Illinois has positioned itself as a leader in the data center sector.
The state has several advantages that have made it attractive to data center operators. It has a relatively stable energy grid. The Midwest has cheaper electricity than you'll find on either coast. And for now, data centers are largely unregulated in Illinois. In fact the state until recently had offered financial incentives for data center developers.
The strategy paid off. Illinois is home to more than 240 data centers. Most are in the Chicago area. Most are smaller. And most have functioned without anyone noticing.
Now, several hyperscale data centers are under development in Illinois, in part to fuel the growth in artificial intelligence. Large data centers require a lot of energy, enough to power about 100,000 homes.
If Bloomington-Normal government leaders decide they want to bring a data center to the community, they would need to demonstrate that the community has the energy capacity to sustain it.
Scott Allen is an energy policy specialist with the Citizens Utility Board, a nonprofit utility watchdog. Allen said the growth of AI is when the public started to notice.
“What changed was the drive behind artificial intelligence and the race that those data center developers who develop and hope to rent to the AI data centers and then the hyperscalers themselves, the Googles, the Metas,” Allen said.
And customers noticed on their utility bills. CUB notes power prices in Illinois are close to 50% higher than they were two years ago.
Michael Brown, executive director of the nonprofit Ecology Action Center in Normal, notes that in the last five years, growth in hyperscale data centers in the region has grown at a 43% clip. Other factors have contributed to the higher costs, such as more electric cars, trucks and buses on the road.
“Data centers are part of the equation that we are already seeing an increase right now that can be correlated with data center growth in our region,” Brown said.
When it comes to who pays for the increased energy demand, it doesn't matter if the data center is in your backyard or in Texas. The Midcontinent Independent System Operator [MISO] is the nonprofit that operates the electric grid across much of Illinois and 14 other Midwest states. You are paying for energy expansion anywhere in the MISO region.
Growth in data centers may be just beginning. In its latest long-term forecast, MISO said it expects load growth rates "not seen in decades," and it says data centers will take up one-fifth of all electricity by 2030, and one-fourth by 2040.
Meeting demand
Industry leaders are not sure the state will be able to meet demand without major changes. Nathan Miller is senior director of E3, Energy and Environmental Economics. He led a study last year which said Illinois faces "resource adequacy challenges" that must be addressed or we can expect energy shortages in the next decade.
“Which are likely to affect the cost and reliability of electricity supplies for Illinois businesses and consumers. This is not just an Illinois state problem. This is a broader regional challenge that affects the state of Illinois,” Miller said.
E3 produced the report for the Illinois Power Agency, an independent state government office which buys power for residents and businesses in the state. The agency is working on ways to address growing demand. That would involve more energy generation and enhanced distribution.
Ameren Illinois distributes electricity across must of Central and Southern Illinois. The utility is in the midst of a grid transmission project that cuts through McLean County and spans 380 miles of lines. Ameren is also building three new substations and upgrading several existing substations.
Ameren is asking state regulators to approve $65 million in rate increases for consumers to help recoup some of its costs. CUB is challenging the hike, accusing the utility of wasteful spending and poor planning.
When it comes to data center proposals, Ameren said it evaluates them case by case and said its responsibility is to maintain reliability for all customers by investing in electricity infrastructure.
Ameren declined WGLT's request for an interview.
Energy producers
Data center operators also talk to energy producers [Ameren is an energy distributor, not a producer] before deciding where they can build.
Jeff Conrad has fielded plenty of those calls. He's President and CEO of Wabash Valley Power Alliance, an Indiana-based nonprofit that purchases and supplies power to Corn Belt Energy and 20 other energy cooperatives in Illinois and Indiana. Conrad estimated he's taken inquiries from data center operators close to 70 times asking if they could support a data center project, including in Corn Belt's territory in Central Illinois.
“We are not for, we are not against. We are concerned about the potentially significant impacts, not only to our community, but to other communities as well."Michael Brown, Ecology Action Center
“We have a good frank discussion early on because we are going to make sure we are doing it responsibly and we are going to protect our [customers] at the end of the day,” Conrad said.
Conrad said Wabash Valley does not drive the discussion with data center developers. Ultimately, he said it's up to what a community wants, what other resources are available and what the developer is willing to do.
Wabash Valley has contracted to provide power to one data center currently in development in Lebanon, Ind. north of Indianapolis and has been in talks on a few other projects.
Based on that math — one contract after close to 70 separate inquiries — Conrad said it's hard to get to "yes" because the data center provider would cover the cost for any energy expansion.
