[co-author: Grayson Schmidt]
Alabama has established a sweeping energy infrastructure financing program through the “Powering Growth Act,” outlined in Senate Bill 304, which was signed into law by Alabama Gov. Kay Ivey on May 14, 2025, and became effective June 1, 2025. The legislation creates the Alabama Energy Infrastructure Bank (AEIB) and associated funds under the State Industrial Development Authority (SIDA) to support industrial and economic growth statewide.
The legislation specifically targets Alabama's 10 priority economic sectors identified in the state's strategic growth plan, including metals and advanced materials, chemical manufacturing, and technology industries — all of which require substantial energy infrastructure. These energy-intensive sectors are driving the projected 6GW peak demand increase, representing a 33% growth that existing infrastructure cannot adequately support.
Key Takeaways
- $1 billion bond authority addresses critical infrastructure gaps. With peak energy demand forecasted to rise 33% over the next decade, this substantial financing capacity directly targets transmission and substation expansion needs.
- Alabama creates a first-of-its-kind state energy infrastructure bank and Strategic Energy Infrastructure Development Fund. This represents a forward approach in a traditionally fossil-heavy state, positioning Alabama as an early mover in state-led energy infrastructure financing.
- Rural communities receive guaranteed investment allocation. The mandated 40% rural allocation through 2030 (50% post-2030) ensures meaningful infrastructure investment in underserved areas, potentially attracting manufacturers and logistics firms to rural counties. Rural counties are defined as having populations of less than 150,000.
- Strategic equipment procurement eliminates development delays. The Strategic Energy Infrastructure Development Fund's ability to pre-purchase long-lead equipment like transformers addresses supply chain bottlenecks that can delay projects for years.
- No new taxes or ratepayer burdens imposed. The program leverages existing state capital and tobacco settlement proceeds to attract private and federal investment, avoiding additional costs to citizens while maximizing public investment impact.
Program Benefits
The AEIB provides financing for utility and energy infrastructure needed at industrial development sites through a comprehensive approach. The bank is modeled similarly to a "green bank" but funds infrastructure across all energy types, not just renewables. SIDA is authorized to issue up to $1 billion in bonds to finance eligible projects, with an initial $50 million seed fund primarily sourced from the Alabama 21st Century Fund (tobacco settlement proceeds). The program offers financing, credit enhancement, loan guarantees, and interest rate subsidies to support municipal and cooperative power providers.
AEIB Program Structure
Eligible Projects
Eligible projects include infrastructure tied to economic development incentives under the Alabama Jobs Act, site readiness grants via SIDA, and enhancements in areas poised for future industrial growth. The program specifically targets energy infrastructure that supports:
- Transmission and distribution system upgrades
- Substation expansion and modernization
- Industrial site power readiness
- Municipal and cooperative utility infrastructure
- Long-lead equipment stockpiling for rapid deployment
- Grid resilience and supply chain durability improvements
Application Requirements
Oversight and Accountability
The AEIB operates under robust oversight mechanisms designed to ensure responsible use of public funds and project effectiveness:
Implementation Outlook
With the act taking effect June 1, 2025, Alabama has begun accepting applications and can deploy capital immediately. Early implementation priorities include establishing the external expert advisory framework, developing standardized application processes, and coordinating with existing economic development pipeline projects. The timing aligns strategically with federal infrastructure investments and growing industrial demand, positioning Alabama to capture significant economic development opportunities.
