A study performed by the Power Bureau, led by former Illinois Power Agency Director Mark Pruitt, finds that fully funding the expansion of Illinois’ renewable energy program will result in lower electric bills for Illinois ratepayers. The study, “Cost Analysis of Renewable Energy Deployment in Illinois,” compared the additional funding needed to reach a 40% renewable energy goal with the impact the additional renewables would have on wholesale energy and capacity prices, and the direct savings realized by rooftop and community solar customers. It found that reaching 40% renewable energy will create a net benefit for Illinois consumers of $1.21 billion over 10 years.
This study focused strictly on Illinois’ electric costs, meaning these results are in addition to the economic benefits of new jobs and property tax revenue and the broader health and environmental impacts of renewable energy generation. The analysis considered specifics of the Illinois energy market including the mix of large and small-scale renewables that is currently set in state policy.
The study models three well-known impacts that renewable energy generation creates in electric markets:
First, wind and solar generators bid into wholesale energy auctions at lower prices than coal, gas or nuclear power because the fuel for renewables, the wind and the sun, is free. Adding more zero-cost fuel to the energy market drives down the wholesale cost of energy. The study references 16 academic papers that have studied how adding more renewable energy to the electricity mix reduces wholesale energy prices in electric markets across the country.
Second, adding rooftop solar or ‘distributed generation’ to the regional energy markets reduces peak demand for electricity as customers generate their own electricity. This is an accepted practice that grid operators use today and reduces the costs that consumers pay for capacity, or backup power that is available to meet spikes in energy demand
Third, rooftop solar and community solar customers save money on their electric bills. Since solar is a one-time cost, the direct impact on consumer electric bills can be modeled. The study makes conservative estimates of direct consumer savings and only calculates the price impacts over ten years, though solar installations have a useful life of 25-30 years, and continue to provide these cost savings throughout this period.
Wholesale energy and capacity savings, which impact all ratepayers, create the majority of consumer savings statewide.
The study finds the following impacts will occur if Illinois expands it renewable energy program to 40% by 2031:
Renewable Energy Program Funding: +$2.94 billion
Wholesale Energy Costs: -$1.76 billion
Wholesale Capacity Costs: -$1.79 billion
Retail Supply Cost of Distributed Generation: -$603 million
Net consumer cost savings: -$1.21 billion
Illinois’ renewable energy program approved more than 25,000 new wind and solar energy projects between 2017 and 2020, more than doubling Illinois’ renewable energy generation. Program funding was exhausted in December 2020. The state currently has a waitlist of more than 4,000 renewable energy projects that cannot be approved without additional funding.
Expanding renewable energy in Illinois to 40% by 2030 will not only create consumer savings, but is also projected to generate $8.2 billion in new economic activity and 53,000 Illinois construction jobs by 2033.