“We’ve got to make sure from our standpoint, the reliability. At the end of the day, we are not going to do it if we don’t have the capability to make sure it can be done right and [cost] doesn’t spill over to our other members,” Conrad said.
Still Conrad said he sees where data centers bring down rates for other customers — as long as the capacity is there — if a contract is structured with its members [consumers] in mind.
“In our instance, if you do a transaction, and in some cases they'll cover all their cost, and then also maybe there'll be some fees that they pay us as well, and some of the benefit of that gets shared with all our members, and that can help kind of keep our costs down,” he said.
Conrad said the question of whether Wabash Valley can support a certain data center project is site specific and a moving target as supply and demand changes. Wabash Valley generates some of its own power and buys the rest. It co-owns a coal-fired power plant south of St. Louis and a gas power plant near Decatur, but otherwise has an all-of-the-above portfolio, one that's relying increasingly on gas. Natural gas has replaced coal as its leading fuel source since 2020.
Expanding renewable energy
Conrad said there are challenges to expanding energy production. In 2021, Gov. JB Pritzker signed the Climate and Equitable Jobs Act. It calls for the state to eliminate all production of coal and natural gas by 2045.
Conrad said natural gas is a reliable energy source. It's also cleaner burning, but getting a plant up and running now could take five years or longer, and that puts it up against that 2045 deadline.
“The challenge that we have right now is with all this growth, the demand on the [gas] turbines and that part of the industry trying to catch up to make sure there are enough turbines. That makes the timing a little bit more challenging,” Conrad said.
Conrad also sees promise in nuclear power. Illinois lifted a near four-decade old moratorium on new nuclear construction last year, but he said it could take a decade or longer to get a new plant online. Conrad said solar energy is still in high demand, though wind energy development has slowed.
Illinois has not weaned itself off of coal as early as renewable energy advocates would like. A coal power plant in Pekin that was set to retire at the end of 2028, was allowed to stay open an additional year to help meet demand.
Environmental advocates worry that the rising demand for energy to power data centers will lead to more climate-warming greenhouse gases.
“That is simply not sustainable,” said Juliana Vidal. She worked with the Ecology Action Center to produce a strategic plan for McLean County's energy use. It set a goal for McLean County to be carbon-neutral by 2050. “We are quickly, quicky approaching that planetary cutoff line where it’s going to get too hot and lot of these processes are going to denature."
Vidal said Meta's 20-year contract to buy power from the Clinton nuclear plant may seem like a win for clean energy, but it doesn't expand clean energy in an area where that capacity is limited. And she noted many data centers are relying on large diesel generators for backup power, another environmental harm.
Ecology Action Center's Michael Brown said continued reliance on fossil fuels will further hurt those who live in areas that disproportionately suffer from the health risks associated with air pollution and other environmental hazards.
“We are not for, we are not against [data centers], we are concerned about the potentially significant impacts, not only to our community, but to other communities as well, including specifically environmental justice communities,” Brown said.
The nonprofit Illinois Environmental Council [IEC] is pushing for state legislation called the Power Act that would require data center operators to pay for all necessary upgrades and it would have to come entirely from renewable sources. It's the so-called BEYONCCE [Bring Your Own New Clean Capacity and Energy] provision.
“I think folks understand that clean energy is the most reliable, it’s the cheapest form of energy and it’s what is best for our communities as well,” said Hannah Flath, IEC’s director of communications and campaigns. “I think we are going to hold strong [to ensure the Power Act passes.”
Flath acknowledged going entirely green is easier said than done. Illinois is well behind its target to be carbon free by 2045.
“We set that goal in 2021. We definitely did not expect that data centers were going to impact us in the way that they have over the last couple of years in particular. And we have a number of other challenges as well that are impacting demand,” Flath said, adding that the grid operator which serves Chicago and northeastern Illinois, PJM, has a backlog in which green energy projects are waiting three to five years to get approval to connect to the grid.
CUB is also backing the Power Act. Scott Allen with CUB said forcing data center providers to not impose any additional costs to consumers is something they should easily be able to do.
“They are spending hundreds of billions of dollars on these. They could erect an entirely new grid for all of us for the cost of these data centers,” Allen said.
The Power Act introduced earlier this year is still awaiting a vote.
Bloomington and Normal are hosting a community forum on data centers with a series of industry and government experts, from 5-8 p.m. Wednesday at the Bloomington Center for the Performing Arts.
