A bill pending in the Alabama Senate would create a revolving “energy infrastructure bank” to award loans for utility projects to meet the increasing demand for power, including at new industrial sites.
Senate Bill 304, sponsored by Sen. Arthur Orr, R-Decatur, could get a vote in that chamber this week.
“The future is going to require more and more electrical production and electrical needs,” Orr told the Fiscal Responsibility and Economic Development Committee recently. “This bill has nothing to do with production, with the generation of power. But it does have to do with transmissions and substations and all the infrastructure needed for said power and the delivery at a particular site.”
Senate Bill 304 authorizes the State Industrial Development Authority to issue up to $1 billion in bonds to provide loans and other financial assistance for eligible energy infrastructure projects that support economic growth.
Orr said the low- or no-interest loans will go mainly to co-op or municipal electrical providers.
Eligible projects are defined in the bill as those identified by the Alabama Department of Commerce and qualifying for economic development incentives under the Alabama Jobs Act; energy infrastructure necessary for the development of a site approved by the State Industrial Development Authority; or to support “energy infrastructure projects in areas where the energy infrastructure is anticipated to facilitate future economic development…”
The bill also allows the SIDA board to acquire equipment to have it ready for a particular project, eliminating what can be years-long wait times, Orr said.
Orr told Alabama Daily News north Alabama lost a proposed industrial project because it would take too long to get the infrastructure equipment needed to get the required power to the site.
“This would allow the SIDA board to secure that equipment,” he said.
“… You can build a plant in two years, but if you can’t get power for three years or four years, that project isn’t coming,” Orr said.
Infrastructure study
Commerce last year began a statewide study to “identify growth corridors in the state where key industries can be poised for accelerated expansion” and assess infrastructure needs among transportation, utility, water, internet and telecommunications systems.
The 2024 legislation calling for the study said it would prioritize “the geographic areas of the state with high potential for economic growth, identifying current capacities, future needs and strategic investments required to facilitate sustainable development across the state.”
That report is expected to be completed at the end of this month, but a preliminary version says Alabama’s peak energy demand is expected to increase by 33 percent in the next decade.
“The primary drivers behind site selection for major industrial projects have shifted and the availability of energy is almost always at the top of the list now,” Stefania Jones, commerce’s manager of governmental relations and marketing, told Alabama Daily News. “We see the investments our competitors are starting to make in their energy infrastructure. “Senator Orr’s SB304 is an investment in proactive energy infrastructure development that empowers our state’s communities, urban and rural, to compete for projects that will bring jobs and investment to every part of the state.”
Advancing with Orr’s SB304 is Senate Bill 313 by Sen. Rodger Smitherman, D-Birmingham, and Senate Bill 311 by Sen. Josh Carnley, R-Ino. Smitherman’s bill would allow the infrastructure bank to receive funding from the Alabama 21st Century Fund, which is used to collect and distribute tobacco settlement funds. The bill initially transfers $50 million from the fund to the Alabama Energy Infrastructure Bank for the 2026 fiscal year. As of last month, there was $74 million in the fund, according to a fiscal note on the bill.
A fiscal note on Orr’s says it would increase annual debt obligations by about $50.3 million for 40 years.
Senate Bill 311 modifies and puts new deadlines on the Alabama Department of Transportation’s procedure for permitting electrical transmission facilities.
“Though the idea of an energy bank is not a new one, we’ve known for quite some time that this would be the best mechanism for funding the type of infrastructure development Alabama needs to remain competitive, our situation is unique because of the varying processes of the transmission providers in our state, and this became abundantly clear during our work together on the energy infrastructure study,” Jones said.