a national company that has invested heavily in Illinois solar and that runs VPPs in Puerto Rico, California, and other places. “There is an official pathway and timeline for all of this.”
Illinois, like many states, has demand-response programs that are often considered part of virtual power plants, helping people reduce their energy use during peak demand. And ComEd has already proposed a VPP program to state regulators.
But legislation is crucial for VPPs to really take off, to ensure that programs “feature robust participation, innovation by aggregators, and a wide range of benefits,” said Samarth Medakkar, policy principal for Advanced Energy United, a national trade association of power, transportation, and software companies focused on clean energy.
Illinois’ bill would permit third-party aggregators to manage VPP deployment, a common setup in other states wherein a company, like Virtual Peaker in Vermont, coordinates battery deployment and demand response for the customer and utility.
ComEd and Ameren would be required to file reports by the end of 2028 detailing how many people have enrolled in the VPP program and its effects on energy supply.
By the end of 2027, the companies would have to file proposals for their own VPP programs, which the state regulatory commission must approve by the close of 2028. Those programs would need to include higher incentives for low- to moderate-income customers, “community-driven” community solar projects, and areas targeted for equity investments in Illinois’ existing energy laws.
“VPPs have a huge potential in a state like Illinois, where there are already many capable devices — like smart thermostats and solar systems which can pair with storage — increasing in number at a rate we can accelerate,” said Medakkar.
Saving customers money with VPPs
An analysis conducted by clean-energy think tank RMI found that VPPs could meet most of the expected new demand in Illinois, providing a crucial bridge while more clean-power generation and transmission lines are built.
The report notes that the state will need around 3.9 gigawatts of new generation or energy savings by 2029, as demand grows and old fossil-fueled plants retire.
VPPs could satisfy about three-quarters of that need, the analysis says, if they account for 10% of electricity used during peak demand times by tapping batteries and dialing down customers’ energy consumption.
Plus, it takes much less time to set up a VPP than to build a new traditional power plant. “VPPs can be deployed in as little as six months, nearly three years quicker than the median deployment timelines for utility-scale batteries and natural gas plants,” notes the RMI report, which was produced for Advanced Energy United to inform the legislative process.