Illinois is the only state in the MISO that pays distributed batteries a direct incentive. Its Clean and Reliable Grid Affordability Act (CRGA) gives standalone BESS a $250/kWh rebate. That is the first distribution-scale storage incentive in MISO, and the only firm, upfront revenue a developer can guarantee.

Distributed batteries already hold a structural advantage. Projects under 5 MW can skip MISO's 49 GW battery interconnection queue and reach the market years before a utility-scale project. In addtion, a battery of 100 kW or more can then sell the full wholesale stack and benefit from the new CRGA rebate in Illinois.

Using Modo Energy’s Virtual Benchmark, we can test what a 5 MW, four-hour standalone battery would have made in 2025. Energy contributes $24,000/MW-year, regulation $105,000/MW-year, and capacity $75,000/MW-yr.

Key takeaways

• Illinois is the only MISO state paying distributed batteries a direct incentive, providing a $250 per kWh CRGA rebate for standalone BESS.
• Distributed BESS is just 10% of MISO's battery fleet, 112 megawatts (MW) across 7 states, but it skips the 49 GW queue. 76% of the distributed fleet is utility-owned and rate-based, so the merchant opportunity is largely untapped.
• A 100 kW battery can sell the full wholesale stack directly as an Energy Storage Resource, in contrast to other ISOs.
• A 5 MW standalone Illinois battery that sells into wholesale markets could earn $271,000/MW-year with 25% from the CRGA rebate.
• Future incentives are most likely in MISO North, where real-time TB spreads are strongest and several policies are slated for introduction.

Distributed batteries are 10% of MISO's fleet, and queue delays gave them a head start

MISO's operating battery fleet totals 1,162 MW, of which distributed-scale systems (those under 20 MW) make up 112 MW across 7 states.

That 10% had a structural go-to-market advantage while grid-scale BESS require further approval. Utility-scale batteries wait in a 49 GW interconnection queue that takes 3.2 years to clear. A distribution-connected project skips it, connecting under state and utility rules. Therefore, a distributed BESS could reach the market while a queued project is still in study.

76% of the fleet is utility-owned and rate-based rather than wholesale projects. Merchant, developer-built projects are a smaller but growing share now that batteries of 100 kW or more can enter the wholesale markets.

In Illinois and Arkansas, every operating distributed battery is co-located with solar.

A distributed battery can participate in MISO wholesale markets

Unlike other markets, MISO lets a distribution-connected battery of 100 kW or more participate directly in energy, regulation, and capacity, with no aggregation.

For example, New York's Value of Distributed Energy Resources (VDER) tariff forces a choice between state compensation and wholesale revenue. MISO sets no such trade.

Most of the operating fleet has not taken that route, earning a rate-based return instead, which is why the merchant opportunity is still open. A merchant case favors longer-duration batteries, since MISO requires at least a four-hour duration to participate in its capacity market.

Only Illinois offers firm revenue certainty as other states explore policy options

Five MISO states are worth comparing for a developer, and they differ sharply on how much money reaches one. The rest of the fleet sits in states with no framework at all.

Illinois provides the only direct developer incentive. Its CRGA rebate pays standalone BESS $250/kWh, rising to $300/kWh for net-metering-eligible systems until June 2028.

Since dispatch is voluntary, the developer is paid without sacrificing dispatch control. Few operating batteries capture that full stack today. Therefore, the merchant route is open, and in Illinois the rebate de-risks BESS buildout via a policy mechanism.

Developers are already reacting to the recent policy shift. Base Power, after a $1 billion raise, is entering Illinois for the CRGA's virtual-power-plant dispatch program. Its arrival signals the broader opportunity is drawing well-funded developers.

Other states in MISO North are exploring policy options:

• Minnesota: Xcel owns its distributed batteries directly through Capacity*Connect, up to 200 MW by 2028, with no third-party entry.
• Michigan: its regulator has ordered virtual power plants into utility resource plans, a signal ahead of a market.
• Missouri: commercial and industrial customers can join wholesale demand response, but with no incentive.
• Wisconsin: the largest distributed fleet, 30 MW, and no framework at all.

Illinois is first, and MISO North decides whether others follow

For now, Illinois stands alone. It is the only MISO state that pays a distributed battery directly, and the rebate is what makes the revenue bankable.

Whether Illinois is the first of many depends on MISO North. Michigan is closest. Its virtual-power-plant bills, SB 731 and 732, cleared committee in March 2026. Separately, its regulator has ordered utilities to model virtual power plants in their plans. Minnesota has the strongest real-time top-bottom spreads, providing merchant upside if incentives become available to developers.