Why developers come here
Alabama’s pitch has been a vertically integrated utility with generation to sell, abatements that could run 30 years, and land along the I-65 and I-20 corridors that is cheap by Atlanta standards. Meta built in Huntsville and is finishing an $800 million campus in Montgomery; Google has operated at the former Widows Creek coal plant site in Jackson County since 2018 and has expanded it. Industrial power averaged 7.25 cents per kWh in 2024 (EIA) and 7.84 cents year-to-date through June 2026, the highest of the five Gulf South states but still under the national average.
What changed in 2025 and 2026 is scale. Inside Climate News counted more than a dozen proposed data centers in Alabama Power territory by August 2026, including Project Marvel in Bessemer (about 1,200 MW on the tracker), a 1,500 MW request from Project Red Clay in Lowndes County, and a 300 MW Birmingham facility under construction. That pipeline prompted the Legislature and the Public Service Commission to rewrite the rules in the same year.
Incentives
- Sales, use, and property tax abatements, Code of Alabama Chapter 9B (Title 40). Cities, counties, and industrial development boards can abate state and local sales and use tax on construction materials and equipment (except the 0.75 percent state education portion), non-educational property taxes, and mortgage and recording taxes. For data processing centers the term has been tiered by investment: 10 years up to $200 million, 20 years for $200 million to $400 million, and 30 years where investment exceeds $200 million within 10 years and $400 million within 20 years. The Department of Revenue notes these tiers apply to abatements granted before January 1, 2027.
- 2026 change: HB 399, now Act 2026-573, signed April 16, 2026 and effective June 1, 2026. For abatements granted on or after January 1, 2027 the maximum term is 20 years, extendable to 30 only if the operator commits to “qualified local investments” such as roads, broadband in unserved areas, water and wastewater systems, or education support. Data centers of 100 MW or more lose the sales and use tax abatement once the property is placed in service, which is why this page marks the exemption as available but narrowing. The governor may waive that for economically distressed counties. The sunset on the data center provisions moved from 2028 to 2032.
- 2026 change: SB 270, Act 2026-610 (“Power to the People Act”), effective October 1, 2026. Requires the PSC to find that any Alabama Power contract with a data center of 150 MW or more at a site recovers the full incremental cost of generation, transmission, distribution, fuel, and taxes caused by that customer, and produces benefits for other customers. The act also expands the PSC from three to seven members.
Power
Alabama Power, a Southern Company subsidiary, is a vertically integrated utility outside any ISO and serves the central and southern two-thirds of the state. North Alabama, including Huntsville and Jackson County, is TVA territory served through local distributors. PowerSouth cooperatives cover parts of the south.
There is no open-access interconnection queue; a large customer negotiates a contract with Alabama Power. Until 2026 those contracts fell under Rate FCR, a 1996 flexible contract rate that let a contract take effect ten days after filing unless the PSC objected. On July 8, 2026 the PSC opened a proceeding to write new procedures for large-load data center contracts (150 MW or more), with comments due August 6 and replies August 21, 2026. Under the proposal Alabama Power files a public version of each contract and an unredacted copy with staff, and the commission has 60 days to review. The first contract filed under the interim process, for a 300 MW Birmingham data center, had its pricing terms redacted, which drew criticism from WBRC and the Energy and Policy Institute. Alabama Power has frozen base rates through 2027, with the governor’s office pressing for 2028, and says large loads “must pay the full cost of serving their electricity needs.”
Water is the lead environmental issue at Bessemer, where opponents cite estimates of 2 million to 10 million gallons a day and proximity to the Cahaba River watershed.
Where the projects are
Birmingham metro and Jefferson County lead: Project Marvel in Bessemer, a 300 MW facility inside Birmingham, and a 14-building Westover proposal in Shelby County. Montgomery has Meta’s campus off I-65 across from the Hyundai plant. Huntsville has Meta’s original campus, expanding to 2.5 million square feet. Jackson County has Google at Widows Creek. Lowndes County in the Black Belt has Project Red Clay, the largest single power request.
Local politics
Bessemer is the test case. Logistic Land Investments first sought rezoning for roughly 700 acres in 2025, then expanded the plan to about 1,600 acres in February 2026 to spread 18 buildings and widen buffers. After more than a year of hearings, the city council approved the additional 914-acre rezoning from agricultural to light industrial on April 21, 2026. Opponents, including the Alabama Rivers Alliance and the Southern Environmental Law Center, cited water, power use, undisclosed end users, and non-disclosure agreements signed by city officials; supporters argued a struggling city needs the tax base. The city also bought land to keep the project clear of the planned Northern Beltline.
At the state level the reaction was bipartisan and fast: HB 399 passed the Senate unanimously. Montgomery and Huntsville, by contrast, courted Meta with abatements and saw little organized opposition.
What a landowner should know
Hyperscale proposals in Alabama have run from 360 acres (Google, Jackson County) to about 1,600 acres (Bessemer). Developers want proximity to Alabama Power 230 kV or 500 kV lines or, in the north, TVA lines, plus municipal or river water. Options with confidentiality clauses are common, and Alabama has no state disclosure rule requiring the end user to be named at rezoning.
Cities have zoning; most rural counties do not, so an unincorporated site may face no public hearing until the abatement comes before the county commission or industrial board. Because 100 MW-plus projects lose the sales tax abatement from 2027, expect developers to press for closings and abatement votes in 2026. The state contact is the Alabama Department of Commerce; abatement rules are on the Department of Revenue site, and large-load contracts are reviewed by the Alabama Public Service Commission.