Illinois’ Changing Energy Sector

A change is undoubtedly upon Illinois’ energy sector.  As illustrated in a new Economic Commentary by the Illinois Economic Policy Institute, the recent proliferation of natural gas, the development of renewable energy policies at both the federal and state level, and increased regulations on coal should inspire the state to pursue alternative energy sources to address the state’s energy production deficit and support the environment. 

REPORT: The Energy Sector in Illinois: Getting Down and Dirty on Clean Energy Opportunities in Illinois [PDF]

Coal and nuclear energy currently make up the largest share of the state’s energy production, at 46% and 40%, respectively.  However, federal regulations related to coal-fired emissions will likely negatively impact the future of this energy source.  While “clean coal” plants help to address the environmental issues with standard coal plants, costs associated with retrofitting a plant remain prohibitive.

Similarly, nuclear power plants are facing potential closures due to inadequate earnings.  As a result of the deregulated energy market in the Midwest and Northeast, nuclear power providers are competing to generate the cheapest electricity against other energy providers that use alternative fuels.  This, combined with state policies that provide additional support for renewable energy sources, as opposed to carbon-zero energy sources, contributes to a foreboding environment for Illinois’ nuclear energy providers.

IL Energy

An abundance of coal, existing infrastructure, and low natural gas and electricity prices give Illinois an advantage in maintaining its current energy strategy.  However, as these plants continue to age, and additional environmental regulations are enforced, turning to cleaner solutions like wind and solar can aid the state in providing reliable energy solutions for the future.

Wind serves as the primary renewable energy source in the state.  Illinois ranks 5th in the nation for installed wind capacity.  Illinois also produces 9.4% of the nation’s biofuels and has the 3rd-largest production capacity for both ethanol and biodiesel .  Additionally, Illinois has the 5th-highest solar energy resource potential in the nation.  The sun intensity in the state is greater than Japan and Germany, which are the two largest solar markets in the world.  All of these factors contribute to Illinois being well-positioned to increase its renewable energy production as a viable alternative to traditional sources.

Similar to renewable energy sources, natural gas energy has the potential to provide economic benefits and certain environmental benefits in Illinois.  In 2014, Illinois consumed 1,093.5 billion cubic feet of natural gas, yet produced only 2,626 million cubic feet.  Illinois has the opportunity to further contribute to natural gas production with the construction of a $1 billion natural gas-powered electric generating facility in Grundy County, Illinois. The plant will have a 1,100 MW capacity, making it a midsize generation facility, and will support the state’s widespread natural gas consumption.

Affordable energy for Illinois’ residents and businesses is crucial to maintaining a stable economy in the future.  As strategies are developed to achieve energy independence and replace aging infrastructure, renewable energy and natural gas should be the primary sources.  The state is well-positioned to take advantage of renewable energy sources, and will develop sustainable, long-term energy sources that provides both economic and environmental benefits.

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