New laws for a new era: Need to meet increased electricity demand reflected in comprehensive measures passed in Illinois and Ohio

Illinois and Ohio lawmakers overhauled their states’ energy policies in 2025, choosing different paths to the same destination: increasing electricity generation to meet skyrocketing demand.

In Ohio, a new law encourages new generation capacity through a mix of regulatory streamlining; tax breaks for qualifying projects; and a provision that allows large electricity users to generate their own, on-site, “behind the meter” electricity.

In Illinois, lawmakers are providing state regulators new powers to negotiate rate hikes to pay for increased generation or storage; requiring more long-term capacity planning; and lifting a moratorium on building nuclear power plants.

The two states’ new laws include numerous other provisions as well, many with the goal of having more-responsive energy policies in place — a necessity, the bills’ sponsors say, considering broader economic trends.

‘Things changing rapidly’

All three of the Midwest’s regional transmission operators are predicting sharply increasing demand for electricity over the next 10 to 20 years (see table), driven by the growth of data centers and artificial intelligence, electric vehicles and, possibly, new technologies such as the use of electrolysis for hydrogen production.

“When we passed [the Climate Equity & Jobs Act] four years ago, everybody kind of assumed that demand would remain relatively stable,” says Illinois Sen. Steve Stadelman, who sponsored SB 25. (As of mid-December, the bill was still awaiting the signature of the governor, who said he will sign it.)

“But because of the data centers and the increased demand, things are changing very rapidly.”

The boom in data centers, in particular, informed some of Ohio legislators’ work on HB 15, which took effect in August.

“Some people say they don’t want them; well, you don’t want them in your backyard, but they’re still going to be built,” says Rep. Roy Klopfenstein, chief sponsor of HB 15. “It’s just a matter of where. Ohio has opened that door and said, ‘Look, we know they’re going to be built. We wouldn’t mind having them here in the correct place.’ ”

New ‘shot clock’ and tax cuts in Ohio

To streamline the regulatory process, legislators are putting a “shot clock” on the Ohio Power Siting Board regarding the approval of new electric generating plants, transmission lines and gas pipelines.

This includes proposals to build on a brownfield or former coal mine designated as a “priority investment area” by local governments.

The Power Siting Board must evaluate the completeness of project applications in priority investment areas within 45 days. It then has another 45 days to issue a final decision. An application is considered approved if the deadline is not met.

For electric generation, transmission-line and pipeline projects outside the priority areas, board review also is accelerated — a statutory maximum of 195 days, and an even quicker timeline for some projects.

“Regulatory certainty was a critical factor for us,” says Sen. Brian Chavez, chair of the Senate Energy Committee.

Another new mechanism for building up Ohio’s energy infrastructure: significant reductions in the tangible personal property tax for new electric generation facilities, energy-conversion equipment, and energy-storage systems. A complete property tax exemption (applied for five years) will be available for projects in the locally designated priority investment areas.

HB 15 also now allows for “behind the meter” energy production, such as on-site generation at data centers.

“Giving the ability to data centers to build this transmission or build this generation behind the meter, and actually own it, is going to spur that development,” Klopfenstein says.

‘More nimble’ approach for Illinois

In 2021, Illinois legislators adopted the Climate Equity & Jobs Act (SB 2408), a comprehensive law that includes a goal of generating 100 percent of electricity from non-carbon sources by 2045.

SB 25, passed in October 2025, keeps that goal and its phased-in reductions of greenhouse gas emissions, while also adding statutory provisions to address issues around affordability and reliability.

For example, the new law gives more powers, and responsibilities, to the Illinois Commerce Commission, the state regulator of utilities and energy markets. Among the ICC’s new powers: the authority to delay planned closures of fossil fuel plants as well as to approve utility rate hikes tied to the construction of new power plants. (SB 25 does provide a way for legislators to suspend commission-approved rate hikes and to negotiate changes.)

“We need to be more nimble in trying to address these energy spikes or demand spikes, and so we’ll want to give the ICC more authority to figure out what the mix is and how we meet that demand,” Stadelman says.

The commission also is empowered to approve, modify or direct changes to utility programs and procurement plans in order to address resource adequacy or reliability shortfalls.

Delaying implementation of phased-in reductions of greenhouse gas emissions is an option, but only as a last resort — and “to the minimum extent and duration necessary to address the resource adequacy shortfall.”

Starting in 2028, the ICC must include ways to expand existing or future electric transmission system capacity in its regular updates of the state’s “Renewable Energy Access Plan.” Utilities serving at least 200,000 customers also will be required to study and propose the use of new technologies (software and hardware upgrades) that maximize capacity and reliability within their existing transmission infrastructure.

And together, state regulators and utilities will develop a statewide integrated resource plan that assesses future electricity demand, resource adequacy and reliability needs over five-, 10-, 15-, and 20-year periods. The plan must be continually updated.

Other provisions in SB 25:

• Establish a new energy-storage procurement mandate. Electric utilities serving more than 300,000 customers must install at least 3,000 MW of battery storage capacity by 2030. The goal is to bolster the use of wind and solar power by being able to use this stored energy at night or when the wind isn’t blowing.
• Create virtual power plant programs, under which utility customers can earn revenue by supplying energy (via their home batteries or solar panels, for example) to the grid when needed.
• Require utilities to expand time-of-use pricing options — for example, charging higher rates at peak hours. (The law also strengthens demand response programs that incentivize customers to reduce peak power use.)
• Fund pilot programs for geothermal energy networks and increase subsidies that retrofit homes for energy savings.
• End a moratorium on the construction of large-scale nuclear power plants. (HB 2473 of 2023 lifted the ban for small modular reactors.)