During the October veto session, Illinois lawmakers passed a sweeping energy reform package aimed at addressing the state’s rising electricity demand, particularly from data centers, while balancing costs, reliability, and environmental concerns. The bill will loosen regulations on nuclear power and provide guidance for battery storage projects, which may result in new charges to ratepayers, although proponents say that savings from more storage on the grid will offset costs.

Matthew Tarduno, an assistant professor of economics at the University of Illinois at Chicago, explains the potential impacts of the bill, the economic trade-offs involved, and how policy design can shape Illinois’ energy future.

 How might this new energy bill affect what regular people pay for electricity in Illinois?

Illinois is split between two electricity markets, which affects how local policies impact bills. Northern Illinois, including the Chicago area, is part of the PJM market, which spans Pennsylvania, New Jersey, Maryland, Ohio, and parts of the Midwest. Central and southern Illinois participate in the MISO market, which covers much of the Midwest down to Louisiana. Prices in each region depend not just on local generation but also on the larger multi-state market. In the short run, this bill is unlikely to change electricity bills much. In the long run, if new generation comes online, it could have an impact, though the effect may differ for residents in northern versus southern Illinois, depending on the market they are in.

What are the potential environmental upsides or downsides of loosening rules on nuclear power?

New nuclear plants generate toxic waste, which is a downside, but they also produce low-cost, continuous power that can replace dirtier fuels like coal and natural gas. Displacing these fuels reduces local air pollution, which contributes to heart and lung problems, and lowers greenhouse gas emissions.

While nuclear accidents are rare, their total health impacts are generally smaller than the ongoing costs of fossil fuel pollution. Long-term storage of nuclear waste remains a concern, but over the next few decades, new nuclear capacity could provide net positive benefits for public health and climate outcomes. Construction and land use impacts also exist, but they are temporary compared with the benefits of low-emission, reliable energy generation.

Why is battery storage such a big deal in this debate, and how could it help with reliability or clean energy goals?

Batteries address the intermittency of renewable energy sources like solar and wind. Solar generation peaks in the middle of the day, while peak electricity demand often happens later in the afternoon and evening. Batteries allow excess generation to be stored and used when it is needed. Their costs have fallen significantly over the past decade, partly thanks to innovations from electric vehicles and consumer electronics.

Batteries also enhance grid reliability because they can dispatch electricity almost instantaneously during emergencies or outages. In Illinois, battery capacity is currently low, so this bill could help integrate storage more fully into the system and support both renewable energy growth and grid stability.

How are data centers changing Illinois’ energy needs, and what trade-offs come with meeting that demand?

Over the past five years, data centers have contributed to growth in electricity demand, which breaks a two-decade long spell of flat electricity use. Meeting that demand is challenging, especially while pursuing clean energy goals. If additional generation comes primarily from fossil fuels, emissions could rise even as renewable capacity increases. Data centers often do not prioritize the source of their electricity, which could keep coal or natural gas plants online.

This doesn’t mean that data center growth is only bad news for electricity emissions, though. There are a few ways that the increase in electricity demand could advantage renewables in the long run. For example, investment in new nuclear projects could lead to advances in small reactors, or load increases could spur reforms in the systems for adding renewable generation to the grid.